Document:

EX 4.5 Form of Subscription Agent Agreement

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RIGHTS AGENCY AND CUSTODIAL AGREEMENT

THIS AGREEMENT MADE as of the [•] day of [•], [•].

B E T W E E N:

Kingsway Financial Services Inc, a corporation incorporated under the laws of the Province of Ontario,

(the "Company")

‐ and ‐

COMPUTERSHARE INVESTOR SERVICES INC., a company existing under the laws of Canada,

(the "Agent")

WHEREAS the Company has resolved to issue Rights (as hereinafter defined); 

AND WHEREAS the Rights are to be issued to all Common Shareholders (as hereinafter defined) but delivered only to certain Common Shareholders;

AND WHEREAS Computershare Investor Services Inc. acts as registrar and transfer agent for the Common Shares (as hereinafter defined);

AND WHEREAS the Company desires that the Agent act as (a) registrar and transfer agent for the Rights, (b) custodian of monies tendered upon exercise of the Rights and (c) custodian of Rights of Non-Qualified Shareholders (as hereinafter defined);

AND WHEREAS the foregoing recitals and statements of fact are made by the Company and not by the Agent.
NOW THEREFORE, in consideration of the mutual covenants herein set forth, the parties agree as follows:

1.    Definitions

1.01    In this Agreement, the following terms have the meaning ascribed thereto below:

		
	(a)
	"Additional Shares" means the Common Shares available for subscription after the initial exercise of the Rights;

		
	(b)
	"Additional Subscription Privilege" means the privilege of Qualified Shareholders to subscribe for Additional Shares after the exercise of all of their Rights;

		
	(c)
	"Agreement" means this agreement;

		
	(d)
	"CDS" means CDS Clearing and Depository Services Inc.;

		
	(e)
	"CDSX" means the clearing and settlement system utilized by CDS and its participants;

		
	(f)
	“DTC”  means the Depositary Trust Company 

		
	(g)
	“ATOP” means the Automated Tender Offer Program

		
	(h)
	"Common Shareholders" means the registered holders  of Common Shares as of the Record Date, as shown on the register of holders of Common Shares maintained by the transfer agent for the Common Shares;

		
	(i)
	"Common Shares" means the common shares in the capital of the     Company;

		
	(j)
	"Expiry Date" means [•];

		
	(k)
	"Record Date" means as at the close of business on [•];

		
	(l)
	"Rights" means rights to purchase Common Shares; 

		
	(m)
	"Rights Certificates" means certificates representing Rights;

		
	(n)
	"Rights Offering Circular" means the rights offering circular dated [•];  and

		
	(o)
	"Subscription Funds" means any and all monies tendered by Qualified Shareholders of Rights for the purchase of Common Shares, which monies must be in the form of a certified cheque, bank draft or money order payable to the Agent. 

2.    Appointment of Registrar and Transfer Agent

2.01     The Agent is hereby appointed as registrar and transfer agent for the Rights and the Agent hereby accepts such appointment upon the terms hereinafter set forth.

2.02     The Agent shall keep the Company's register of Rights, register of transfers of Rights and supply of unissued Rights Certificates.  Subject to such instructions as may be from time to time given by the Company in writing, the Agent shall:

		
	(a)
	subject to (b) and (c) below, issue Rights to all of the Common Shareholders and enter the issuance of such Rights on the Company's register of Rights; 

		
	(b)    
	forward the Rights Offering Circular, the Rights Certificate(s) issued to each Shareholder, a covering letter (if provided by the Company) and a return envelope addressed to the Agent;

(c)       record transfers of Rights and cancel Rights Certificates surrendered upon such transfers; 

		
	(d)
	accept for exercise Rights along with Subscription Funds and cancel the Rights Certificates presented.  Subject to Section 8.01, the Company shall have full discretion to determine whether any type of exercise of Rights has been properly made and the Company has the absolute right to determine whether to accept or reject any category of exercise not in proper form;

		
	(e)
	accept subscriptions for Additional Shares, along with Subscription Funds, pursuant to the exercise of the Additional Subscription Privilege

		
	(f)
	in the event that any Common Shares remain available for subscription on the Expiry Date after the exercise of the Rights and the Additional Subscription Privilege, advise the Company of the number of Common Shares which remain available; 

		
	(g) 
	until the Expiry Date, make such entries from time to time in the register of Rights and register of transfers of Rights as may be necessary in order that the account of each holder of Rights may be properly and accurately kept;

		
	(h)
	supply the Company from time to time as requested in writing with lists of holders of Rights as shown on the register of Rights showing the name and last known address of each holder and the number of Rights held by each holder; 

		
	(i)
	forward certificates representing the Common Shares subscribed for and purchased pursuant to the exercise of Rights, including under the Additional Subscription Privilege, to the relevant subscriber within five (5) business days after the Expiry Date (provided that the Agent shall have no obligation to forward such certificates unless the Agent has been provided with such certificates in advance by the transfer agent for the Common Shares); and

		
	(j) 
	send to each holder of Rights exercising the Additional Subscription Privilege who remitted funds in excess of their ultimate allocation of Additional Shares, a cheque representing the amount of such excess funds (without interest or deduction). 

2.03           The Agent may destroy any and all unissued  Rights Certificates after the Expiry Date.  

2.04        All Rights Certificates surrendered to the Agent for cancellation shall be held by it for a period of six (6) years. The Agent shall not be required to hold such certificates after the expiry of such period, and may thereafter destroy such certificates without notice to the Company. The Company agrees to instruct the Agent from time to time as to the earlier disposal, if any, to be made of such Rights Certificates.  Any storage expenses incurred for retaining custody of the Rights Certificates and related records in connection with the services hereunder shall be at the sole expense of the Company.

2.05        The Company hereby authorizes and directs the Agent to use the CDSX.  The Company acknowledges and accepts that the use of CDSX by a CDS participant (in accordance with the provisions of the CDS Participant Rules) shall satisfy the terms of the Rights offering as to the execution and delivery of a Rights Certificate by the CDS participant, without such participant physically completing and surrendering such Rights Certificate.

2.06        The Company hereby authorizes and directs the Agent to use ATOP.  The Company acknowledges and accepts that the use of ATOP by a DTC participant (in accordance with the provisions of the DTC Participant Rules) shall satisfy the terms of the Rights offering as to the execution and delivery of a Rights Certificate by the DTC participant, without such participant physically completing and surrendering such Rights Certificate. 

3.    Tax Matters
3.01        The Company shall be solely responsible for all tax processing relating to or arising from the duties or actions contemplated by this Agreement, including evaluation, reporting, remittance, filing, and issuance of tax slips, tax forms, summaries and reports, except as is specifically delegated to the Agent pursuant to this Agreement or as may be agreed subsequently, in writing by the parties.   The Agent shall process only such tax matters as have been specifically delegated to it pursuant to this Agreement or as may be agreed subsequently, and, in so doing, the Agent does not undertake to carry out any inquiry, evaluation, reporting, remittance, filing or issuance of tax slips, summaries and reports necessarily incidental thereto, which shall remain the sole responsibility of the Company.  The Agent shall be entitled to rely upon and assume, without further inquiry or verification, the accuracy and completeness of any tax 

processing information, documentation or instructions received by the Agent, directly or indirectly, from or on behalf of the Company or the shareholder. It is agreed that any direction must be supplied to the Agent prior to processing any entitlement or filing.

5.    Appointment of Custodian

5.01     The Agent is hereby appointed as custodian for the receipt and holding of the Subscription Funds and the Agent hereby accepts such appointment.

6.    Delivery of Subscription Funds

6.01     Any Subscription Funds which may be received by the Company directly from Shareholders will be promptly delivered or paid over to the Agent.

6.02     After the later of (a) the Expiry date, (b) the calculation and tabulation by the Agent of all presented subscriptions and (c) the receipt by the Agent of the certificates for the Common Shares, the Subscription Funds shall be paid by the Agent to the Company. 

6.03      Any payment made under Section 6.01 or 6.02 shall be made by wire or certified cheque or other arrangements as may be agreeable by the Agent.  Notwithstanding the aforementioned, all payments in excess of $25 million must be made by electronic transfer, rather than by cheques, bank drafts or other, traditional, paper-based payment items.

7.    Covenants by the Company

7.01    The Company covenants with the Agent that:
 
		
	          
	(a)    the Company shall promptly give notice to the Agent of any and all changes to the terms and conditions of the Rights which the Company may resolve to make from time to time and  the Company shall prepare and execute any and all documents required to amend this Agreement pursuant to any such changes made; 

		
	          
	(b)    the Company shall review and provide written sign-off as to the accuracy of, and its acceptance of, the prorated calculation of the Additional Subscription, if any, prior to the issuing of any Common Shares distributable; and 

		
	           
	(c)    the Company shall provide to the transfer agent for the Common Shares a treasury direction to the transfer agent for the Common Shares that are required to be issued pursuant to the Rights Offering Circular.

8.    Replacement of Lost Rights Certificates

8.01        In the case of the loss, theft or destruction of any Rights Certificate, the Company approves the Blanket Lost Instrument Bond Program, including the Waiver of Probate provision and authorizes the Agent to use such program on the Company's behalf. Before a replacement certificate shall be issued, the Agent must receive: (a) evidence satisfactory to the Agent of the loss, theft or destruction of such certificate; and (b) an indemnity bond satisfactory to the Agent.
 
9.    Liability and Indemnification

9.01        The Agent shall not be liable for any action taken or omitted to be taken by the Agent under or in connection with this Agreement, except for losses caused by the Agent's bad faith, wilfull misconduct or gross negligence.    

9.02        The Company hereby agrees to indemnify and hold harmless the Agent, its affiliates, their current and former directors, officers, employees and agents, from and against any and all claims, demands, losses, penalties, costs, expenses, fees and liabilities, including, without limitation, legal fees and expenses directly or indirectly arising out of,  in connection with, or in respect of,  this Agreement, except where same results from gross negligence, wilful misconduct or bad faith on the part of the Agent

9.03        Notwithstanding any other provision of this Agreement, and whether such losses or damages are foreseeable or unforeseeable, the Agent shall not be liable under any circumstances whatsoever for any (a) breach by any other party of securities law or other rule of any securities regulatory authority, (b) lost profits or (c) special, indirect, incidental, consequential, exemplary, aggravated or punitive losses or damages.

9.04        Notwithstanding any other provision of this Agreement, any liability of the Agent shall be limited, in the aggregate, to the amount of fees paid by the Company to the Agent under this Agreement.

9.05        The provisions of this Article 9 shall survive indefinitely, including the removal of, or resignation by, the Agent and the termination of this Agreement.

9.06        The Agent shall retain the right not to act and shall not be liable for refusing to act unless it has received clear instructions and/or documentation and sufficient time to give effect to such instructions and/or documentation. The Agent shall retain the right not to act and shall not be liable for refusing to act due to a lack of information or for any other reason whatsoever, the Agent, in its sole judgment, determines that such act might cause the Agent to be in non-compliance with any applicable anti-money laundering, anti-terrorist or economic sanctions legislation, regulation or guideline.  Further, should the Agent, in its sole judgment, determine at any time that the Agent acting under this Agreement has resulted in the Agent being in non-compliance with any applicable anti-money laundering, anti-terrorist or economic sanctions legislation, regulation or guideline, then the Agent shall have the right to resign on 10 days written notice to the Company, provided (a) that the Agent's written notice shall describe the circumstances of such non-compliance; and (b) that if such circumstances are rectified to the Agent's satisfaction within such 10 day period, then such resignation shall not be effective.

10.        Concerning the Agent

10.01        In acting as Agent, the Agent:

		
	(a)
	may rely upon any instrument, certificate, report, direction, instruction, request, waiver, consent, receipt or other paper or document believed by the Agent to be genuine and to have been signed or presented by the proper person(s) and the Agent shall be under no duty to make any investigation or inquiry as to any signature or statement contained therein, but may accept the same as having been properly given and as conclusive evidence of the truth and accuracy of any statements therein contained;

		
	(b)     
	shall  be under no obligation to prosecute or defend  any  action or suit in respect of its agency relationship under this Agreement, but will do so at the request of the Company provided that the Company   furnishes indemnity and funding satisfactory to the Agent against any liability, cost or expense which might be incurred; and

 
		
	(c)      
	shall have no duties or obligations except as expressly

		
	          
	provided in this Agreement.

11.    Legal Advice and Appointment of Agents

11.01    The Agent may, at its discretion and as it reasonably requires for the

purpose of discharging its duties or determining its rights hereunder, refer any matter to the Company, the Company's legal  counsel, or the legal counsel for the Agent, for direction and  advice, and may retain consultants, experts, advisors, agents or agencies, brokers or organizations, including organizations related to the Agent.  All costs and expenses incurred pursuant to this Section shall be at the expense of the Company.  The Agent shall be entitled to act and rely upon, and shall be fully protected in acting and relying upon, the services and advice provided pursuant to this Section.

12.    Notices

12.01     Any notice or communication to be given by one party to this Agreement to the other shall be in writing and delivered or sent, by courier, by personal delivery, by first class insured mail, by email, or by facsimile transmission to the following address:

If to the Agent:

Computershare Investor Services Inc.
100 University Avenue, 8th floor
Toronto, ON  M5J 2Y1

Attention:  Project Manager, Client Services 
Facsimile Number: [•]
    
If to the Company:

C/O Kingsway America Inc
150 Pierce Road, 6th Floor
Itasca, IL 60107, USA
    
                         Attention:  General Counsel
Facsimile Number: [•]
or to such other address as the party to whom such notice or communication is to be given shall have last designated to the party giving the same in the manner specified in this Section 12.01. Any such notice or communication shall be deemed to have been given and received by the addressee: (a) if sent by courier or personal delivery, upon actual delivery; (b) if sent by mail, five (5) business days after posting; and (c) if sent by facsimile transmission, or (d) via email  upon the same business day if given during the ordinary business hours of the addressee, or the next following business day if given outside of such hours.  

13.    Force Majeure

13.01        Except for the payment obligations of the Company contained herein, neither party shall be liable to the other, or held in breach of this Agreement, if prevented, hindered, or delayed in the performance or observance of any provision contained herein by reason of act of God, riots, terrorism, acts of war, epidemics, governmental action or judicial order, earthquakes, or any other similar causes (including, but not limited to, mechanical, electronic or communication interruptions, disruptions or failures). Performance times under this Agreement shall be extended for a period of time equivalent to the time lost because of any delay that is excusable under this Section.
14.    Fees and Expenses

14.01        The Company shall pay the Agent for the above-mentioned services and for all additional services required to fulfill its obligations hereunder or provided in connection herewith in accordance with Schedule “A” attached hereto, which fees are subject to revision by the Agent from time to time on thirty (30) days' written notice, and shall reimburse the Agent for all costs and expenses. Without limiting the generality of the foregoing and notwithstanding any other provision of this Agreement or of any tariff or schedule of fees, the Company agrees to pay the Agent such additional compensation, costs and expenses as are agreed between the parties to be warranted by any 

additional time, effort and/or responsibility incurred or expended by the Agent in order to comply with any laws it may be subject to as Agent hereunder, including without limitation, unclaimed property legislation.  
14.02        The Company shall pay the Agent the fees and expenses within thirty (30) days of the date of the Agent's invoice.  The Company acknowledges that late payment may be subject to interest charges as indicated on the invoice.  All amounts so payable and the interest thereon will be payable out of any assets in the possession of the Agent in priority to amounts owing to any other persons.
14.03        The Company agrees that the fees of the Agent are confidential information.  As such, the Company agrees not to disclose such fees to a third party without the Agent's prior written consent, save and except for disclosure (a) to the Company's professional advisors, held to strict confidence and (b) as required or otherwise compelled by law. The registration statement filed on Form S-3 will disclose a lump sum fee.
14.04        In the event the Company defaults in its payment obligations to the Agent hereunder, the Agent shall have the right, commencing thirty (30) days following written notification to the Company of such default and unless such default has been remedied, to immediately suspend service or terminate this Agreement, subject to the Agent's rights and recourses under this Agreement or applicable law.

15.        General

15.01         It is understood and agreed that any benefits accruing to the holders of Rights at any time are held by each and every holder as against the Company alone.  In all respects, subject to Section 5.02 hereof, the Agent shall act as agent of the Company in the execution of duties assumed hereunder.

15.02        Time shall be of the essence of this Agreement.

15.03         This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.

15.04         This Agreement shall be constructed in accordance with the laws of the Province of [•] and the federal laws of Canada applicable therein.  Each party accedes and submits to the jurisdiction of the courts of the Province of [•] and all courts of appeal therefrom.

15.05         The insertion of headings and the division of this Agreement into Articles, Sections, Subsections and Schedules are not to be considered part of this Agreement and are included solely for convenience of reference and are not intended to be full or accurate descriptions of the contents hereof. 
15.06        This Agreement may be executed in several counterparts and evidenced by a facsimile or an email copy of an original execution page bearing the signature of each party, each of which when so executed shall be deemed to be an original, and such counterparts, email or facsimile copies thereof together shall comprise one and the same instrument and, notwithstanding their date of execution, shall be deemed to bear the date as of the date first above written.
15.07        This Agreement shall not be assigned by either of the parties hereto without the prior written consent of the other 

15.08        The Agent will disburse monies according to this Agreement only to the extent that monies have been deposited with it.  In no event shall the Agent expend or risk its own funds or otherwise incur financial liability in the performance of its duties or in the exercise of any of its rights or powers hereunder.

15.09        All dollar references in this Agreement are in Canadian dollars.

15.10        This Agreement and the schedule(s) attached hereto constitute the entire agreement between the parties pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, of the parties and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof, except as specifically set forth herein.  No amendment, supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by the party to be bound thereby.

15.11        The Company hereby represents that any account to be opened by the Agent, and any money, securities or other assets to be held by the Agent, in connection with this Agreement, for or to the credit of the Company, are not intended to be used by or on behalf of any party other than the Company.

15.12        Words importing the singular number only shall include the plural and vice versa.

[15.13        The parties hereto confirm that it is their wish that this Agreement as well as all other documents relating hereto, including notices, have been and shall be drawn up in English. Les parties aux présentes confirment leur consentement à ce que cette convention de même que tous les documents, ainsi que tout avis s'y rattachant, soient rédigés en anglais.]

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first written above.

[•]

Per:                                                             
I have the authority to bind the Company    

COMPUTERSHARE INVESTOR SERVICES INC.

Per:                                                                
I have the authority to bind the Company

Per:                                                                
I have the authority to bind the Company

SCHEDULE“A”ex4x1.htm

Exhibit 4.1

 

 

Common Stock Purchase Warrant Agreement

THIS COMMON STOCK PURCHASE WARRANT AGREEMENT (the “Agreement”), by and between Venaxis, Inc., a Colorado corporation (the “Company”) and Corporate Stock Transfer, Inc., a Colorado corporation (the “Warrant Agent”), dated as of May 30, 2013.

 

Section 1.  Definitions.  Capitalized terms used and not otherwise defined herein have the meanings set forth in that certain Purchase Agreement (the “Purchase Agreement”), dated May 23, 2013, between the Company and Piper Jaffray & Co.

 

Section 2.  Form of Warrant Certificate.  Each Common Stock Purchase Warrant (the “Warrant”) will certify that for value received, the holder or its assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “Original Issue Date”) and on or prior to 5:30 p.m., New York City time, on the date that is five (5) years following the Original Issue Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from the Company 0.35 of a share of Common Stock per Warrant (as subject to adjustment hereunder, the “Warrant Shares”). The purchase price of $1.36 per share of Common Stock under the Warrant shall be equal to the Exercise Price, as defined in Section 3(b).  The Company shall issue each Warrant in registered form only, in substantially the form of Exhibit A hereto, the provisions of which are incorporated herein and shall be signed by, or bear the facsimile signature of an authorized officer of the Company.

 

Section 3.   Exercise.

 

a)  Exercise of the purchase rights represented by the Warrant may be made, in whole or in part, at any time or times on or after the Original Issue Date and on or before the Termination Date by the registered holder thereof by surrendering the Warrant, at the office of the Warrant Agent, with a duly executed facsimile copy of the Notice of Exercise Form annexed to the Warrant, and, unless the cashless exercise procedure specified in Section 3(c) below is specified in the applicable Notice of Exercise Form, by paying in full, in lawful money of the United States, in cash, good certified check or good bank draft payable to the order of the Company (or as otherwise agreed to by the Company), the Exercise Price for each full Warrant Share as to which the Warrant is exercised and any and all applicable taxes due in connection with the exercise of the Warrant, the exchange of the Warrant for the Warrant Shares, and the issuance of the Common Stock.

 

b)  Exercise Price.  The exercise price per share of the Common Stock under the Warrant shall be $1.36, subject to adjustment hereunder (the “Exercise Price”).

 

c)  Cashless Exercise. If at the time of exercise hereof there is no effective registration statement registering, or the prospectus contained therein is not available for the issuance of the Warrant Shares to the Holder, then the Warrant may be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a certificate for the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

 

	
  

	
(A) = the average of the VWAPs for the five (5) Trading Days immediately preceding the date on which Holder elects to exercise  Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;

 

	
  

	
(B) = the Exercise Price of the Warrant, as adjusted hereunder; and

 

  

  

  

	
  

	
(X) = the number of Warrant Shares that would be issuable upon exercise of the Warrant in accordance with the terms of the Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)  if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

 

d)        Mechanics of Exercise.

 

i.  Delivery of Warrant Shares Upon Exercise. Delivery of the Warrant Shares shall be transmitted by the Warrant Agent to the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by Holder or (B) the Warrant is being exercised via cashless exercise, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the latest of (A) the delivery to the Company of the Notice of Exercise, (B) surrender of the Warrant (if required) and (C) payment of the aggregate Exercise Price as set forth above (including by cashless exercise, if permitted) (such date, the “Warrant Share Delivery Date”).   The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant was surrendered and payment of the Exercise Price was made irrespective of the date of delivery of such certificate, with payment to the Warrant Agent of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 3(d)(vi) prior to the issuance of such shares, having been paid.

 

ii.  Delivery of New Warrants Upon Exercise.  If the Warrant is exercised in part, the Warrant Agent shall, at the request of a Holder and upon surrender of the Warrant, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by the Warrant, which new Warrant shall in all other respects be identical with the Warrant.

 

 

  

2

  

iii.  Rescission Rights.  If the Company fails to cause the Warrant Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section 3(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

 

iv.    Compensation for Buy-In on Failure to Timely Deliver Certificates Upon Exercise.  In addition to any other rights available to the Holder, if the Company fails to cause the Warrant Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder.  For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss.  Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

 

v.     No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares shall be issued upon the exercise of the Warrant.  As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

 

vi.    Charges, Taxes and Expenses.  Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, the Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.  The Company shall pay all Warrant Agent fees required for same-day processing of any Notice of Exercise.

 

 

  

3

  

 

vii.  Closing of Books.  The Company will not close its stockholder books or records in any manner which prevents the timely exercise of the Warrant, pursuant to the terms hereof.

 

viii.  Disposition of Proceeds on Exercise of Warrants.  The Warrant Agent shall promptly forward to the Company all monies received by the Warrant Agent for the purchase of shares of Common Stock through the exercise of Warrants.

 

e)  Holder’s Exercise Limitations.  The Company shall not effect any exercise of the Warrant, and a Holder shall not have the right to exercise any portion of the Warrant, pursuant to Section 3 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of the Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of the Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other  Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates.  Except as set forth in the preceding sentence, for purposes of this Section 3(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith.   To the extent that the limitation contained in this Section 3(e) applies, the determination of whether the Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of the Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether the Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of the Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination.   In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  For purposes of this Section 3(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Warrant Agent setting forth the number of shares of Common Stock outstanding.  Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding.  In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including the Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported.  The “Beneficial Ownership Limitation” shall be 4.99%/9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of the Warrant.  The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 3(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon exercise of the Warrant held by the Holder and the provisions of this Section 3(e) shall continue to apply.  Any such increase or decrease will not be effective until the 61st day after such notice is delivered to the Company.  The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 3(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of the Warrant.

 

  

4

  

Section 4.  Certain Adjustments.

 

a)  Stock Dividends and Splits. If the Company, at any time while the Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of the Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of the Warrant shall be proportionately adjusted such that the aggregate Exercise Price of the Warrant shall remain unchanged.  Any adjustment made pursuant to this Section 4(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

 

b)  Pro Rata Distributions.  During such time as the Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the issuance of the Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of the Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution (provided, however, to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

 

  

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c)  Fundamental Transaction. If, at any time while the Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of the Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any limitation in Section 3(e) on the exercise of the Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which the Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limiation in Section 3(e) on the exercise of the Warrant).  For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration.  If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of the Warrant following such Fundamental Transaction.  Notwithstanding anything to the contrary, in the event of a Fundamental Transaction that is (1) an all cash transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Exchange Act, or (3) a Fundamental Transaction involving a person or entity not traded on a national securities exchange, including, but not limited to, the Nasdaq Global Select Market, the Nasdaq 

 

  

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Global Market, or the Nasdaq Capital Market, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction, purchase the Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value of the remaining unexercised portion of the Warrant on the date of the consummation of such Fundamental Transaction.  “Black Scholes Value” means the value of the Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the 90 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date.  The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor Entity”) to assume in writing all of the obligations of the Company under the Warrant and the other Transaction Documents in accordance with the provisions of this Section 4(c) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for the Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to the Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of the Warrant (without regard to any limitations on the exercise of the Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of the Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of the Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under the Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

 

d)  Calculations. All calculations under this Section 4 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 4, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

 

e)  Notice to Holder.

 

i.  Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 4, the Company shall (1) promptly give written notice to the Warrant Agent of such adjustments; and (ii) promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

 

  

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ii.  Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company with copy to the Warrant Agent, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice.  To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K.  The Holder shall remain entitled to exercise the Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

 

Section 5.  Transfer of Warrant.

 

a)  Transferability.  The Warrant and all rights thereunder are transferable, in whole or in part, upon surrender of the Warrant at the principal office of the Warrant Agent, together with a written assignment of the Warrant substantially in the form attached to the Warrant duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer.  Upon such surrender and, if required, such payment, the Warrant Agent shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of the Warrant not so assigned, and the Warrant shall promptly be cancelled.  The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

 

  

8

  

b)  New Warrants. The Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Warrant Agent, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney.  Subject to compliance with Section 5(a), as to any transfer which may be involved in such division or combination, the Company and Warrant Agent shall execute and the Warrant Agent shall deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Original Issue Date and shall be identical with the Warrant except as to the number of Warrant Shares issuable pursuant thereto.

 

c)  Warrant Register. The Warrant Agent shall register the Warrant, upon records to be maintained by the Warrant Agent for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time.  The Warrant Agent may deem and treat the registered Holder of the Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

 

Section 6.  Warrant Agent.  The Company’s transfer agent for its Common Stock and Warrants, Corporate Stock Transfer, Inc., shall serve as warrant agent under the Warrant (the “Warrant Agent”).  Upon thirty (30) days’ notice to the Holder, the Company may appoint a new warrant agent.  Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or shareholders services business shall be a successor warrant agent under the Warrant without any further act.  Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last address as shown on the Warrant Register.  The Warrant Agent is hereby authorized to countersign and to deliver, in accordance with the terms of this Agreement, the Warrants required to be issued pursuant to the provisions of Section 5, and the Company, whenever required by the Warrant Agent, will supply the Warrant Agent with Warrants duly executed on behalf of the Company for such purpose.  The Warrant Agent shall be liable under this Agreement only for its own negligence, willful misconduct and bad faith.  The Company agrees to indemnify the Warrant Agent and save it harmless against any and all liabilities, including judgments, costs and reasonable counsel fees, for anything done or omitted by the Warrant Agent in the execution of this Agreement except as a result of the Warrant Agent’s negligence, willful misconduct or bad faith.  The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or any Warrant (except its countersignature thereof), nor shall it be responsible for any breach by the Company of any covenant or condition contained in this Agreement or in any Warrant.  The Warrant Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the terms and conditions herein set forth and among other things, shall account promptly to the company with respect to the Warrants exercised and concurrently account for, and pay to the Company, all moneys received by the Warrant Agent for the purchase of shares of the Company’s Common stock through the exercise of Warrants.  The Warrant Agent shall keep copies of this Agreement available for inspection by holders of Warrants during normal business hours.

 

  

9

  

Section 7.  Miscellaneous.

 

a)  No Rights as Stockholder Until Exercise.  The Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 3(d)(i).

 

b)  Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of the Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will issue and the Warrant Agent shall countersign and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

 

c)  Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

 

d)  Authorized Shares.

 

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under the Warrant.  The Company further covenants that its issuance of the 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 the Warrant Shares upon the exercise of the purchase rights under the Warrant.  The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed.  The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by the Warrant will, upon exercise of the purchase rights represented by the Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

 

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in the Warrant against impairment.  Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of the Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under the Warrant.

 

  

10

  

Before taking any action which would result in an adjustment in the number of Warrant Shares for which the Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

 

e)  Restrictions.  The Holder acknowledges that the Warrant Shares acquired upon the exercise of the Warrant, if not registered, and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.  For purposes of Rule 144 promulgated under the Securities Act of 1933, as amended, it is intended, understood and acknowledged that 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 the Warrant was originally exercised (provided that the Securities and Exchange Commission continues to take the position that such treatment is proper at the time of such exercise).

 

f)  Nonwaiver and Expenses.  No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies.  Without limiting any other provision of the Warrant or the Purchase Agreement, if the Company willfully and knowingly fails to comply with any provision of the Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

 

g)  Notices.  Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

 

h)  Limitation of Liability.  No provision hereof, in the absence of any affirmative action by the Holder to exercise the Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

i)  Remedies.  The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under the Warrant.  The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of the Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

 

j)  Successors and Assigns.  Subject to applicable securities laws, the Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder.  The provisions of this Agreement and the Warrant are intended to be for the benefit of any Holder from time to time of the Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

 

  

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k)  Amendment.  The provisions of the Warrant and all warrants issued pursuant to the Purchase Agreement may be amended and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company has obtained the written consent of the Holders representing not less than a majority of the Warrant Shares obtainable upon exercise of the Warrants then outstanding.

 

l)  Severability.  Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of the Warrant.

 

m)  Headings.  The headings used in this Agreement are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Agreement.

 

n)  Governing Law; Jurisdiction ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. EACH OF THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF DENVER, FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION DOCUMENTS), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT. EACH OF THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PERSON AT THE ADDRESS IN EFFECT FOR NOTICES TO IT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. EACH OF THE COMPANY AND THE HOLDER HEREBY WAIVES ALL RIGHTS TO A TRIAL BY JURY.

(Signature Page Follows)

 

  

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IN WITNESS WHEREOF, the Company has caused the Agreement to be executed by the parties hereto as of the date first above indicated.

 

	 	
VENAXIS, INC.

	 
	 	 	 	 
	
 

	
By: 

	/s/ Jeffrey G. McGonegal 	 
	 	 	Name:  Jeffrey G. McGonegal 	 
	 	 	Title:  Chief Financial Officer	 
	 	 	 	 

	 	Company Name	 
	 	 	 	 
	
 

	
By: 

	/s/ Carylyn K. Bell	 
	 	 	Name:  Carylyn K. Bell	 
	 	 	Title: President	 
	 	 	 	 

  

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EXHIBIT A

Form of Warrant Certificate

[see attached]

 

 

 

  

  

  

 

 

 

	 Number	
VENAXIS, INC. 

 

THIS WARRANT WILL BE VOID IF NOT EXERCISED PRIOR 

TO 5:30 P.M. NEW YORK CITY TIME, MAY 30, 2018

	 	
Warrant

 

 

 

 

	
 

  SPECIMEN

THIS CERTIFIES THAT, for value received,    

                                                                              

is the registered holder of a Warrant or Warrants expiring May 30, 2018 (the “Warrant”) to purchase 0.35 of one fully paid and non-assessable share of common stock, no par value (“Shares”) of Venaxis, Inc., a Colorado corporation (the “Company”) for each Warrant evidenced by this Warrant Certificate.  The Warrant entitles the holder thereof to purchase from the Company, commencing upon the date of issuance, such number of Shares of the Company at the price of $1.36 per full Share (the “Exercise Price”), upon surrender of the Warrant, with a duly executed facsimile copy of the Notice of Exercise Form attached hereto and payment of the Exercise Price at the office or agency of the Warrant agent, Corporate Stock Transfer, Inc. (the “Warrant Agent”), but subject to the conditions set forth herein and in the Common Stock Purchase Warrant Agreement between the Company and the Warrant Agent (the “Warrant Agreement”).  The terms of the Warrant Agreement are incorporated herein in their entirety.  In the event of a conflict between this Warrant Certificate and the Warrant Agreement, the terms of the Warrant Agreement shall control.

 

This Warrant will expire on the date first written above if it is not exercised prior to such date by the registered holder pursuant to the terms of the Warrant Agreement.

 

No fraction of a Share will be issued upon any exercise of a Warrant.  If the holder of a Warrant would be entitled to receive a fraction of a Share upon any exercise of a Warrant, the Company shall, upon such exercise, round up to the nearest whole number the number of Shares to be issued to such holder or pay a cash adjustment in respect of such fractional amount.

 

Warrant Certificates, when surrendered at the office or agency of the Warrant Agent by the registered holder hereof in person or by attorney duly authorized in writing, may be exchanged in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants.

 

Upon due presentment for registration of transfer of the Warrant Certificate at the office or agency of the Warrant Agent in the manner provided in the Warrant Agreement, a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee in exchange for this Warrant Certificate as provided in the Warrant Agreement.

 

The Company and the Warrant Agent may deem and treat the registered holder as the absolute owner of this Warrant Certificate (notwithstanding any notation of ownership or writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the registered holder, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary.

 

	 	 	 	 	 	 	CORPORATE STOCK TRANSFER, INC. 
	
Venaxis, Inc.

	 	 	 	 	 	By:	 
	Seal,	 	President	 	Secretary	 	Transfer Agent and Registrar Authorized Officer
	Colorado	 	 	 	 	 

 

  

  

  

NOTICE OF EXERCISE

TO:           VENAXIS, INC.

(1) The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

 

(2) Payment shall take the form of (check applicable box):

 

[  ] in lawful money of the United States; or

 

[  ] if permitted, the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise the Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

 

(3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:

 

_______________________________

The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:

_______________________________

_______________________________

_______________________________

[SIGNATURE OF HOLDER]

Name of Investing Entity: _____________________________________________________

Signature of Authorized Signatory of Investing Entity:  _____________________________

Name of Authorized Signatory:  _______________________________________________

Title of Authorized Signatory:   _______________________________________________

Date: ___________________

  

  

  

 

ASSIGNMENT FORM

(To assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)

FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to

 

_______________________________________________ whose address is

_______________________________________________________________.

_______________________________________________________________

Dated:  ______________, _______

Holder’s Signature:                                _____________________________

Holder’s Address:                                  _____________________________

                  _____________________________

Signature Guaranteed:  ___________________________________________

NOTE:  The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company.  Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.

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