WARRANT AGREEMENT
THIS
WARRANT AGREEMENT
dated as
of June 27, 2006, is entered into between AMARILLO BIOSCIENCES, INC., a Texas
corporation (the "Company"), and MARKS VALUE PARTNERS, LLC, a California
limited
liability company (“Holder”).
W
I T N E S S E T H:
WHEREAS,
the
Company proposes to issue to Holder warrants ("Warrants") to purchase up
to
200,000 shares (the "Shares") of the Voting Common Stock of the Company (the
“Stock”); and
WHEREAS,
the
Warrants issued pursuant to this Agreement are being issued by the Company
to
Holder in connection with that certain Investor Direct Marketing Service
Agreement dated June 27, 2006, between the parties hereto;
NOW,
THEREFORE,
in
consideration of the premises, the agreements herein set forth and other
good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Grant.
Holder
is hereby granted the right to purchase, at any time from execution of this
Warrant Agreement by both parties ("Effective Date") until 5:00 p.m., Central
Standard Time, on June 26, 2009 (the "Warrant Exercise Term"), up to 200,000
Shares at an initial exercise price of $2.00 per Share. The Warrants may
be
exercised in whole or in part, and from time to time during the term
hereof.
2. Warrant
Certificates.
The
warrant certificates (“Warrant Certificates”) delivered and to be delivered
pursuant to this Agreement shall be in the form set forth as Exhibit "A",
attached hereto and made a part hereof. A future election to exercise the
Warrant to purchase shares, in whole or in part, shall be completed on the
form
attached at page A-3 of Exhibit A, and a future assignment or transfer of
the
Warrant Certificate, in whole or in part, shall be completed using the form
attached at Page A-4 of Exhibit A.
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3. Exercise
of Warrants.
The
Warrants initially are exercisable at the price set forth in Article 1, above,
payable in cash or by certified or official bank check to the order of the
Company, or any combination of cash or such check. Upon surrender of the
Warrant
Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the exercise price for the Shares purchased, at
the
Company's principal offices, the registered Holder of a Warrant Certificate
shall be entitled to receive a certificate or certificates for the Shares
so
purchased. In the case of a purchase of less than all the Shares purchasable
under any Warrant Certificate, the Company shall cancel said Warrant Certificate
upon the surrender thereof and shall execute and deliver a new Warrant
Certificate of like tenor for the balance of the Shares purchasable
thereunder.
4. Issuance
of Certificates.
Upon the
exercise of the Warrants, the issuance of certificates for the Shares shall
be
made forthwith without charge to the Holder thereof, except for any tax which
may be payable in respect of the issuance thereof, and for which the Company
shall be required, by applicable law or regulation, to withhold, and such
certificates shall (subject to the provisions of Article 5 hereof) be issued
in
the name of, or in such names as may be directed by, the Holder thereof.
The
Company shall not be required to issue or deliver such certificates unless
or
until the person or persons requesting the issuance thereof shall have paid
to
the Company the amount of such tax.
The
Warrant Certificates and, upon exercise of the Warrants in whole or in part,
certificates representing the Shares shall bear a legend substantially similar
to the following:
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"The
securities represented by this certificate and the other securities issuable
upon exercise hereof have not been registered under the Securities Act of
1933,
as amended (the ‘Act’), and may not be offered or sold except (i) pursuant to an
effective registration statement under the Act, (ii) to the extent applicable,
pursuant to Rule 144 under the Act (or any similar rule under such Act relating
to the disposition of securities), or (iii) upon the delivery by the holder
to
the Company of an opinion of competent securities counsel stating that an
exemption from registration under such Act is available."
5. Restriction
on Transfer of Warrants.
(a) The
Holder of a Warrant Certificate, by its acceptance thereof, covenants and
agrees
that the Warrants are being acquired as an investment and not with a view
to the
distribution thereof, and that the Warrants may not be sold, transferred,
assigned, hypothecated or otherwise disposed of, in whole or in part, except
upon compliance with applicable state and federal securities laws.
(b) Holder
has had an opportunity to receive and review all documents and information
that
it considers material to Holder’s acquisition of the Warrants and to ask
questions of and receive satisfactory answers from the Company, or a person
or
persons acting on the Company’s behalf, concerning the Company and the terms and
conditions of the purchase of the Warrants, and all such questions have been
answered to the full satisfaction of Holder.
(c) Holder
is
a sophisticated investor with such knowledge and experience in financial
and
business matters and investments in restricted securities that Holder is
capable
of evaluating the merits and risks of acquiring the Warrants.
(d) Holder
is
an
“accredited investor” as defined in Regulation D under the Securities Act of
1933, as amended (the “Securities
Act”).
(e) Holder
acknowledges that except as expressly stated in Article 9 of this
Agreement, neither the Company nor any officer, director, employee, agent
or
representative of the Company have made any representations or warranties
of any
kind to Holder including representations regarding future revenues, earnings
or
profits of the Company, the future value of the Warrants or Shares, the future
capitalization of the Company, the occurrence or timing of any public offering
by the Company, the amount of future business that may be transacted by the
Company or otherwise. Holder further understands that the Company’s success in
achieving its goals and objectives in the future and implementing its business
plan cannot be predicted and is subject to numerous factors not within the
control of the Company. Holder is not acquiring the Warrants based upon
representations, oral or written, by any person with respect to the future
value
of, or income from, the Warrants or Shares, or the length of time that Holder
will be required to remain as the owner of the Warrants or Shares but rather
upon an independent examination and judgment as to the prospects of the
Company.
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(f) Holder
understands that neither the Warrants nor the Shares have been registered
under
the Securities Act, or any other applicable state or federal securities statutes
(together with the Securities Act, the “Acts”).
Holder understands that the Warrants are subject to restrictions on transfer
and
that Holder may bear the economic risk of acquiring the Warrants for an
indefinite period of time.
(g) The
address and federal tax number set forth herein are Holder’s true and correct
residence or principal place of business and federal tax number. Holder has
no
present intention of moving Holder’s residence or principal place of business to
any other state or jurisdiction.
(h) Holder
acknowledges that the Warrants were not offered to Holder by means of general
solicitation, publicly disseminated advertisements or sales
literature.
(i) Holder
understands
that the Warrants are being offered and sold to it in reliance on specific
provisions of federal and state securities laws and that the Company is relying
upon the truth and accuracy of the representations, warranties, agreements,
acknowledgements and understandings of Holder
set
forth herein.
6. Price.
The
exercise price of each Warrant shall be as stated in Article 1.
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7. Not
Registered.
The
Warrants and the Shares have not been registered for purposes of public
distribution under the Securities Act of 1933, as amended (the
"Act").
8. Certain
Reclassifications, Merger, Consolidation, or Sale.
In case
the Company should propose to effect any reclassification or change in the
outstanding shares of the Stock (other than a change in par value to no par
value, or from no par value to par value, or as a result of a split or reverse
split or other similar subdivision or combination), or any consolidation
of the
Company with, or merger of the Company into, another corporation (other than
a
consolidation or merger in which the Company is the surviving corporation
and
which does not result in any reclassifica-tion or change of the outstanding
shares of Common Stock, except a change as a result of a subdivision or
combination of such shares or a change in par value, as aforesaid), or a
sale or
conveyance to another corporation of the property of the Company as an entirety,
the Holders shall be notified in writing of such proposed transaction at
least
thirty (30) days prior to the consummation thereof. Shares of Stock acquired
by
Holder pursuant to its exercise or partial exercise of the Warrants shall
participate fully in such transaction, on the same basis as other issued
and
outstanding shares of Stock of the Company. Any Warrants not exercised prior
to
the consummation of any such transaction shall lapse in their entirety and
shall
be of no further force or effect.
9. Stock
Splits or Reverse Stock Splits.
In case
the Company should undergo a stock split or reverse stock split or other
similar
subdivision or combination, the Warrant shall remain in force during the
Warrant
Exercise Term, and the number of shares with respect to which the Warrants
are
exercisable, and the exercise price, shall be appropriately adjusted.
10. Registration
of Shares.
If at
any time after Holder shall have exercised some or all of the Warrants, the
Company should determine to conduct a registered public offering of its
securities, the Company shall notify Holder and Holder shall have the right
to
have its Shares registered as a part of the registration contemplated with
regard to such public offering. Such registration of the Shares shall be
at the
Company’s expense. The foregoing notwithstanding, the Company shall not be
required to include Holder’s stock in the registration, if the Company’s
underwriters object thereto; provided further, however, that if the underwriters
permit any executive officers, directors, or ten percent (10%) owners of
the
Company to register their shares pursuant to such offering, then Holder shall
be
entitled to register a proportionate number of its Shares pursuant to such
offering, which proportion shall be determined by dividing the number of
shares
of executive officers, directors, and ten percent (10%) owners allowed to
be
registered, by the number of shares of the Company then issued and outstanding,
held by such persons.
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11. Representations
and Warranties of the Company.
The
Company represents and warrants to Holder as follows:
(a) The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Texas. The Company has all requisite
corporate power and authority to own or lease, as the case may be, its
properties and to carry on its business as now conducted.
(b) The
Company has the corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and consummate the transactions
contemplated hereby. The Company has taken all necessary corporate action
to
authorize the execution, delivery and performance of this Agreement and the
transactions contemplated hereby.
(c) This
Agreement has been duly executed and delivered by the Company and constitutes
a
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms except
as
may be limited by bankruptcy, insolvency, reorganization or other laws of
general application relating to or affecting the enforcement of creditors’
rights generally, and the effect of rules of law governing the availability
of
equitable remedies.
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12. Exchange
and Replacement of Warrant Certificates.
Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of any Warrant Certificate, and, in case
of
loss, theft or destruction, of indemnity or security reasonably satisfactory
to
it, and reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of the Warrants, if mutilated,
the
Company will make and deliver a new Warrant Certificate of like tenor, in
lieu
thereof.
13. Reservation
of Securities.
The
Company shall at all times reserve and keep available out of its authorized
shares of Stock, solely for the purpose of issuance upon the exercise of
the
Warrants, such number of shares of Stock as shall be issuable upon the exercise
thereof. The Company covenants and agrees that, upon exercise of the Warrants
and payment of the Exercise Price therefor, all shares of Stock issuable
upon
such exercise shall be duly and validly issued, fully paid, non-assessable
and
not subject to the preemptive rights of any shareholder.
14. Shareholder
Rights.
Nothing
contained in this Agreement shall be construed as conferring upon the Holder
or
Holders the right to vote or to consent or to receive notice as a shareholder
in
respect of any meetings of shareholders for the election of directors or
any
other matters, or as having any rights whatsoever as a shareholder of the
Company, prior to the exercise of the Warrants.
15. Notices.
All
notices, requests, consents and other communications hereunder shall be in
writing and shall be deemed to have been duly made when delivered, or mailed
by
registered or certified mail, return receipt requested:
(a) if
to a
registered holder of the Warrants, to the address of such Holder as show
on the
books of the Company; or
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(b) if
to the
Company, to its principal place of business or to such other address as the
Company may designate by notice to the Holders.
16. Supplements
and Amendments.
The
Company and Holder may from time to time supplement or amend this Agreement
in
order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any provisions herein,
or to
make any other provisions in regard to matters or questions arising hereunder
which the company and Holder may deem necessary or desirable.
17. Successors.
All the
covenants and provisions of this Agreement by or for the benefit of the Company
and the Holders inure to the benefit of their respective successors and
permitted assigns hereunder. Holder may assign any or all of the Warrants
to one
or more of its Affiliates (as hereafter defined) without the consent of the
Company. No Warrants may be assigned to any non-Affiliates of the Holder
without
the Company’s prior written consent which consent will not be unreasonably
withheld or delayed. “Affiliate” shall mean with respect to any person, any
other person controlling, controlled by or under common control with such
person. For purposes of this definition and this Agreement, the term “control”
(and correlative terms) means the power, whether by contract, equity ownership
or otherwise, to direct the policies or management of a person.
18. Termination.
This
Agreement shall terminate at the end of the Warrant Exercise Term, or upon
such
earlier date as all Warrants have been exercised, except that the provisions
of
Article 9 shall survive such termination.
19. Governing
Law.
This
Agreement and each Warrant Certificate issued hereunder shall be deemed to
be a
contract made under the laws of the State of Texas and for all purposes shall
be
construed in accordance with the laws of said State, and venue of any action
relating to the Warrants or the Shares shall be in Potter County,
Texas.
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20. Benefits
of this Agreement.
Nothing
in this Agreement shall be construed to give to any person or corporation
other
than the Company and Holder and any legal or equitable right, remedy or claim
under this Agreement; and this Agreement shall be for the sole and exclusive
benefit of the Company and Holder and any other Holder or Holders of the
Warrant
Certificates, Warrants or the Shares.
21. Market
Stand-Off.
In
connection with any underwritten public offering by the Company of its equity
securities pursuant to an effective registration statement filed under the
Securities Act, Holder shall not, without the prior written consent of the
Company’s managing underwriter, (i) lend, offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract
to
sell, grant any option, right or warrant to purchase, or otherwise transfer
or
dispose of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock (whether
such
shares or any such securities are then owned by Holder or are thereafter
acquired), or (ii) enter into any swap or other arrangement that transfers
to
another, in whole or in part, any of the economic consequences of ownership
of
the Common Stock, whether any such transaction described in clause (i) or
(ii)
above is to be settled by delivery of Common Stock or such other securities,
in
cash or otherwise. Such restriction (the “Market
Stand-Off”)
shall
be in effect for such period of time following the date of the final prospectus
for the offering as may be requested by the Company or such underwriters.
In no
event, however, shall such period exceed one hundred and eighty (180) days.
In
the event of the declaration of a stock dividend, a spin-off, a stock split,
an
adjustment in conversion ratio, a recapitalization or a similar transaction
affecting the Company’s outstanding securities without receipt of consideration,
any new, substituted or additional securities that are by reason of such
transaction distributed with respect to any shares subject to the Market
Stand-Off, or into which such shares thereby become convertible, shall
immediately be subject to the Market Stand-Off. In order to enforce the Market
Stand-Off, the Company may impose stop-transfer instructions with respect
to the
Shares until the end of the applicable stand-off period. The Company’s
underwriters shall be beneficiaries of the agreement set forth in this Article
19. This Article 19 shall not apply to shares registered in a public offering
under the Securities Act. Holder shall be subject to this Article 19 only
if the
directors, officers and 10% shareholders of the Company are subject to
arrangements which are no more favorable than those to which Holder will
be
subject, and in the event of such more favorable arrangements, Holder will
agree
to be likewise bound by the terms thereof.
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IN
WITNESS WHEREOF,
the
parties hereto have caused this Agreement to be duly executed, as of the
date
and year first above written.
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COMPANY:
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HOLDER: | ||
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AMARILLO
BIOSCIENCES, INC.
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MARKS VALUE PARTNERS, LLC | ||
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By:
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/s/
Xxxxxx X. Xxxxxxx
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By:
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Xxxxxx X. Xxxxxxx, President |
Xxxx Xxxxx, Member and Manager |
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Federal
Tax I.D. No. of LLC:_______________
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Address:
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EXHIBIT
"A"
THE
WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON
EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS
AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO
AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF RESTRICTED SECURITIES), OR (iii) UPON THE DELIVERY
BY THE
HOLDER TO THE COMPANY OF AN OPINION OF COMPETENT SECURITIES COUNSEL STATING
THAT
AN EXEMP-TION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
EXERCISABLE
ON OR BEFORE 5:00 P.M., CENTRAL STANDARD TIME, JUNE
26,
2009.
200,000
Warrants
WARRANT
CERTIFICATE
This
Warrant Certificate certifies that MARKS VALUE PARTNERS, LLC (“Holder”) or
registered assigns, is the registered holder of 200,000 Warrants to purchase,
at
any time from June 27, 2006, until 5:00 p.m., Central Standard Time, on June
26,
2009 ("Expiration Date"), up to 200,000 shares ("Shares") of fully-paid and
non-assessable Voting Common Stock of AMARILLO BIOSCIENCES, INC., a Texas
corporation (the "Company"), at the exercise price (the "Exercise Price")
of
$2.00 per Share upon surrender of this Warrant Certificate and payment of
the
Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Warrant Agreement dated as of June
27,
2006 between the Company and Holder (the "Warrant Agreement"). Payment of
the
Exercise Price may be made in cash, by certified or official bank check in
funds
payable to the order of the Company, by application of principal and accrued
interest owing to Holder to the extent permitted by the Warrant Agreement,
or
any combination of cash, such check or application of indebtedness.
No
Warrant may be exercised after 5:00 p.m., Central Standard Time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall become void.
A-1
The
Warrants evidenced by this Warrant Certificate are part of a duly authorized
issue of Warrants issued pursuant to the Warrant Agreement which Warrant
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and
the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
Upon
due
presentment for registration of transfer of this Warrant Certificate at an
office or agency of the Company, a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number
of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.
Upon
the
exercise of less than all of the Warrants evidenced by this Certificate,
the
company shall forthwith issue to the holder hereof a new Warrant Certificate
representing the number of unexercised Warrants.
The
Company may deem and treat the registered holder(s) hereof as the absolute
owner(s) of this Warrant Certificate (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise
hereof,
and of any distribution to the holder(s) hereof, and for all other purposes,
and
the Company shall not be affected by any notice to the contrary.
All
terms
used in this Warrant Certificate which are defined in the Warrant Agreement
shall have the meanings assigned to them in the Warrant Agreement.
IN
WITNESS WHEREOF,
the
Company has caused this Warrant Certificate to be duly executed.
DATED:
June 27,
2006.
| AMARILLO BIOSCIENCES, INC. | ||
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| By: | /s/ Xxxxxx X. Xxxxxxx | |
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Xxxxxx X. Xxxxxxx, President |
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A-2
AMARILLO
BOISCIENCES, INC.
ELECTION
TO PURCHASE SHARES
UNDER
WARRANT AGREEMENT DATED JUNE 27, 2006
The
undersigned hereby irrevocably elects to exercise the right, represented
by a
Warrant Certificate issued in the name of the undersigned, to purchase
_____________ Shares and herewith tenders in payment for such Shares cash
or a
certified or official bank check payable to the order of AMARILLO BIOSCIENCES,
INC. (the “Company”) in the amount of $_____________, all in accordance with the
terms of the Warrant Agreement. The undersigned requests that a certificate
for
such Shares be registered in the name of ________________________________,
and
that such Certificate be delivered to ____________________________________,
whose address is
______________________________________________________.
Dated:
________________________.
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Signature
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(Signature
must conform in all respects to name of holder as specified on
the face of
the Warrant Certificate)
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(Insert
Federal Employer’s Tax Id Number
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or
Other Identifying Number of Holder)
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A-3
[FORM
OF ASSIGNMENT]
(To
be
executed by the registered holder if such holder
desires
to transfer the Warrant Certificate.)
FOR
VALUE RECEIVED
___________________________________________ hereby
sells, assigns and transfers unto
______________________________________________
(print
name and address of transferee)
the
attached Warrant Certificate, evidencing the right to purchase ____________
Shares of Voting Common Stock of AMARILLO BIOSCIENCES, INC., together with
all
right, title and interest therein, and does hereby irrevocably constitute
and
appoint __________________________, Attorney, to transfer the within Warrant
Certificate on the books of the within-named Company, with full power of
substitution.
FOR
VALUE RECEIVED
______________________________________________
hereby sells, assigns and transfers unto
_____________________________________________________________________
(print
name and address of transferee)
the
attached Warrant Certificate, evidencing the right to purchase ____________
Shares of Voting Common Stock of AMARILLO BIOSCIENCES, INC., together with
all
right, title and interest therein, and does hereby irrevocably constitute
and
appoint __________________________, Attorney, to transfer the within Warrant
Certificate on the books of the within-named Company, with full power of
substitution.
DATED:
_______________________.
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Signature
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(Signature
must conform in all respects to name of holder as specified
on the face of
the Warrant Certificate)
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(Insert
Federal Employer’s Tax Id Number
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or
Other Identifying Number of Holder)
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A-4
