WARRANT EXERCISE AGREEMENT
Mueller Trading L.P. of Lakewood
Lakewood, New Jersey
Gentlemen:
For good and valuable consideration, the parties agree as
follows:
1. Reference is made to 1,500,000 warrants owned by you
("Mueller") to purchase shares of Common Stock (`Common
Stock") of ImageMatrix, Inc., a Colorado corporation, (the
"Company") at prices ranging from $2.00 to $3.00 (the
"Existing Warrants").
2. In exchange for exercising the Existing Warrants before
January 31, 1997, the Company will reduce the exercise price
to $2.00 per share on all the 1,500,000 Existing Warrants
and Mueller shall receive New Warrants ("New Warrants") as
described below.
3. New Warrants.
(1) For each 100 Existing Warrants which are exercised on
or before February 27, 1998, the Company shall forthwith
upon such exercise issue to Mueller 100 warrants to purchase
shares of Common Stock at $3.00 (the "New Warrants"). Each
of the New Warrants shall expire six months after issuance,
or, if earlier, 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 Warrants.
(2) Except as previously set forth herein, the New Warrants
shall be in the respective forms of the Existing Warrants.
4. Notwithstanding anything to the contrary contained
herein, Mueller 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 Mueller
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
Mueller, in form and substance satisfactory to the Company
and the Company's counsel, shall prevail in all matters
relating to the amount of Mueller's 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 upon
receiving written notice from Mueller that it desires the
New Warrants to be registered, a registration statement on
Form S-3 (the "Registration Statement") for the public sale
by Mueller 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 Mueller may reasonably
request.
(d) The Company shall pay all expenses of the registration
hereunder, other than Mueller's underwriting discounts and
counsel or other fees incurred on a voluntary basis.
(e) The Company shall supply to Mueller a reasonable number
of copies of all registration materials and prospectuses.
The Company and Mueller shall execute and deliver to each
other indemnity agreements which are conventional in
registered offerings of this type. The Mueller shall
reasonably cooperate with the Company in the preparation and
filing of the Registration Statement and appropriate
amendments thereto.
(f) Mueller 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
Mueller) on exercise of the Warrants, whether or not such
shares are sold simultaneously with such conversion or
exercise. Mueller shall deliver any prospectus which it is
legally required to be delivered on the sale of such shares
and be subject to such rules and provisions outlined in
Section 6 (a) below.
(h) Should Mueller 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) Mueller 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) Mueller 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 Mueller
shall have received the favorable opinion of counsel to
Mueller, 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. Mueller realizes that the New
Warrants are not a liquid investment.
(c) Mueller 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. Mueller has the knowledge and experience to
evaluate the Company and the risks and merits relating
thereto.
(d) Mueller represents and warrants that Mueller 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 Mueller, Mueller acknowledges that Mueller
is able to bear the economic risk of losing Mueller's entire
investment in the shares and understands that an investment
in the Company involves substantial risks; Mueller 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 Mueller, and Mueller
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 October 24, 1997
Mueller Trading L.P. of Lakewood
By: /s/ Mueller Trading L.P. of Lakewood
Agreed:
ImageMatrix Corporation
BY /s/ Blair McNea