Attached files
THIS
AMENDED AND RESTATED WARRANT TO PURCHASE COMMON STOCK IS GIVEN IN REPLACEMENT OF
A WARRANT TO PURCHASE COMMON STOCK DATED OCTOBER 15, 2009. THE
PREDECESSOR WARRANT, MARKED “EXCHANGED”, WILL BE RETURNED TO THE COMPANY UPON
THE HOLDER’S RECEIPT OF THIS AMENDED AND RESTATED WARRANT (HEREINAFTER REFERRED
TO AS THIS “WARRANT”).
THE
SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED BY THE HOLDER HEREOF FOR ITS
OWN ACCOUNT FOR INVESTMENT WITH NO INTENTION OF MAKING OR CAUSING TO BE MADE A
PUBLIC DISTRIBUTION OF ALL OR ANY PORTION THEREOF. SUCH SECURITIES
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
SECURITIES ACT’) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED, EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT.
No.
____ October 15,
2009
Z
TRIM HOLDINGS, INC.
FORM
OF WARRANT TO PURCHASE COMMON STOCK
Void
after October 15, 2014
Z
Trim Holdings, Inc., an Illinois corporation (the “Company”), hereby
certifies that, for value received, Brightline Ventures I, LLC (including any
successors and assigns, “Holder”), is
entitled, subject to the terms set forth below, to purchase from the Company at
any time or from time to time during the Exercise Period, defined below, and
prior to 5:00 PM Central time, on October 15, 2014 (the “Expiration Date”),
fully paid and nonassessable shares of Common Stock (the “Warrant Shares”)
under the terms set forth herein.
This Warrant is issued pursuant to that
certain Subscription Agreement dated October 15, 2009 by and between the Company
and the Holder (the “Subscription
Agreement”) that was executed and delivered in connection with that
certain Confidential Private Placement Memorandum of the Company dated March 25,
2009 as amended and supplemented by a restatement thereof dated as of August 31,
2009 (the “Private
Offering”).
1. Number of Warrant Shares;
Exercise Price. This Warrant shall evidence the right of the
Holder to purchase up to 2,778,750 Warrant Shares at an exercise price per
Warrant Share of $1.50 per share (the “Exercise Price”),
subject to adjustment as provided in Section 6 below.
2. Definitions. As
used herein the following terms, unless the context otherwise requires, have the
following respective meanings:
(a) The term
“Common Stock”
shall mean the common stock, par value $.00005 per share, of the
Company.
(b) The term
“Company” shall
include any company which shall succeed to or assume the obligations of the
Company hereunder.
(c) The term
“Corporate
Transaction” shall mean (i) a sale, lease transfer or conveyance of all
or substantially all of the assets of the Company; (ii) a consolidation of the
Company with, or merger of the Company with or into, another corporation or
other business entity in which the stockholders of the Company immediately prior
to such consolidation or merger own less than 50% of the voting power of the
surviving entity immediately after such consolidation or merger; or (iii) any
transaction or series of related transactions to which the Company is a party in
which in excess of 50% of the Company’s voting power is transferred, excluding
any consolidation or merger effected exclusively to change the domicile of the
Company.
(d) The term
“Stock” shall
mean (i) Common Stock or (ii) any other class of stock resulting from successive
changes or reclassifications of such Common Stock consisting solely of changes
in par value, or from par value to no par value, or from no par value to par
value.
3. Exercise Date;
Expiration. Subject to the terms hereof, this Warrant may be
exercised by the Holder at any time or from time to time before the Expiration
Date (the “Exercise
Period”).
4. Exercise of Warrant; Partial
Exercise. This Warrant may be exercised in full by the Holder
by surrender of this Warrant, together with the Holder’s duly executed form of
subscription attached hereto as Exhibit A, to the
Company at its principal office, accompanied by payment, in cash or by certified
or official bank check payable to the order of the Company, of the aggregate
exercise price (as determined above) of the number of Warrant Shares to be
purchased hereunder. The exercise of this Warrant pursuant to this
Section 4 shall be deemed to have been effected immediately prior to the close
of business on the business day on which this Warrant is surrendered to the
Company as provided in this Section 4, and at such time the person in whose name
any certificate for Warrant Shares shall be issuable upon such exercise shall be
deemed to be the record holder of such Warrant Shares for all
purposes. As soon as practicable after the exercise of this Warrant,
the Company at its expense will cause to be issued in the name of and delivered
to the Holder, or as the Holder may direct, a certificate or certificates for
the number of fully paid and nonassessable full shares of Warrant Shares to
which the Holder shall be entitled on such exercise, together with cash, in lieu
of any fraction of a share, equal to such fraction of the current fair market
value of one full Warrant Share as determined in good faith by the Board of
Directors, and, if applicable, a new warrant evidencing the balance of the
shares remaining subject to the Warrant.
5. Net
Issuance.
(a) Cashless
Exercise. Only in the event that there is not in
effect a registration statement with the SEC covering the Warrant
Shares, in addition to and without limiting the rights of the Holder under the
terms of this Warrant, the Holder shall have the right to convert this Warrant
(the “Conversion
Right”) into Warrant Shares as provided in this Section 5 at any time or
from time to time beginning on the 6-month anniversary of the date of this
Warrant and ending at the expiration of the Exercise Period. Upon
exercise of the Conversion Right with respect to shares subject to the Warrant
(the “Converted
Warrant Shares”), the Company shall deliver to the Holder (without
payment by the Holder of any exercise price or any cash or other consideration)
that number of fully paid and nonassessable Warrant Shares computed using the
following formula:
X = Y (A -
B)
A
Where: X
= the number of
Warrant Shares to be delivered to the Holder;
Y
= the number of
Converted Warrant Shares;
A
= the fair
market value of one Warrant Share on the Conversion Date (as defined below);
and
B
= the Exercise
Price (as adjusted on the Conversion Date).
No
fractional shares shall be issuable upon exercise of the Conversion Right, and
if the number of shares to be issued determined in accordance with the foregoing
formula is other than a whole number, the Company shall pay to the Holder an
amount in cash equal to the fair market value of the resulting fractional share
on the Conversion Date (as defined below). Shares issued pursuant to
the Conversion Right shall be treated as if they were issued upon the exercise
of the Warrant.
(b) Method of
Exercise. The Conversion Right may be exercised by the Holder
by the surrender of the Warrant at the principal office of the Company together
with a written statement specifying that the Holder thereby intends to exercise
the Conversion Right and indicating the total number of shares under the Warrant
that the Holder is exercising through the Conversion Right. Such
conversion shall be effective upon receipt by the Company of the Warrant
together with the aforesaid written statement, or on such later date as is
specified therein (the “Conversion
Date”). Certificates for the shares issuable upon exercise of
the Conversion Right shall be delivered to the Holder promptly following the
Conversion Date.
(c) Determination of Fair Market
Value. For purposes of this Section 5, fair market value of a
Warrant Share on the Conversion Date shall be determined as
follows:
(i) If this
Warrant is to be exercised contingent upon and effective immediately prior to
the initial public offering of the Company’s Common Stock pursuant to an
effective registration statement under the Securities Act (an “Initial Public
Offering”), the fair market value of a Warrant Share shall be deemed to
be equal to the price per share to the public of the shares of Common Stock sold
in the Initial Public Offering as set forth on the front cover of the final
prospectus relating to the Initial Public Offering;
(ii) If the
Common Stock is traded on a stock exchange or the Nasdaq Stock Market (or a
similar national quotation system), the fair market value of a Warrant Share
shall be deemed to be the average of the closing selling prices of the Common
Stock on the stock exchange or system determined by the Board to be the primary
market for the Common Stock over the ten (10) trading day period ending on the
date prior to the Conversion Date, as such prices are officially quoted in the
composite tape of transactions on such exchange or system;
(iii) If the
Common Stock is traded over-the-counter, the fair market value of a Warrant
Share 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 ending on the date prior to the Conversion Date,
as such prices are reported by the National Quotation Bureau Incorporated or any
successor system ; and
(iv) If there
is no public market for the Common Stock, then the fair market value of a
Warrant Share shall be determined by the Board of Directors of the Company in
good faith and, upon request of the Holder, the Board (or a representative
thereof) shall, as promptly as reasonably practicable but in any event not later
than 15 days after such request, notify the Holder of the Fair Market Value per
share of Common Stock.
6. Adjustments to Conversion
Price and Number of Warrant Shares. For the purposes of this
Section 6, the term Exercise Price shall mean the Exercise Price per share set
forth on the first page of this Warrant as adjusted from time to time pursuant
to the provisions of this Section 6. The number and kind of Warrant
Shares (or any shares of stock or other securities which may be) issuable upon
the exercise of this Warrant and the Exercise Price hereunder shall be subject
to adjustment from time to time upon the happening of certain events, as
follows:
(a) Splits and Subdivisions. In
the event the Company should at any time or from time to time fix a record date
for the effectuation of a split or subdivision of the outstanding shares of
Common Stock or the determination of the holders of Common Stock entitled to
receive a dividend or other distribution payable in additional shares of Common
Stock or other securities or rights convertible into, or entitling the holder
thereof to receive directly or indirectly, additional shares of Common Stock
(hereinafter referred to as the “Common Stock Equivalents”)
without payment of any consideration by such holder for the additional shares of
Common Stock or Common Stock Equivalents, then, as of such record date (or the
date of such distribution, split or subdivision if no record date is fixed), the
Exercise Price shall be appropriately decreased and the number of Warrant Shares
for which this Warrant is exercisable shall be appropriately increased in
proportion to such increase of outstanding shares.
(b) Combination of
Shares. If the number of shares of Common Stock outstanding at
any time after the date hereof is decreased by a combination of the outstanding
shares of Common Stock, the Exercise Price shall be appropriately increased and
the number of Warrant Shares for which this Warrant is exercisable shall be
appropriately decreased in proportion to such decrease in outstanding
shares.
(c) Reclassification or
Reorganization. If the Warrant Shares issuable upon the
exercise of this Warrant shall be changed into the same or different number of
shares of any class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a split, subdivision or stock dividend
provided for in Section 6(a) above or a combination of shares provided for in
Section 6(b) above, or a reorganization, merger or consolidation provided for in
Section 6(d) below, then and in each such event the Holder shall be entitled to
receive upon the exercise of this Warrant the kind and amount of shares of stock
and other securities and property receivable upon such reorganization,
reclassification or other change, to which a holder of the number of Warrant
Shares issuable upon the exercise of this Warrant would have received if this
Warrant had been exercised immediately prior to such reorganization,
reclassification or other change, all subject to further adjustment as provided
herein.
(d) Merger or
Consolidation. If at any time or from time to time there shall
be a capital reclassification or reorganization of the Warrant Shares or a
Corporate Transaction (other than a subdivision, combination, reclassification
or exchange of shares provided for elsewhere in this Section 6) of the Company,
then as a part of such reorganization or Corporate Transaction, adequate
provision shall be made so that the Holder shall thereafter be entitled to
receive upon the exercise of this Warrant, the number of shares of stock or
other securities or property of the Company, resulting from such reorganization,
recapitalization or Corporate Transaction to which a holder of the number of
Warrant Shares issuable upon the exercise of this Warrant would have received if
this Warrant had been exercised immediately prior to such reorganization or
Corporate Transaction. In any such case, the Company will make
appropriate provision to insure that the provisions of this Section 6(d) hereof
will thereafter be applicable as nearly as may be in relation to any shares of
stock or securities thereafter deliverable upon the exercise of this
Warrant. The
Company shall not effect any such Corporate Transaction unless prior to or
simultaneously with the consummation thereof the successor corporation (if other
than the Company) resulting from such Corporate Transaction or the corporation
purchasing or acquiring such assets or other appropriate corporation or entity
shall assume the obligation to deliver to the Holder, at the last address of the
Holder appearing on the books of the Company, such shares of stock, securities
or assets as, in accordance with the foregoing provisions, the Holder may be
entitled to purchase, and the other obligations under this
Warrant. The provisions of this Section 6(d) shall similarly apply to
successive reorganizations, reclassifications, or Corporate
Transactions.
(e) Computation of Adjusted
Exercise Price. In the event that the Company sells or issues
shares of Stock at a price less than the Exercise Price in effect immediately
prior to such sale or issuance, then the Exercise Price shall be reduced
immediately thereafter so that it shall equal the price at which such shares of
Stock are sold or issued, as applicable.
(f) Options, Rights, Warrants
and Convertible and Exchangeable Securities. Subject to
Section 6(h) hereof, in case the Company shall at any time after the date hereof
issue options, rights or warrants to subscribe for shares of Stock, or issue any
securities convertible into or exchangeable for shares of Stock, for a
consideration per share less than the Exercise Price in effect immediately prior
to the issuance of such options, rights, warrants or such convertible or
exchangeable securities, or without consideration, the Exercise Price in effect
immediately prior to the issuance of such options, rights, warrants or such
convertible or exchangeable securities, as the case may be, shall be reduced to
the price established for such options, rights, warrants or convertible or
exchangeable securities that entitle the holders thereof to receive a share of
Stock.
(g) Adjustment in Number of
Warrant Shares. Upon each adjustment of the Exercise Price
pursuant to the provisions of this Section 6, the number of Warrant Shares
issuable upon the exercise of this Warrant shall be adjusted to the nearest full
amount by multiplying a number equal to the Exercise Price in effect immediately
prior to such adjustment by the number of Warrant Shares issuable upon exercise
of the Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
(h) No Adjustment of Exercise
Price in Certain Cases. No adjustment of the Exercise Price
shall be made:
(i) Upon
issuance or sale of this Warrant or Warrant Shares, or the other warrants and
warrant shares issued in connection herewith pursuant to the Subscription
Agreement, or shares of Common Stock issuable upon exercise of other options,
warrants and convertible securities outstanding as of the date hereof,
including, without limitation, those that are being issued in connection with
the closing of the Private Offering.
(ii) Upon
the issuance or sale of any shares of capital stock, or the grant of options
exercisable therefor, issued or issuable after the date of this Warrant, to
directors, officers, employees, advisers and consultants of the Company or any
subsidiary pursuant to any incentive or non-qualified stock option plan or
agreement, stock purchase plan or agreement, stock restriction agreement or
restricted stock plan, employee stock ownership plan (ESOP), consulting
agreement, stock appreciation right (SAR), stock depreciation right (SDR), bonus
stock arrangement, or such other similar compensatory options, issuances,
arrangements, agreements or plans approved by the Board of Directors of the
Company.
(iii) Upon
the issuance of any shares of capital stock or the grant of warrants or options
(or the exercise thereof) as consideration for mergers, acquisitions, strategic
alliances and other commercial transactions, other than in connection with a
financing transaction.
(iv) If
the amount of said adjustment shall be less than one cent ($0.01) per security
issuable upon exercise of this Warrant; provided, however, that in such
case any adjustment that would otherwise be required then to be made shall be
carried forward and shall be made at the time of and together with the next
subsequent adjustment which, together with any adjustment so carried forward,
shall amount to at least one cent ($0.01) per security issuable upon exercise of
this Warrant.
(i) Notice of Record Dates; Adjustments. In
the event of an Initial Public Offering or a Corporate Transaction, the Company
shall provide to the Holder twenty (20) days advance written notice of such
Initial Public Offering or Corporate Transaction. The Company shall
promptly notify the Holder in writing of each adjustment or readjustment of the
Exercise Price hereunder and the number of Warrant Shares issuable upon the
exercise of this Warrant. Such notice shall state the adjustment or
readjustment and show in reasonable detail the facts on which that adjustment or
readjustment is based.
7. Registration
Rights. The Company hereby agrees that the Holder shall be
entitled, with respect to all Warrant Shares issued upon the exercise of this
Warrant, to the registration rights set forth in the Registration Rights
Agreement, dated as of October 15, 2009, by and among the Company, the Holder
and the investors in the Private Offering, as may be amended or supplemented
from time to time, the terms of which are hereby incorporated by this reference,
with the same force and effect as if specifically set forth herein.
8. Replacement of
Warrants. On receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement reasonably satisfactory in form
and amount to the Company or, in the case of any such mutilation, on surrender
and cancellation of such Warrant, the Company at its expense will execute and
deliver to the Holder, in lieu thereof, a new Warrant of like
tenor.
9. No Rights or Liability as a
Stockholder. This Warrant does not entitle the Holder hereof
to any voting rights or other rights as a stockholder of the
Company. No provisions hereof, in the absence of affirmative action
by the Holder 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 as a stockholder of the Company.
10. Miscellaneous.
(a) Transfer of Warrant;
Permitted Designees. The Holder agrees not to make any
disposition of this Warrant, the Warrant Shares or any rights hereunder without
the prior written consent of the Company. Any such permitted transfer
must be made by the Holder in person or by duly authorized attorney, upon
delivery of this Warrant and the form of assignment attached hereto as Exhibit B to any such
permitted transferee. As a condition precedent to such transfer, the
transferee shall sign an investment letter in form and substance satisfactory to
the Company. Subject to the foregoing, the provisions of this Warrant
shall inure to the benefit of and be binding upon any successor to the Company
and shall extend to any holder hereof. Notwithstanding anything contained
herein, the Company shall, upon written instructions to be delivered to the
Company within fifteen (15) business days following the date hereof, transfer
all or a portion of this Warrant to officers, directors, employees and other
registered agents or associated persons of the Holder (collectively, “Permitted Designees”)
in accordance with this Section 10; provided, however, the Company shall not be
required to issue such Warrants to any person who is not an “accredited
investor” within the meaning of Regulation D promulgated under the Securities
Act and provided, further, such transfer must be in compliance with applicable
Federal and state securities laws. Each Permitted Designee shall be
required to execute fully and completely the Investor Representation Letter in
the form attached hereto as Exhibit C prior to
the issuance of the Warrant to such person.
(b) Titles and
Subtitles. The titles and subtitles used in this Warrant are
for convenience only and are not to be considered in construing or interpreting
this Warrant.
(c) Notices. Any
notice required or permitted to be given to a party pursuant to the provisions
of this Warrant shall be in writing and shall be effective and deemed given to
such party under this Warrant on the earliest of the following: (i) the date of
personal delivery; (ii) two (2) business days after transmission by facsimile,
addressed to the other party at its facsimile number, with confirmation of
transmission; (iii) four (4) business days after deposit with a return receipt
express courier for United States deliveries; or (iv) five (5) business days
after deposit in the United States mail by registered or certified mail (return
receipt requested) for United States deliveries. All notices not
delivered personally or by facsimile will be sent with postage and/or other
charges prepaid and properly addressed to such party at the address set forth on
the signature page hereto, or at such other address as such party may designate
by ten (10) days advance written notice to the other party
hereto. Notices to the Company will be marked “Attention: Chief
Financial Officer.”
(d) Attorneys’
Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Warrant, the prevailing party shall be
entitled to reasonable attorneys’ fees, costs and disbursements in addition to
any other relief to which such party may be entitled.
(e) Amendments and
Waivers. Any term of this Warrant may be amended and the
observance of any term of this Warrant may be waived (either generally or in a
particular instance and either retroactively or prospectively) with the written
consent of the Holder and the Company. Any amendment or waiver
effected in accordance with this Section 10(e) shall be binding upon the Holder
of this Warrant (and of any securities into which this Warrant is convertible),
each future holder of all such securities, and the Company.
(f) Severability. If
one or more provisions of this Warrant are held to be unenforceable under
applicable law, such provision shall be excluded from this Warrant and the
balance of the Warrant shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
(g) Governing
Law. This Warrant shall be governed by and construed and
enforced in accordance with the laws of the State of Illinois, without giving
effect to its conflicts of laws principles.
(h) Counterparts. This
Warrant may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
[REMAINDER
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In
Witness Whereof, the Company has caused this Warrant to be executed by
its duly authorized officer as of the date first written above.
Z
TRIM HOLDINGS, INC.,
an
Illinois corporation
By:
Name:
Steven J. Cohen
Title:
Chief Executive Officer
Address: 1011
Campus Drive
Mundelein, IL 60060
EXHIBIT
A
FORM OF
SUBSCRIPTION
(To be
signed only on exercise of Warrant)
To: Z-TRIM
HOLDINGS, INC.
The undersigned, pursuant to the
provisions set forth in the attached Warrant, hereby irrevocably elects to (a)
purchase _____ shares of the Common Stock covered by such Warrant and herewith
makes payment of $ _________, representing the full purchase price for such
shares at the price per share provided for in such Warrant, or (b) exercise such
Warrant for _______ shares purchasable under the Warrant pursuant to the Net
Issue Exercise provisions of Section 5 of such Warrant.
Please issue a certificate or
certificates representing ________ shares in the name of the undersigned or in
such other name or names as are specified below:
(Name)
(Address)
The undersigned represents that the
aforesaid shares are being acquired for the account of the undersigned for
investment and not with a view to, or for resale in connection with, the
distribution thereof and that the undersigned has no present intention of
distributing or reselling such shares, all except as in compliance with
applicable securities laws.
(Signature
must conform in all respects to name of the Holder as specified on the face of
the Warrant)
(Print Name)
(Address)
Dated:
EXHIBIT
B
FORM OF
ASSIGNMENT
(To
assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
For Value
Received, the foregoing Warrant and all rights evidenced thereby are
hereby assigned to:
Name:
(Please
Print)
Address:
(Please
Print)
Dated: __________,
20__
Holder’s
Signature:
Holder’s
Address:
NOTE: The signature
to this Form of Assignment must correspond with the name as it appears on the
face of the Warrant, without alteration or enlargement or any change
whatever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
EXHIBIT
C
FORM OF INVESTOR
REPRESENTATION LETTER
DATE
Z Trim
Holdings, Inc.
1011
Campus Drive
Mundelein,
IL 60060
Gentlemen:
In
connection with my receipt of warrants (“Warrants”) to purchase the number of
shares of common stock referred to below, I hereby represent, warrant and
covenant as follows:
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1.
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Check
each one which is applicable:
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I
am an “accredited investor” within the meaning of Regulation D promulgated
under the Securities Act of 1933 (the
“Act”);
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I
have such knowledge and experience in financial, tax, and business matters
so as to utilize information made available to me in order to evaluate the
merits and risks of an investment decision with respect
thereto;
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2.
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I
have had the opportunity to ask questions and receive and review such
answers and information concerning Z Trim Holdings, Inc. (the “Issuer”) as
I have deemed pertinent;
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3.
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I
am not relying on the Issuer respecting the tax and other economic
considerations of an investment in the
Issuer;
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4.
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I
am acquiring the Warrants and the underlying securities related thereto
solely for my own account for investment and not with a view to resale or
distribution. I acknowledge that neither the Warrants nor the
underlying securities have been registered under the Act and may not be
resold except pursuant to an effective registration statement thereunder
or an exemption therefrom;
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_______________________
Name:
Holder of
Warrants to purchase _____ shares of
common stock of Z Trim Holdings, Inc. pursuant to the terms of the Common Stock
Purchase Warrant of even