THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF CAN BE
TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT OF 1933, AS AMENDED, AND
APPLICABLE STATE SECURITIES LAWS. THIS WARRANT AND THE UNDERLYING SECURITIES MAY
NOT BE SOLD, TRANSFERRED, OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT, UNLESS, IN THE OPINION OF COUNSEL TO THE COMPANY, SUCH
REGISTRATION IS NOT THEN REQUIRED.
UNDERWRITER'S UNIT PURCHASE WARRANT
PACIFIC BIOMETRICS, INC.
170,000 Units
(Common Stock and Warrants)
THIS CERTIFIES THAT, for value received, Paradise Valley Securities, Inc.,
an Arizona corporation (the "Underwriter"), or its successors and permitted
assigns (the "Holder") is entitled to subscribe for and purchase from PACIFIC
BIOMETRICS, INC., a Delaware corporation, whose address is 0000 Xxxxxxxx Xxxxxx,
Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000 (the "Company"), at any time from and after
the one year anniversary of the effective date of the Company's Registration
Statement on Form SB-2 (File No. 333-11551) filed with the Securities and
Exchange Commission (the "Registration Statement"), and prior to Midnight (Los
Angeles, California time) on October __, 2001, which latter date is five years
from the effective date of the Registration Statement (the "Exercise Period"),
170,000 units (the "Units"), each Unit (i) consisting of one share of the
Company's common stock, $.01 par value (the "Common Stock"), and (ii) a warrant
("Purchase Warrant") to purchase one share of Common Stock, at a price of $5.70
per Unit (as adjusted in accordance with this Warrant, the "Purchase Price"),
subject, however, to the provisions and upon the terms and conditions
hereinafter set forth in this Warrant. The Purchase Warrants which are included
in the Units shall be issued pursuant to and subject to the terms and conditions
of that Warrant Agreement between the Company and American Securities Transfer &
Trust, Incorporated, as warrant agent, the form of which was filed as Exhibit
4.3 to the Registration Statement, or any successor or replacement warrant
agreement. The term "Effective Date" as used in this Warrant means October __,
1996, the effective date of the Registration Statement.
This Warrant is the "Underwriter's Unit Warrant" issued pursuant to the
Underwriting Agreement dated October __, 1996 relating to the initial public
offering of Units underwritten by Paradise Valley Securities, Inc.
1. Exercise; Issuance of Certificates; Payment for Shares. The rights
represented by this Warrant may be exercised by the Holder, in whole or in part
(but not as to a fractional Unit), at any time or from time to time during the
Exercise Period, upon presentation and surrender of this Warrant to the Company,
at its principal office as set forth on Page 1 of this Warrant, with a duly
executed subscription (in the form attached hereto) and accompanied by payment
of the Purchase Price for each Unit so purchased. Such payment shall be made, in
cash or by certified, bank, or cashier's check, payable to the order of the
Company, or by wire transfer of funds to the Company's account. The Units so
purchased shall be deemed to have been issued to the Holder as of the close of
business on the date on which this Warrant shall have been surrendered to the
Company, along with the subscription and full payment for the Units purchased.
Certificates for the securities so purchased and, unless this Warrant shall have
expired, a new Warrant representing the number of Units, if any, with respect to
which this Warrant shall not then have been exercised, shall be delivered to the
Holder within a reasonable time, and in any event within 30 days, after the
Holder has complied with the provisions of this Section 1.
2. Restrictions on Transfer of Warrant. For the one year period after the
Effective Date the Holder may not sell, assign pledge, hypothecate or otherwise
transfer any rights under this Warrant to anyone other than (a) any officer or
partner of the Underwriter; (b) any other underwriter identified in the
Underwriting Agreement and described in the Registration Statement (or any
substitute underwriter appointed in accordance with the Underwriting Agreement)
and any such underwriter's officers or partners; (c) any successor to the
business of the Underwriter; or (d) any transferee who receives this Warrant by
operation of law as a result of the death or dissolution of any Holder permitted
by this Section 2.
3. Reservation of Shares. The Company covenants and agrees that all
securities that it may issue upon the exercise of the rights represented by this
Warrant will, upon issuance, be fully paid and nonassessable and free from all
taxes, liens and charges. The Company further covenants and agrees that at all
times prior to the expiration of the Exercise Period, there shall be authorized
and reserved for issuance upon exercise of this Warrant such number of shares of
Common Stock as shall be required for issuance on full exercise of this Warrant.
The Company further agrees that at all such times prior to the expiration of the
exercise period for the Purchase Warrants there shall be authorized and reserved
for issuance upon exercise of the Purchase Warrants included within the Units
subject to this Warrant such number of shares of Common Stock as shall be
required for issuance on full exercise of such Purchase Warrants.
4. Exchange, Assignment, or Loss of Warrant.
(a) This Warrant is exchangeable, without expense other than as
provided in this Section 4, at the option of the Holder, upon presentation and
surrender hereof to the Company, for other Warrants of different denominations
entitling the holder(s) thereof to purchase in the aggregate the same number of
Units purchasable hereunder.
(b) This Warrant may not be sold, transferred, assigned, or
hypothecated except as permitted under Section 2 herein. Any such permitted
assignment shall be made by surrender of this Warrant to the Company, together
with a duly executed assignment (in the form of the assignment attached hereto)
and funds sufficient to pay any transfer tax, whereupon the Company shall,
without charge, execute and deliver a new Warrant or Warrants in the name(s) of
the assignee(s) named in such instrument of assignment, and this Warrant shall
promptly be canceled.
(c) This Warrant may be divided or combined with other Warrants that
carry the same rights upon presentation and surrender of this Warrant at the
office of the Company together with a written notice, signed by the Holder,
specifying the names and denominations in which new Warrants are to be issued.
(d) The Company will execute and deliver a new Warrant of like tenor
and date upon receipt by the Company of evidence satisfactory to it of the loss,
theft, destruction, or mutilation of this Warrant, and (i) in the case of loss,
theft, or destruction, upon receipt by the Company of indemnity satisfactory to
the Company, or (ii) in the case of mutilation, upon presentation, surrender,
and cancellation of this Warrant.
(e) The term "Warrant" as used in this Section 4 includes any
warrants issued in substitution for or replacement of this Warrant, or into
which this Warrant may be divided or exchanged.
5. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at law or equity.
The rights of the Holder are limited to those
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expressed in the Warrant and are not enforceable against the Company except to
the extent set forth herein.
6. Adjustment and Other Events.
(a) In case the Company shall declare any dividend or other
distribution upon its outstanding Common Stock payable in Common Stock or shall
subdivide its outstanding shares of Common Stock into a greater number of
shares, then the number of Units that may thereafter be purchased upon the
exercise of the rights represented hereby shall be increased in proportion to
the increase through such dividend, distribution, or subdivision, and the
Purchase Price shall be decreased in such proportion. In case the Company shall
at any time combine the outstanding shares of its Common Stock into a smaller
number of shares, the number of Units that may thereafter be purchased upon the
exercise of the rights represented hereby shall be decreased in proportion to
the decrease through such combination, and the Purchase Price shall be increased
in such proportion.
(b) In case of any (i) reclassification, capital reorganization, or
other change of outstanding Common Stock of the Company (other than a change as
a result of an issuance of Common Stock under Subsection 6(a)), or (ii)
consolidation or merger of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the continuing
corporation and that does not result in any reclassification, capital
reorganization or other change of the shares of Common Stock issuable upon
exercise of this Warrant), or (iii) sale or conveyance to another corporation of
all or substantially all of the Company's assets as an entirety, then and in
such event the terms of this Section 6 shall be deemed to be appropriately
adjusted, and the Company shall cause effective provision to be made, so that
the Holder shall have the right thereafter, by exercising this Warrant, to
purchase the kind and amount of shares of stock, warrants or other rights to
purchase such stock, and other securities and property, if any receivable upon
such reclassification, capital reorganization, or other change, consolidation,
merger, sale or conveyance that the Holder would have received had the Warrants
been exercised immediately prior to such event.
(c) The Company shall not effect any consolidation, merger, or sale
or conveyance of assets within the meaning of subsection 6(b)(ii)-(iii), unless
prior to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from such consolidation or
merger or the corporation purchasing such assets shall assume by written
instrument executed and mailed or delivered to the Holder hereof pursuant to
Section 10 herein, the obligation to deliver to such Holder such shares of
stock, securities, or assets as, in accordance with the foregoing provisions,
such Holder may be entitled to purchase. In no event shall the securities
received pursuant to this subsection be registerable or transferable other than
pursuant and subject to the terms of this Warrant.
(d) If the Company shall at any time or from time to time (i)
distribute (otherwise than as a dividend in cash or in Common Stock or in
securities convertible into or exchangeable for Common Stock) to the holders of
Common Stock (or grant any rights to such holders to acquire) assets, including
stock or other securities of any subsidiary, without any consideration paid or
to be paid by such holders or for a consideration paid less than the fair market
value of such assets as reasonably determined by the Board of Directors of the
Company, or (ii) declare a dividend upon the Common Stock (to the extent payable
otherwise than out of earnings or earned surplus, as indicated by the accounting
treatment of such dividend in the books of the Company, and otherwise than in
Common Stock, or securities convertible into or exchangeable for Common Stock),
then the Company shall reserve, and the holder of each Warrant shall thereafter
upon exercise thereof be entitled to receive, for each share of Common Stock
purchasable thereunder on the record date established by the Company for the
determination of holders
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of Common Stock entitled to receive such distribution, right or dividend (or if
no such record date shall have been established, on the date of such
distribution, grant of such right or payment of such dividend), (i) the amount
of such assets that would have been distributable to, or as to which such right
would have been granted to, the holder thereof, or (ii) the amount of such
dividend (to the extent above-stated) that such holder would have received had
such holder been a holder of one share of Common Stock on such record (or other)
date. Such entitlement by the Holder shall be without increase in (except in
respect for the consideration, if any, paid for such assets by the holders of
Common Stock) the then current Purchase Price.
(e) If (i) there shall be an event requiring an adjustment as
provided in subsections 6(a) or 6(b); (ii) the Company shall make a distribution
that comes within subsection 6(d); (iii) the Company shall offer for
subscription pro rata to the holders of its Common Stock any additional shares
of stock of any class, or other rights; or (iv) there shall be a voluntary or
involuntary dissolution, liquidation or winding up of the Company; then, in any
one or more of such cases, the Company shall give to the Holder (i) at least
twenty days' prior written notice of the date on which the books of the Company
shall close or a record shall be taken for such dividend, distribution or
subscription rights, or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, and (ii) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, at least twenty days' prior written notice of the date when the same
shall take place. Such notice in accordance with the foregoing clause and to the
extent applicable shall specify (i) in the case of any such dividend,
distribution or subscription rights, the date on which the holders of Common
Stock shall be entitled thereto, and (ii) when the holders of Common Stock shall
be entitled to exchange their Common Stock for securities or other property
deliverable upon such reorganization, liquidation or winding up, as the case may
be. Upon the happening of an event requiring adjustment of the Purchase Price or
the kind or amount of securities or property purchasable hereunder, the Company
shall forthwith give notice to the Holder, which such notice shall be
accompanied by a certificate of the Company, stating the adjusted Purchase Price
and the adjusted number of shares of Common Stock and Purchase Warrants
purchasable or the kind and amount of any such securities or property so
purchasable upon exercise of this Warrant, as the case may be, and setting forth
in reasonable detail the method of calculation and the facts upon which such
calculation is based. Such certificate shall, absent manifest error, be
conclusive evidence of the correctness of any computation made thereunder.
(f) No fractional shares of Common Stock or script representing
fractional shares of Common Stock shall be issued upon the exercise of this
Warrant, and the Company shall have no obligation for any cash payment with
respect thereto.
(g) The number of shares of Common Stock of any class at any time
outstanding shall include all shares of Common Stock of that class then owned or
held by or for the account of the Company.
(h) Irrespective of any adjustment or change in the Purchase Price
or the number of Units or other securities actually purchasable under each
Warrant, the Warrants theretofore and thereafter purchased may continue to
express the Purchase Price and the number of Units or other securities
purchasable thereunder as such price and number of Units were expressed in the
Warrants when initially issued.
7. Registration Rights Under the Securities Act of 1933.
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(a) Optional Registrations. If at any time or times after the first
annual anniversary of the Effective Date and before the seventh annual
anniversary of the Effective Date, the Company shall determine to register any
shares of its Common Stock or securities convertible into or exchangeable or
exercisable for shares of the Common Stock under the Securities Act of 1933, as
amended (the "Act") (whether in connection with a public offering of securities
by the Company (a "primary offering"), a public offering of securities by
stockholders (a "secondary offering"), or both, but not in connection with a
registration effected solely to implement an employee benefit plan or a
transaction to which Rule 145 or any other similar rule of the Securities and
Exchange Commission (the "Commission") under the Act is applicable), the Company
will promptly give written notice thereof to the holders of Registrable
Securities (as hereinafter defined in paragraph 7(d) below) then outstanding
(the "Holders"). In connection with any such registration, the Company will use
its best efforts to effect the registration under the Act of all Registrable
Securities which such Holders may request in a writing delivered to the Company
within 15 days after delivery of such notice by the Company pursuant to Section
10 hereof; provided, however, that in the case of the registration of shares of
Common Stock by the Company in connection with an underwritten public offering,
if the underwriter determines that a limitation on the number of shares to be
underwritten is required, the underwriter may (subject to the allocation
priority set forth below) exclude from such registration and underwriting some
or all of the Registrable Securities which would otherwise be underwritten
pursuant to the notice described herein. The Company shall advise all Holders
that have requested inclusion of Registrable Securities in such underwritten
offering (the "Requesting Holders") promptly after such determination by the
underwriter, and the number of shares of securities that are entitled to be
included in the registration and underwriting (other than those to be sold for
the account of the Company) shall be allocated among the Requesting Holders (but
not among any other holders of securities of the Company) in proportion, as
nearly as practicable, to their respective holdings of Registrable Securities.
All expenses of the registration and offering (including transfer taxes on
shares being sold by the Requesting Holders), except for the fees and expenses
of counsel for the Requesting Holders shall be borne by the Company, except that
the Requesting Holders shall bear underwriting discounts and selling commissions
attributable to their Registrable Securities being registered. Without in any
way limiting the types of registrations to which this paragraph 7(a) shall
apply, in the event that the Company shall effect a shelf registration under
Rule 415 promulgated under the Securities Act, or any other similar rule or
regulation ("Rule 415"), the Company shall take all necessary action, including,
without limitation, the filing of post-effective amendments, to permit the
Requesting Holders to include their shares in such registration in accordance
with the terms of this paragraph 7(a).
(b) Required Registration. If on any one occasion after the first
annual anniversary of the Effective Date and before the fifth annual anniversary
of the Effective Date, one or more of the Holders holding at least sixty percent
(60%) of the Registrable Securities then held by all of the Holders shall notify
the Company in writing that he or they intend to offer or cause to be offered
for public sale all or any portion of his or their Registrable Securities having
an aggregate proposed offering price of not less than $750,000.00, the Company
will notify all of the Holders of Registrable Securities who would be entitled
to notice of a proposed registration under paragraph 7(a) above of its receipt
of such notification from such Holder or Holders. Upon the written request of
any such Holder delivered to the Company within 15 days after delivery by the
Company of such notification pursuant to Section 10 hereof, the Company will use
its best efforts to cause such of the Registrable Securities as may be requested
by any Holders (including the Holder or Holders giving the initial notice of
intent to register hereunder) to be registered under the Securities Act in
accordance with the terms of this paragraph 7(b), which registration may be
under any form of registration statement eligible for use by the Company for
such purpose. All expenses of such registration and offering shall be borne by
the Company, except the reasonable fees and expenses of counsel for the Holders
and selling discounts and commissions, if any. If the Company shall furnish to
the Holders requesting a registration statement under this 7(b) a certificate
signed by the President of the Company stating that, in the good faith judgment
of the Board of Directors,
-5-
it would not be in the best interests of the Company and its stockholders
generally for such registration statement to be filed, the Company shall have
the right to defer such filing for a period of not more than 90 days after the
receipt of the request for registration; provided, however, that the Company may
not utilize this right to defer more than once in any twelve-month period. The
Company shall not be required to cause a registration statement requested
pursuant to this paragraph 7(b) to become effective prior to 90 days following
the effective date of a registration statement initiated by the Company, if the
request for registration has been received by the Company subsequent to the
giving of written notice by the Company, made in good faith, to the Holders of
Registrable Securities to the effect that the Company is commencing to prepare a
Company-initiated registration statement (other than a registration effected
solely to implement an employee benefit plan or a transaction to which Rule 145
or any other similar rule of the Commission under the Securities Act is
applicable); provided, however, that the Company shall use its best efforts to
achieve such effectiveness promptly following such 90-day period if the request
pursuant to this paragraph 7(b) has been made prior to the expiration of such
90-day period. If so requested by any Holder in connection with a registration
under this paragraph, the Company shall take such steps as are required to
register such Holder's Registrable Securities for sale on a delayed or
continuous basis under Rule 415, and also take such steps as are required to
keep any registration effective until the earlier of (i) all of such Holder's
Registrable Securities registered thereunder are sold, (ii) the Registration
Securities are eligible for sale pursuant to Rule 144, or (iii) nine months from
the effective date of the Registration Statement covering such registerable
securities. The obligation of the Company hereunder shall be deemed satisfied
only when a registration statement covering all shares of Registrable Securities
specified in notices received as aforesaid shall have become effective and, if
the method of disposition is a firm commitment underwritten public offering, all
such shares have been sold pursuant thereto. In connection with such a firm
commitment underwriting, the Company shall have the right to include in the
registration statement therefor shares of Common Stock to be offered and sold
for the account of the Company; provided, however, that no Registrable Shares
shall be excluded from such registration and underwriting by reason of the
inclusion of any securities for the Company's account.
If the method of disposition is an underwritten public
offering, the Company may designate the managing underwriter of such offering,
subject to approval of the holders of a majority of the Registrable Securities
to be sold in such offering, which approval shall not be unreasonably withheld
or delayed.
(c) Registrable Securities. For the purposes of this Section 7, the
term Registrable Securities shall mean any Common Stock issued or issuable upon
exercise hereof (or any (i) Warrant(s) issued in replacement hereof or thereof),
(ii) any Purchase Warrants issued or issuable upon exercise thereof, (iii) any
Common Stock issued or issuable upon exercise of the Purchase Warrants, and (iv)
any Common Stock issued or issuable with respect to the Common Stock underlying
this Warrant, any other such Warrants or any Purchase Warrants by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization.
In connection with any registration statement which pertains to
Registerable Securities, the selling Holders shall (i) enter into any reasonable
underwriting agreement required by the proposed underwriter for the selling
Holders, if any, and (ii) immediately notify the Company, at any time when a
prospectus relating to the Holder's Registrable Securities is required to be
delivered under the Act, of the happening of any event relating to information
respecting such Holder as a result of which the prospectus which forms a part of
such registration statement contains an untrue statement of a material fact or
omits any material fact necessary to make the statements therein not misleading.
-6-
(d) Further Obligations of the Company. Whenever under the preceding
paragraphs of this Section 7 the Company is required hereunder to register any
Registrable Securities, it agrees that it shall also do the following:
(i) Use its best efforts to diligently prepare and file with
the Commission a registration statement and such amendments and supplements to
said registration statement and the prospectus used in connection therewith as
may be necessary to keep said registration statement effective and to comply
with the provisions of the Act with respect to the sale of securities covered by
said registration statement for the period necessary to complete the proposed
public offering;
(ii) Furnish to each selling Holder such copies of each
preliminary and final prospectus and such other documents as such Holder may
reasonably request to facilitate the public offering of his Registrable
Securities;
(iii) Enter into any reasonable underwriting agreement
required by the proposed underwriter for the selling Holders, if any;
(iv) Use its best efforts to register or qualify the
securities covered by said registration statement under the securities or
blue-sky laws of such jurisdictions as any selling Holder may reasonably
request, provided that the Company shall not be required to register or qualify
the securities in any jurisdictions which require it to qualify to do business
or subject itself to general service of process therein;
(v) Immediately notify each selling Holder, at any time when a
prospectus relating to his Registrable Securities is required to be delivered
under the Act, of the happening of any event as a result of which such
prospectus contains an untrue statement of a material fact or omits any material
fact necessary to make the statements therein not misleading, and, at the
request of any such selling Holder, prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus will not contain any untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein not misleading;
(vi) Cause all such Registrable Securities to be listed on or
included in each securities exchange or quotation system on which similar
securities issued by the Company are then listed.
(vii) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and make generally available
to its security holders, in each case as soon as practicable, but not later than
30 days after the close of the period covered thereby an earnings statement of
the Company which will satisfy the provisions of Section 11(a) of the Securities
Act; and
(viii) Obtain and furnish to each selling Holder, immediately
prior to the effectiveness of the registration statement (and, in the case of an
underwritten offering, at the time of delivery of any Registrable Securities
sold pursuant thereto), a cold comfort letter from the Company' s independent
public accountants in customary form and covering such matters of the type
customarily covered by cold comfort letters as the holders of a majority of the
Registrable Securities being sold reasonably request.
(e) Indemnification. Incident to any registration statement referred
to in this Section 7, and subject to applicable law, the Company will indemnify
and hold harmless each underwriter, each Holder of Registrable Securities
(including its respective partners, directors, officers, employees and
-7-
agents) so registered, and each person who controls any of them within the
meaning of Section 15 of the Act or Section 20 of the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder (the
"Exchange Act"), from and against any and all losses, claims, damages, expenses
and liabilities, joint or several (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claim asserted), to which they, or any of
them, may become subject under the Act, the Exchange Act or otherwise, insofar
as such losses claims damages or liabilities arise out of or are based on (i)
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement (including any related preliminary or definitive
prospectus, or any amendment or supplement to such registration statement or
prospectus), (ii) any omission or alleged omission to state in such document a
material fact required to be stated in it or necessary to make the statements in
it, in light of the circumstances under which made, not misleading, or (iii) any
violation by the Company of the Securities Act, any state securities or blue sky
laws or any rule or regulation thereunder in connection with such registration.
The indemnity agreement of the Company contained in this subsection 7(e) shall
not apply to amounts paid in settlement of any loss, claim, damage, expense or
liability if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld), nor shall the Company be
liable to any person for any loss, claim, damage, expense or liability arising
from any written information such person furnishes to the Company expressly for
use in connection with a registration statement or from the person's failure to
deliver, at the time required by the Act, a final or amended prospectus that
corrects any actual or alleged untrue statement or omission in any preliminary
prospectus. With respect to any untrue statement or omission or alleged untrue
statement or omission in the information furnished in writing to the Company by
such Holder expressly for use in such registration statement, such Holder will
indemnify and hold harmless each underwriter, the Company (including its
directors, officers, employees and agents), each other Holder of Registrable
Securities (including its respective partners directors, officers, employees and
agents) so registered, and each person who controls any of them within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, expenses and liabilities,
joint or several, to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise to the same extent provided in the
immediately preceding sentence. In no event, however, shall the liability of a
Holder for indemnification under this subparagraph 7(f) exceed the proceeds
received by such Holder from its sale of Registrable Securities under such
registration statement.
(f) Notice and Defense. Promptly after any indemnified party under
subsection 7(e) receives notice of the commencement of any action (including any
governmental action), such indemnified party shall, if it intends to make a
claim against any indemnifying party under subsection 7(e), deliver to the
indemnifying party a written notice describing the action. The indemnifying
party shall have the right to participate in and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to assume and control the defense with counsel mutually satisfactory to the
parties. An indemnified party shall have the right to retain its own counsel, at
the indemnifying party's expense, if an actual or potential conflict of interest
prevents representations of such indemnified party by the counsel retained by
the indemnifying party. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under subsection
7(e) to the extent of such prejudice.
8. Transfer to Comply with the Securities Act of 1933.
(a) This Warrant and the shares of Common Stock, Purchase Warrants,
or any other security issued or issuable upon exercise of this Warrant may not
be offered or sold except in compliance
-8-
with the Act and then only against receipt of an agreement of such person to
whom such offer or sale is made to comply with the provisions of this Section 8
with respect to any resale or other disposition of such securities; except that
no such agreement shall be required from any person purchasing shares of Common
Stock or Purchase Warrants pursuant to a registration statement effective under
the Act.
(b) The Holder agrees that, prior to the disposition of any shares
of Common Stock or Purchase Warrants purchased on the exercise hereof under
circumstances that might require registration of such securities under the Act,
the Holder shall give written notice to the Company, expressing his intention as
to the disposition to be made of such shares. Promptly upon receiving such
notice, the Company shall present copies thereof to its counsel. If, in the
opinion of such counsel, the proposed disposition does not require registration
under the Act or any similar federal or state statute then in force, of the
shares of Common Stock, Purchase Warrants, or any other security issuable or
issued upon the exercise of this Warrant, the Company shall, as promptly as
practicable, notify the Holder of such opinion, whereupon the Holder shall be
entitled to dispose of such shares of Common Stock, Purchase Warrants, or other
security issuable or issued upon the exercise hereof, all in accordance with the
terms of the notice delivered by the Holder to the Company.
(c) The Company may cause a legend in substantially the form set
forth on the first page of this Warrant on each Warrant and certificate
representing shares of Common Stock or any other security issued or issuable
upon exercise of this Warrant not theretofore distributed to the public or sold
to underwriters for distribution to the public pursuant to Section 7 hereof,
unless counsel for the Company is of the opinion as to any such certificate that
such legend is unnecessary.
9. Applicable Law. This Warrant shall be governed by, and construed in
accordance with, the laws of the State of Delaware.
10. Notice. All notices and other communications provided for herein shall
be in writing and telecopied, mailed or to the intended recipient to the
following addresses: (i) if the Holder, to Paradise Valley Securities, Inc.,
00000 Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000; and (ii) if to
the Company, at its address appearing on page 1 of this Warrant. The Holder or
the Company may change its address for delivery of notice to such other address
as may be designated therefor by written notice to the other hereunder. All such
communications shall be deemed to have been duly given when transmitted by
telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid.
11. Survival. The various rights and obligations of the Holder and of the
Company as set forth in Sections 7 and 8 herein shall survive the exercise and
surrender of this Warrant.
12. Successors and Assigns. All the covenants and provisions of this
Warrant shall bind and inure to the benefit of the Holder and the Company and
their respective successors and assigns.
13. Descriptive Headings. The descriptive headings of the several Sections
of this Warrant are inserted for convenience only and do not constitute a part
of this Warrant.
-9-
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed and delivered.
PACIFIC BIOMETRICS, INC.
By: ________________________________________
Xxxx X. Xxxxx, President
Dated: ___________, 1996
Attest:
___________________________________
________________________, Secretary
-10-
ASSIGNMENT
(to be completed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned assigns and transfers to the Assignee
named below all of the rights of the undersigned under the Warrant, with respect
to the number of shares of Common Stock and the number of Purchase Warrants set
forth below:
Number of
Name of Number of Purchase
Assignee Address Shares Warrants
-------- ------- ------ --------
The undersigned does hereby irrevocably constitute and appoint
______________ as Attorney-in-fact to transfer such right on the books of the
Company, with full power of substitution.
Dated: ___________________, 199__.
_________________________________________
Signature
-11-
SUBSCRIPTION
(To be executed only upon exercise of Warrant)
PACIFIC BIOMETRICS INC.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
The undersigned hereby elects to purchase, pursuant to the provisions of
the within Warrant held by the undersigned, _________ _________________________
to shares of Common Stock of PACIFIC BIOMETRICS, INC., a Delaware corporation.
Payment of the Purchase Price per share accompanies this Subscription.
DATED: ____________________________.
____________________________________________
By: ________________________________________
Its: _______________________________________
-12-
