EXHIBIT 4.1
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CAPITAL STOCK WARRANT
BY
LIFEF/X, INC.
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WARRANT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
No. WC -1 Warrant to Purchase Shares of Capital Stock
WARRANT TO PURCHASE CAPITAL STOCK
of
LIFEF/X, INC.
This certifies that, for value received, Safeguard 2001 Capital, L.P., or
its registered assigns ("Holder") is entitled, subject to the terms set forth
below, to purchase from Lifef/x, Inc. (the "Company"), a Nevada corporation, a
number of shares of the Underlying Securities up to the Warrant Coverage Number
(the "Warrant Shares") upon surrender hereof, at the principal office of the
Company referred to below, with the subscription form attached hereto duly
executed, and simultaneous payment therefor in lawful money of the United States
or otherwise as hereinafter provided, at the Exercise Price as set forth in
Section 2 below. The number, character and Exercise Price of such shares of
capital stock are subject to adjustment as provided below. This Warrant and any
Warrant subsequently issued upon exchange or transfer hereof is hereinafter
collectively called the "Warrant." This Warrant is being issued by the Company
in exchange for certain other warrants to purchase an aggregate of 15,628,295
shares of the Company's Common Stock currently held by the initial Holder (or
its affilate) as additional consideration for the initial Holder entering into
the Credit Agreement, and the parties acknowledge and agree that the option
inherent in this Warrant has nominal value.
1. CERTAIN DEFINITIONS. As used in this Warrant, the following terms
shall have the following meanings:
"ALTERNATIVE TRANSACTION" shall mean any transaction in which the Company,
in exchange for cash, issues and sells equity securities or securities
convertible into, exchangeable or exercisable for, equity securities, of the
Company which occurs before the first anniversary of the repayment in full of
funds borrowed by the Company under the Credit Agreement, other than (i)
issuance of stock options for and shares of Common Stock to employees, officers,
directors and consultants pursuant to stock incentive plans in existence on the
date hereof or pursuant to subsequent stock incentive plans approved by
Safeguard 2001 Capital, L.P., which issuance has been approved by the Safeguard
2001 Capital, L.P. and (ii) issuances of securities upon exercise of stock
options or warrants outstanding as of the date hereof.
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"CREDIT AGREEMENT" shall mean that certain Credit Agreement, dated the date
hereof, between the Company and the initial Holder.
"DISPOSITION" shall mean a (i) consolidation or merger of the Company with
or into any other entity in which the holders of the Company outstanding voting
capital stock immediately before such consolidation or merger do not,
immediately after such consolidation or merger, retain stock or other equity
interests representing a majority of the voting power of the surviving entity of
such consolidation or merger; (ii) a sale, lease, license or other disposition
of all or substantially all of the Company's assets or intellectual property; or
(iii) a liquidation, dissolution or winding up of the Company.
"UNDERLYING SECURITIES" shall mean, at the option of the Holder, either:
(i) shares of the Common Stock of the Company, or (ii) the securities that the
Company sells in an Alternative Transaction.
"VESTED WARRANT SHARES" shall mean that portion of the Warrant Shares
determined by dividing the aggregate amount of the loans advanced to the Company
under the Credit Agreement by the Exercise Price; provided, however, that in the
event the Company is party to an Alternative Transaction or Disposition, this
term shall mean all of the Warrant Shares.
"WARRANT COVERAGE NUMBER" shall mean the quotient obtained by dividing
$4,000,000 by the Exercise Price.
2. TERM OF WARRANT. Subject to the terms and conditions set forth herein,
this Warrant shall be exercisable, in whole or in part, during the term
commencing on the date hereof and ending at the earlier of: (i) 5 p.m., Eastern
time, on December 17, 2011, or (ii) 30 days after the Holder receives a copy of
a signed term sheet or letter of intent with respect to an Alternative
Transaction that Holder shall have determined, in its reasonable judgment,
provides the Company with funding, from a credit-worthy investor on terms
enforceable by the Company, sufficient for the Company to continue operations
for a period of at least 24 months under a business plan that, under
conservative assumptions, provides for the achievement of sustainable positive
operating cash flow during such period; provided, however, that if such
Alternative Transaction (x) is not consummated, then this Warrant shall not
expire as set forth in clause (ii) above with respect to such proposed
Alternative Transaction, or (y) is consummated on terms and conditions different
from those set forth in the term sheet, this Warrant shall not expire until 30
days after the Holder's receipt of a detailed notice of the changed terms or
conditions (the "Expiration Date").
3. EXERCISE PRICE. The Exercise Price at which this Warrant may be
exercised shall be $0.094316 per share of Common Stock, as adjusted from time to
time pursuant to Section 11 hereof; provided, however, that in the event this
Warrant is being exercised by the Holder after receiving notice from the Company
pursuant to Section 2 and in connection with an Alternative Transaction, the
Exercise Price shall be the lesser of (i) the Exercise Price set forth above, or
(ii) the quotient obtained by dividing the "pre-money" valuation implicit in
such Alternative Transaction by the sum of (A) 51,960,268 (which is the sum of
33,615,724 shares of Common Stock outstanding on the date hereof plus 18,344,544
shares of Common Stock to be
2.
set aside for issuance pursuant to stock incentive plans, and therefore is
subject to adjustment for stock dividends, combinations, splits,
recapitalizations and the like) plus (B) the number of stock options of the
Company outstanding on the date hereof the exercise price of which at the time
of the execution of the definitive agreements relating to such Alternative
Transaction is less than the then-current Fair Market Value (as determined
pursuant to Section 4(d)) of the underlying capital stock. Notwithstanding the
prior sentence, if a Willful Default (as defined in the Credit Agreement) shall
have occurred under the Credit Agreement, the Exercise Price at which this
Warrant may be exercised shall be 85% of the amount otherwise calculated under
this Section.
4. EXERCISE OF WARRANT.
(a) This Warrant is exercisable with respect to any or all of the Vested
Warrant Shares, at the option of the Holder, at any time and from time to time
at or prior to the Expiration Date, upon surrender of this Warrant to the
Company together with (a) a duly completed (i) Notice of Exercise, in the form
attached hereto as EXHIBIT A, or (ii) Net Issue Election Notice, in the form
attached hereto as EXHIBIT B, and (b) payment of an amount equal to the Exercise
Price multiplied by the number of Warrant Shares with respect to which this
Warrant is being exercised as provided in paragraph 4(b). If the Holder
exercises this Warrant with respect to less than all of the Warrant Shares
represented by this Warrant, the Company shall cancel this Warrant upon the
surrender thereof and shall execute and deliver to the Holder a new Warrant for
the balance of such Warrant Shares.
(b) Payment of the Exercise Price for the Warrant Shares with respect to
which this Warrant is being exercised shall be made, at the option of the
Holder, (a) by delivery of cash payable by wire transfer of immediately
available funds, (b) by cancellation by the Holder of indebtedness of the
Company to Holder under the Credit Agreement, (c) by net issue election as set
forth in paragraph 4(c) below, or (d) by any combination of items (a)-(c).
(c) In the event that this Warrant is being exercised in connection with
an Alternative Transaction with respect to which the Holder has made the
determination which accelerates the Expiration Date pursuant to clause (ii) of
Section 2, the Holder may elect to receive, without payment by the Holder of any
additional consideration, shares of Common Stock equal to the value of the
Vested Warrant Shares or any portion thereof by the surrender of this Warrant to
the Company, together with a duly completed Net Issue Election Notice, in the
form attached hereto as EXHIBIT B, at the office of the Company. Thereupon, the
Company shall issue to the Holder such number of fully paid and nonassessable
shares of Common Stock as is 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 pursuant to this paragraph 4(c);
Y = the number of Vested Warrant Shares covered by this Warrant
in respect of which the net issue election is made pursuant to
this paragraph 4(c);
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A = the Fair Market Value of one share of the Company's Common
Stock (as defined below) as of the time that the net issue
election is made pursuant to this paragraph 3(c) and
determined in accordance with paragraph 4(d); and
B = the Exercise Price in effect under this Warrant at the time
that the net issue election is made pursuant to this paragraph
4(c).
(d) DETERMINATION OF FAIR MARKET VALUE. For purposes of this Section 4,
fair market value of a share of Common Stock at the time that the net issue
election is made shall mean:
(1) If traded on a stock exchange, the fair market value of the
Common Stock shall be deemed to be the average of the closing selling prices of
the Common Stock on the stock exchange determined by the Board to be the primary
market for the Common Stock over the ten (10) trading day period (or such
shorter period immediately following the closing of an initial public offering)
ending on the date prior to the date that the net issue election is made, as
such prices are officially quoted in the composite tape of transactions on such
exchange;
(2) If traded over-the-counter, the fair market value of the Common
Stock shall be deemed to be the average of the closing bid prices (or, if such
information is available, the closing selling prices) of the Common Stock over
the ten (10) trading day period (or such shorter period immediately following
the closing of an initial public offering) ending on the date prior to the date
that the net issue election is made, as such prices are reported by the National
Association of Securities Dealers through its Nasdaq system, any successor
system or any exchange on which it is listed, whichever is applicable; or
(3) If there is no public market for the Common Stock, then the fair
market value shall be determined by the Board of Directors of the Company in
good faith.
(e) This Warrant shall be deemed to have been exercised immediately
prior to the close of business on the date of its surrender for exercise as
provided above, and the person entitled to receive the shares of Common Stock
issuable upon such exercise shall be treated for all purposes as the holder of
record of such shares as of the close of business on such date. As promptly as
practicable on or after such date, the Company at its expense shall issue and
deliver to the person or persons entitled to receive the same a certificate or
certificates for the number of shares issuable upon such exercise.
5. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional share to which the Holder would otherwise be
entitled, the Company shall make a cash payment equal to the Exercise Price
multiplied by such fraction.
6. 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 loss, theft, or destruction, on delivery of an indemnity
agreement reasonably satisfactory in form and substance to the Company or, in
the case of mutilation, on surrender and cancellation of this
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Warrant, the Company at its expense shall execute and deliver, in lieu of this
Warrant, a new warrant of like tenor and amount.
7. NO SHAREHOLDER RIGHTS OR LIABILITIES. This Warrant shall not entitle the
Holder hereof to any voting rights or other rights as a shareholder of the
Company, provided, however, that if Holder has any rights under any other
agreement with the Company that provides for a calculation using the number of
shares issued or issuable to Holder, then that number of shares issuable
pursuant to this Warrant shall be included in such calculation.
8. TRANSFER OF WARRANT; RESTRICTIONS ON TRANSFER
(a) WARRANT REGISTER. The Company will maintain a register (the "Warrant
Register") containing the names and addresses of the Holder or Holders. Any
Holder of this Warrant or any portion thereof may change his address as shown on
the Warrant Register by written notice to the Company requesting such change.
Any notice or written communication required or permitted to be given to the
Holder may be delivered or given by mail to such Holder as shown on the Warrant
Register and at the address shown on the Warrant Register. Prior to due
presentment of this Warrant together with a completed assignment form attached
hereto as EXHIBIT C for registration of transfer, the Company may deem and treat
the Holder as the absolute owner of the Warrant, notwithstanding any notation of
ownership or other writing thereon, for the purpose of any exercise thereof and
for all other purposes, and the Company shall not be affected by any notice to
the contrary.
(b) WARRANT AGENT. The Company may, by written notice to the Holder,
appoint an agent for the purpose of maintaining the Warrant Register referred to
in Section 8(a) above, issuing the Common Stock or other securities then
issuable upon the exercise of this Warrant, exchanging this Warrant, replacing
this Warrant, or any or all of the foregoing. Thereafter, any such registration,
issuance, exchange, or replacement, as the case may be, shall be made at the
office of such agent.
(c) TRANSFERABILITY OF WARRANT.
(i) The Holder of this Warrant, by acceptance hereof, agrees to
comply in all respects with the provisions of this Section 8. Without in any way
limiting the representations set forth herein, the Holder agrees that neither
this Warrant nor the Warrant ▇▇▇▇▇▇ represented hereby may be hypothecated,
sold, assigned or otherwise transferred (each a "Transfer") voluntarily by
▇▇▇▇▇▇, unless and until the transferee has agreed in writing for the benefit of
the Company to be bound by this Section 8, the other provisions of this Warrant
and:
(1) there is then in effect a Registration Statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such Registration Statement; or
(2) the Holder shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition (provided, however, that
the Holder shall not be required for Holder to effect such Transfer), and (B) if
reasonably requested by the Company, the Holder shall have furnished the Company
with an opinion of counsel, reasonably
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satisfactory to the Company, that such disposition will not require registration
of the Warrant and/or the Warrant Shares under the Securities Act. It is agreed
that the Company will not require opinions of counsel for transfers to any
Affiliate of Holder (as defined below) or for transactions made pursuant to Rule
144 except in unusual circumstances.
(ii) Notwithstanding the provisions of paragraph (i) immediately
above, (i) no such Registration Statement, prior consent or opinion of counsel
shall be necessary for a transfer (A) by a Holder which is a partnership to a
partner of such partnership or a retired partner of such partnership who retires
after the date hereof, or to the estate of any such partner or retired partner
or to the transfer by gift, will or intestate succession of any partner to his
spouse or to the siblings, lineal descendants or ancestors of such partner or
his spouse , or (B) by a Holder to an "affiliate" of the Holder as that term is
defined in Rule 405 promulgated by the Securities and Exchange Commission under
the Securities Act, if the transferee agrees in writing to be subject to the
terms hereof to the same extent as if he were an original Holder hereunder and
(ii) no transferee shall be required, as a condition to any transfer of the
Warrant or the Warrant Shares by the Holder, to agree to be bound by this
Section 8, if the transferee is acquiring the Warrant and/or Warrant Shares
pursuant to a Registration Statement under the Securities Act or in a
transaction made pursuant to Rule 144. Each new certificate evidencing the
Warrant and/or Warrant Shares so transferred shall bear the appropriate
restrictive legends set forth in Section 8(e) below, except that such
certificate shall not bear such restrictive legend if, in the opinion of counsel
for the Company, such legend is not required in order to establish or assist in
compliance with any provisions of the Securities Act or any applicable state
securities laws.
(d) EXCHANGE OF WARRANT UPON A TRANSFER. On surrender of this Warrant
for exchange, properly endorsed on the Assignment Form and subject to the
provisions of this Warrant with respect to compliance with the Securities Act
and with the limitations on assignments and transfers and contained in this
Section 8, the Company at its expense shall issue to or on the order of the
Holder a new warrant or warrants of like tenor, in the name of the Holder or as
the Holder (on payment by the Holder of any applicable transfer taxes) may
direct, for the number of shares issuable upon exercise thereof. Any transferee
of ▇▇▇▇▇▇'s right to receive any vested Warrant Shares under this Warrant shall
receive a warrant substantially similar to this Warrant.
(e) REPRESENTATIONS OF HOLDER. The Holder hereby represents and
acknowledges to the Company that:
(i) this Warrant, the Common Stock issuable upon exercise of this
Warrant and any securities issued with respect to any of them by way of a stock
dividend or stock split or in connection with a reorganization, merger,
consolidation, sale or transfer of the Company's assets will be "restricted
securities" as such term is used in the rules and regulations under the
Securities Act and that such securities have not been and may not be registered
under the Securities Act or any state securities law, and that such securities
must be held indefinitely unless registration is effected or transfer can be
made pursuant to appropriate exemptions;
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(ii) the Holder has read, and fully understands, the terms of this
Warrant set forth on its face and the attachments hereto, including the
restrictions on transfer contained herein;
(iii) the Holder is purchasing for investment for its own account
and not with a view to or for sale in connection with any distribution of this
Warrant or the Common Stock of the Company issuable upon exercise of this
Warrant and it has no intention of selling such securities in a public
distribution in violation of the federal securities laws or any applicable state
securities laws; provided that nothing contained herein will prevent Holder from
transferring such securities in compliance with the terms of this Warrant and
the applicable federal and state securities laws;
(iv) the Holder is an "accredited investor" within the meaning of
paragraph (a) of Rule 501 of Regulation D promulgated by the Securities and
Exchange Commission and an "excluded purchaser" within the meaning of Section
25102(f) of the California Corporate Securities Law of 1968; and
(v) the Company may affix the following legends (in addition to any
other legend(s), if any, required by applicable state corporate and/or
securities laws) to certificates for shares of Common Stock (or other
securities) issued upon exercise of this Warrant:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE
SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT.
COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE
SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER
OF RECORD HEREOF TO THE SECRETARY OF THE COMPANY AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.
9. RESERVATION OF STOCK. The Company covenants that during the Term this
Warrant is exercisable, the Company will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon the exercise of this Warrant and, from time to time, will
take all steps necessary to amend its Amended and Restated Articles of
Incorporation to provide sufficient reserves of shares of Common Stock issuable
upon exercise of the Warrant. The Company further covenants that all shares that
may be issued upon the exercise of rights represented by this Warrant, upon
exercise of the rights represented by this Warrant and payment of the Exercise
Price, all as set forth herein, will be free from all taxes, liens, and charges
in respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously or otherwise specified herein). The Company agrees
that its issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for shares of Common Stock upon the
exercise of this Warrant.
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10. AMENDMENTS. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought.
11. ADJUSTMENTS. The Exercise Price and the number of shares purchasable
hereunder are subject to adjustment from time to time as follows:
(a) MERGER, SALE OF ASSETS, ETC. If at any time, while this Warrant, or
any portion thereof, is outstanding and unexpired there shall be (i) a
reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), a merger or consolidation
of the Company with or into another corporation in which the Company is not the
surviving entity (but excluding any merger effected exclusively for the purpose
of changing the domicile of the Company), or a reverse triangular merger in
which the Company is the surviving entity but the shares of the Company's
capital stock outstanding immediately prior to the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash, or otherwise, or (ii) a sale or transfer of the Company's properties and
assets as, or substantially as, an entirety to any other person, then, as a part
of such reorganization, merger, consolidation, sale or transfer, lawful
provision shall be made so that the holder of this Warrant shall thereafter be
entitled to receive upon exercise of this Warrant, during the period specified
herein and upon payment of the Exercise Price then in effect, the number of
shares of stock or other securities or property of the successor corporation
resulting from such reorganization, merger, consolidation, sale or transfer
which a holder of the shares deliverable upon exercise of this Warrant would
have been entitled to receive in such reorganization, consolidation, merger,
sale or transfer if this Warrant had been exercised immediately before such
reorganization, merger, consolidation, sale or transfer, all subject to further
adjustment as provided in this Section 11. The foregoing provisions of this
Section 11(a) shall similarly apply to successive reorganizations,
consolidations, mergers, sales and transfers and to the stock or securities of
any other corporation which are at the time receivable upon the exercise of this
Warrant. If the per share consideration payable to the holder hereof for shares
in connection with any such transaction is in a form other than cash or
marketable securities, then the value of such consideration shall be determined
in good faith by the Company's Board of Directors. In all events, appropriate
adjustment (as determined in good faith by the Company's Board of Directors)
shall be made in the application of the provisions of this Warrant with respect
to the rights and interests of the Holder after the transaction, to the end that
the provisions of this Warrant shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property deliverable after
that event upon exercise of this Warrant.
(b) NOTICE. If the Company proposes at any time to merge or consolidate
with or into any other corporation, or sell, lease or convey all or
substantially all its property or business or intellectual property, or to
liquidate, dissolve or wind up, including any transaction to which Section 11(a)
above applies, then the Company shall send to the holder of this Warrant at
least 20 days' prior written notice of the date on which a record shall be taken
for determining rights to vote in respect of such event.
(c) RECLASSIFICATION, ETC. If the Company at any time while this
Warrant, or any portion thereof, remains outstanding and unexpired shall, by
reclassification of securities or otherwise, change any of the securities as to
which purchase rights under this
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Warrant exist into the same or a different number of securities of any other
class or classes, this Warrant shall thereafter represent the right to acquire
such number and kind of securities as would have been issuable as the result of
such change with respect to the securities which were subject to the purchase
rights under this Warrant immediately prior to such reclassification or other
change and the Exercise Price therefor shall be appropriately adjusted, all
subject to further adjustment as provided in Section 11.
(d) SPLIT, SUBDIVISION OR COMBINATION OF SHARES. If the Company at any
time while this Warrant, or any portion thereof, remains outstanding and
unexpired shall split, subdivide or combine the securities as to which purchase
rights under this Warrant exist, into a different number of securities of the
same class, the Exercise Price for such securities shall be proportionately
decreased in the case of a split or subdivision or proportionately increased in
the case of a reverse split or combination.
(e) ADJUSTMENTS FOR DIVIDENDS IN STOCK OR OTHER SECURITIES OR PROPERTY.
If while this Warrant, or any portion hereof, remains outstanding and unexpired
the holders of the securities as to which purchase rights under this Warrant
exist at the time shall have received, or, on or after the record date fixed for
the determination of eligible Shareholders, shall have become entitled to
receive, without payment therefor, other or additional stock or other securities
or property (other than cash) of the Company by way of dividend, then and in
each case, this Warrant shall represent the right to acquire, in addition to the
number of shares of the security receivable upon exercise of this Warrant, and
without payment of any additional consideration therefor, the amount of such
other or additional stock or other securities or property (other than cash) of
the Company which such holder would hold on the date of such exercise had it
been the holder of record of the security receivable upon exercise of this
Warrant on the date hereof and had thereafter, during the period from the date
hereof to and including the date of such exercise, retained such shares and/or
all other additional stock available by it as aforesaid during such period,
giving effect to all adjustments called for during such period by the provisions
of this Section 11.
(f) SALE OF SHARES BELOW EXERCISE PRICE.
(i) If at any time prior to the date hereof, the Company issues or
sell; or is deemed by the express provisions of this subsection (i) to have
issued or sold, Additional Shares of Common Stock (as defined in subsection
11(f)(iv) below), other than as a dividend or other distribution on any class of
stock as provided in Section 11(e) above, and other than a subdivision or
combination of shares of Common Stock as provided in Section 11(d) above, for an
Effective Price (as defined in subsection 11(f)(iv) below) less than the then
effective applicable Exercise Price, then and in each such case the then
existing Exercise Price shall be reduced, as of the opening of business on the
date of such issue or sale, to the Effective Price. No adjustment shall be made
to the Exercise Price in an amount less than one cent per share. Any adjustment
otherwise required by this Section 11(f) that is not required to be made due to
the preceding sentence shall be included in any subsequent adjustment to the
Exercise Price.
(ii) For the purpose of making any adjustment required under
Section 11(f)(i), the consideration received by the Company for any issue or
sale of securities
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shall (A) to the extent it consists of cash, be computed at the net amount of
cash received by the Company after deduction of any underwriting or similar
commissions, compensation or concessions paid or allowed by the Company in
connection with such issue or sale, (B) to the extent it consists of property
other than cash, be computed at the fair value of that property as determined in
good faith by the Company's Board of Directors, and (C) if Additional Shares of
Common Stock, Convertible Securities (as defined in subsection (iii) or rights
or options to purchase either Additional Shares of Common Stock or Convertible
Securities are issued or sold together with other stock or securities or other
assets of the Company for a consideration which covers both, be computed as the
portion of the consideration so received that may be reasonably determined in
good faith by the Board of Directors to be allocable to such Additional Shares
of Common Stock, Convertible Securities or rights or options.
(iii) For the purpose of the adjustment required under Section
11(f)(i), if the Company issues or sells (i) stock or other securities
convertible into, Additional Shares of Common Stock (such convertible stock or
securities being herein referred to as "Convertible Securities") or (ii) rights,
options or warrants for the purchase of Additional Shares of Common Stock or
Convertible Securities and if the Effective Price of such Additional Shares of
Common Stock is less than the applicable Exercise Price, in each case the
Company shall be deemed to have issued at the time of the issuance of such
rights, options, warrants or Convertible Securities the maximum number of
Additional Shares of Common Stock issuable upon exercise or conversion thereof
and to have received as consideration for the issuance of such shares an amount
equal to the total amount of the consideration, if any, received by the Company
for the issuance of such rights, options, warrants or Convertible Securities,
plus, in the case of such rights, options or warrants, the minimum amounts of
consideration, if any, payable to the Company upon the exercise of such rights,
options or warrants, plus, in the case of Convertible Securities, the minimum
amounts of consideration, if any, payable to the Company (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities) upon the conversion thereof; PROVIDED that if in the case of
Convertible Securities the minimum amounts of such consideration cannot be
ascertained, but are a function of antidilution or similar protective clauses,
the Company shall be deemed to have received the minimum amounts of
consideration without reference to such clauses; PROVIDED FURTHER that if the
minimum amount of consideration payable to the Company upon the exercise or
conversion of rights, options, warrants or Convertible Securities is reduced
over time or on the occurrence or non-occurrence of specified events other than
by reason of antidilution adjustments, the Effective Price shall be recalculated
using the figure to which such minimum amount of consideration is reduced;
PROVIDED FURTHER that if the minimum amount of consideration payable to the
Company upon the exercise or conversion of such rights, options, warrants or
Convertible Securities is subsequently increased, the Effective Price shall be
again recalculated using the increased minimum amount of consideration payable
to the Company upon the exercise or conversion of such rights, options, warrants
or Convertible Securities. No further adjustment of the applicable Exercise
Price, as adjusted upon the issuance of such rights, options, warrants or
Convertible Securities, shall be made as a result of the actual issuance of
Additional Shares of Common Stock on the exercise of any such rights, options or
warrants or the conversion of any such Convertible Securities. If any such
rights, options, warrants or the conversion privilege represented by any such
Convertible Securities shall expire without having been exercised, the
applicable Exercise Price as adjusted upon the issuance of such rights, options,
warrants or Convertible Securities shall be readjusted to the applicable
Exercise Price which would have been in effect had an adjustment been made
10
on the basis that the only Additional Shares of Common Stock so issued were the
Additional Shares of Common Stock, if any, actually issued or sold on the
exercise of such rights, options, warrants or rights of conversion of such
Convertible Securities, and such Additional Shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company upon such
exercise, plus the consideration, if any, actually received by the Company for
the granting of all such rights, options or warrants, whether or not exercised,
plus the consideration received for issuing or selling the Conversion Securities
actually converted, plus the consideration, if any, actually received by the
Company (other than by cancellation of liabilities or obligations evidenced by
such Convertible Securities) on the conversion of such Convertible Securities,
PROVIDED that such readjustment shall not apply to prior exercises of this
Warrant.
(iv) "Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company or deemed to be issued pursuant to this
Section 11(f), whether or not subsequently reacquired or retired by the Company,
other than (A) shares of Common Stock issued upon exercise of this Warrant; (B)
shares of Common Stock issued pursuant to or subject to, and including without
duplication, options, warrants or other Common Stock purchase rights (as
adjusted for any stock dividends, combinations, splits, recapitalizations and
the like) granted after the date of this Warrant to employees, officers or
directors of, or consultants or advisors to the Company or any subsidiary
pursuant to stock purchase or stock option plans or other arrangements which,
along with any amendments thereto, are approved by the Board and by Safeguard
2001 Capital, L.P.; (C) shares of Common Stock issued pursuant to the exercise
of options, warrants or convertible securities outstanding as of the date of
this Warrant; (D) shares of Common Stock issued upon a subdivision of the Common
Stock for which an adjustment is made pursuant to subsections 11(d) or 11(f).
The "Effective Price" of Additional Shares of Common Stock shall mean the
quotient determined by dividing the total number of Additional Shares of Common
Stock issued or sold, or deemed to have been issued or sold by the Company under
this Section 11(f), into the aggregate consideration received, or deemed to have
been received by the Company for such issue under this Section 11(f), for such
Additional Shares of Common Stock.
(g) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment pursuant to this Section 11, the Company at its
expense shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and furnish to each holder of this Warrant a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. The Company shall, upon the
written request, at any time, of any such holder, furnish or cause to be
furnished to such holder a like certificate setting forth: (i) such adjustments
and readjustments; (ii) the Exercise Price at the time in effect; and (iii) the
number of shares and the amount, if any, of other property which at the time
would be received upon the exercise of the Warrant.
11
12. AVAILABILITY OF INFORMATION. The Company will cooperate with holder of
any "restricted securities" in supplying such information as may be necessary
for such holder to complete and file any information reporting forms presently
or hereafter required by the Securities and Exchange Commission, or any
successor federal agency having similar powers, as a condition to the
availability of an exemption from the Securities Act for the sale of any
"restricted securities."
13. MISCELLANEOUS.
(a) NOTICE. Notice or demand pursuant to this Warrant shall be deemed
effectively given upon (a) personal delivery to the party to be notified, (b)
upon telefacsimile transmission to the party to be notified at the telefacsimile
number indicated for such party on the signature page hereof, if any, upon
confirmation of transmission or (c) one (1) day after deposit with an overnight
courier service or three (3) days after deposit with the United States Post
Office, by registered or certified mail, postage prepaid and addressed, if to
the Holder of this Warrant, to the Holder at its last known address as it shall
appear in the records of the Company, and if to the Company, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇. #▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: General Counsel. The Company or Holder
may alter the address to which communications are to be sent by giving notice of
such change of address in conformity with the provisions of this Section 13(a)
for the giving of notice.
(b) GOVERNING LAW. The validity, interpretation and performance of this
Warrant shall be governed by the laws of the Commonwealth of Pennsylvania
without regard to principles of conflicts of laws.
(c) SUCCESSORS, ASSIGNS. Subject to the restrictions on transfer by
▇▇▇▇▇▇ set forth in Section 8 hereof, all the terms and provisions of the
Warrant shall be binding upon and inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto.
(d) SEVERABILITY. Should any part but not the whole of this Warrant for
any reason be declared invalid, such decision shall not affect the validity of
any remaining portion, which remaining portion shall remain in force and effect
as if this Warrant had been executed with the invalid portion thereof
eliminated, and it is hereby declared the intention of the parties hereto that
they would have executed the remaining portion of this Warrant without including
therein any such part which may, for any reason, be hereafter declared invalid.
(e) NO IMPAIRMENT. The Company will not, by any voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but will at all times in good
faith assist in the carrying out of all the provisions of this Warrant and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Holder of this Warrant against impairment.
(f) INTEGRATION. This Warrant and any documents referred to herein or
executed contemporaneously herewith constitute the Company's and ▇▇▇▇▇▇'s entire
agreement with respect to the subject matter hereof and supersede all
agreements, representations,
12
warranties, statements, promises and understandings, whether oral or written,
with respect to the subject matter hereof.
(g) HOLIDAYS. If the last or appointed day for the taking of any action
or the expiration of any right required or granted herein shall be a Saturday or
a Sunday or shall be a legal holiday, then such action may be taken or such
right may be exercised on the next succeeding business day.
13
IN WITNESS WHEREOF, the Company and the Holder have each caused this
Warrant to be executed by its officers thereunto duly authorized.
Dated: December 17, 2001
Lifef/x, Inc.
By:/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Executive Officer
Fax no.▇▇▇-▇▇▇-▇▇▇▇
HOLDER:
Safeguard 2001 Capital, L.P.
By: Safeguard Delaware, Inc., its general partner
By: /s/ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Executive Vice President and General
Counsel
-------------------------------------
Fax no.
------------------------------------
14
EXHIBIT A
FORM OF NOTICE OF EXERCISE
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant for, and to purchase thereunder, __________
shares of ________________ (identify underlying security) of Lifef/x, Inc., a
Nevada corporation and herewith makes payment of $__________ therefor and
requests that the certificates for such shares be issued in the name of, and
delivered to, ____________________, federal taxpayer identification number
__________, whose address is _____________________________________________.
In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of ___________________ are being acquired solely
for the account of the undersigned and not as a nominee for any other party, and
for investment, and the undersigned will not offer, sell or otherwise dispose of
any such shares of _____________________ except under circumstances that will
not result in a violation of the Securities Act of 1933, as amended, or any
state securities laws.
Please issue a new Warrant for the unexercised portion of the attached
Warrant in the name of, and delivered to, ____________________, federal taxpayer
identification number __________, whose address is _____________________________
___________________________________________.
Dated:____________
------------------------------------------
(Signature must conform to name of holder
as specified on the face of the Warrant)
A-1
EXHIBIT B
FORM OF NET ISSUE ELECTION NOTICE
(To be signed only on net issue exercise of the Warrant)
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise this Warrant with respect to __________ shares of Common
Stock of Lifef/x, Inc., a Nevada corporation, pursuant to the net issuance
provisions set forth in paragraph 3(c) of the Warrant and requests that the
certificates for the number of shares of Common Stock issuable pursuant to said
paragraph 3(c) after application of the net issuance formula to such __________
shares be issued in the name of, and delivered to, ____________________, federal
taxpayer identification number __________, whose address is
__________________________________.
In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock are being acquired solely for the
account of the undersigned and not as a nominee for any other party, and for
investment, and the undersigned will not offer, sell or otherwise dispose of any
such shares of Common Stock except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended, or any state securities
laws.
Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of, and delivered to, ____________________, federal
taxpayer identification number __________, whose address is ____________________
_____________________________________________.
Dated:___________________
-----------------------------------------
(Signature must conform to name of holder
as specified on the face of the Warrant)
B-1
EXHIBIT C
ASSIGNMENT FORM
(To be executed by the Warrant Holder if it desires to effect a transfer of
the Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________, whose Social Security or other
identification number is ________________________ [residing/located] at
____________________________ ____________________ the attached Warrant, and
appoints _____________________________ residing at
__________________________________________________________________ the
undersigned's attorney-in-fact to transfer said Warrant on the books of the
Company, with full power of substitution in the premises.
Dated: ______________, 20__
In the presence of:
-------------------------------- ------------------------------------------
(Signature must conform in all respects to
the Warrant Holder as specified on the
face of the Warrant, without alteration,
enlargement or any change whatsoever).
C-1