Exhibit 10.4
SECURED CONVERTIBLE REVOLVING PROMISSORY NOTE AGREEMENT
up to $500,000 New York, NY
April 23, 2002
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. IT MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THIS PROMISSORY
NOTE UNDER THE SECURITIES ACT OF 1933 AND QUALIFICATION UNDER
APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
SATISFACTORY TO THE BORROWER THAT SUCH REGISTRATION IS NOT REQUIRED.
AGREEMENT made as of the 20th Day of Apri1 2001 by and between
Medicius, Inc. ("Borrower" or the "Company"), a Nevada corporation
with an office address of 0000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx,
XX 00000 and M and E Equities, LLC, ("Holder"), a New Jersey limited
liability company, having an office at 0000 Xxxxxxx 0 Xxxxx, Xxxxxx,
Xxx Xxxxxx 00000, ("Lender").
WITNESSETH
WHEREAS, Borrower desires to enter a transaction, as more
fully outlined below and in the attached Security Agreement, to
borrow from the Lender a maximum of $500,000; and
WHEREAS, Lender is willing provide up to $500,000 in loans
upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, the parties hereto, in exchange for the
mutual covenants, herein contained and intending to be legally bound
hereby agree as follows:
RECITAL
Medicius, Inc. ("Borrower"), a Nevada corporation, with an
office address of 0000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, XX
00000, for value received, hereby promises to pay to the order of M
and E Equities, LLC, ("Holder"), a New Jersey limited liability
company, having an office at 0000 Xxxxxxx 0 Xxxxx, Xxxxxx, Xxx
Xxxxxx 00000, the principal amount of five hundred thousand
($500,000) dollars, or the aggregated unpaid principal amount of all
Revolving Credit Loans (as hereinafter defined) made to the Borrower
by the Holder, whichever is less, on April 23, 2004 (such date, or
such earlier date upon which the principal and interest is due upon
acceleration pursuant to Section 3 hereof is hereinafter referred to
as the "Due Date") and to pay interest from the date hereof on the
unpaid principal amount hereof at the rate set forth below, all on
the terms and conditions set forth herein. Payment for all amounts
due hereunder shall be made in lawful money of the United States of
America by certified mail, return receipt requested, to the address
of the Holder (as hereinafter defined) or by wire transfer to an
account designated in writing by the Holder.
/1/
TERMS OF NOTE
As used herein, the term "Revolving Credit Loans" shall mean
cash loans extended from time to time by the Holder to the Borrower.
In no event shall the aggregate amount of the Revolving Credit Loans
("aggregate loan balance") extended hereunder exceed the principal
amount of $500,000 at any one time, without the separate express
written consent of the Holder.
The following is a statement of the rights of the Holder of
this Note and the conditions to which this Note is subject, and to
which the Holder hereof, by the acceptance of this Note, agrees:
1.Definitions. As used in this Note, the term "Holder" shall
mean M and E Equities, LLC or any subsequent holder of this Note.
2.Interest. Interest shall accrue from the date hereof until
all outstanding principal and interest on this Note shall have been
paid in full at the rate of nine percent (9%) per annum on the
unpaid principal balance hereof and shall be payable on the Due
Date. In the event that the principal amount of this Note is not
paid in full on the Due Date, interest at the maximum legally
permitted interest rate shall continue to accrue on the balance of
any unpaid principal until such balance is paid.
0.Xxxxxx of Default. If any of the events specified in this
Section 3 shall occur (herein individually referred to as an "Event
of Default"):
(i) Default in payment of principal or interest under
this Note when due;
(ii) A material default by the Borrower in any
obligation, or breach by the Borrower of any representation,
warranty, covenant or agreement, herein or in other documents signed
by the Borrower in connection with the issuance of this Note, the
Security Agreement (as hereinafter defined) which is not cured or
cannot be cured by the Borrower within ten (10) days after the
Holder has given the Borrower written notice of such default;
(iii) The institution by the Borrower of proceedings to
be adjudicated as bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency proceedings against it or
the filing by it of a petition or answer or consent seeking
reorganization or release under the Federal Bankruptcy Code, or any
other applicable federal or state law, or the consent by it to the
filing of any such petition or the appointment of a receiver,
liquidator, assignee, trustee or other, similar official for all or
any substantial part of its property, or the taking of any action by
the Borrower in furtherance of any such action;
(iv) If, within sixty (60) days after the commencement
of an action against the Borrower seeking any bankruptcy,
insolvency, reorganization, liquidation or similar relief under any
present or future statute, law or regulation, such action shall not
have been resolved in favor of the Borrower or all orders or
proceedings there under affecting the property of the Borrower
stayed, or if the stay or any such order or proceeding shall
thereafter be set aside, or if, within sixty (60) days
/2/
after the appointment without the consent or acquiescence of the
Borrower of any trustee or receiver for all or any substantial part
of its property such appointment shall not have been vacated;
(v) Any default of the Borrower under any indebtedness
or other obligation which aggregate at least $75,000 if such default
is not cured by the Borrower before the earlier of (1) ten (10) days
after the Holder has given the Borrower written notice of such
default or (2) the obligee of such indebtedness or other obligation
has made demand or notified the Borrower of any acceleration and in
either case, any cure period has elapsed; or
(vi) The rendering of one or more judgments or orders
against the Borrower for the payment of money exceeding any
applicable insurance coverage by more than $75,000 in the aggregate,
and either (1) enforcement proceedings shall have been commenced by
any creditor upon any such judgment or order, or (2) there shall be
any period of 30 consecutive days during which a stay of enforcement
of any such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect;
then, with the exception of an Event of Default specified in
clauses (iii) and (iv) above, the Holder of this Note may, by notice
to the Borrower, declare the principal of this Note, all interest
thereon and all other amounts payable hereunder to be immediately
due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived by the
Borrower, whereupon the principal amount of this Note, all such
interest and all other such amounts shall become and be immediately
due and payable, and exercise any and all of his other rights under
applicable law hereunder.
Upon, the occurrence of an Event of Default specified in
clauses (iii) or (iv) above, the principal amount of this Note, all
interest thereon and all other amounts payable hereunder shall
thereupon and concurrently therewith become due and payable and
interest upon the principal shall accrue at the rate of 15% per
annum, all without any action by the Holder of this Note, and
without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by the Borrower, anything
in this Note to the contrary notwithstanding.
4.Prepayment. The Borrower may at any time prepay in whole or
in part the principal sum, plus accrued interest on the amount so
prepaid to date of payment, of this Note, without penalty or
premium.
0.Xxxxxxxx. Payment of this Note is secured by security
interest in all of the assets and intellectual property rights of
the Company pursuant to a Security Agreement (the "Security
Agreement") dated the date hereof between the parties hereto.
6.Conversion and Warrants. The principal amount of this Note,
and any accrued but unpaid interest thereon, may be converted into
such number of shares ("Conversion Shares") of Common Stock of the
Borrower equal to five (5) Conversion Shares for each dollar of
remaining principal balance and accrued and unpaid interest. The
conversion described in the immediately preceding sentence shall
automatically be deemed to have occurred upon written notice by
Holder to Borrower, and shall be evidenced by the delivery, in a
reasonable time period, by the Borrower to the Holder
/3/
of a stock certificate representing the Conversion Shares. Upon such
delivery, this Note shall be null and void and of no further force
or effect, and Holder shall xxxx this Note "cancelled" and return it
to the Borrower. The failure by Holder to so return this Note
to Borrower shall not affect or otherwise impair the conversion of
this Note and the cancellation hereof in exchange for the Conversion
Shares. Within ten (10) days after the execution hereof Borrower
shall deliver to Holder, ten (10) Class A warrants of the Borrower,
in the form attached as Exhibit A, multiplied by the aggregate loan
balance, each Class A warrant convertible into one (1) share of
common stock of the Company, exercisable at $0.20 per share. In
addition, for each Class A warrant (when) exercised, Holder shall
receive two (2) Class C warrants of Medicius, Inc., each Class C
warrant exercisable into one (1) share of common stock of Medicius,
Inc. at $1.00 per share.
7.Covenants. Without the prior written consent of Holder, the
Borrower shall not;
(i) except as otherwise described herein, or in the
attached payment agreement and/or security
agreement, (Borrower shall not) create, authorize
or issue, or obligate itself to issue, any debt
security or security convertible into or
exercisable for any debt security senior to, or
having a priority over, this Note;
(ii) pay or declare any cash dividend or other
distribution to holders of any class of equity
securities of the Borrower or any of its
subsidiaries;
(iii) redeem, retire, purchase or otherwise acquire
(or pay into or set aside for a sinking fund for
such purpose) any shares of capital stock of the
Borrower or any of its subsidiaries;
(iv) except for the transaction contemplated and as
otherwise described in the Letter of Intent by and
between ATR Search, Inc. and Medicius, Inc. dated
April 5, 2002, (Borrower shall not) sell, lease,
transfer, convey, or otherwise dispose of all or
substantially all of its property or business,
acquire any business or merge into or consolidate
with any other corporation (other than a wholly-
owned subsidiary corporation), effect any
transaction or series of related transactions in
which more than fifty percent (50%) of the voting
power of the Borrower is disposed of, or otherwise
effect a liquidation;
(v) after the execution hereof, permit or authorize the
Borrower or any subsidiary of the Borrower to issue
any shares of its capital stock or any security
exchangeable for or convertible into shares of its
capital stock to any officer, director, shareholder
or employee of the Borrower or any of its
subsidiaries or any affiliate or related party of
any such officer, director, shareholder or
employee; or
(vi) take any action that results in the transfer or
license of material assets of the Borrower or any
of its subsidiaries to any person other than a
wholly-owned subsidiary of the Borrower.
8.Representations. The Borrower represents and warrants to
the Holder that: (i) each of this Note and the Security Agreement is
a legal, valid and binding agreement of the Borrower, enforceable
against the Borrower in accordance with its terms; and (ii) the
execution and delivery
/4/
by the Borrower of this Note and the Security Agreement and the
performance by the Borrower of the transactions contemplated hereby
and thereby do not and will not conflict with, or result in a breach
of, or constitute a default under the Certificate of Incorporation
of by-laws of the Borrower or any agreement to which the Borrower is
a party or to which the Borrower or its assets may be bound or
affected.
9.Waiver of Presentation. Demand, Etc. All parties now or
hereafter liable with respect to this Note, whether the Borrower,
Guarantor, endorser or any other person hereby expressly waive
presentment, demand of payment, protest, notice for demand of
payment, protest and notice of non- payment, or any other notice of
any kind with respect thereto. No delay or failure on the part of
the Holder in the exercise of any right or remedy hereunder or under
the Security Agreement or at law or in equity, shall operate as a
waiver thereof, and no single or partial exercise by the Holder or
of any right or remedy hereunder or there under shall preclude or
estop another or further exercise or any other right or remedy.
10. Defenses, Set-Offs, Counterclaims. Borrower hereby agrees
not to raise or interpose any defense, set-off or counterclaim of
any kind or nature whatsoever which it may have against the Holder
in any action brought upon this Note, the Guaranty, the Pledge
Agreement or the Security Agreement and Borrower acknowledges that
it has no defense of any kind or nature to the enforcement of this
Note, the Guaranty, the Pledge Agreement or the Security Agreement
or to the binding nature of the obligations represented hereby or
thereby.
11. Amendments. No amendment, modification, alteration or
change of any of the provisions of this Note shall be effective
unless in writing signed by the Borrower and the Holder and only to
the extent therein set forth.
12. Governing Law: Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State
of New York excluding the body of law relating to conflict laws.
Borrower hereby consents to the exclusive jurisdiction of the state
and federal courts located in Trenton, New Jersey in connection with
any lawsuit, claim or other proceeding relating to this Note, the
Security Agreement or the transactions contemplated hereby or
thereby.
13. Time of the Essence. Time is of the essence of this Note
and in case this Note is collected by law or through an attorney at
law or under advice there from, the Borrower agrees to pay all costs
of collection including reasonable attorneys' fees. The Holder
shall be under no duty to exercise any or all of the rights and
remedies given by this Note or the Security Agreement and no party
to this instrument shall be discharged from the obligations or
undertakings hereunder (a) should the Holder release or agree not to
xxx any person against whom the party has, to the knowledge of
Holder, a right to recourse, or (b) should the Holder agree to
suspend the right to enforce this Note or the Security Agreement or
Holder's interest in any collateral pledged to secure this Note
against such person or otherwise discharge such person.
14. Consent to Service and Waiver of Jury Trial. The Borrower
hereby consents to service of any notice, process, motion or other
document in connection with any lawsuit or other proceeding arising
out of or relating to this Note or the Security Agreement by
registered mail, return receipt
/5/
requested to the address set forth below or such other address as
the Borrower shall provide Holder in writing and the Borrower hereby
waives any right to trial by Jury in any such lawsuit or proceeding.
15. Severability. In the event that any term or provision of
this Note shall be finally determined to be superseded, invalid,
illegal or otherwise unenforceable pursuant to applicable law by any
authority having jurisdiction, such determination shall not impair
or otherwise affect the validity, legality or enforceability of the
remaining terms and provisions of this Note, which shall be enforced
as if the unenforceable term or provision were deleted.
IN WITNESS WHEREOF, the undersigned has caused this Note to be
issued this 25th day of April 2002.
Medicius, Inc. ("Borrower")
By: /s/ Xxxxx Xxxxxx
--------------------------
Xxxxx X. Xxxxxx, President
M and E Equities, LLC, ("Holder")
By: /s/ Xxxxx Mendlewitz
---------------------------
Xxxxx Mendlewitz, Principal
/6/
SECURITY AGREEMENT
FOR VALUE RECEIVED, and to induce M and E Equities, LLC,
("Holder"), a New Jersey limited liability company, having an office
at 0000 Xxxxxxx 0 Xxxxx, Xxxxxx, Xxx Xxxxxx 00000, ("Secured
Party"), to make the loan described in the Secured Convertible
Revolving Promissory Note (the "Note") dated the date hereof from
Medicius, Inc., a Nevada corporation, with an office address of 0000
Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, XX 00000, ("Borrower"), Secured
Party and Borrower hereby agree that Secured Party shall have the
rights, remedies and benefits hereinafter set forth.
W I T N E S S E T H
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have
the following meanings:
"Collateral" shall have the meaning described in the exhibit
annexed hereto.
"Financing Agreements" shall mean this Agreement and the
Note.
"Obligations" shall mean all now existing and hereafter
arising indebtedness, obligations and liabilities of any kind of
Borrower to Secured Party, now or hereafter existing, absolute or
contingent, joint and/or several, secured or unsecured, due or not
due, contractual or tortuous, liquidated or unliquidated, arising
under or with respect to the Financing Agreements.
All other terms defined in the preamble or the recitals
hereto shall have the respective meanings ascribed to them therein.
Unless the context otherwise indicates, all terms used without
definition in this Agreement shall have the meanings ascribed to
them in the Uniform Commercial Code of the State of New York as
presently in effect, to the extent the Same are used or defined
therein.
ARTICLE 2
GRANT OF SECURITY INTEREST
As security for the payment and performance of the
Obligations, Borrower hereby grants to Secured party a continuing
security interest in and a general lien upon the Collateral. Except
as otherwise contemplated in the transaction more fully described in
the Letter of Intent by and between ATR Search, Inc. and Medicius,
Inc., dated April 5, 2002, Borrower shall not sell, transfer, assign
or in any other way dispose of, to any other party, any or all of
the Collateral during the term hereof.
/1/
ARTICLE 3
REPRESENTATIONS, WARRANTIES
AND COVENANTS OF BORROWER
Borrower hereby represents and warrants to, and covenants and
agrees with, Secured Party that:
3.1 Authority and Power. Borrower has the right and power
and is duly authorized and empowered to enter into, execute, deliver
and perform this Agreement, the other Financing Agreements and all
agreements, documents and instruments executed in connection
herewith and therewith, and this Agreement, the other Financing
Agreements and such other agreements, documents and instruments
constitute and will constitute legal, valid and binding obligations
of Borrower, enforceable in accordance with their respective terms.
3.2 Further Assurances: Financing Statements. Upon request
of Secured Party, at any time, either prior to or after the
contemplated transaction between ATR Search, Inc. and Medicius,
Inc., and from time to time, Borrower, or its successor will, at its
own cost and expense, execute and deliver to Secured Party one or
more financing statements pursuant to the Uniform Commercial Code,
or amendments or continuations thereof, and any other documents
required by Secured Party to further evidence, effect or perfect the
security interest granted herein or to otherwise effectuate the
purposes of this Agreement, including, without limitation,
assignments of foreign and domestic patents and trademarks, and, to
the extent permitted by applicable law, Borrower hereby authorizes
Secured Party to execute and file at any time or times one or more
financing statements pursuant to the Uniform Commercial Code with
respect to any or all of the Collateral, signed only by Secured
Party. Borrower hereby agrees that a carbon, photographic or other
reproduction of this Agreement or of a financing statement shall be
sufficient as a financing statement.
3.3 Title to Collateral. Until such time as the merger
between ATR Search, Inc. ("ATR") and Borrower is completed, the
Collateral is, and shall at all times be, in Borrower's possession
and owned by Borrower free and clear of any security interests,
liens or encumbrances, except that the title to the Collateral may
transfer to the surviving entity upon completion of the merger.
However, notwithstanding the foregoing, the title to the Collateral
may transfer to the surviving entity only if, (1) the security
interest in the Collateral shall remain in favor of Secured Party
upon completion of the merger, or (2) the security interest in the
Collateral is retired (a) as a result of consideration or preference
offered by ATR and accepted by Holder, (b) early payoff of the Note
(see attached) by Medicius, or (c) conversion of the Note by Holder
to ATR common stock.
/2/
3.4 Condition of Collateral. Borrower will keep the
Collateral in good condition and repair, reasonable wear and tear
excepted, and will furnish all required parts and servicing
(including any contract service necessary to maintain the benefit of
any warranty of the manufacturer). Borrower will promptly notify
Secured Party of any destruction of or any substantial damage to a
material portion of the Collateral.
ARTICLE 4
RIGHTS AND REMEDIES
4.1 Rights Under Uniform Commercial Code. In addition to
all of its other rights and remedies under this Agreement, the other
Financing Agreements and any other agreement with Borrower, Secured
Party shall have all of the rights and remedies of a secured party
under the Uniform Commercial Code of the State of New York and of
any state in which Collateral is located from time to time.
4.2 Remedies Cumulative. All rights and remedies of Secured
Party arising under this Agreement, the other Financing Agreements,
any other agreement with Borrower or by operation of law shall be
cumulative and non-exclusive, to the fullest extent permitted by
law.
ARTICLE 5
SECURED PARTY'S EXPENSES AND ATTORNEYS' FEES
Borrower will be liable to Secured Party for any and
all sums, costs and expenses which Secured Party may pay or incur
pursuant to the provisions of this Agreement or in defending,
protecting or enforcing the security interest granted herein or in
enforcing payment of the Obligations or otherwise in connection with
the provisions hereof, including without limitation all search,
filing and recording fees, appraisal fees, taxes, levies and
reasonable attorneys' and accountants' fees and legal expenses, all
fees and expenses for the service and filing of papers, fees of
marshals, sheriffs, custodians, auctioneers and others, travel
expenses, court costs and collection charges, all expenditures in
connection with the repossession, holding, preparation for sale and
sale of the Collateral, as well as all damages for breach of
warranty, misrepresentation or breach of covenant by Borrower, and
all such liabilities shall be part of the Obligations and shall be
payable upon demand.
/3/
ARTICLE 6
MISCELLANEOUS
6.1 Waivers. Any failure or delay by Secured Party to
require strict performance by Borrower of any of the provisions,
warranties, terms or conditions contained herein or in any of the
other Financing Agreements shall not affect Secured Party's right to
demand strict compliance therewith and performance thereof, and any
waiver of any default shall not waive or affect any other default,
whether prior or subsequent thereto, and whether of the same or of a
different type. None of the warranties, conditions, provisions
and terms contained herein or in any other agreement, document or
instrument shall be deemed to have been waived by any act or
knowledge of Secured Party, but only by an instrument in writing,
signed by the Secured Party and directed to Borrower specifying such
waiver.
6.2 Notices. Any notice, demand, consent, approva1,
disapproval or statement (collectively, "Notices") required or
permitted to be given by the terms and provisions of this Agreement,
or by any law or governmental regulation, shall conform with the
provisions of Section 12 of the Payment Agreement between the
parties hereto dated the date hereof.
6.3 Severability. Wherever possible, each provision of this
Agreement shall be interpreted in a manner so as to be effective and
valid under applicable law. If any provision of this Agreement shall
be held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such provision
and the remaining provisions of this Agreement shall remain
unaffected and in full force and effect.
6.4 Successors and Assigns. This Agreement shall be binding
upon and for the benefit of the parties hereto and their respective
legal representatives, successors and assigns.
6.5 Governing Law; Consent to Jurisdiction; Venue Waiver;
Waiver of Jury Trial. The validity, interpretation and effect of
this Agreement shall be governed by the laws of the State of New
York, except with regards to its conflicts of laws provisions.
Borrower hereby consents to the nonexclusive jurisdiction of all
courts in said State and hereby waives all right to trial by jury in
any action, suit or proceeding brought to enforce or defend any
rights or remedies under this Agreement.
6.6 Articles and Section Titles. The titles of articles and
sections contained in this Agreement are merely for convenience and
shall be without substantive meaning or content.
6.7 Termination. This Security Agreement shall remain in
full force and effect until the indefeasible cash payment in full of
the Note. Upon termination hereof the Secured Party shall any all
documents necessary to evidence such termination and the release of
all liens created hereunder, including, without limitation, the
filing of Forms UCC-3 with the appropriate government offices.
/4/
6.8 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be considered an
original but all of which shall constitute one and the same
Agreement.
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the 25th day of April, 2002.
MEDICIUS, INC.
By: /s/ Xxxxx Xxxxxx
--------------------------
Xxxxx X. Xxxxxx, President
M and E EQUITIES, LLC.
By: /s/ Xxxxx Xxxxxxxxxx
--------------------------
Xxxxx Xxxxxxxxxx
/5/
DESCRIPTION OF COLLATERAL
All of Borrower's now existing and hereafter arising interests in
and to all of the following, whether now existing or owned or
hereafter created or acquired, wherever located, including
substitutions, accessions, additions and replacements thereto and
proceeds thereof:
(i) all accounts, contract rights, chattel paper,
documents, instruments, intellectual property and general
intangibles (including, but not limited to, all of Borrower's now
existing and hereafter arising tax and duty refunds, all now owned
and hereafter acquired franchises, licenses, permits, patents,
patent applications, trademarks, tradestyles, tradenames and
copyrights, all rights thereunder and registrations thereof, and all
of Borrower's now existing and hereafter arising interests in real
and personal property); Borrower's interest in the goods represented
thereby and all returned, reclaimed, and repossessed goods with
respect thereto; all of Borrower's rights as an unpaid vendor
(including stoppage in transit, repletion, and reclamation), all
additional amounts due to Borrower from any account of Borrower
irrespective of whether such additional amounts have been
specifically assigned to Secured Party; all guaranties, mortgages on
real and personal property, leases, letters of credit and other
agreements or property securing or relating to any of the items
referred to above, and all monies, deposits, securities,
instruments, credits and other property now or hereafter held by
Secured Party or any entity which at any time participates in
Secured Party's financing of Borrower; and all rights and remedies
of Borrower under or in connection with all of the foregoing;
(ii)all inventory, including raw materials, work-in-
progress, finished and semi-finished inventory, and all names and
marks affixed or to be affixed thereto for purposes of selling same
for the seller, manufacturer or licensor thereof, and all right,
title and interest of Borrower therein and thereto;
(iii) all machinery, equipment, furniture, fixtures, and
all accessories, fittings and parts therefor;
(iv)all of Borrower's books and records relating to all of
the foregoing;
(v) any and all products and proceeds of the foregoing in
any form, whether from the voluntary or involuntary disposition
thereof, including without limitation accounts, contract rights,
general intangibles, chattel paper, documents, instruments,
inventory, equipment, fixtures, all insurance proceeds and all
claims by Borrower against third parties for damage to or loss or
destruction of any or all of the foregoing.
/6/
EXHIBIT A
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND
MAY NOT BE TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") SHALL HAVE
BECOME EFFECTIVE WITH RESPECT THERETO OR (ii) RECEIPT BY THE COMPANY
OF AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO
THE EFFECT THAT REGISTRATION UNDER THE SECURITIES ACT IS NOT
REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER NOR IS SUCH
TRANSFER IN VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS. THIS
LEGEND SHALL BE ENDORSED UPON ANY WARRANT ISSUED IN EXCHANGE FOR
THIS WARRANT OR ANY SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT.
CLASS A WARRANT TO PURCHASE COMMON STOCK
OF
Medicius, Inc.
No.1
This is to Certify That, FOR VALUE RECEIVED,
_________________________ or assigns ("Holder"), is entitled to
purchase, subject to the provisions of this Warrant, from Medicius,
Inc., a Nevada corporation, with an office address of 0000 Xxxxxxxxx
Xxxx, Xxxxx 000, Xxxxxxxx, XX 00000 ("Company"),
____________________ fully paid, validly issued and nonassessable
shares of common stock of the Company, par value $0.001, ("Common
Stock") at a price of $0.20 per share at any time or from time to
time during the period from January 5, 2002 through January 4, 2005,
subject to adjustment as set forth herein. The number of shares of
Common Stock to be received upon the exercise of this Warrant and
the price to be paid for each share of Common Stock may be adjusted
from time to time as hereinafter set forth. The shares of Common
Stock deliverable upon such exercise, and as adjusted from time to
time, are hereinafter sometimes referred to as "Warrant Shares" and
the exercise price of a share of Common Stock in effect at any time
and as adjusted from time to time is hereinafter sometimes referred
to as the "Exercise Price".
(a) EXERCISE OF WARRANT; CANCELLATION OF WARRANT.
(1) This Warrant may be exercised in whole or in part at
any time or from time to time during the Exercise Period; provided,
however, that (i) if either such day is a day on which banking
institutions in the State of New York are authorized by law to
close, then on the next succeeding day which shall not be such a
day, and (ii) in the event of any merger, consolidation or sale of
substantially all the assets of the Company as an entirety,
resulting in any distribution to the Company's stockholders, prior
to expiration of the Exercise Period (the "Expiration Date"), the
Holder shall have the right to exercise this Warrant commencing at
such time through Expiration Date into the kind and amount of shares
of stock and other securities and property (including cash)
receivable by a holder of the number of shares of Common Stock into
which this Warrant might have been exercisable immediately prior
thereto. This Warrant may be exercised by presentation and surrender
hereof to the Company at its principal office with the Purchase Form
annexed hereto duly executed and accompanied by payment of the
Exercise Price for the number of Warrant Shares specified in such
form. As soon as practicable after each such exercise of the
warrants, but not later than seven (7) days following the receipt of
good and available funds, the Company shall issue and deliver to the
Holder a certificate or certificate for the Warrant Shares issuable
upon such exercise, registered in the name of the Holder or its
/1/
designee. If this Warrant should be exercised in part only, the
Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the rights of the
Holder thereof to purchase the balance of the Warrant Shares
purchasable thereunder. Upon receipt by the Company of this Warrant
at its office in proper form for exercise, the Holder shall be
deemed to be the holder of record of the shares of Common Stock
issuable upon such exercise, notwithstanding that the stock transfer
books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be
physically delivered to the Holder.
(2) At any time during the Exercise Period, the Holder
may, at its option, exercise this Warrant on a cashless basis by
exchanging this Warrant, in whole or in part (a "Warrant Exchange"),
into the number of Warrant Shares determined in accordance with this
Section (a)(2), by surrendering this Warrant at the principal office
of the Company or at the office of its stock transfer agent,
accompanied by a notice stating such Holder's intent to effect such
exchange, the number of Warrant Shares to be exchanged and the date
on which the Holder requests that such Warrant Exchange occur (the
"Notice of Exchange"). The Warrant Exchange shall take place on the
date specified in the Notice of Exchange or, if later, the date the
Notice of Exchange is received by the Company (the "Exchange Date").
Certificates for the shares issuable upon such Warrant Exchange and,
if applicable, a new warrant of like tenor evidencing the balance of
the shares remaining subject to this Warrant, shall be issued as of
the Exchange Date and delivered to the Holder within seven (7) days
following the Exchange Date. Current market value shall have the
meaning set forth Section (c) below, except that for purposes
hereof, the date of exercise, as used in such Section (c), shall
mean the Exchange Date.
(3) For each one (1) Warrant exercised, Holder will
receive two (2) Class C warrants of the Company, each Class C
warrant is exercisable into one (1) shares of Common stock of the
Company, at $1.00 per share.
(b) RESERVATION OF SHARES. The Company shall at all times
reserve for issuance and/or delivery upon exercise of this Warrant
such number of shares of its Common Stock as shall be required for
issuance and delivery upon exercise of the Warrants.
(c) FRACTIONAL SHARES. No fractional shares or script
representing fractional shares shall be issued upon the exercise of
this Warrant. With respect to any fraction of a share called for
upon any exercise hereof, the Company shall pay to the Holder an
amount in cash equal to such fraction multiplied by the current
market value of a share, determined as follows:
(1) If the Common Stock is listed on a national
securities exchange or admitted to unlisted trading
privileges on such exchange or listed for trading on the
Nasdaq National Market, the current market value shall be
the last reported sale price of the Common Stock on such
exchange or market on the last business day prior to the
date of exercise of this Warrant or if no such sale is
made on such day, the average of the closing bid and asked
prices for such day on such exchange or market; or
(2) If the Common Stock is not so listed or admitted
to unlisted trading privileges, but is traded on the
Nasdaq SmallCap Market, the current market value shall be
the average of the closing bid and asked prices of such
day on such market and if the Common Stock is not so
traded, the current market value shall be the mean of the
last reported bid and asked prices reported by the NASD
/2/
Electronic Bulletin Board on the last business day prior
to the date of the exercise of this Warrant; or
(3) If the Common Stock is not so listed or admitted
to unlisted trading privileges and bid and asked prices
are not so reported, the current market value shall be an
amount, not less than book value thereof as at the end of
the most recent fiscal year of the Company ending prior to
the date of the exercise of the Warrant, determined in
such reasonable manner as may be prescribed by the Board
of Directors of the Company.
(d) EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT. This
Warrant is exchangeable, without expense, at the option of the
Holder, upon presentation and surrender hereof to the Company or at
the office of its stock transfer agent, if any, for other warrants
of different denominations entitling the holder thereof to purchase
in the aggregate the same number of shares of Common Stock
purchasable hereunder. Upon surrender of this Warrant to the Company
at its principal office or at the office of its stock transfer
agent, if any, with the Assignment Form annexed hereto duly executed
and funds sufficient to pay any transfer tax, the Company shall,
without charge, execute and deliver a new Warrant in the name of the
assignee named in such instrument of assignment and this Warrant
shall promptly be canceled. This Warrant may be divided or combined
with other warrants which carry the same rights upon presentation
hereof at the principal office of the Company or at the office of
its stock transfer agent, if any, together with a written notice
specifying the names and denominations in which new Warrants are to
be issued and signed by the Holder hereof. The term "Warrant" as
used herein includes any Warrants into which this Warrant may be
divided or exchanged. Upon receipt by the Company of evidence
satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and
cancellation of this Warrant, if mutilated, the Company will execute
and deliver a new Warrant of like tenor and date. Any such new
Warrant executed and delivered shall constitute an additional
contractual obligation on the part of the Company, whether or not
this Warrant so lost, stolen, destroyed, or mutilated shall be at
any time enforceable by anyone.
(e) RIGHTS OF THE HOLDER. The Holder shall not, by virtue
hereof, be entitled to any rights of a shareholder in the Company,
either at law or equity, and the rights of the Holder are limited to
those expressed in the Warrant and are not enforceable against the
Company except to the extent set forth herein.
(f) ANTI-DILUTION PROVISIONS. Subject to the provisions of
Section 1 hereof, the Exercise Price in effect at any time and the
number and kind of securities purchasable upon the exercise of the
Warrants shall be subject to adjustment from time to time upon the
happening of certain events as follows:
(1) In case the Company shall hereafter (i) declare
a dividend or make a distribution on its outstanding
shares of Common Stock in shares of Common Stock, (ii)
subdivide or reclassify its outstanding shares of Common
Stock into a greater number of shares, or (iii) combine or
reclassify its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect at
the time of the record date for such dividend or
distribution or of the effective date of such subdivision,
combination or reclassification shall be adjusted so that
it shall equal the price determined by multiplying the
Exercise Price by a fraction, the
/3/
denominator of which shall be the number of shares of
Common Stock outstanding after giving effect to such
action, and the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to
such action. Such adjustment shall be made successively
whenever any event listed above shall occur.
(2) In case the Company shall fix a record date for
the issuance of rights or warrants to all holders of its
Common Stock entitling them to subscribe for or purchase
shares of Common Stock (or securities convertible into
Common Stock) at a price (the "Subscription Price") (or
having a conversion price per share) less than the current
market price on such record date or less than the Exercise
Price, the Exercise Price shall be adjusted so that the
same shall equal the lower of (i) the price determined by
multiplying the Exercise Price in effect immediately prior
to the date of such issuance by a fraction, the numerator
of which shall be the sum of the number of shares of
Common Stock outstanding on the record date mentioned
below and the number of additional shares of Common Stock
which the aggregate offering price of the total number of
shares of Common Stock so offered (or the aggregate
conversion price of the convertible securities so offered)
would purchase at such current market price per share of
the Common Stock, and the denominator of which shall be
the sum of the number of shares of Common Stock
outstanding on such record date and the number of
additional shares of Common Stock offered for subscription
or purchase (or into which the convertible securities so
offered are convertible) or (ii) in the event the
Subscription Price is equal to or higher than the current
market price but is less than the Exercise Price, the
price determined by multiplying the Exercise Price in
effect immediately prior to the date of issuance by a
fraction, the numerator of which shall be the sum of the
number of shares outstanding on the record date mentioned
below and the number of additional shares of Common Stock
which the aggregate offering price of the tota1 number of
shares of Common Stock so offered (or the aggregate
conversion price of the convertible securities so offered)
would purchase at the Exercise Price in effect immediately
prior to the date of such issuance, and the denominator of
which shall be the sum of the number of shares of Common
Stock outstanding on the record date mentioned below and
the number of additional shares of Common Stock offered
for subscription or purchase (or into which the
convertible securities so offered are convertible). Such
adjustment shall be made successively whenever such rights
or warrants are issued and shall become effective
immediately after the record date for the determination of
shareholders entitled to receive such rights or warrants;
and to the extent that shares of Common Stock are not
delivered (or securities convertible into Common Stock are
not delivered) after the expiration of such rights or
warrants the Exercise Price shall be readjusted to the
Exercise Price which would then be in effect had the
adjustments made upon the issuance of such rights or
warrants been made upon the basis of delivery of only the
number of shares of Common Stock (or securities
convertible into Common Stock) actually delivered.
(3) In case the Company shall hereafter distribute
to the holders of its Common Stock evidences of its
indebtedness or assets (excluding cash dividends or
distributions and dividends or distributions referred to
in Subsection (1) above)
/4/
or subscription rights or warrants (excluding those
referred to in Subsection (2) above), then in each such
case the Exercise Price in effect thereafter shall be
determined by multiplying the Exercise Price in effect
immediately prior thereto by a fraction, the numerator of
which shall be the total number of shares of Common Stock
outstanding multiplied by the current market price per
share of Common Stock, less the fair market value (as
determined by the Company's Board of Directors) of said
assets or evidences of indebtedness so distributed or of
such rights or warrants, and the denominator of which
shall be the total number of shares of Common Stock
outstanding multiplied by such current market price per
share of Common Stock. Such adjustment shall be made
successively whenever such a record date is fixed. Such
adjustment shall be made whenever any such distribution is
made and shall become effective immediately after the
record date for the determination of shareholders entitled
to receive such distribution.
(4) In case the Company shall hereafter issue shares
of its Common Stock (excluding shares issued (i) in any of
the transactions described in Subsection (1) above, (ii)
upon exercise of options, warrants, convertible securities
and convertible debentures outstanding as of the date
hereof, or exercise of the Warrants, or (iii) to
shareholders of any corporation which merges into the
Company in proportion to their stock holdings of such
corporation immediately prior to such merger, upon such
merger, but only if no adjustment is required pursuant to
any other specific subsection of this Section (f) with
respect to the transaction giving rise to such rights) for
a consideration per share (the "Offering Price") less than
the current market price on the date the Company fixes the
offering price of such additional shares or less than the
Exercise Price, the Exercise Price shall be adjusted
immediately thereafter so that it shall equal (i) the
price determined by multiplying the Exercise Price in
effect immediately prior thereto by a fraction, the
numerator of which shall be the sum of the number of
shares of Common Stock outstanding immediately prior to
the issuance of such additional shares and the number of
shares of Common Stock which the aggregate consideration
received for the issuance of such additional shares would
purchase at such current market price per share of Common
Stock, and the denominator of which shall be the number of
shares of Common Stock outstanding immediately after the
issuance of such additional shares or (ii) in the event
the Offering Price is equal to or higher than the current
market price per share but less than the Exercise Price,
the price determined by multiplying the Exercise Price in
effect immediately prior to the date of issuance by a
fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to
the issuance of such additional shares and the number of
shares of Common Stock which the aggregate consideration
received for the issuance of such additional shares would
purchase at the Exercise Price in effect immediately prior
to the date of such issuance, and the denominator of which
shall be the number of shares of Common Stock outstanding
immediately after the issuance of such additional shares.
Such adjustment shall be made successively whenever such
an issuance is made.
(5) In case the Company shall hereafter issue any
securities convertible into or exchangeable or exercisable
for its Common Stock (excluding securities issued in
transactions described in Subsections (1) and (3) above)
for a
/5/
consideration per share of Common Stock (the "Exchange
Price") initially deliverable upon conversion, exercise or
exchange of such securities (determined as provided in
Subsection (7) below) less than the current market price
in effect immediately prior to the issuance of such, or
less than the Exercise Price, the Exercise Price shall be
adjusted immediately thereafter so that it shall equal
lower of (i) the price determined by multiplying the
Exercise Price in effect immediately prior thereto by a
fraction, the numerator of which shall be the sum of the
number of shares of Common Stock outstanding immediately
prior to the issuance of such securities and the number of
shares of Common Stock which the aggregate consideration
received for such securities (or the aggregate exercise
price in the case of options or warrants) would purchase
at such current market price per share of Common Stock,
and the denominator of which shall be the sum of the
number of shares of Common Stock outstanding immediately
prior to such issuance and the maximum number of shares of
Common Stock of the Company deliverable upon conversion or
exercise of or in exchange for such securities at the
initial conversion, exercise or exchange price or rate or
(ii) in the event the Exchange Price is equal to or higher
than the current market price per share but less than the
Exercise Price, the price determined by multiplying the
Exercise Price in effect immediately prior to the date of
issuance by a fraction, the numerator of which shall be
the sum of the number of shares outstanding immediately
prior to the issuance of such securities and the number of
shares of Common Stock which the aggregate consideration
received for such securities would purchase at the
Exercise Price in effect immediately prior to the date of
such issuance, and the denominator of which shall be the
sum of the number of shares of Common Stock outstanding
immediately prior to the issuance of such securities and
the maximum number of shares of Common Stock of the
Company deliverable upon conversion of or in exchange for
such securities at the initial conversion or exchange
price or rate. Such adjustment shall be made successively
whenever such an Issuance is made.
(6) Whenever the Exercise Price payable upon
exercise of each Warrant is adjusted pursuant to
Subsections (1), (2), (3), (4) and (5) above, the number
of Shares purchasable upon exercise of this Warrant shall
simultaneously be adjusted by multiplying the number of
Shares initially issuable upon exercise of this Warrant by
the Exercise Price in effect on the date hereof and
dividing the product so obtained by the Exercise Price, as
adjusted.
(7) For purposes of any computation respecting
consideration received pursuant to Subsections (4) and (5)
above, the following shall apply:
(A) in the case of the issuance of shares of Common
Stock for cash, the consideration shall be the amount of
such cash, provided that in no case shall any deduction be
made for any commissions, discounts or other expenses
incurred by the Company for any underwriting of the issue
or otherwise in connection therewith;
(B) in the case of the issuance of shares of Common
Stock for a consideration in whole or in part other than
cash, the consideration other than cash shall be deemed to
be the fair market value thereof as determined in good
faith by
/6/
the Board of Directors of the Company (irrespective of the
accounting treatment thereof), whose determination shall
be conclusive; and
(C) in the case of the issuance of securities
convertible into or exchangeable for shares of Common
Stock, the aggregate consideration received therefor shall
be deemed to be the consideration received by the Company
for the issuance of such securities plus the additional
minimum consideration, if any, to be received by the
Company upon the conversion or exchange thereof (the
consideration in each case to be determined in the same
manner as provided in clauses (A) and (B) of this
Subsection (7)).
(8) For the purpose of any computation under
Subsections (1), (3), (4) and (5) above, the current
market price per share of Common Stock at any date shall
be determined in the manner set forth in Section (c).
(9) No adjustment in the Exercise Price shall be
required unless such adjustment would require an increase
or decrease of at least five cents ($0.05) in such price;
provided, however, that any adjustments which by reason of
this Subsection (9) are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment required to be made hereunder. All calculations
under this Section (f) shall be made to the nearest cent
or to the nearest one-hundredth of a share, as the case
may be. Anything in this Section (f) to the contrary
notwithstanding, the Company shall be entitled, but shall
not be required, to make such changes in the Exercise
Price, in addition to those required by this Section (f),
as it shall determine, in its sole discretion, to be
advisable in order that any dividend or distribution in
shares of Common Stock, or any subdivision,
reclassification or combination of Common Stock, hereafter
made by the Company shall not result in any Federal Income
tax liability to the holders of Common Stock or securities
convertible into Common Stock (including Warrants).
(10) Whenever the Exercise Price is adjusted, as
herein provided, the Company shall promptly but no later
than 10 days after any request for such an adjustment by
the Holder, cause a notice setting forth the adjusted
Exercise Price and adjusted number of Shares issuable upon
exercise of each Warrant, and, if requested, information
describing the transactions giving rise to such
adjustments, to be mailed to the Holders at their last
addresses appearing in the Warrant Register, and shall
cause a certified copy thereof to be mailed to its
transfer agent, if any. The Company may retain a firm of
independent certified public accountants selected by the
Board of Directors (who may be the regular accountants
employed by the Company) to make any computation required
by this Section (f), and a certificate signed by such firm
shall be conclusive evidence of the correctness of such
adjustment.
(11) In the event that at any time, as a result of an
adjustment made pursuant to Subsection (1) above, the
Holder of this Warrant thereafter shall become entitled to
receive any shares of the Company, other than Common
Stock, thereafter the number of such other shares so
receivable upon exercise of this Warrant shall be subject
to adjustment from time to time in a manner and on
/7/
terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock contained in
Subsections (1) to (8), inclusive above.
(12) Irrespective of any adjustments in the Exercise
Price or the number or kind of shares purchasable upon
exercise of this Warrant, Warrants theretofore or
thereafter issued may continue to express the same price
and number and kind of shares as are stated in the similar
Warrants initially issuable pursuant to this Agreement.
(g) OFFICER'S CERTIFICATE. Whenever the Exercise Price shall
be adjusted as required by the provisions of the foregoing Section,
the Company shall forthwith file in the custody of its Secretary or
an Assistant Secretary at its principal office and with its stock
transfer agent, if any, an officer's certificate showing the
adjusted Exercise Price determined as herein provided, setting forth
in reasonable detail the facts requiring such adjustment, including
a statement of the number of additional shares of Common Stock, if
any, and such other facts as shall be necessary to show the reason
for and the manner of computing such adjustment. Each such officer's
certificate shall be made available at all reasonable times for
inspection by the holder or any holder of a Warrant executed and
delivered pursuant to Section (a) and the Company shall, forthwith
after each such adjustment, mail a copy by certified mail of such
certificate to the Holder or any such holder.
(h) NOTICES TO WARRANT HOLDERS. So long as this Warrant shall
be outstanding, (i) if the Company shall pay any dividend or make
any distribution upon the Common Stock or (ii) if the Company shall
offer to the holders of Common Stock for subscription or purchase by
them any share of any class or any other rights or (iii) if any
capital reorganization of the Company, reclassification of the
capital stock of the Company, consolidation or merger of the Company
with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to
another corporation, or voluntary or involuntary dissolution,
liquidation or winding up of the Company shall be effected, then in
any such case, the Company shall cause to be mailed by certified
mail to the Holder, at least fifteen days prior the date specified
in (x) or (y) below, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which (x)
a record is to be taken for the purpose of such dividend,
distribution or rights, or (y) such reclassification,
reorganization, consolidation, merger, conveyance, lease,
dissolution, liquidation or winding up is to take place and the
date, if any to be fixed, as of which the holders of Common Stock or
other securities shall receive cash or other property deliverable
upon such reclassification, reorganization, consolidation, merger,
conveyance, lease, dissolution, liquidation or winding up.
(i) RECLASSIFICATION, REORGANIZATION OR MERGER. In case of
any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the Company, or in case of any
consolidation or merger of the Company with or into another
corporation (other than a merger with a subsidiary in which merger
the Company is the continuing corporation and which does not result
in any reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the class issuable upon
exercise of this Warrant) or in case of any sale, lease or
conveyance to another corporation of the property of the Company as
an entirety, the Company shall, as a condition precedent to such
transaction, cause effective provisions to be made so that the
Holder shall have the right thereafter by exercising this Warrant at
any time prior to the expiration of the Warrant, to purchase the
kind and amount of shares of stock and other securities and property
receivable upon such reclassification, capital reorganization and
other change, consolidation, merger, sale or conveyance by a holder
of the
/8/
number of shares of Common Stock which might have been purchased
upon exercise of this Warrant immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance.
Any such provision shall include provision for adjustments, which
shall be as nearly equivalent, as may be practicable to the
adjustments provided for in this Warrant. The foregoing provisions
of this Section (i) shall similarly apply to successive
reclassifications, capital reorganizations and changes of shares of
Common Stock and to successive consolidations, mergers, sales or
conveyances. In the event that in connection with any such capital
reorganization or reclassification, consolidation, merger, sale or
conveyance, additional shares of Common Stock shall be issued in
exchange, conversion, substitution or payment, in whole or in part,
for a security of the Company other than Common Stock, any such
issue shall be treated as an issue of Common Stock covered by the
provisions of Subsection (1) of Section (f) hereof.
(j) REGISTRATION RIGHTS.
(1) The Company hereby agrees with the holders of
the Warrants and the Warrant Shares or their transferees
(collectively, the "Holders") that upon notice by Holders
beneficially owning at least 50% of the Warrants and
Warrant Shares, it will, at any time during the five year
period commencing six months after the Company has
completed an initial public offering or is otherwise
publicly traded (the "Registration Period"), within three
weeks of such notice prepare and file with the Securities
and Exchange Commission ("SEC") a registration statement
under the Securities Act of 1933, as amended (the "Act")
covering the resale of the Warrant Shares and use its best
efforts to cause such registration statement to become
effective as soon as practicable thereafter. If the
Company shall determine to proceed during the Registration
Period with the actual preparation and filing of a
registration statement under the Act in connection with
the proposed offer and sale of any of its securities by it
or any of its security holders (other than a registration
statement on Form X-0, X-0 or other limited purpose form),
then the Company will give written notice of its
determination to all record holders of the Warrants and
Warrant Shares. Upon the written request from any Holder,
the Company will, except as herein provided, cause all
such Warrant Shares to be included in such registration
statement, all to the extent requisite to permit the sale
or other disposition by the prospective seller or sellers
of the Warrant Shares to be so registered; provided,
further, that nothing herein shall prevent the Company
from, at any time, abandoning or delaying any
registration. If any registration pursuant to this Section
j(1) shall be underwritten in whole or in part, the
Company may require that the Warrant Shares requested for
inclusion by the Holders be included in the underwriting
on the same terms and conditions as the securities
otherwise being sold through the underwriters.
(2) The Company will, until such time as the Warrant
Shares may be sold under Rule 144 without volume
limitation:
(A) prepare and file with the SEC such amendments to
such registration statement and supplements to the
prospectus contained therein as may be necessary to keep
such registration statement effective;
(B) furnish to the Holders participating in such
registration and to the underwriters of the securities
being registered such reasonable number of copies of the
registration statement, preliminary prospectus, final
prospectus and such
/9/
other documents as such underwriters may reasonably
request in order to facilitate the public offering of such
securities;
(C) use its best efforts to register or qualify the
securities covered by such registration statement under
such state securities or blue sky laws of such
jurisdictions as the Holders may reasonably request in
writing within twenty (20) days following the original
filing of such registration statement, except that the
Company shall not for any purpose be required to execute a
general consent to service of process or to qualify to do
business as a foreign corporation in any jurisdiction
wherein it is not so qualified or subject itself to
taxation in any such jurisdiction;
(D) notify the Holders, promptly after it shall
receive notice thereof, of the time when such registration
statement has become effective or a supplement to any
prospectus forming a part of such registration statement
has been filed;
(E) notify the Holders promptly of any request by
the SEC for the amending or supplementing of such
registration statement or prospectus or for additional
information;
(F) prepare and file with the SEC, promptly upon the
request of any Holders, any amendments or supplements to
such registration statement or prospectus which, in the
opinion of counsel for such Holders (and concurred in by
counsel for the Company), is required under the Act or the
rules and regulations thereunder in connection with the
distribution of Common Stock by such Holders;
(G) prepare and promptly file with the SEC and
promptly notify such Holders of the filing of such
amendment or supplement to such registration statement or
prospectus as may be necessary to correct any statements
or omissions if, at the time when a prospectus relating to
such securities is required to be delivered under the Act,
any event shall have occurred as the result of which any
such prospectus or any other prospectus as then in effect
would include an untrue statement of a material fact or
omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in
which they were made, not misleading; and
(H) advise the Holders, promptly after it shall
receive notice or obtain knowledge thereof, of the
issuance of any stop order by the SEC suspending the
effectiveness of such registration statement or the
initiation or threatening of any proceeding for that
purpose and promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if
such stop order should be issued.
The Company may require each Holder of Warrant Shares as to
which any registration is being effected to furnish to the Company
such information regarding the distribution of such Warrant Shares
as the Company may from time to time reasonably request in writing.
(3) All fees, costs and expenses of and incidental
to such registration, inclusion and public offering in
connection therewith shall be borne by the Company,
provided, however, that the Holders shall bear their pro
rata share of
/10/
the underwriting discount and commissions and transfer
taxes. The fees, costs and expenses of registration to be
borne by the Company as provided above shall include,
without limitation, all registration, filing, and NASD
fees, printing expenses, fees and disbursements of counsel
and accountants for the Company, and all legal fees and
disbursements and other expenses of complying with state
securities or blue sky laws of any jurisdictions in which
the securities to be offered are to be registered and
qualified (except as provided above). Fees and
disbursements of counsel and accountants for the Holders
and any other expenses incurred by the Holders not
expressly included above shall be borne by the Holders.
(4) The Company will indemnify and hold harmless
each Holder of Warrant Shares which are included in a
registration statement pursuant to the provisions of
Section (j)(1) hereof, its directors and officers, and any
underwriter (as defined in the Act) for such Holder and
each person, if any, who controls such Holder or such
underwriter within the meaning of the Act, from and
against, and will reimburse such Holder and each such
underwriter and controlling person with respect to, any
and all loss, damage, liability, cost and expense to which
such Holder or any such underwriter or controlling person
may become subject under the Act or otherwise, insofar as
such losses, damages, liabilities, costs or expenses are
caused by any untrue, statement or alleged untrue
statement of any material fact contained in such
registration statement, any prospectus contained therein
or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading;
provided, however, that the Company will not be liable in
any such case to the extent that any such loss, damage,
liability, cost or expenses arises out of or is based upon
an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with
information furnished by such Holder, such underwriter or
such controlling person in writing specifically for use in
the preparation thereof.
(5) Each Holder of Warrant Shares included in a
registration pursuant to the provisions of Section (j)(1)
hereof will indemnify and hold harmless the Company, its
directors and officers, any controlling person and any
underwriter from and against, and will reimburse the
Company, its directors and officers, any controlling
person and any underwriter with respect to, any and all
loss, damage, liability cost or expense to which the
Company or any controlling person and/or any underwriter
may become subject under the Act or otherwise, insofar as
such losses, damages, liabilities, costs or expenses are
caused, by any untrue statement or alleged untrue
statement of any material fact contained in such
registration statement, any prospectus contained therein
or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, in
each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission
or alleged omission was so made in reliance upon and in
strict conformity with written information furnished by or
on behalf of such Holder specifically for use in the
preparation thereof.
/11/
(6) Promptly after receipt by an indemnified party
pursuant to the provisions of Sections (j)(4) or (5) of
notice of the commencement of any action involving the
subject matter of the foregoing indemnity provisions such
indemnified party will, if a claim thereof is to be made
against the indemnifying party pursuant to the provisions
of said Sections (j)(4) or (5), promptly notify the
indemnifying party of the commencement thereof; but the
omission to so notify the indemnifying party will not
relieve it from any liability which it may have to any
indemnified party otherwise than hereunder. In case such
action is brought against any indemnified party and it
notifies the indemnifying party of the commencement
thereof, the indemnifying party shall have the right to
participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party, provided, however,
if counsel for the indemnifying party concludes that a
single counsel cannot under applicable legal and ethical
considerations, represent both the indemnifying party and
the indemnified party, the indemnified party or parties
have the right to select separate counsel to participate
in the defense of such action on behalf of such
indemnified party or parties. After notice from the
indemnifying party to such indemnified party of its
election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified
party pursuant to the provisions of said Sections (j)(4)
or (5) for any legal or other expense subsequently
incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of
investigation, unless (i) the indemnified party shall have
employed counsel in accordance with the provisions of the
preceding sentence, (ii) the indemnifying party shall not
have employed counsel satisfactory to the indemnified
party to represent the indemnified party within a
reasonable time after the notice of the commencement of
the action or (iii) the indemnifying party has authorized
the employment of counsel for the indemnified party at the
expense of the indemnifying party.
MEDICIUS, INC.
By:
____________________________
Xxxxx X. Xxxxxx, President
Dated: April _______, 2003
/12/
PURCHASE FORM
Dated ____________________
The undersigned hereby irrevocably elects to exercise the
within Warrant to the extent of purchasing ___________________
shares of Common Stock and hereby makes payment of __________ in
payment of the actual exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name ________________________________
(Please typewrite or print in block letters)
Address ______________________________________________________
Signature _____________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED, _____________________ hereby sells,
assigns and transfers unto
Name ________________________________
(Please typewrite or print in block letters)
Address ______________________________________________________
the right to purchase Common Stock represented by this Warrant to
the extent of _______________ shares as to which such right is
exercisable and does hereby irrevocably constitute and appoint
____________________ Attorney, to transfer the same on the books of
the Company with full power of substitution in the premises.
Date ____________________
Signature _____________________________
/13/
