Contract
Exhibit
(d)(3)
THIS
WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
AND
THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO ▇▇▇▇▇▇ PRODUCTS CORP. THAT SUCH REGISTRATION IS NOT
REQUIRED.
|
Right
to Purchase ____________ shares of Common Stock of ▇▇▇▇▇▇ Products
Corp.
(subject to adjustment as provided
herein)
|
COMMON
STOCK PURCHASE WARRANT
|
Issue
Date: December ___, 2007
|
▇▇▇▇▇▇
PRODUCTS CORP., a corporation organized under the laws of the State of Delaware
(the “Company”), hereby certifies that, for value received,
__________________________, _________________________________
___________________________, or its assigns (the “Holder”), is entitled, subject
to the terms set forth below, to purchase from the Company at any time after
the
Issue Date until 5:00 p.m., E.S.T on the fourth anniversary of the Issue Date
(the “Expiration Date”), up to ____________ fully paid and nonassessable shares
of Common Stock at a per share purchase price of $0.15. The aforedescribed
purchase price per share, as adjusted from time to time as herein provided,
is
referred to herein as the "Purchase Price." The number and character of such
shares of Common Stock and the Purchase Price are subject to adjustment as
provided herein. The Company may reduce the Purchase Price for some or all
of
the Warrants, temporarily or permanently.
As
used
herein the following terms, unless the context otherwise requires, have the
following respective meanings:
(a) The
term
“Company” shall include ▇▇▇▇▇▇ Products Corp. and any corporation which shall
succeed or assume the obligations of ▇▇▇▇▇▇ Products Corp. hereunder.
(b) The
term
“Common Stock” includes (i) the Company's Common Stock, $0.001 par value
per share, and (ii) any other securities into which or for which any of the
securities described in (i) may be converted or exchanged pursuant to a
plan of recapitalization, reorganization, merger, sale of assets or
otherwise.
(c) The
term
“Excepted Issuances” shall mean any
proposed sale by the Company of its Common Stock or other securities or equity
linked debt obligations, except in connection with (i) full or partial
consideration in connection with a strategic merger, acquisition, consolidation
or purchase of substantially all of the securities
or assets of corporation or other entity which holders of such securities or
debt are not at any time granted registration rights, (ii)
the
Company’s issuance of securities in connection with strategic license agreements
and other partnering arrangements so long as such issuances are not for the
purpose of raising capital and which holders of such securities or debt are
not
at any time granted registration rights, (iii) the Company’s issuance of Common
Stock or the issuances or grants of options to purchase Common Stock to
employees, directors, and consultants, pursuant to plans described on Schedule
A, (iv) as a result of the exercise of the Warrants or conversion of the Notes,
(v) an underwritten public offering in connection with not less than $10,000,000
of gross proceeds of such public offering and (vi) as otherwise described on
Schedule A.
(d) The
term
“Other Securities” refers to any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which
the
holder of the Warrant at any time shall be entitled to receive, or shall have
received, on the exercise of the Warrant, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant
to
Section 5 or otherwise.
(e) The
term
“Qualified Financing Subscription Agreement” means the Company’s subscription
agreement dated as of September 28, 2007.
(f) The
term
“Warrant Shares” shall mean the Common Stock issuable upon exercise of this
Warrant.
1. Exercise
of Warrant.
1.1. Number
of Shares Issuable upon Exercise.
From
and after the Issue Date through and including the Expiration Date, the Holder
hereof shall be entitled to receive, upon exercise of this Warrant in whole
in
accordance with the terms of subsection 1.2 or upon exercise of this
Warrant in part in accordance with subsection 1.3, shares of Common Stock
of the Company, subject to adjustment as described herein.
1.2. Full
Exercise.
This
Warrant may be exercised in full by the Holder hereof by delivery of an original
or facsimile copy of the form of subscription attached as Exhibit A hereto
(the “Subscription Form”) duly executed by such Holder and delivery within two
days thereafter of payment, in cash, wire transfer or by certified or official
bank check payable to the order of the Company, in the amount obtained by
multiplying the number of shares of Common Stock for which this Warrant is
then
exercisable by the Purchase Price then in effect. The original Warrant is not
required to be surrendered to the Company until it has been fully exercised.
1.3. Partial
Exercise.
This
Warrant may be exercised in part (but not for a fractional share) by surrender
of this Warrant in the manner and at the place provided in subsection 1.2
except that the amount payable by the Holder on such partial exercise shall
be
the amount obtained by multiplying (a) the number of whole shares of Common
Stock designated by the Holder in the Subscription Form by (b) the Purchase
Price then in effect. On any such partial exercise provided the Holder has
surrendered the original Warrant, the Company, at its expense, will forthwith
issue and deliver to or upon the order of the Holder hereof a new Warrant of
like tenor, in the name of the Holder hereof or as such Holder (upon payment
by
such Holder of any applicable transfer taxes) may request, for the balance
of
the whole number of shares of Common Stock for which such Warrant may still
be
exercised.
1.4. Fair
Market Value.
Fair
Market Value of a share of Common Stock as of a particular date (the
"Determination Date") shall mean:
(a) If
the
Company's Common Stock is traded on an exchange or is quoted on the National
Association of Securities Dealers, Inc. Automated Quotation ("NASDAQ"), Global
Market, Nasdaq Global Select Market, the NASDAQ Capital Market or the American
Stock Exchange, LLC, then the closing or last sale price, respectively, reported
for the last business day immediately preceding the Determination
Date;
(b) If
the
Company's Common Stock is not traded on an exchange or on the NASDAQ Global
Market, the NASDAQ Capital Market or the American Stock Exchange, Inc., but
is
traded in the over-the-counter market, then the average of the closing bid
and
ask prices reported for the last business day immediately preceding the
Determination Date;
2
(c) Except
as
provided in clause (d) below, if the Company's Common Stock is not publicly
traded, then as the Holder and the Company agree, or in the absence of such
an
agreement, by arbitration in accordance with the rules then standing of the
American Arbitration Association, before a single arbitrator to be chosen from
a
panel of persons qualified by education and training to pass on the matter
to be
decided; or
(d) If
the
Determination Date is the date of a liquidation, dissolution or winding up,
or
any event deemed to be a liquidation, dissolution or winding up pursuant to
the
Company's charter, then all amounts to be payable per share to holders of the
Common Stock pursuant to the charter in the event of such liquidation,
dissolution or winding up, plus all other amounts to be payable per share in
respect of the Common Stock in liquidation under the charter, assuming for
the
purposes of this clause (d) that all of the shares of Common Stock then
issuable upon exercise of all of the Warrants are outstanding at the
Determination Date.
1.5. Company
Acknowledgment.
The
Company will, at the time of the exercise of the Warrant, upon the request
of
the Holder hereof acknowledge in writing its continuing obligation to afford
to
such Holder any rights to which such Holder shall continue to be entitled after
such exercise in accordance with the provisions of this Warrant. If the Holder
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such Holder any such
rights.
1.6. Trustee
for Warrant Holders.
In the
event that a bank or trust company shall have been appointed as trustee for
the
Holder of the Warrants pursuant to Subsection 3.2, such bank or trust
company shall have all the powers and duties of a warrant agent (as hereinafter
described) and shall accept, in its own name for the account of the Company
or
such successor person as may be entitled thereto, all amounts otherwise payable
to the Company or such successor, as the case may be, on exercise of this
Warrant pursuant to this Section 1.
1.7 Delivery
of Stock Certificates, etc. on Exercise.
The
Company agrees that the shares of Common Stock purchased upon exercise of this
Warrant shall be deemed to be issued to the Holder hereof as the record owner
of
such shares as of the close of business on the date on which this Warrant shall
have been surrendered and payment made for such shares as aforesaid. As soon
as
practicable after the exercise of this Warrant in full or in part, and in any
event within four (4) business
days
thereafter (“Warrant Share Delivery Date”), the Company at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder hereof, or as such Holder
(upon payment by such Holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates for
the number of duly and validly issued, fully paid and non-assessable shares
of
Common Stock (or Other Securities) to which such Holder shall be entitled on
such exercise, plus, in lieu of any fractional share to which such Holder would
otherwise be entitled, cash equal to such fraction multiplied by the then Fair
Market Value of one full share of Common Stock, together with any other stock
or
other securities and property (including cash, where applicable) to which such
Holder is entitled upon such exercise pursuant to Section 1 or otherwise.
The Company understands that a delay in the delivery of the Warrant Shares
after
the Warrant Share Delivery Date could result in economic loss to the Holder.
As
compensation to the Holder for such loss, the Company agrees to pay (as
liquidated damages and not as a penalty) to the Holder for late issuance of
Warrant Shares upon exercise of this Warrant the proportionate amount of $100
per business day after the Warrant Share Delivery Date for each $10,000 of
Purchase Price of Warrant Shares for which this Warrant is exercised which
are
not timely delivered. The Company shall pay any payments incurred under this
Section in immediately available funds upon demand. Furthermore, in addition
to
any other remedies which may be available to the Holder, in the event that
the
Company fails for any reason to effect delivery of the Warrant Shares by the
Warrant Share Delivery Date, the Holder may revoke all or part of the relevant
Warrant exercise by delivery of a notice to such effect to the Company,
whereupon the Company and the Holder shall each be restored to their respective
positions immediately prior to the exercise of the relevant portion of this
Warrant, except that the liquidated damages described above shall be payable
through the date notice of revocation or rescission is given to the Company.
3
1.8 Buy-In.
In
addition to any other rights available to the Holder, if the Company fails
to
deliver to a Holder the Warrant Shares as required pursuant to this Warrant,
within six (6) business days after the Warrant Share Delivery Date and the
Holder or a broker on the Holder’s behalf, purchases (in an open market
transaction or otherwise) shares of common stock to deliver in satisfaction
of a
sale by such Holder of the Warrant Shares which the Holder was entitled to
receive from the Company (a "Buy-In"),
then
the Company shall pay in cash to the Holder (in addition to any remedies
available to or elected by the Holder) the amount by which (A) the Holder's
total purchase price (including brokerage commissions, if any) for the shares
of
common stock so purchased exceeds (B) the aggregate Purchase Price of the
Warrant Shares
required
to have been delivered together
with interest thereon at a rate of 15% per annum, accruing until such amount
and
any accrued interest thereon is paid in full (which amount shall be paid as
liquidated damages and not as a penalty). For
example, if a Holder purchases shares of Common Stock having a total purchase
price of $11,000 to cover a Buy-In with respect to $10,000 of Purchase Price
of
Warrant Shares to have been received upon exercise of this Warrant, the Company
shall be required to pay the Holder $1,000,
plus interest. The
Holder shall provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In.
2. Cashless
Exercise.
(a) If
a
registration statement (“Registration Statement”) is effective such that the
Holder may sell its shares of Common Stock upon exercise hereof pursuant to
such
Registration Statement, this Warrant may be exercisable in whole or in part
for
cash only as set forth in Section 1 above. If no such Registration Statement
is
available, then commencing two years after the Issue Date, payment upon exercise
may be made at the option of the Holder either in (i) cash, wire transfer
or by certified or official bank check payable to the order of the Company
equal
to the applicable aggregate Purchase Price, (ii) by delivery of Common Stock
issuable upon exercise of the Warrants in accordance with
Section (b) below or (iii) by a combination of any of the
foregoing methods, for the number of shares of Common Stock specified in such
form (as such exercise number shall be adjusted to reflect any adjustment in
the
total number of shares of Common Stock issuable to the holder per the terms
of
this Warrant) and the holder shall thereupon be entitled to receive the number
of duly authorized, validly issued, fully-paid and non-assessable shares of
Common Stock (or Other Securities) determined as provided herein.
(b) Subject
to the provisions herein to the contrary, if the Fair Market Value of one share
of Common Stock is greater than the Purchase Price (at the date of calculation
as set forth below), in lieu of exercising this Warrant for cash, the holder
may
elect to receive shares equal to the value (as determined below) of this Warrant
(or the portion thereof being cancelled) by surrender of this Warrant at the
principal office of the Company together with the properly endorsed Subscription
Form in which event the Company shall issue to the holder a number of shares
of
Common Stock computed using the following formula:
X=Y
(A-B)
A
| Where | X= |
the
number of shares of Common Stock to be issued to the
holder
|
|
Y=
|
the
number of shares of Common Stock purchasable under the Warrant or,
if only
a portion of the Warrant is being exercised, the portion of the Warrant
being exercised (at the date of such
calculation)
|
|
A=
|
the
average of the closing sale prices of the Common Stock for the five
(5)
Trading Days immediately prior to (but not including) the Exercise
Date,
or Fair Market Value, whichever is
less
|
|
B=
|
Purchase
Price (as adjusted to the date of such
calculation)
|
4
For
purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood
and acknowledged that as of the Issue Date the Warrant Shares issued in a
cashless exercise transaction shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be deemed to have
commenced, on the date this Warrant was originally issued.
3. Adjustment
for Reorganization, Consolidation, Merger, etc.
3.1. Reorganization,
Consolidation, Merger, etc.
In case
at any time or from time to time, the Company shall (a) effect a
reorganization, (b) consolidate with or merge into any other person or
(c) transfer all or substantially all of its properties or assets to any
other person under any plan or arrangement contemplating the dissolution of
the
Company, then, in each such case, as a condition to the consummation of such
a
transaction, proper and adequate provision shall be made by the Company whereby
the Holder of this Warrant, on the exercise hereof as provided in
Section 1, at any time after the consummation of such reorganization,
consolidation or merger or the effective date of such dissolution, as the case
may be, shall receive, in lieu of the Common Stock (or Other Securities)
issuable on such exercise prior to such consummation or such effective date,
the
stock and other securities and property (including cash) to which such Holder
would have been entitled upon such consummation or in connection with such
dissolution, as the case may be, if such Holder had so exercised this Warrant,
immediately prior thereto, all subject to further adjustment thereafter as
provided in Section 3.
3.2. Dissolution.
In the
event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, prior to such
dissolution, shall at its expense deliver or cause to be delivered the stock
and
other securities and property (including cash, where applicable) receivable
by
the Holder of the Warrants after the effective date of such dissolution pursuant
to this Section 3 to a bank or trust company (a "Trustee") having its
principal office in New York, NY, as trustee for the Holder of the
Warrants.
3.3. Continuation
of Terms.
Upon
any reorganization, consolidation, merger or transfer (and any dissolution
following any transfer) referred to in this Section 3, this Warrant shall
continue in full force and effect and the terms hereof shall be applicable
to
the Other Securities and property receivable on the exercise of this Warrant
after the consummation of such reorganization, consolidation or merger or the
effective date of dissolution following any such transfer, as the case may
be,
and shall be binding upon the issuer of any Other Securities, including, in
the
case of any such transfer, the person acquiring all or substantially all of
the
properties or assets of the Company, whether or not such person shall have
expressly assumed the terms of this Warrant as provided in Section 4. In
the event this Warrant does not continue in full force and effect after the
consummation of the transaction described in this Section 3, then only in
such event will the Company's securities and property (including cash, where
applicable) receivable by the Holder of the Warrants be delivered to the Trustee
as contemplated by Section 3.2.
3.4 Share
Issuance.
Until
the Expiration Date, if the Company shall issue any Common Stock except for
the
Excepted Issuances, prior to the complete exercise of this Warrant for a
consideration less than the Purchase Price that would be in effect at the time
of such issue, then, and thereafter successively upon each such issue, the
Purchase Price shall be reduced to such other lower price for then outstanding
Warrants. For purposes of this adjustment, the issuance of any security or
debt
instrument of the Company carrying the right to convert such security or debt
instrument into Common Stock or of any warrant, right or option to purchase
Common Stock shall result in an adjustment to the Purchase Price upon the
issuance of the above-described security, debt instrument, warrant, right,
or
option if such issuance is at a price lower than the Purchase Price in effect
upon such issuance and again at any time upon any subsequent issuances of shares
of Common Stock upon exercise of such conversion or purchase rights if such
issuance is at a price lower than the Purchase Price in effect upon such
issuance. The
number of shares of Common Stock that the Holder of this Warrant shall
thereafter, on the exercise hereof, be entitled to receive shall be adjusted
to
a number determined by multiplying the number of shares of Common Stock that
would otherwise (but for the provisions of this Section 3.4) be issuable on
such
exercise by a fraction of which (a) the numerator is the Purchase Price that
would otherwise (but for the provisions of this Section 3.4) be in effect,
and
(b) the denominator is the Purchase Price in effect on the date of such
exercise.
5
4. Extraordinary
Events Regarding Common Stock.
In the
event that the Company shall (a) issue additional shares of the Common
Stock as a dividend or other distribution on outstanding Common Stock,
(b) subdivide its outstanding shares of Common Stock, or (c) combine
its outstanding shares of the Common Stock into a smaller number of shares
of
the Common Stock, then, in each such event, the Purchase Price shall,
simultaneously with the happening of such event, be adjusted by multiplying
the
then Purchase Price by a fraction, the numerator of which shall be the number
of
shares of Common Stock outstanding immediately prior to such event and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such event, and the product so obtained shall thereafter
be
the Purchase Price then in effect. The Purchase Price, as so adjusted, shall
be
readjusted in the same manner upon the happening of any successive event or
events described herein in this Section 4. The number of shares of Common
Stock that the Holder of this Warrant shall thereafter, on the exercise hereof,
be entitled to receive shall be adjusted to a number determined by multiplying
the number of shares of Common Stock that would otherwise (but for the
provisions of this Section 4 be issuable on such exercise by a fraction of
which
(a) the numerator is the Purchase Price that would otherwise (but for the
provisions of this Section 4) be in effect, and (b) the denominator is the
Purchase Price in effect on the date of such exercise.
5. Certificate
as to Adjustments.
In each
case of any adjustment or readjustment in the shares of Common Stock (or Other
Securities) issuable on the exercise of the Warrants, the Company at its expense
will promptly cause its Chief Financial Officer or other appropriate designee
to
compute such adjustment or readjustment in accordance with the terms of the
Warrant and prepare a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment
is
based, including a statement of (a) the consideration received or
receivable by the Company for any additional shares of Common Stock (or Other
Securities) issued or sold or deemed to have been issued or sold, (b) the
number of shares of Common Stock (or Other Securities) outstanding or deemed
to
be outstanding, and (c) the Purchase Price and the number of shares of
Common Stock to be received upon exercise of this Warrant, in effect immediately
prior to such adjustment or readjustment and as adjusted or readjusted as
provided in this Warrant. The Company will forthwith mail a copy of each such
certificate to the Holder of the Warrant and any Warrant Agent of the Company
(appointed pursuant to Section 11 hereof).
6. Reservation
of Stock, etc. Issuable on Exercise of Warrant; Financial
Statements.
The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of the Warrants, all shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of the Warrant. This
Warrant entitles the Holder hereof to receive copies of all financial and other
information distributed or required to be distributed to the holders of the
Company's Common Stock.
7. Assignment;
Exchange of Warrant.
Subject
to compliance with applicable securities laws, this Warrant, and the rights
evidenced hereby, may be transferred by any registered holder hereof (a
"Transferor"); provided, however, that by acceptance of this Warrant, ▇▇▇▇▇▇
agrees that it may not and will not assign any portion of this Warrant to any
competitor of the Company that is engaged in the manufacture, distribution
or
marketing of technology inhibiting pathogenic bacteria. On the surrender for
exchange of this Warrant, with the Transferor's endorsement in the form of
Exhibit B attached hereto (the “Transferor Endorsement Form") and together
with an opinion of counsel reasonably satisfactory to the Company that the
transfer of this Warrant will be in compliance with applicable securities laws,
the Company will issue and deliver to or on the order of the Transferor thereof
a new Warrant or Warrants of like tenor, in the name of the Transferor and/or
the transferee(s) specified in such Transferor Endorsement Form (each a
"Transferee"), calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock called for on the face or faces of the Warrant
so surrendered by the Transferor.
6
8. Replacement
of Warrant.
On
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any such loss,
theft or destruction of this Warrant, on delivery of an indemnity agreement
or
security reasonably satisfactory in form and amount to the Company or, in the
case of any such mutilation, on surrender and cancellation of this Warrant,
the
Company at its expense, twice only, will execute and deliver, in lieu thereof,
a
new Warrant of like tenor.
9. Registration
Rights.
The
following provisions will be applicable to this Warrant subject to receipt
of
the written consent of the holders of at least 51% of the total shares of Common
Stock issuable upon conversion of the outstanding notes under the Qualified
Financing Subscription Agreement.
9.1. Registration
Rights.
The
Company hereby grants the following registration rights to holder of this
Warrant:
(i) On
one
occasion, for a period commencing one hundred and twenty-one (121) days after
the Issue Date, but not later than two years after the Issue Date, upon a
written request therefor from any record holder or holders of more than 50%
of
the shares of Common Stock issued and issuable upon conversion of the
outstanding 6% Secured Convertible Notes due December __, 2010 (the “Notes”) and
exercise of the Common Stock Purchase Warrants (the “New Warrants”) issued
concurrently to the Holders of the Notes on the Issue Date, the Company shall
prepare and file with the Securities and Exchange Commission (the “SEC”) a
registration statement under the Securities Act of 1933, as amended (the “1933
Act”) registering the Registrable Securities, as defined in Section 9.1(iv)
hereof, which are the subject of such request for unrestricted public resale
by
the holder thereof. For purposes of Sections 9.1(i) and 9.1(ii), Registrable
Securities shall not include securities which (A) are registered for resale
in
an effective registration statement, (B) are included for registration in a
pending registration statement, (C) have been issued without further transfer
restrictions after a sale or transfer pursuant to Rule 144 under the 1933 Act,
or (D) are not yet required to be included in a Registration Statement. Upon
the
receipt of such request, the Company shall promptly give written notice to
all
other record holders of the Registrable Securities that such registration
statement is to be filed and shall include in such registration statement
Registrable Securities for which it has received written requests within ten
days after the Company gives such written notice. Such other requesting record
holders shall be deemed to have exercised their demand registration right under
this Section 9.1(i).
7
(ii) If
the
Company at any time proposes to register any of its securities under the 1933
Act for sale to the public, whether for its own account or for the account
of
other security holders or both, except in connection with (i) the registration
statements of the Company (File Nos. 333-128287, 333-133549, 333-115514,
333-119065, 333-121052, 333-122383 and 333-147265) on file with the SEC, (ii)
the registration for resale of issuances pursuant to a private offering in
connection with not less than $3,000,000 of gross proceeds of such private
offering or (iii) with respect to registration statements on Forms S-4, S-8
or
another form not available for registering the Registrable Securities for sale
to the public, provided the Registrable Securities are not otherwise registered
for resale by the Holder pursuant to an effective registration statement, each
such time it will give at least five (5) days' prior written notice to the
record holder of the Registrable Securities of its intention so to do. Upon
the
written request of the Holder, received by the Company within ten (10) days
after the giving of any such notice by the Company, to register any of the
Registrable Securities not previously registered, the Company will cause such
Registrable Securities as to which registration shall have been so requested
to
be included with the securities to be covered by the registration statement
proposed to be filed by the Company, all to the extent required to permit the
sale or other disposition of the Registrable Securities so registered by the
holder of such Registrable Securities (the “Seller” or “Sellers”). In the event
that any registration pursuant to this Section 9.1(ii) shall be, in whole or
in
part, an underwritten public offering of common stock of the Company, the number
of shares of Registrable Securities to be included in such an underwriting
may
be reduced by the managing underwriter if and to the extent that the Company
and
the underwriter shall reasonably be of the opinion that such inclusion would
adversely affect the marketing of the securities to be sold by the Company
therein; provided, however, that the Company shall notify the Seller in writing
of any such reduction. Notwithstanding the foregoing provisions, or Section
9.4
hereof, the Company may withdraw or delay or suffer a delay of any registration
statement referred to in this Section 9.1(ii) without thereby incurring any
liability to the Seller.
(iii) If,
at
the time any written request for registration is received by the Company
pursuant to Section 9.1(i), the Company has determined to proceed with the
actual preparation and filing of a registration statement under the 1933 Act
in
connection with the proposed offer and sale for cash of any of its securities
for the Company's own account and the Company actually does file such other
registration statement, such written request shall be deemed to have been given
pursuant to Section 9.1(ii) rather than Section 9.1(i), and the rights of the
holders of Registrable Securities covered by such written request shall be
governed by Section 9.1(ii).
(iv) The
Company shall file with the SEC a Form S-3 registration statement (the
“Registration Statement”) (or such other form that it is eligible to use) in
order to register the Registrable Securities for resale and distribution under
the 1933 Act within sixty (60) calendar days after the Issue Date (the
“Filing Date”), and cause the Registration Statement to be declared effective
not
later
than one hundred and twenty (120) calendar days after the Issue Date
(the
“Effective Date”). The Company will register not less than a number of shares of
Common Stock in the aforedescribed registration statement that is equal to
100%
of
the shares of Common Stock issued and issuable upon conversion of all of the
Notes and exercise of the New Warrants together with a number of shares of
Common Stock equal to 100% of the shares of Common Stock issued and issuable
upon exercise of the Company’s outstanding Common Stock Purchase Warrants issued
between December 1, 2006 and June 4, 2007 with initial exercise prices of $0.09
(the “9 Cent Warrants”) and $0.20 per share (the “20 Cent Warrants” and,
together with the New Warrants and the 9 Cent Warrants, the “Warrants”). Such
shares of Common Stock issued and issuable in connection with the conversion
or
exercise, as applicable, of the Notes and Warrants are collectively referred
to
herein as the “Registrable Securities”. The Registrable Securities shall be
reserved and set aside exclusively for the benefit of each Holder and holder
of
Warrants, pro rata,
and not
issued, employed or reserved for anyone other than each such Holder and Warrant
holder. The Registration Statement will immediately be amended or additional
registration statements will be immediately filed by the Company as necessary
to
register additional shares of Common Stock to allow the public resale of all
Common Stock included in and issuable by virtue of the Registrable Securities.
Except with the written consent of a Majority in Interest (as defined in the
Security Agreement dated December __, 2007 relating to the Notes) , no
securities of the Company other than the Registrable Securities will be included
in the Registration Statement. It shall be deemed a Non-Registration Event
if at
any time after the date the Registration Statement registering the Initial
Registrable Securities (as defined in Section 9.1(v)) is declared effective
by
the SEC (“Actual Effective Date”) the Company has registered for unrestricted
resale on behalf of the holders of Notes and Warrants for thirty or more
consecutive days less than the
amount of Common Shares required to be registered as described in this Section
9.
8
(v) The
amount of Registrable Securities required to be included in the initial
Registration Statement as described in Section 9.1(iv) (“Initial Registrable
Securities”) shall be not less than 100% of the maximum amount of Common Stock
which may be included in a Registration Statement without exceeding registration
limitations imposed by the SEC pursuant to Rule 415 of the 1933 Act (the “Rule
415 Amount”). In the event that less than all of the Registrable Securities are
included in the Registration Statement as a result of the limitation described
in this Section 9.1(v), then the Company will file additional Registration
Statements each registering the Rule 415 Amount (each such Registration
Statement a “Subsequent Registration Statement”), seriatim,
until
all of the Initial Registrable Securities have been registered. The Filing
Date
and Effective Date of each such additional Registration Statement shall be,
respectively, thirty (30) and ninety (90) days after the first day such
Subsequent Registration Statement may be filed without objection by the SEC
based on Rule 415 of the 1933 Act.
(vi) Unless
otherwise instructed in writing by a holder of Registrable Securities and only
if the initial Registration Statement does not include all of the Registrable
Securities, the Registrable Securities will be registered on behalf of each
such
holder in the Registration Statements based on Common Stock issuable upon
conversion or exercise of Notes and Warrants, in the following order and
priority:
(A) Notes
(B) Warrants
(vii) Priority
shall be given to Common Stock issuable upon conversion of actual outstanding
Notes ahead of shares of Common Stock issuable upon exercise of Warrants. The
foregoing notwithstanding, Registrable Securities shall be allocated and
registered pro rata among the holders of Notes and Warrants based upon their
holdings thereof.
9.2. Registration
Procedures.
If and
whenever the Company is required by the provisions of Section 9.1(i) or 9.1(ii)
to effect the registration of any Registrable Securities under the 1933 Act,
the
Company will, as expeditiously as possible:
(a) subject
to the timelines provided herein, prepare and file with the SEC a registration
statement required by this Section 9 with respect to such securities and use
its
best efforts to cause such registration statement to become and remain effective
for the period of the distribution contemplated thereby (determined as herein
provided), promptly provide to the holders of the Registrable Securities copies
of all filings and SEC letters of comment and notify such holders (by telecopier
and by e-mail addresses provided by such holders) on or before the first
business day thereafter that the Company receives notice that (i) the SEC has
no
comments or no further comments on the Registration Statement, and (ii) the
registration statement has been declared effective (failure to timely provide
notice as required by this Section 9.2(a) shall be a material breach of the
Company’s obligations and a Non-Registration Event as defined in Section 9.4;
9
(b) prepare
and file with the SEC such amendments and supplements to such Registration
Statement and the prospectus used in connection therewith as may be necessary
to
keep such Registration Statement effective until such Registration Statement
has
been effective for a period of two (2) years, and comply with the provisions
of
the 1933 Act with respect to the disposition of all of the Registrable
Securities covered by such Registration Statement in accordance with the
Sellers’ intended method of disposition set forth in such Registration Statement
for such period;
(c) furnish
to the Sellers, at the Company’s expense, such number of copies of the
Registration Statement and the prospectus included therein (including each
preliminary prospectus) as such persons reasonably may request in order to
facilitate the public sale or their disposition of the securities covered by
such Registration Statement or make them electronically available;
(d) use
its
commercially
reasonable best efforts to register or qualify the Registrable Securities
covered by such Registration Statement under the securities or “blue sky” laws
of New York and such jurisdictions as the Sellers shall request in writing,
provided, however, that the Company shall not for any such purpose be required
to qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service
of
process in any such jurisdiction;
(e) if
applicable, list the Registrable Securities covered by such Registration
Statement with any securities exchange on which the Common Stock of the Company
is then listed;
(f) notify
the Holder within twenty-four hours of the Company’s becoming aware that a
prospectus relating thereto is required to be delivered under the 1933 Act,
of
the happening of any event of which the Company has knowledge as a result of
which the prospectus contained in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing or which
becomes subject to an SEC, state or other governmental order suspending the
effectiveness of the registration statement covering any of the Registrable
Securities;
(g) provided
same would not be in violation of the provision of the SEC’s Regulation FD, make
available for inspection by the Sellers, and any attorney, accountant or other
agent retained by the Seller or underwriter, all publicly available,
non-confidential financial and other records, pertinent corporate documents
and
properties of the Company, and cause the Company's officers, directors and
employees to supply all publicly available, non-confidential information
reasonably requested by the seller, attorney, accountant or agent in connection
with such Registration Statement; and
(h) provide
to the Sellers copies of the Registration Statement and amendments thereto
five
business days prior to the filing thereof with the SEC. Holder’s failure to
comment on any Registration Statement or other document provided to a Holder
or
its counsel shall not be construed to constitute approval thereof nor an
acknowledgement of the accuracy thereof.
9.3. Provision
of Documents.
In
connection with each registration described in this Section 9, each Seller
will
furnish to the Company in writing such information and representation letters
with respect to itself and the proposed distribution by it as reasonably shall
be necessary in order to assure compliance with federal and applicable state
securities laws.
10
9.4. Non-Registration
Events.
The
Company and the Holder agree that the Sellers will suffer damages if the
Registration Statement is not declared effective by the SEC by the Effective
Date, and any registration statement required under Section 9.1(i) or 9.1(ii)
is
not filed within 60 days after written request and declared effective by the
SEC
within 150 days after such request, and maintained in the manner and within
the
time periods contemplated by Section 9 hereof, and it would not be feasible
to
ascertain the extent of such damages with precision. Accordingly, if (A) any
Registration Statement is not declared effective on or before the required
Effective Date, (B) due to the action or inaction of the Company the
Registration Statement is not declared effective within three (3) business
days
after receipt by the Company or its attorneys of a written or oral communication
from the SEC that the Registration Statement will not be reviewed or that the
SEC has no further comments, (C) if the registration statement described in
Sections 9.1(i) or 9.1(ii) is not filed within 60 days after such written
request, or is not declared effective within 150 days after such written
request, or (D) any registration statement described in Sections 9.1(i), 9.1(ii)
or 9.1(iv) is filed and declared effective but shall thereafter cease to be
effective for a period of time which shall exceed seventy-five (75) days in
the
aggregate per year (defined as every rolling period of 365 consecutive days
commencing on the Actual Effective Date (each such event referred to in clauses
A through D of this Section 9.4 is referred to herein as a "Non-Registration
Event"), then the Company shall deliver to the holder of Registrable Securities,
as liquidated damages (“Liquidated Damages”), an amount equal to one percent
(1%) for each thirty (30) days (or such lesser pro-rata amount for any period
of
less than thirty (30) days) of the principal amount of the outstanding Notes
and
purchase price of shares of Common Stock issued upon conversion of Notes and
exercise of Warrants held by holders of Registrable Securities which are subject
to such Non-Registration Event. The Company must pay the Liquidated Damages
in
cash. The Liquidated Damages must be paid within ten (10) days after the end
of
each thirty (30) day period or shorter part thereof for which Liquidated Damages
are payable. In the event a Registration Statement is filed by the Filing Date
but is withdrawn prior to being declared effective by the SEC, then such
Registration Statement will be deemed to have not been filed and Liquidated
Damages will be calculated accordingly. All
oral
or written comments received from the SEC relating to the Registration Statement
must be satisfactorily responded to within
twenty (20) days after receipt of comments from the SEC. Failure
to
timely respond to SEC comments is a Non-Registration Event for which Liquidated
Damages shall accrue and be payable by the Company to the holders of Registrable
Securities at the same rate and amounts set forth above calculated from the
date
the response was required to have been made.
9.5. Expenses.
All
expenses incurred by the Company in complying with this Section 9, including,
without limitation, all registration and filing fees, printing expenses (if
required), fees and disbursements of counsel and independent public accountants
for the Company, fees and expenses (including reasonable counsel fees) incurred
in connection with complying with state securities or “blue sky” laws, fees of
the Financial Regulatory Authority Inc., transfer taxes, and fees of transfer
agents and registrars, are called “Registration Expenses.” All underwriting
discounts and selling commissions applicable to the sale of Registrable
Securities are called "Selling Expenses." The Company will pay all Registration
Expenses in connection with each registration statement under Section 9. Selling
Expenses in connection with each registration statement under Section 9 shall
be
borne by the Seller and may be apportioned among the Sellers in proportion
to
the number of shares sold by the Seller relative to the number of shares sold
under such registration statement or as all Sellers thereunder may
agree.
11
9.6. Indemnification
and Contribution.
(a) In
the
event of a registration of any Registrable Securities under the 1933 Act
pursuant to this Section 9, the Company will, to the extent permitted by law,
indemnify and hold harmless the Seller, each officer of the Seller, each
director of the Seller, each underwriter of such Registrable Securities
thereunder and each other person, if any, who controls such Seller or
underwriter within the meaning of the 1933 Act, against any losses, claims,
damages or liabilities, joint or several, to which the Seller, or such
underwriter or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Registrable Securities was registered under the 1933 Act
pursuant to this Section 9, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, 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 not
misleading in light of the circumstances when made, and will subject to the
provisions of Section 9.6(c) reimburse the Seller, each such underwriter and
each such controlling person for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company shall not
be
liable to the Seller to the extent that any such damages arise out of or are
based upon an untrue statement or omission made in any preliminary prospectus
if
(i) the Seller failed to send or deliver a copy of the final prospectus
delivered by the Company to the Seller with or prior to the delivery of written
confirmation of the sale by the Seller to the person asserting the claim from
which such damages arise, (ii) the final prospectus would have corrected such
untrue statement or alleged untrue statement or such omission or alleged
omission, or (iii) to the extent that any such loss, claim, damage or liability
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 any such Seller, or any such controlling person in writing specifically
for
use in such registration statement or prospectus.
(b) In
the
event of a registration of any of the Registrable Securities under the 1933
Act
pursuant to this Section 9, each Seller severally but not jointly will, to
the
extent permitted by law, indemnify and hold harmless the Company, and each
person, if any, who controls the Company within the meaning of the 1933 Act,
each officer of the Company who signs the registration statement, each director
of the Company, each underwriter and each person who controls any underwriter
within the meaning of the 1933 Act, against all losses, claims, damages or
liabilities, joint or several, to which the Company or such officer, director,
underwriter or controlling person may become subject under the 1933 Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
under which such Registrable Securities were registered under the 1933 Act
pursuant to this Section 9, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, 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 not
misleading, and will reimburse the Company and each such officer, director,
underwriter and controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action, provided, however, that the Seller will
be
liable hereunder in any such case if and only to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement
or
alleged untrue statement or omission or alleged omission made in reliance upon
and in conformity with information pertaining to such Seller, as such, furnished
in writing to the Company by such Seller specifically for use in such
registration statement or prospectus, and provided, further, however, that
the
liability of the Seller hereunder shall be limited to the net proceeds actually
received by the Seller from the sale of Registrable Securities pursuant to
such
registration statement.
12
(c) Promptly
after receipt by an indemnified party hereunder of notice of the commencement
of
any action, such indemnified party shall, if a claim in respect thereof is
to be
made against the indemnifying party hereunder, notify the indemnifying party
in
writing thereof, but the omission so to notify the indemnifying party shall
not
relieve it from any liability which it may have to such indemnified party other
than under this Section 9.6(c) and shall only relieve it from any liability
which it may have to such indemnified party under this Section 9.6(c), except
and only if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified
party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake
the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 9.6(c) for any legal expenses subsequently incurred
by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with counsel so selected,
provided, however, that, if the defendants in any such action include both
the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses available to
it
which are different from or additional to those available to the indemnifying
party or if the interests of the indemnified party reasonably may be deemed
to
conflict with the interests of the indemnifying party, the indemnified parties,
as a group, shall have the right to select one separate counsel and to assume
such legal defenses and otherwise to participate in the defense of such action,
with the reasonable expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the indemnifying
party as incurred.
(d) In
order
to provide for just and equitable contribution in the event of joint liability
under the 1933 Act in any case in which either (i) a Seller, or any controlling
person of a Seller, makes a claim for indemnification pursuant to this Section
9.6 but it is judicially determined (by the entry of a final judgment or decree
by a court of competent jurisdiction and the expiration of time to appeal or
the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 9.6 provides
for indemnification in such case, or (ii) contribution under the 1933 Act may
be
required on the part of the Seller or controlling person of the Seller in
circumstances for which indemnification is not provided under this Section
9.6;
then, and in each such case, the Company and the Seller will contribute to
the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion so that the Seller is
responsible only for the portion represented by the percentage that the public
offering price of its securities offered by the registration statement bears
to
the public offering price of all securities offered by such registration
statement, provided, however, that, in any such case, (y) the Seller will not
be
required to contribute any amount in excess of the public offering price of
all
such securities sold by it pursuant to such registration statement; and (z)
no
person or entity guilty of fraudulent misrepresentation (within the meaning
of
Section 11(f) of the 1933 Act) will be entitled to contribution from any person
or entity who was not guilty of such fraudulent misrepresentation.
13
9.7. Delivery
of Unlegended Shares.
(a) Within
four (4) business days (such fourth business day being the “Unlegended Shares
Delivery Date”) after the business day on which the Company has received (i) a
notice that shares of Common Stock held by Holder have been sold pursuant to
the
Registration Statement or Rule 144 under the 1933 Act, (ii) a representation
that the prospectus delivery requirements, or the requirements of Rule 144,
as
applicable and if required, have been satisfied, and (iii) the original share
certificates representing the shares of Common Stock that have been sold, and
(iv) in the case of sales under Rule 144, customary representation letters
of
the Holder and/or Holder’s broker regarding compliance with the requirements of
Rule 144, the Company at its expense, (y) shall deliver, and shall cause legal
counsel selected by the Company to deliver to its transfer agent (with copies
to
Holder) an appropriate instruction and opinion of such counsel, directing the
delivery of shares of Common Stock without any legends purporting to restrict
transfers in compliance with the 1933 Act (the “Unlegended Shares”); and (z)
cause the transmission of the certificates representing the Unlegended Shares
together with a legended certificate representing the balance of the shares
of
Common Stock represented by such certificate, if any, to the Holder at the
address specified in the notice of sale, via express courier, by electronic
transfer or otherwise on or before the Unlegended Shares Delivery
Date.
(b) In
lieu
of delivering physical certificates representing the Unlegended Shares, upon
request of ▇▇▇▇▇▇, so long as the certificates therefor do not bear a legend
and
the Holder is not obligated to return such certificate for the placement of
a
legend thereon, the Company shall cause its transfer agent to electronically
transmit the Unlegended Shares by crediting the account of ▇▇▇▇▇▇’s prime broker
with the Depository Trust Company through its Deposit Withdrawal At Custodian
system. Such delivery must be made on or before the Unlegended Shares Delivery
Date.
(c) The
Company understands that a delay in the delivery of the Unlegended Shares
pursuant to this Section 9 later than two business days after the Unlegended
Shares Delivery Date could result in economic loss to Holder. As compensation
to
Holder for such loss, the Company agrees to pay late payment fees (as liquidated
damages and not as a penalty) to the Holder for late delivery of Unlegended
Shares in the amount of $100 per business day after the Delivery Date for each
$10,000 of purchase price of the Unlegended Shares subject to the delivery
default. If during any 360 day period, the Company fails to deliver Unlegended
Shares as required by this Section 9.7 for an aggregate of thirty (30) days,
then the Holder or assignee holding securities subject to such default may,
at
its option, require the Company to redeem all or any portion of the shares
of
Common Stock subject to such default at a price per share equal to the greater
of (i) 120%, or (ii) a fraction in which the numerator is the highest closing
price of the Common Stock during the aforedescribed thirty day period and the
denominator of which is the lowest conversion or exercise price during such
thirty day period, multiplied by the aggregate conversion or exercise price
relating to such shares of Common Stock (“Unlegended Redemption Amount”). The
Company shall pay any payments incurred under this Section in immediately
available funds upon demand.
(d) In
the
event Holder shall request delivery of Unlegended Shares as described in this
Section 9.7 and the Company is required to deliver such Unlegended Shares
pursuant to this Section 9.7, the Company may not refuse to deliver Unlegended
Shares based on any claim that Holder or any one associated or affiliated with
such Holder has been engaged in any violation of law, or for any other reason,
unless, an injunction or temporary restraining order from a court, on notice,
restraining and or enjoining delivery of such Unlegended Shares shall have
been
sought and obtained by the Company or at the Company’s request or with the
Company’s assistance, and the Company has posted a surety bond for the benefit
of Holder in the amount of 120% of the amount of the aggregate purchase price
of
the shares Common Stock which are subject to the injunction or temporary
restraining order, which bond shall remain in effect until the completion of
arbitration/litigation of the dispute and the proceeds of which shall be payable
to such Holder to the extent Holder obtains judgment in ▇▇▇▇▇▇’s
favor.
14
10. Maximum
Exercise.
The
Holder shall not be entitled to exercise this Warrant on an exercise
date, in
connection with that number of shares of Common Stock which would be in excess
of the sum of (i) the number of shares of Common Stock beneficially owned
by the Holder and its affiliates on an exercise date, and (ii) the number
of shares of Common Stock issuable upon the exercise of this Warrant with
respect to which the determination of this limitation is being made on an
exercise date, which would result in beneficial ownership by the Holder and
its
affiliates of more than 4.99% of the outstanding shares of Common Stock on
such
date. For the purposes of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and Regulation 13d-3 thereunder.
Subject to the foregoing, the Holder shall not be limited to aggregate exercises
which would result in the issuance of more than 4.99%. The
restriction described in this paragraph may be waived, in whole or in part,
upon sixty-one (61) days prior notice from the Holder to the Company to increase
such percentage to up to 9.99%, but not in excess of 9.99%. The Holder may
decide whether to convert any other convertible debt security or warrant of
the
Company or exercise this Warrant to achieve an actual 4.99% or up to 9.99%
ownership position as described above, but not in excess of 9.99%.
11. Warrant
Agent.
The
Company may, by written notice to the Holder of the Warrant, appoint an agent
(a
“Warrant Agent”) for the purpose of issuing Common Stock (or Other Securities)
on the exercise of this Warrant pursuant to Section 1, exchanging this
Warrant pursuant to Section 7, and replacing this Warrant pursuant to
Section 8, or any of the foregoing, and thereafter any such issuance,
exchange or replacement, as the case may be, shall be made at such office by
such Warrant Agent.
12. Transfer
on the Company's Books.
Until
this Warrant is transferred on the books of the Company, the Company may treat
the registered holder hereof as the absolute owner hereof for all purposes,
notwithstanding any notice to the contrary.
13. Notices.
All
notices, demands, requests, consents, approvals, and other communications
required or permitted hereunder shall be in writing and, unless otherwise
specified herein, shall be (i) personally served, (ii) deposited in the mail,
registered or certified, return receipt requested, postage prepaid, (iii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice. Any notice or other communication required or permitted
to be
given hereunder shall be deemed effective (a) upon hand delivery or delivery
by
facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be: if to the Company, to: ▇▇▇▇▇▇
Products Corp., ▇▇-▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Chief Financial Officer,
telecopier: (▇▇▇) ▇▇▇-▇▇▇▇, with a copy by telecopier only to: ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇
& ▇▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., telecopier: (▇▇▇)
▇▇▇-▇▇▇▇, and (ii) if to the Holder, to the address and telecopier number listed
on the first paragraph of this Warrant, with a copy by telecopier only to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & Deutsch LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, telecopier number: (▇▇▇) ▇▇▇-▇▇▇▇.
15
14. Law
Governing This Warrant.
This
Warrant shall be governed by and construed in accordance with the laws of the
State of New York without regard to principles of conflicts of laws. Any action
brought by either party against the other concerning the transactions
contemplated by this Warrant shall be brought only in the state courts of New
York or in the federal courts located in the state and county of New York.
The
parties to this Warrant hereby irrevocably waive any objection to jurisdiction
and venue of any action instituted hereunder and shall not assert any defense
based on lack of jurisdiction or venue or based upon forum
non conveniens.
The
Company and Holder waive trial by jury.
The
prevailing party shall be entitled to recover from the other party its
reasonable attorney's fees and costs. In the event that any provision of this
Warrant or any other agreement delivered in connection herewith is invalid
or
unenforceable under any applicable statute or rule of law, then such provision
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute or rule of law. Any such
provision which may prove invalid or unenforceable under any law shall not
affect the validity or enforceability of any other provision of any
agreement.
IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.
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▇▇▇▇▇▇
PRODUCTS CORP.
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By:
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Name:
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▇▇▇▇▇
▇. ▇▇▇▇▇
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Title:
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CEO
and President
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16
Exhibit A
FORM
OF
SUBSCRIPTION
(to
be
signed only on exercise of Warrant)
TO:
▇▇▇▇▇▇ PRODUCTS CORP.
The
undersigned, pursuant to the provisions set forth in the attached Warrant
(No.____), hereby irrevocably elects to purchase (check applicable
box):
___________
shares of the Common Stock covered by such Warrant; or
___
the
maximum number of shares of Common Stock covered by such Warrant pursuant
to the
cashless exercise procedure set forth in Section 2.
The
undersigned herewith makes payment of the full purchase price for such shares
at
the price per share provided for in such Warrant, which is $___________.
Such
payment takes the form of (check applicable box or boxes):
___
$__________
in lawful money of the United States; and/or
___
the
cancellation of such portion of the attached Warrant as is exercisable for
a
total of _______ shares of Common Stock (using a Fair Market Value of $_______
per share for purposes of this calculation); and/or
___
the
cancellation of such number of shares of Common Stock as is necessary, in
accordance with the formula set forth in Section 2, to exercise this
Warrant with respect to the maximum number of shares of Common Stock purchasable
pursuant to the cashless exercise procedure set forth in
Section 2.
The
undersigned requests that the certificates for such shares be issued in the
name
of, and delivered to _____________ whose address is __________
The
undersigned is an "accredited investor", as such term is defined in Regulation
D
promulgated by the Commission under the Securities Act of 1933 (the “Act”) with
such knowledge and experience in financial, tax and other business matters
to
evaluate the merits and risks of and to make an informed investment decision
with respect to the proposed purchase, which represents a speculative
investment. The undersigned is able to bear the risk of such investment for
an
indefinite period and to afford a complete loss thereof. The
undersigned
understands and agrees that the Warrant and the underlying shares of Common
Stock have not been registered under the Act or any applicable state securities
laws, by reason of their issuance in a transaction that does not require
registration under the Securities Act (based in part on the accuracy of the
undersigned’s representations and warranties contained herein), and the
undersigned will not sell, offer to sell, assign, pledge, hypothecate or
otherwise transfer any such shares of Common Stock except pursuant to an
effective registration statement under the Act, unless an exemption from
registration is available.
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Dated:
______________
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(Signature
must conform to name of holder as specified
on
the face of the Warrant)
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(Address)
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17
Exhibit B
FORM
OF
TRANSFEROR ENDORSEMENT
(To
be
signed only on transfer of Warrant)
For
value
received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading "Transferees" the right represented
by
the within Warrant to purchase the percentage and number of shares of Common
Stock of ▇▇▇▇▇▇ PRODUCTS CORP. to which the within Warrant relates specified
under the headings "Percentage Transferred" and "Number Transferred,"
respectively, opposite the name(s) of such person(s) and appoints each such
person Attorney to transfer its respective right on the books of ▇▇▇▇▇▇ PRODUCTS
CORP. with full power of substitution in the premises.
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Transferees
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Percentage
Transferred
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Number
Transferred
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Dated:
______________, ___________
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(Signature
must conform to name of holder as specified on the face of the
warrant)
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Signed
in the presence of:
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(Name)
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(address)
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ACCEPTED
AND AGREED:
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[TRANSFEREE]
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(address)
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(Name)
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18
SCHEDULE
A
Currently
Outstanding Securities:
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14.
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Warrants
to purchase 8,808,929 shares of Common Stock to be issued to Indigo,
for
Placement Agent fee in connection with various financing
tranches
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19
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15.
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Warrants
to purchase 3,000,000 shares of Common Stock to be issued to Greenbridge
as a fee in connection with the Greenbridge Line of
Credit
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16.
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3,298,206
shares of Common Stock for possible conversion of the November 2002
promissory note in the amount of $593,034 of principal and
interest
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17.
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Issuances
made pursuant to a private offering whereby the offering is no less
than
$3,000,000
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Pursuant
to the 2006 Stock Plan, 2,500,000 shares reserved for issuance upon
the
exercise of stock options to be granted in the future
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19.
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4,545,455
Shares of Common Stock to be issued upon conversion of 6% Notes and
warrants to purchase 2,746,666 shares of common stock, issued in
connection with the Qualified Financing
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20.
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Warrants
to purchase 4,500,000 shares of Common Stock to be issued to employees,
directors and consultants as
compensation
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20