[EXHIBIT 10.9.2]
THIS WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. EXCEPT AS OTHERWISE SET FORTH
HEREIN OR IN A SECURITIES PURCHASE AGREEMENT DATED AS OF
APRIL 21, 2006, NEITHER THIS WARRANT NOR ANY OF SUCH
SHARES MAY BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES
UNDER SAID ACT OR, AN OPINION OF COUNSEL, IN FORM,
SUBSTANCE AND SCOPE, CUSTOMARY FOR OPINIONS OF COUNSEL IN
COMPARABLE TRANSACTIONS, THAT REGISTRATION IS NOT REQUIRED
UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 OR
REGULATION S UNDER SUCH ACT.
Right to
Purchase
17,715,000
Shares
of Common
Stock, par
value $.001
per share
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, AJW OFFSHORE, LTD. or
its registered assigns, is entitled to purchase from Med Gen, Inc., a
Nevada corporation (the "Company"), at any time or from time to time
during the period specified in Paragraph 2 hereof, 17,715,000 fully
paid and nonassessable shares of the Company's Common Stock, par value
$.001 per share (the "Common Stock"), at an exercise price per share
equal to $.05 (the "Exercise Price"). The term "Warrant Shares," as
used herein, refers to the shares of Common Stock purchasable hereunder.
The Warrant Shares and the Exercise Price are subject to adjustment as
provided in Paragraph 4 hereof. The term "Warrants" means this Warrant
and the other warrants issued pursuant to that certain Securities
Purchase Agreement, dated April 21, 2006, by and among the Company
and the Buyers listed on the execution page thereof (the "Securities
Purchase Agreement"), including any additional warrants issuable
pursuant to Section 4(l) thereof.
This Warrant is subject to the following terms, provisions, and
conditions:
1. Manner of Exercise; Issuance of Certificates; Payment for
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Shares. Subject to the provisions hereof, this Warrant may be
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exercised by the holder hereof, in whole or in part, by the surrender
of this Warrant, together with a completed exercise agreement in the
form attached hereto (the "Exercise Agreement"), to the Company during
normal business hours on any business day at the Company's principal
executive offices (or such other office or agency of the Company as it
may designate by notice to the holder hereof), and upon (i) payment to
the Company in cash, by certified or official bank check or by wire
transfer for the account of the Company of the Exercise Price for the
Warrant Shares specified in the Exercise Agreement or (ii) if the
resale of the Warrant Shares by the holder is not then registered
pursuant to an effective registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), delivery to the
Company of a written notice of an election to effect a "Cashless
Exercise" (as defined in Section 11(c) below) for the Warrant Shares
specified in the Exercise Agreement. The Warrant Shares so purchased
shall be deemed to be issued to the holder hereof or such holder's
designee, as the record owner of such shares, as of the close of
business on the date on which this Warrant shall have been
surrendered, the completed Exercise Agreement shall have been deliv-
ered, and payment shall have been made for such shares as set forth
above. Certificates for the Warrant Shares so purchased, representing
the aggregate number of shares specified in the Exercise Agreement,
shall be delivered to the holder hereof within a reasonable time, not
exceeding three (3) business days, after this Warrant shall have been
so exercised. The certificates so delivered shall be in such
denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or such other name as shall be
designated by such holder. If this Warrant shall have been exercised
only in part, then, unless this Warrant has expired, the Company
shall, at its expense, at the time of delivery of such certificates,
deliver to the holder a new Warrant representing the number of shares
with respect to which this Warrant shall not then have been exercised.
In addition to all other available remedies at law or in equity, if
the Company fails to deliver certificates for the Warrant Shares
within three (3) business days after this Warrant is exercised, then
the Company shall pay to the holder in cash a penalty (the "Penalty")
equal to 2% of the number of Warrant Shares that the holder is
entitled to multiplied by the Market Price (as hereinafter defined)
for each day that the Company fails to deliver certificates for the
Warrant Shares. For example, if the holder is entitled to 100,000
Warrant Shares and the Market Price is $2.00, then the Company shall
pay to the holder $4,000 for each day that the Company fails to
deliver certificates for the Warrant Shares. The Penalty shall be
paid to the holder by the fifth day of the month following the month
in which it has accrued.
Notwithstanding anything in this Warrant to the contrary,
in no event shall the holder of this Warrant be entitled to exercise a
number of Warrants (or portions thereof) in excess of the number of
Warrants (or portions thereof) upon exercise of which the sum of (i)
the number of shares of Common Stock beneficially owned by the holder
and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unexercised
Warrants and the unexercised or unconverted portion of any other
securities of the Company (including the Notes (as defined in the
Securities Purchase Agreement)) subject to a limitation on conversion
or exercise analogous to the limitation contained herein) and (ii) the
number of shares of Common Stock issuable upon exercise of the
Warrants (or portions thereof) with respect to which the determination
described herein is being made, would result in beneficial ownership
by the holder and its affiliates of more than 4.9% of the outstanding
shares of Common Stock. For purposes of the immediately preceding
sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and
Regulation 13D-G thereunder, except as otherwise provided in clause
(i) of the preceding sentence. Notwithstanding anything to the
contrary contained herein, the limitation on exercise of this Warrant
set forth herein may not be amended without (i) the written consent of
the holder hereof and the Company and (ii) the approval of a majority
of shareholders of the Company.
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2. Period of Exercise. This Warrant is exercisable at any
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time or from time to time on or after the date on which this Warrant
is issued and delivered pursuant to the terms of the Securities
Purchase Agreement and before 6:00 p.m., New York, New York time on
the seventh (7th) anniversary of the date of issuance (the "Exercise
Period").
3. Certain Agreements of the Company. The Company hereby
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covenants and agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will,
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upon issuance in accordance with the terms of this Warrant, be validly
issued, fully paid, and nonassessable and free from all taxes, liens,
and charges with respect to the issue thereof.
(b) Reservation of Shares. During the Exercise Period,
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the Company shall at all times have authorized, and reserved for the
purpose of issuance upon exercise of this Warrant, a sufficient number
of shares of Common Stock to provide for the exercise of this Warrant.
(c) Listing. The Company shall promptly secure the
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listing of the shares of Common Stock issuable upon exercise of the
Warrant upon each national securities exchange or automated quotation
system, if any, upon which shares of Common Stock are then listed
(subject to official notice of issuance upon exercise of this Warrant)
and shall maintain, so long as any other shares of Common Stock shall
be so listed, such listing of all shares of Common Stock from time to
time issuable upon the exercise of this Warrant; and the Company shall
so list on each national securities exchange or automated quotation
system, as the case may be, and shall maintain such listing of, any
other shares of capital stock of the Company issuable upon the
exercise of this Warrant if and so long as any shares of the same
class shall be listed on such national securities exchange or
automated quotation system.
(d) Certain Actions Prohibited. The Company will not,
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by amendment of its charter 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 to be observed or
performed by it hereunder, but will at all times in good faith assist
in the carrying out of all the provisions of this Warrant and in the
taking of all such action as may reasonably be requested by the holder
of this Warrant in order to protect the exercise privilege of the
holder of this Warrant against dilution or other impairment,
consistent with the tenor and purpose of this Warrant. Without
limiting the generality of the foregoing, the Company (i) will not
increase the par value of any shares of Common Stock receivable upon
the exercise of this Warrant above the Exercise Price then in effect,
and (ii) will take all such actions as may be necessary or appropriate
in order that the Company may validly and legally issue fully paid and
nonassessable shares of Common Stock upon the exercise of this
Warrant.
(e) Successors and Assigns. This Warrant will be binding
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upon any entity succeeding to the Company by merger, consolidation, or
acquisition of all or substantially all the Company's assets.
4. Antidilution Provisions. During the Exercise Period, the
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Exercise Price and the number of Warrant Shares shall be subject to
adjustment from time to time as provided in this Paragraph 4.
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In the event that any adjustment of the Exercise Price as
required herein results in a fraction of a cent, such Exercise Price
shall be rounded up to the nearest cent.
(a) Adjustment of Exercise Price and Number of Shares upon
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Issuance of Common Stock. Except as otherwise provided in Paragraphs
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4(c) and 4(e) hereof, if and whenever on or after the date of issuance
of this Warrant, the Company issues or sells, or in accordance with
Paragraph 4(b) hereof is deemed to have issued or sold, any shares of
Common Stock for no consideration or for a consideration per share
(before deduction of reasonable expenses or commissions or
underwriting discounts or allowances in connection therewith) less
than the Market Price on the date of issuance (a "Dilutive Issuance"),
then immediately upon the Dilutive Issuance, the Exercise Price will
be reduced to a price determined by multiplying the Exercise Price in
effect immediately prior to the Dilutive Issuance by a fraction, (i)
the numerator of which is an amount equal to the sum of (x) the number
of shares of Common Stock actually outstanding immediately prior to
the Dilutive Issuance, plus (y) the quotient of the aggregate
consideration, calculated as set forth in Paragraph 4(b) hereof,
received by the Company upon such Dilutive Issuance divided by the
Market Price in effect immediately prior to the Dilutive Issuance, and
(ii) the denominator of which is the total number of shares of Common
Stock Deemed Outstanding (as defined below) immediately after the
Dilutive Issuance.
(b) Effect on Exercise Price of Certain Events. For
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purposes of determining the adjusted Exercise Price under Paragraph
4(a) hereof, the following will be applicable:
(i) Issuance of Rights or Options. If the Company in
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any manner issues or grants any warrants, rights or options, whether
or not immediately exercisable, to subscribe for or to purchase Common
Stock or other securities convertible into or exchangeable for Common
Stock ("Convertible Securities") (such warrants, rights and options to
purchase Common Stock or Convertible Securities are hereinafter
referred to as "Options") and the price per share for which Common
Stock is issuable upon the exercise of such Options is less than the
Market Price on the date of issuance or grant of such Options, then
the maximum total number of shares of Common Stock issuable upon the
exercise of all such Options will, as of the date of the issuance or
grant of such Options, be deemed to be outstanding and to have been
issued and sold by the Company for such price per share. For purposes
of the preceding sentence, the "price per share for which Common Stock
is issuable upon the exercise of such Options" is determined by
dividing (i) the total amount, if any, received or receivable by the
Company as consideration for the issuance or granting of all such
Options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise of all
such Options, plus, in the case of Convertible Securities issuable
upon the exercise of such Options, the minimum aggregate amount of
additional consideration payable upon the conversion or exchange
thereof at the time such Convertible Securities first become
convertible or exchangeable, by (ii) the maximum total number of
shares of Common Stock issuable upon the exercise of all such Options
(assuming full conversion of Convertible Securities, if applicable).
No further adjustment to the Exercise Price will be made upon the
actual issuance of such Common Stock upon the exercise of such Options
or upon the conversion or exchange of Convertible Securities issuable
upon exercise of such Options.
(ii) Issuance of Convertible Securities. If the
----------------------------------
Company in any manner issues or sells any Convertible Securities,
whether or not immediately convertible (other than where the same are
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issuable upon the exercise of Options) and the price per share for
which Common Stock is issuable upon such conversion or exchange is
less than the Market Price on the date of issuance, then the maximum
total number of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities will, as of the date of
the issuance of such Convertible Securities, be deemed to be
outstanding and to have been issued and sold by the Company for such
price per share. For the purposes of the preceding sentence, the
"price per share for which Common Stock is issuable upon such
conversion or exchange" is determined by dividing (i) the total
amount, if any, received or receivable by the Company as consideration
for the issuance or sale of all such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any, payable
to the Company upon the conversion or exchange thereof at the time
such Convertible Securities first become convertible or exchangeable,
by (ii) the maximum total number of shares of Common Stock issuable
upon the conversion or exchange of all such Convertible Securities.
No further adjustment to the Exercise Price will be made upon the
actual issuance of such Common Stock upon conversion or exchange of
such Convertible Securities.
(iii) Change in Option Price or Conversion Rate.
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If there is a change at any time in (i) the amount of additional
consideration payable to the Company upon the exercise of any Options;
(ii) the amount of additional consideration, if any, payable to the
Company upon the conversion or exchange of any Convertible Securities;
or (iii) the rate at which any Convertible Securities are convertible
into or exchangeable for Common Stock (other than under or by reason
of provisions designed to protect against dilution), the Exercise
Price in effect at the time of such change will be readjusted to the
Exercise Price which would have been in effect at such time had such
Options or Convertible Securities still outstanding provided for such
changed additional consideration or changed conversion rate, as the
case may be, at the time initially granted, issued or sold.
(iv) Treatment of Expired Options and Unexercised
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Convertible Securities. If, in any case, the total number of shares
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of Common Stock issuable upon exercise of any Option or upon
conversion or exchange of any Convertible Securities is not, in fact,
issued and the rights to exercise such Option or to convert or
exchange such Convertible Securities shall have expired or terminated,
the Exercise Price then in effect will be readjusted to the Exercise
Price which would have been in effect at the time of such expiration
or termination had such Option or Convertible Securities, to the
extent outstanding immediately prior to such expiration or termination
(other than in respect of the actual number of shares of Common Stock
issued upon exercise or conversion thereof), never been issued.
(v) Calculation of Consideration Received. If
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any Common Stock, Options or Convertible Securities are issued, granted
or sold for cash, the consideration received therefor for purposes of
this Warrant will be the amount received by the Company therefor,
before deduction of reasonable commissions, underwriting discounts or
allowances or other reasonable expenses paid or incurred by the
Company in connection with such issuance, grant or sale. In case any
Common Stock, Options or Convertible Securities are issued or sold for
a consideration part or all of which shall be other than cash, the
amount of the consideration other than cash received by the Company
will be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of
consideration received by the Company will be the Market Price thereof
as of the date of receipt. In case any Common Stock, Options or
Convertible Securities are issued in connection with any acquisition,
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merger or consolidation in which the Company is the surviving
corporation, the amount of consideration therefor will be deemed to be
the fair value of such portion of the net assets and business of the
non-surviving corporation as is attributable to such Common Stock,
Options or Convertible Securities, as the case may be. The fair value
of any consideration other than cash or securities will be determined
in good faith by the Board of Directors of the Company.
(vi) Exceptions to Adjustment of Exercise Price.
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No adjustment to the Exercise Price will be made (i) upon the exercise
of any warrants, options or convertible securities granted, issued and
outstanding on the date of issuance of this Warrant; (ii) upon the
grant or exercise of any stock or options which may hereafter be
granted or exercised under any employee benefit plan, stock option
plan or restricted stock plan of the Company now existing or to be
implemented in the future, so long as the issuance of such stock or
options is approved by a majority of the independent members of the
Board of Directors of the Company or a majority of the members of a
committee of independent directors established for such purpose; or
(iii) upon the exercise of the Warrants.
(c) Subdivision or Combination of Common Stock. If the
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Company at any time subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) the
shares of Common Stock acquirable hereunder into a greater number of
shares, then, after the date of record for effecting such subdivision,
the Exercise Price in effect immediately prior to such subdivision
will be proportionately reduced. If the Company at any time combines
(by reverse stock split, recapitalization, reorganization,
reclassification or otherwise) the shares of Common Stock acquirable
hereunder into a smaller number of shares, then, after the date of
record for effecting such combination, the Exercise Price in effect
immediately prior to such combination will be proportionately
increased.
(d) Adjustment in Number of Shares. Upon each adjustment
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of the Exercise Price pursuant to the provisions of this Paragraph 4,
the number of shares of Common Stock issuable upon exercise of this
Warrant shall be adjusted by multiplying a number equal to the
Exercise Price in effect immediately prior to such adjustment by the
number of shares of Common Stock issuable upon exercise of this
Warrant immediately prior to such adjustment and dividing the product
so obtained by the adjusted Exercise Price.
(e) Consolidation, Merger or Sale. In case of any
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consolidation of the Company with, or merger of the Company into any
other corporation, or in case of any sale or conveyance of all or
substantially all of the assets of the Company other than in
connection with a plan of complete liquidation of the Company, then as
a condition of such consolidation, merger or sale or conveyance,
adequate provision will be made whereby the holder of this Warrant
will have the right to acquire and receive upon exercise of this
Warrant in lieu of the shares of Common Stock immediately theretofore
acquirable upon the exercise of this Warrant, such shares of stock,
securities or assets as may be issued or payable with respect to or in
exchange for the number of shares of Common Stock immediately
theretofore acquirable and receivable upon exercise of this Warrant
had such consolidation, merger or sale or conveyance not taken place.
In any such case, the Company will make appropriate provision to
insure that the provisions of this Paragraph 4 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 will not effect any consolidation, merger or
sale or conveyance unless prior to the consummation thereof, the
successor corporation (if other than the Company) assumes by written
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instrument the obligations under this Paragraph 4 and the obligations
to deliver to the holder of this Warrant such shares of stock,
securities or assets as, in accordance with the foregoing provisions,
the holder may be entitled to acquire.
(f) Distribution of Assets. In case the Company shall
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declare or make any distribution of its assets (including cash) to
holders of Common Stock as a partial liquidating dividend, by way of
return of capital or otherwise, then, after the date of record for
determining shareholders entitled to such distribution, but prior to
the date of distribution, the holder of this Warrant shall be entitled
upon exercise of this Warrant for the purchase of any or all of the
shares of Common Stock subject hereto, to receive the amount of such
assets which would have been payable to the holder had such holder
been the holder of such shares of Common Stock on the record date for
the determination of shareholders entitled to such distribution.
(g) Notice of Adjustment. Upon the occurrence of any
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event which requires any adjustment of the Exercise Price, then, and
in each such case, the Company shall give notice thereof to the holder
of this Warrant, which notice shall state the Exercise Price resulting
from such adjustment and the increase or decrease in the number of
Warrant Shares purchasable at such price upon exercise, setting forth
in reasonable detail the method of calculation and the facts upon
which such calculation is based. Such calculation shall be certified
by the Chief Financial Officer of the Company.
(h) Minimum Adjustment of Exercise Price. No adjustment
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of the Exercise Price shall be made in an amount of less than 1% of
the Exercise Price in effect at the time such adjustment is otherwise
required to be made, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the next
subsequent adjustment which, together with any adjustments so carried
forward, shall amount to not less than 1% of such Exercise Price.
(i) No Fractional Shares. No fractional shares of Common
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Stock are to be issued upon the exercise of this Warrant, but the
Company shall pay a cash adjustment in respect of any fractional share
which would otherwise be issuable in an amount equal to the same
fraction of the Market Price of a share of Common Stock on the date of
such exercise.
(j) Other Notices. In case at any time:
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(i) the Company shall declare any dividend upon
the Common Stock payable in shares of stock of any class or make any other
distribution (including dividends or distributions payable in cash out
of retained earnings) to the holders of the Common Stock;
(ii) the Company shall offer for subscription pro
rata to the holders of the Common Stock any additional shares of stock
of any class or other rights;
(iii) there shall be any capital reorganization of
the Company, or reclassification of the Common Stock, or consolidation
or merger of the Company with or into, or sale of all or substantially
all its assets to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
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then, in each such case, the Company shall give to the holder of this
Warrant (a) notice of the date on which the books of the Company shall
close or a record shall be taken for determining the holders of Common
Stock entitled to receive any such dividend, distribution, or
subscription rights or for determining the holders of Common Stock
entitled to vote in respect of any such reorganization,
reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding-up, notice of the date (or, if not
then known, a reasonable approximation thereof by the Company) when
the same shall take place. Such notice shall also specify the date on
which the holders of Common Stock shall be entitled to receive such
dividend, distribution, or subscription rights or to exchange their
Common Stock for stock or other securities or property deliverable
upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, or winding-up, as the case may be.
Such notice shall be given at least 30 days prior to the record date
or the date on which the Company's books are closed in respect
thereto. Failure to give any such notice or any defect therein shall
not affect the validity of the proceedings referred to in clauses (i),
(ii), (iii) and (iv) above.
(k) Certain Events. If any event occurs of the type
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contemplated by the adjustment provisions of this Paragraph 4 but not
expressly provided for by such provisions, the Company will give
notice of such event as provided in Paragraph 4(g) hereof, and the
Company's Board of Directors will make an appropriate adjustment in
the Exercise Price and the number of shares of Common Stock acquirable
upon exercise of this Warrant so that the rights of the holder shall
be neither enhanced nor diminished by such event.
(l) Certain Definitions.
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(i) "Common Stock Deemed Outstanding" shall mean
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the number of shares of Common Stock actually outstanding (not including
shares of Common Stock held in the treasury of the Company), plus (x)
pursuant to Paragraph 4(b)(i) hereof, the maximum total number of
shares of Common Stock issuable upon the exercise of Options, as of
the date of such issuance or grant of such Options, if any, and (y)
pursuant to Paragraph 4(b)(ii) hereof, the maximum total number of
shares of Common Stock issuable upon conversion or exchange of
Convertible Securities, as of the date of issuance of such Convertible
Securities, if any.
(ii) "Market Price," as of any date, (i) means the
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average of the last reported sale prices for the shares of Common
Stock on the OTCBB for the five (5) Trading Days immediately preceding
such date as reported by Bloomberg, or (ii) if the OTCBB is not the
principal trading market for the shares of Common Stock, the average
of the last reported sale prices on the principal trading market for
the Common Stock during the same period as reported by Bloomberg, or
(iii) if market value cannot be calculated as of such date on any of
the foregoing bases, the Market Price shall be the fair market value
as reasonably determined in good faith by (a) the Board of Directors
of the Company or, at the option of a majority-in-interest of the
holders of the outstanding Warrants by (b) an independent investment
bank of nationally recognized standing in the valuation of businesses
similar to the business of the corporation. The manner of determining
the Market Price of the Common Stock set forth in the foregoing
definition shall apply with respect to any other security in respect
of which a determination as to market value must be made hereunder.
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(iii) "Common Stock," for purposes of this
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Paragraph 4, includes the Common Stock, par value $.001 per share, and
any additional class of stock of the Company having no preference as to
dividends or distributions on liquidation, provided that the shares
purchasable pursuant to this Warrant shall include only shares of
Common Stock, par value $.001 per share, in respect of which this
Warrant is exercisable, or shares resulting from any subdivision or
combination of such Common Stock, or in the case of any
reorganization, reclassification, consolidation, merger, or sale of
the character referred to in Paragraph 4(e) hereof, the stock or other
securities or property provided for in such Paragraph.
5. Issue Tax. The issuance of certificates for Warrant Shares
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upon the exercise of this Warrant shall be made without charge to the
holder of this Warrant or such shares for any issuance tax or other
costs in respect thereof, provided that the Company shall not be
required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any certificate in a
name other than the holder of this Warrant.
6. No Rights or Liabilities as a Shareholder. This Warrant
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shall not entitle the holder hereof to any voting rights or other
rights as a shareholder of the Company. No provision of this Warrant,
in the absence of affirmative action by the holder hereof to purchase
Warrant Shares, and no mere enumeration herein of the rights or
privileges of the holder hereof, shall give rise to any liability of
such holder for the Exercise Price or as a shareholder of the Company,
whether such liability is asserted by the Company or by creditors of
the Company.
7. Transfer, Exchange, and Replacement of Warrant.
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(a) Restriction on Transfer. This Warrant and the rights
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granted to the holder hereof are transferable, in whole or in part,
upon surrender of this Warrant, together with a properly executed
assignment in the form attached hereto, at the office or agency of the
Company referred to in Paragraph 7(e) below, provided, however, that
any transfer or assignment shall be subject to the conditions set
forth in Paragraph 7(f) hereof and to the applicable provisions of the
Securities Purchase Agreement. Until due presentment for registration
of transfer on the books of the Company, the Company may treat the
registered holder hereof as the owner and holder hereof for all
purposes, and the Company shall not be affected by any notice to the
contrary. Notwithstanding anything to the contrary contained herein,
the registration rights described in Paragraph 8 are assignable only
in accordance with the provisions of that certain Registration Rights
Agreement, dated April 21, 2006, by and among the Company and the
other signatories thereto (the "Registration Rights Agreement").
(b) Warrant Exchangeable for Different Denominations.
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This Warrant is exchangeable, upon the surrender hereof by the holder
hereof at the office or agency of the Company referred to in Paragraph
7(e) below, for new Warrants of like tenor representing in the
aggregate the right to purchase the number of shares of Common Stock
which may be purchased hereunder, each of such new Warrants to
represent the right to purchase such number of shares as shall be
designated by the holder hereof at the time of such surrender.
(c) Replacement of Warrant. Upon receipt of evidence
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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, upon delivery of an indemnity
agreement reasonably satisfactory in form and amount to the Company,
or, in the case of any such mutilation, upon surrender and
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cancellation of this Warrant, the Company, at its expense, will
execute and deliver, in lieu thereof, a new Warrant of like tenor.
(d) Cancellation; Payment of Expenses. Upon the
---------------------------------
surrender of this Warrant in connection with any transfer, exchange,
or replacement as provided in this Paragraph 7, this Warrant shall
be promptly canceled by the Company. The Company shall pay all taxes
(other than securities transfer taxes) and all other expenses (other
than legal expenses, if any, incurred by the holder or transferees)
and charges payable in connection with the preparation, execution, and
delivery of Warrants pursuant to this Paragraph 7.
(e) Register. The Company shall maintain, at its
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principal executive offices (or such other office or agency of the
Company as it may designate by notice to the holder hereof), a
register for this Warrant, in which the Company shall record the name
and address of the person in whose name this Warrant has been issued,
as well as the name and address of each transferee and each prior
owner of this Warrant.
(f) Exercise or Transfer Without Registration. If, at
-----------------------------------------
the time of the surrender of this Warrant in connection with any exercise,
transfer, or exchange of this Warrant, this Warrant (or, in the case
of any exercise, the Warrant Shares issuable hereunder), shall not be
registered under the Securities Act of 1933, as amended (the
"Securities Act") and under applicable state securities or blue sky
laws, the Company may require, as a condition of allowing such
exercise, transfer, or exchange, (i) that the holder or transferee of
this Warrant, as the case may be, furnish to the Company a written
opinion of counsel, which opinion and counsel are acceptable to the
Company, to the effect that such exercise, transfer, or exchange may
be made without registration under said Act and under applicable state
securities or blue sky laws, (ii) that the holder or transferee
execute and deliver to the Company an investment letter in form and
substance acceptable to the Company and (iii) that the transferee be
an "accredited investor" as defined in Rule 501(a) promulgated under
the Securities Act; provided that no such opinion, letter or status as
an "accredited investor" shall be required in connection with a
transfer pursuant to Rule 144 under the Securities Act. The first
holder of this Warrant, by taking and holding the same, represents to
the Company that such holder is acquiring this Warrant for investment
and not with a view to the distribution thereof.
8. Registration Rights. The initial holder of this Warrant
-------------------
(and certain assignees thereof) is entitled to the benefit of such
registration rights in respect of the Warrant Shares as are set forth
in Section 2 of the Registration Rights Agreement.
9. Notices. All notices, requests, and other communications
-------
required or permitted to be given or delivered hereunder to the holder
of this Warrant shall be in writing, and shall be personally
delivered, or shall be sent by certified or registered mail or by
recognized overnight mail courier, postage prepaid and addressed, to
such holder at the address shown for such holder on the books of the
Company, or at such other address as shall have been furnished to the
Company by notice from such holder. All notices, requests, and other
communications required or permitted to be given or delivered
hereunder to the Company shall be in writing, and shall be personally
delivered, or shall be sent by certified or registered mail or by
recognized overnight mail courier, postage prepaid and addressed, to
the office of the Company at 7284 Palmetto Park Road, Suite 207, Boca
Raton, FL 33433, Attention: Chief Executive Officer, or at such other
address as shall have been furnished to the holder of this Warrant by
notice from the Company. Any such notice, request, or other
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communication may be sent by facsimile, but shall in such case be
subsequently confirmed by a writing personally delivered or sent by
certified or registered mail or by recognized overnight mail courier
as provided above. All notices, requests, and other communications
shall be deemed to have been given either at the time of the receipt
thereof by the person entitled to receive such notice at the address
of such person for purposes of this Paragraph 9, or, if mailed by
registered or certified mail or with a recognized overnight mail
courier upon deposit with the United States Post Office or such
overnight mail courier, if postage is prepaid and the mailing is
properly addressed, as the case may be.
10. Governing Law. THIS WARRANT SHALL BE ENFORCED, GOVERNED BY
-------------
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH
STATE, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. THE
PARTIES HERETO HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE
UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK, NEW YORK WITH
RESPECT TO ANY DISPUTE ARISING UNDER THIS WARRANT, THE AGREEMENTS
ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING.
BOTH PARTIES FURTHER AGREE THAT SERVICE OF PROCESS UPON A PARTY MAILED
BY FIRST CLASS MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE
OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR PROCEEDING. NOTHING
HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL NON-
APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE
AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR
IN ANY OTHER LAWFUL MANNER. THE PARTY WHICH DOES NOT PREVAIL IN ANY
DISPUTE ARISING UNDER THIS WARRANT SHALL BE RESPONSIBLE FOR ALL FEES
AND EXPENSES, INCLUDING ATTORNEYS' FEES, INCURRED BY THE PREVAILING
PARTY IN CONNECTION WITH SUCH DISPUTE.
11. Miscellaneous.
-------------
(a) Amendments. This Warrant and any provision hereof
----------
may only be amended by an instrument in writing signed by the Company
and the holder hereof.
(b) Descriptive Headings. The descriptive headings of
--------------------
the several paragraphs of this Warrant are inserted for purposes of
reference only, and shall not affect the meaning or construction of
any of the provisions hereof.
(c) Cashless Exercise. Notwithstanding anything to
-----------------
the contrary contained in this Warrant, if the resale of the Warrant
Shares by the holder is not then registered pursuant to an effective
registration statement under the Securities Act, this Warrant may be
exercised by presentation and surrender of this Warrant to the Company
at its principal executive offices with a written notice of the
holder's intention to effect a cashless exercise, including a
calculation of the number of shares of Common Stock to be issued upon
such exercise in accordance with the terms hereof (a "Cashless
Exercise"). In the event of a Cashless Exercise, in lieu of paying
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the Exercise Price in cash, the holder shall surrender this Warrant
for that number of shares of Common Stock determined by multiplying
the number of Warrant Shares to which it would otherwise be entitled
by a fraction, the numerator of which shall be the difference between
the then current Market Price per share of the Common Stock and the
Exercise Price, and the denominator of which shall be the then
current Market Price per share of Common Stock. For example, if the
holder is exercising 100,000 Warrants with a per Warrant exercise
price of $0.75 per share through a cashless exercise when the Common
Stock's current Market Price per share is $2.00 per share, then upon
such Cashless Exercise the holder will receive 62,500 shares of Common
Stock.
(d) Remedies. The Company acknowledges that a breach
--------
by it of its obligations hereunder will cause irreparable harm to the
holder, by vitiating the intent and purpose of the transaction
contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Warrant will
be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Warrant, that the
holder shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable
herein, to an injunction or injunctions restraining, preventing or
curing any breach of this Warrant and to enforce specifically the
terms and provisions thereof, without the necessity of showing
economic loss and without any bond or other security being required.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company has caused this Warrant to
be signed by its duly authorized officer.
MED GEN, INC.
By: /s/Paul B. Kravitz
-------------------------------
Paul B. Kravitz
Chairman and Chief Executive
Officer
Dated as of April 21, 2006
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FORM OF EXERCISE AGREEMENT
Dated: ________ __, 200_
To: ______________________
The undersigned, pursuant to the provisions set forth in the
within Warrant, hereby agrees to purchase ________ shares of Common
Stock covered by such Warrant, and makes payment herewith in full
therefor at the price per share provided by such Warrant in cash or by
certified or official bank check in the amount of, or, if the resale
of such Common Stock by the undersigned is not currently registered
pursuant to an effective registration statement under the Securities
Act of 1933, as amended, by surrender of securities issued by the
Company (including a portion of the Warrant) having a market value (in
the case of a portion of this Warrant, determined in accordance with
Section 11(c) of the Warrant) equal to $_________. Please issue a
certificate or certificates for such shares of Common Stock in the
name of and pay any cash for any fractional share to:
Name:____________________________
Signature:
Address:_________________________
_________________________
Note: The above signature
should correspond
exactly with the name
on the face of the
within Warrant, if
applicable.
and, if said number of shares of Common Stock shall not be all the
shares purchasable under the within Warrant, a new Warrant is to be
issued in the name of said undersigned covering the balance of the
shares purchasable thereunder less any fraction of a share paid in
cash.
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all the rights of the undersigned under the within Warrant,
with respect to the number of shares of Common Stock covered thereby
set forth hereinbelow, to:
Name of Assignee Address No of Shares
- ---------------- ------- ------------
, and hereby irrevocably constitutes and appoints ____________________
_______________ as agent and attorney-in-fact to transfer said Warrant
on the books of the within-named corporation, with full power of
substitution in the premises.
Dated: ________ __, 200_
In the presence of: ______________________________
Name:______________________________
Signature:_________________________
Title of Signing Officer
or Agent (if any):
_________________________
Address:___________________________
___________________________
Note: The above signature should
correspond exactly with the
name on the face of the
within Warrant, if applicable.