WARRANT EXERCISE AGREEMENT
Xxxxxxx Trading L.P. of Lakewood
Lakewood, New Jersey
Gentlemen:
For good and valuable consideration, the parties agree as
follows:
1. Reference is made to 1,000,000 warrants owned by you
("Xxxxxxx") to purchase shares of common stock (`common
stock") of Imagematrix, Inc., a Colorado corporation, (the
"Company") at $2.25 per share (the "existing $2.25
warrants") and 500,000 warrants owned by Xxxxxxx to purchase
shares of common stock at $3 per share (the "existing $3
warrants"). The existing $2.25 warrants and the existing $3
warrants are referred to collectively herein as the
"Existing Warrants."
2. Concurrently herewith, Xxxxxxx is exercising 300,000
existing $3 warrants at a reduced exercise price of $1 per
share. Should Xxxxxxx exercise the 200,000 remaining
existing $3 warrants on or before October 1, 1997, then the
exercise price of such remaining existing $3 warrants shall
be similarly reduced to $1 per share, and the exercise price
of the first 650,000 to be exercised of the existing $2.25
warrants shall be reduced to $1 per share until December 31,
1997 and to $1-3/8 per share thereafter. The exercise price
of the remaining 350,000 existing $2.25 warrants shall not
be changed by this Agreement.
3. New Warrants.
(a) For each 100 Existing warrants which are exercised on
or before August 1, 1998, whether at their respective
original exercise prices or at the reduced exercise prices
aforesaid, the Company shall forthwith upon such exercise
issue to Xxxxxxx 70 warrants to purchase shares of common
stock at $2.25 (the "new $2.25 warrants") and 30 warrants to
purchase shares of common stock at $3 per share (the "new $3
warrants"). Each of the new $2.25 Warrants and the new $3
warrants (collectively the "New Warrants") shall expire
three years after issuance, or, if earlier,
(i) as to the new $2.25 Warrants, upon 30 days notice given
by the Company within 10 days after the end of ten
consecutive trading days to which the closing bid price of
the common stock on NASDAQ was not less than $4 per share,
but only if throughout such trading days and through the
date of such notice a registration statement has been in
effect for the sale of the shares issuable on exercise of
the new $2.25 Warrants; and
(ii) as to the new $3 Warrants upon 30 days notice given by
the Company within 10 days after the end of ten consecutive
trading days in which the closing bid price of the common
stock on NASDAQ was not less than $5 per share, but only if
throughout such trading days and through the date of such
notice a registration statement has been in effect for the
sale of the shares issuable on exercise of the new $3
Warrants.
(b) Except as previously set forth herein, the new $2.25
warrants and the new $3 warrants shall be in the respective
forms of the existing $2.25 warrants the existing $3
warrants.
4. Notwithstanding anything to the contrary contained
herein, Xxxxxxx shall not have the right to exercise any
warrant whatsoever so long as and to the extent that at the
time of such exercise, such exercise would cause the Xxxxxxx
then to be the "beneficial owner" of five percent (5%) or
more of the Company's then outstanding common stock. For
purposes hereof, the term "beneficial owner" shall have the
meaning ascribed to it in Section 13(d) of the Securities
Exchange Act of
1934. The opinion of legal counsel to Xxxxxxx, in form
and substance satisfactory to the Company and the Company's
counsel, shall prevail in all matters relating to the
amount of Xxxxxxx'x beneficial ownership.
5. Registration.
(a) The Company represents and warrants that a registration
statement is effective for the issuance of shares on
exercise of the Existing Warrants notwithstanding the
reduced exercise prices contemplated hereunder, and the
Company will use its best efforts to keep such registration
statement in effect at least until July 1, 1999.
(b) The Company shall file, on or before the 30th day after
the date of this Agreement, a registration statement on Form
S-3 (the "Registration Statement") for the public sale by
Xxxxxxx of the shares which are issuable on exercise of the
New Warrants. The shares to be covered by the Registration
Statement are collectively referred to as the "registered
shares."
(c) The Company shall use its diligent efforts to cause the
Registration Statement to become effective not later than 60
days after the date of filing, and to remain effective for
two years. The registration shall be accompanied by blue
sky clearances in such five states as Xxxxxxx may reasonably
request.
(d) The Company shall pay all expenses of the registration
hereunder, other than Xxxxxxx'x underwriting discounts and
counsel or other fees incurred on a voluntary basis.
(e) The Company shall supply to Xxxxxxx a reasonable number
of copies of all registration materials and prospectuses.
The Company and Xxxxxxx shall execute and deliver to each
other indemnity agreements which are conventional in
registered offerings of this type. The Xxxxxxx shall
reasonably cooperate with the Company in the preparation and
filing of the Registration Statement and appropriate
amendments thereto.
(f) Xxxxxxx may transfer a proportionate part of its
registration rights to a limited number of permitted
transferees of the New Warrants or portions thereof. A
"permitted transferee" is a person to whom a transfer is
made in compliance with the provisions of Section 6.
(g) Once the registration statement is effective, the
Company will issue UNLEGENDED shares of common stock (in
form which can be transmitted electronically if desired by
Xxxxxxx) on exercise of the Warrants, whether or not such
shares are sold simultaneously with such conversion or
exercise. Xxxxxxx shall deliver any prospectus which it is
legally required to be delivered on the sale of such shares.
(h) Should Xxxxxxx from time to time or times give to the
Company notice that it has assigned the Warrants or any
portion thereof, the Company shall within five business days
file a supplement to the registration statement to reflect
the name(s) of the transferee(s) as a selling shareholder.
6. Securities Representations.
(a) Xxxxxxx represents and warrants that it will acquire
and may exercise any New Warrants solely for investment
solely for its own account and not with a view to or for the
resale or distribution thereof except as permitted under the
Registration Statement.
(b) Xxxxxxx understands that it may sell or otherwise
transfer the New Warrants or the shares issuable on exercise
of the New Warrants only if such transaction is duly
registered under the Securities Act of 1933, as amended,
under the Registration Statement or otherwise, or if Xxxxxxx
shall have received the favorable opinion of counsel to
Xxxxxxx, which opinion
shall be reasonably satisfactory to counsel to the Company,
to the effect that such sale or other transfer may be
made in the absence of registration under the Securities
Act of 1933, as amended, and registration or qualification
in every applicable state.
The certificates representing the aforesaid securities will
be legended to reflect these restrictions, and stop transfer
instructions will apply. Xxxxxxx realizes that the New
Warrants are not a liquid investment.
(c) Xxxxxxx has not relied upon the advice of a "Purchaser
Representative" (as defined in Regulation D of the
Securities Act) in evaluating the risks and merits of this
investment. Xxxxxxx has the knowledge and experience to
evaluate the Company and the risks and merits relating
thereto.
(d) Xxxxxxx represents and warrants that Xxxxxxx is an
"accredited investor" as such term is defined in Rule 501 of
Regulation D promulgated pursuant to the Securities Act of
1933, as amended, and shall be such on the date any shares
are issued to the Xxxxxxx, Xxxxxxx acknowledges that Xxxxxxx
is able to bear the economic risk of losing Xxxxxxx'x entire
investment in the shares and understands that an investment
in the Company involves substantial risks; Xxxxxxx has the
power and authority to enter into this agreement, and the
execution and delivery of, and performance under this
agreement shall not conflict with any rule, regulation,
judgment or agreement applicable to the Xxxxxxx, and Xxxxxxx
has invested in previous transactions involving restricted
securities.
7. Miscellaneous.
This agreement may not be changed or terminated
except by written agreement. It shall be binding
on the parties and on their personal
representatives and permitted assigns. It sets
forth all agreements of the parties. It shall be
enforceable by decrees of specific performance
(without posting bond or other security) as well
as by other available remedies. This Agreement
shall be governed by, and construed in accordance
with, the laws of Colorado. The federal and state
courts sitting in the City of Denver, Colorado
shall have exclusive jurisdiction over all matters
relating to this Agreement.
All notices, requests, service of process,
consents, and other communications under this
Agreement shall be in writing and shall be deemed
to have been delivered (i) on the date personally
delivered or (ii) one day after properly sent by
Federal Express, addressed to the respective
parties at their address set forth in this
agreement or (iii) on the day transmitted by
facsimile so long as a confirmation copy is
simultaneously forwarded by Federal Express, in
each case addressed to the respective parties at
their address set forth in this Agreement. Either
party hereto may designate a different address by
providing written notice of such new address to
the other party hereto as provided above.
Dated: as of September 4, 1997
Xxxxxxx Trading L.P. of Lakewood
By: /s/ Xxxxxxx Trading L.P. of Lakewood
Agreed:
IMAGEMATRIX, INC.
BY /s/ Xxxxx XxXxx
