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Exhibit 4.2
WARRANT AND PUT OPTION AGREEMENT
WARRANT AND PUT OPTION AGREEMENT dated as of November 30,
2006 by and between XENOMICS, INC., a Florida corporation
(the "Company") and GIAN LUIGI BUITONI (the "Lead Investor").
W I T N E S S E T H :
WHEREAS, the Company issued to the Lead Investor 6,363,636
warrants (each a "Lead Investor’s Warrant"), each to
purchase one unit, containing one share of the Company’s
common stock, par value $0.0001 per share (the "Common Stock") and
one Common Stock purchase warrant (the "Warrants," and collectively
with the Common Stock, the "Units"),
WHEREAS, the Company agreed to issue the Lead Investor’s
Warrants pursuant to Securities Purchase Agreements dated as of
November 14 and 17, 2006 (the "SPA") among the Company and
the Purchasers named therein, including the Lead Investor, and as
an inducement for the Lead Investor to assume the role of Executive
Chairman and facilitate financing by the Company,
WHEREAS, the Company accepted a proposal by the Lead Investor to
amend certain terms of the Lead Investor Warrants in consideration
of the issuance of an additional 2,727,272 (the "Additional
Warrants’) Lead Investor Warrants containing an option on the
Company’s part to put the Additional Warrants to the Lead
Investor, at certain times and subject to certain conditions ("Put
Option") on November 30, 2006.
NOW, THEREFORE, in consideration of the premises, the payment by
the Lead Investor to the Company of $10.00 (receipt of which is
hereby acknowledged), the agreements herein set forth and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
1.
Grant . The Holder (as defined in Section 3 below) is
hereby granted the right to purchase, at any time from November 30,
2006 until 5:30 p.m., New York time, to December 31, 2007 (the
"Expiration Date"), up to 2,727,272 Units, at an initial purchase
price (subject to adjustment as provided in Section 8 hereof) of
$0.55 per Unit (the "Exercise Price"), subject to the terms and
conditions of this Agreement; provided, on or prior to the time of
exercise, the Company shall have received an aggregate of $5.0
million of financing in addition to financing pursuant to the SPA
(the "Financing Condition"). For the purposes of determining
whether the Financing Condition has been fulfilled, the gross
proceeds of the sale of securities for cash consideration shall be
included, without deduction for commission or expenses of such
sales and the date such proceeds are received by the Company or
deposited in escrow shall be considered the date of completion,
provided definitive documentation is executed as accepted by the
purchasers of such securities on or before September 5, 2007.
The proceeds of securities sold pursuant to the exercise of the Put
Rights set forth in Section 3(b) of this Agreement on or before
August 31, 2007 shall be included in the determination of whether
the Financing Condition has been fulfilled and those sold
thereafter shall
be excluded. If the Company shall not have
attained the financing condition on or before August 31, 2007, the
Lead Investor’s Warrants shall terminate and be of no further
force or effect and thereafter August 31, 2007 shall be deemed the
Expiration Date. The securities issuable upon exercise of the
Lead Investor’s Warrant are sometimes referred to herein as
the "Lead Investor’s Securities."
2.
Warrant Certificates . The warrant certificate (the
"Lead Investor’s Warrant Certificate") to be delivered
pursuant to this Agreement shall be in the form set forth in
Exhibit A attached hereto and made a part hereof, with such
appropriate insertions, omissions, substitutions, and other
variations as required or permitted by this Agreement.
3.
Exercise of Lead Investor’s Warrant; Put Rights .
(a)
Exercise . The Lead Investor’s Warrant is
exercisable during the term set forth in Section 1 hereof payable
by certified or cashier’s check or money order in lawful
money of the United States. Upon surrender of Lead
Investor’s Warrant Certificate with the annexed Form of
Election to Purchase duly executed, together with payment of the
Purchase Price (as hereinafter defined) for the Lead
Investor’s Securities (and such other amounts, if any,
arising pursuant to Section 4 hereof) at the Company’s
principal office currently located at 420 Lexington Avenue, Suite
1701, New York, NY 10170, or the address of the
Company’s transfer agent for its Common Stock, the registered
holder of a Lead Investor’s Warrant Certificate ("Holder" or
"Holders") shall be entitled to receive a certificate or
certificates for the Lead Investor’s Securities so
purchased. The purchase rights represented by each Lead
Investor’s Warrant Certificate are exercisable at the option
of the Holder or Holders thereof, in whole or in part as to Lead
Investor’s Securities. The Lead Investor’s
Warrant may be exercised to purchase all or any part of the Lead
Investor’s Securities represented thereby. In the case
of the purchase of less than all the Lead Investor’s
Securities purchasable on the exercise of the Lead Investor’s
Warrant represented by a Lead Investor’s Warrant Certificate,
the Company shall cancel the Lead Investor’s Warrant
Certificate represented thereby upon the surrender thereof and
shall execute and deliver a new Lead Investor’s Warrant
Certificate of like tenor for the balance of the Lead
Investor’s Securities purchasable thereunder.
(b)
Put Rights . The Lead Investor grants the Company the
rights set forth in this Section 3(b).
(i)
Certain Definitions . As used in this Agreement:
"Maximum Put Amount" shall mean the sum of $5,000,000 less the
amount from the sale of securities during the period beginning on
December __, 2006 to the date of measurement, including any such
sales pursuant to the Company’s prior exercise in part of the
rights contained in this Section 3(b) on or before August 31,
2007. In no event shall the Maximum Put Amount exceed
$500,000 in a period of 30 calendar days or $1,500,000 in the
aggregate.
"Financing Condition" shall have the meaning set forth in
Section 1 of this Agreement.
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(ii)
Upon written notice from the Company at any time on or after June
1, 2007 and ending the earlier of the satisfaction of the Financing
Condition or December 31, 2007, the Lead Investor shall, within 30
days from the date designated in such notice (the "Put Closing
Date"), purchase the number of Units specified in such notice up to
the Maximum Put Amount divided by the applicable Exercise
Price. On each Put Closing Date, the Lead Investor shall
surrender this Warrant and the full Exercise Price of the Units
specified in the Notice in immediately available funds against the
Company’s delivery of Lead Investor’s Securities.
If less than all of the Investor’s Securities which may then
be acquired on the exercise of this Warrant are specified in the
Notice, the Company shall cancel this Warrant and issue and deliver
to the Lead Investor a new Warrant for the Lead Investor’s
Securities remaining.
4.
Issuance of Certificates . Upon the exercise of the
Lead Investor’s Warrant and payment of the Purchase Price
therefor, the issuance of certificates representing the Lead
Investor’s Securities or other securities, properties or
rights underlying such Lead Investor’s Warrant, shall be made
forthwith (and in any event within five (5) business days
thereafter) without further charge to the Holder thereof, and such
certificates shall (subject to the provisions of Sections 5 and 7
hereof) be issued in the name of, or in such names as may be
directed by, the Holder thereof; provided, however, 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 such certificates in a name other than that of the Holder, and
the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such
tax or shall have established to the satisfaction of the Company
that such tax has been paid. The Lead Investor’s
Warrant Certificates and the certificates representing the Lead
Investor’s Securities or other securities, property or rights
(if such property or rights are represented by certificates) shall
be executed on behalf of the Company by the manual or facsimile
signature of the then present Chairman or Vice Chairman of the
Board of Directors or President or Vice President of the Company,
attested to by the manual or facsimile signature of the then
present Secretary or Assistant Secretary or Treasurer or Assistant
Treasurer of the Company. The Lead Investor’s Warrant
Certificates shall be dated the date of issuance thereof by the
Company upon initial issuance, transfer or exchange.
5.
Restriction On Transfer of Lead Investor’s Warrant .
The Holder of an Lead Investor’s Warrant Certificate (and its
Permitted Transferee, as defined below), by its acceptance thereof,
covenants and agrees that the Lead Investor’s Warrant may not
be sold, transferred, assigned, hypothecated or otherwise disposed
of, in whole or in part, unless such sale is registered under the
Securities Act of 1933, as amended, or an exemption therefrom is
available.
6.
Purchase Price .
(a)
Initial and Adjusted Purchase Price . Except as otherwise
provided in Section 8 hereof, the initial purchase price of the
Lead Investor’s Securities shall be $0.55 per Unit. The
adjusted purchase price shall be the price which shall result from
time to time from any and all adjustments of the initial purchase
price in accordance with the provisions of Section 8 hereof.
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(b)
Purchase Price . The term "Purchase Price" herein shall mean
the initial purchase price or the adjusted purchase price,
depending upon the context.
7.
Registration Rights .
(a)
Registration Under the Securities Act of 1933, as amended
("Act") . The Lead Investor’s Warrant may have not been
registered under the Act. The Lead Investor’s Warrant
Certificates may bear the following legend:
-
-
-
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The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act"), and may
not be offered for sale or sold except pursuant to (i) an effective
registration statement under the Act, or (ii) an opinion of
counsel, if such opinion and counsel shall be reasonably
satisfactory to counsel to the issuer, that an exemption from
registration under the Act is available.
(b)
Piggyback Registration . If the Company should file a
registration statement with the Commission under the Act (other
than in connection with a merger or other business combination
transaction or pursuant to Form S-8), it will give written notice
at least twenty (20) calendar days prior to the filing of each such
registration statement to the Lead Investor and to all other
Holders of the Lead Investor’s Warrant and/or the Lead
Investor’s Securities of its intention to do so. If an
Lead Investor or other Holders of the Lead Investor’s Warrant
and/or the Lead Investor’s Securities notify the Company
within fifteen (15) calendar days after receipt of any such notice
of its or their desire to include any Lead Investor’s
Securities in such proposed registration statement, the Company
shall afford the Lead Investor and such Holders of the Lead
Investor’s Warrant and/or Lead Investor’s Securities
the opportunity to have any such Lead Investor’s Securities
registered under such registration statement. Notwithstanding
the provisions of this Section 7(b) and the provisions of Section
7(c), the Company shall have the right at any time after it shall
have given written notice pursuant to this Section 7(b)
(irrespective of whether a written request for inclusion of any
such securities shall have been made) to elect not to file any such
proposed registration statement, or to withdraw the same after the
filing but prior to the effective date thereof.
(c)
Covenants of the Company With Respect to Registration
. In connection with any registrations under Sections 7(b)
hereof, the Company covenants and agrees as follows:
(1)
The Company shall use its best efforts to have any registration
statement declared effective at the earliest possible time, and
shall furnish each Holder desiring to sell Lead Investor’s
Securities such number of prospectuses as shall reasonably be
requested.
(2)
The Company shall pay all costs (excluding fees and expenses of
Holders’ counsel and any underwriting discounts or selling
fees, expenses or commissions), fees and expenses in connection
with any registration statement filed pursuant to Sections 7(b) and
7(c) hereof including, without limitation, the Company’s
legal and accounting fees, printing expenses, blue sky fees and
expenses.
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(3)
The Company will use its best efforts to qualify or register the
Lead Investor’s Securities included in a registration
statement for offering and sale under the securities or blue sky
laws of such states as reasonably are requested by the Holders,
provided that the Company shall not be obligated to execute or file
any general consent to service of process or to qualify as a
foreign corporation to do business under the laws of any such
jurisdiction.
(4)
The Company shall indemnify the Holders of the Lead
Investor’s Securities to be sold pursuant to any registration
statement and each person, if any, who controls such Holders within
the meaning of Section 15 of the Act or Section 20(a) of the
Securities Exchange Act of 1934 (the "Exchange Act"), against all
loss, claim, damage, expense or liability (including all expenses
reasonably incurred in investigating, preparing or defending
against any claim whatsoever) to which any of them may become
subject under the Act, the Exchange Act or otherwise, arising from
such registration statement, but only to the same extent and with
the same effect as the provisions pursuant to which the Company has
agreed to indemnify the Lead Investor contained in Section 8 of the
Underwriting Agreement.
(5)
The Holders of the Lead Investor’s Securities to be sold
pursuant to a registration statement, and their successors and
assigns, shall indemnify the Company, its officers and directors
and each person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, against all loss, claim, damage or expense or liability to
which they may become subject under the Act, the Exchange Act or
otherwise, arising from information furnished by or on behalf of
such Holders, or their successors or assigns, for specific
inclusion in such registration statement to the same extent and
with the same effect as the provisions contained in Section 8 of
the Underwriting Agreement pursuant to which the Lead Investor has
agreed to indemnify the Company.
(6)
Nothing contained in this Agreement shall be construed as requiring
the Holders to exercise their Lead Investor’s Warrant prior
to the initial filing of any registration statement or the
effectiveness thereof, provided that such Holders have made
arrangements reasonably satisfactory to the Company to pay the
exercise price from the proceeds of such offering.
(7)
The Company shall furnish to each Lead Investor for the offering,
if any, such documents as such Lead Investor may reasonably
require.
(8)
The Company shall as soon as practicable after the effective date
of the registration statement, and in any event within 15 months
thereafter, make "generally available to its security holders"
(within the meaning of Rule 158 under the Act) an earnings
statement (which need not be audited) complying with Section 11(a)
of the Act and covering a period of at least 12 consecutive months
beginning after the effective date of the registration
statement.
(9)
The Company shall deliver promptly to each Holder participating in
the offering requesting the correspondence described below and any
managing Lead Investor copies of all correspondence between the
Commission and the Company, its counsel or auditors with
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respect to the registration statement and permit
each Holder and Lead Investor to do such investigation, upon
reasonable advance notice, with respect to information contained in
or omitted from the registration statement as it deems reasonably
necessary to comply with applicable securities laws or rules of the
National Association of Securities Dealers, Inc. ("NASD"). Such
investigation shall include access to books, records and properties
and opportunities to discuss the business of the Company with its
officers and independent auditors, all to such reasonable extent
and at such reasonable times and as often as any such Holder shall
reasonably request.
8.
Certain Adjustments
(a)
Stock Dividends and Splits . If the Company, at any time
while this Warrant is outstanding: (A) pays a stock dividend or
otherwise make a distribution or distributions on shares of its
Common Stock or any other equity or equity equivalent securities
payable in shares of Common Stock (which, for avoidance of doubt,
shall not include any shares of Common Stock issued by the Company
pursuant to this Warrant), (B) subdivides outstanding shares of
Common Stock into a larger number of shares, (C) combines
(including by way of reverse stock split) outstanding shares of
Common Stock into a smaller number of shares, or (D) issues by
reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Exercise Price
shall be multiplied by a fraction of which the numerator shall be
the number of shares of Common Stock (excluding treasury shares, if
any) outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock
outstanding immediately after such event and the number of shares
issuable upon exercise of this Warrant shall be proportionately
adjusted. Any adjustment made pursuant to this Section 8(a)
shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or
distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or
re-classification.
(b)
Subsequent Equity Sales.
i.
If the Company or any Subsidiary thereof, as applicable, at any
time while t
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