Exhibit
10.3
WARRANT
NO. HM:1
NEITHER THIS
WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE BEEN REGISTEREDWITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE
WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE
OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
WARRANT TO PURCHASE SHARES OF COMMON
STOCK OF
INVO BIOSCIENCE, INC.
|
New York,
New York
|
July__, 2009
|
This is to Certify that, for value received,
__________(the “ Holder ”), is entitled
to purchase, subject to the provisions of this Warrant, from INVO
Bioscience, Inc., a Nevada corporation (the “
Company ”), at any time on or after date hereof
(the “ Original Issuance Date ”), and not
later than 5:00 p.m. Eastern Standard Time, _______________, 2014
(the “ Expiration Date ”),
_________shares of common stock, $.0001 par value per share, of the
Company (the “ Common Stock ”) at an
initial purchase price per share (the “ Exercise
Price ”) equal to $.20 (Twenty Cents), subject
to adjustment as provided elsewhere herein. The shares
of the Company's Common Stock issuable upon the exercise of this
Warrant are called herein the “ Warrant Shares
.” The Holder hereof may exercise this Warrant as to all or
any portion of the Warrant Shares which such Holder shall have the
right to acquire hereunder.
This Warrant is one of a series
(collectively the “ Warrants ”) issued in
connection with the Company’s private placement offering (the
“ Offering ”) of its units (the “
Units ”), each Unit consisting of a (i) 12%
Senior Secured Convertible Promissory Note (the “
Notes ”) and (ii) a Warrant. The
terms and conditions of the Offering are described in greater
detail in the Purchase Agreement, dated July __, 2009,
as amended or supplemented from time to time (the “
Purchase Agreement ”). All
capitalized terms used without definition in this Warrant, except
where expressly otherwise indicate, shall have the meanings
ascribed to such terms in the Purchase Agreement.
(a)
Exercise of Warrant . This Warrant may be exercised by
presentation and surrender hereof to the Company with the Form of
Payment Exercise attached hereto as Annex A . The
Warrant shall be deemed to have been exercised when (i) the Company
has received this Warrant, together with a completed Exercise
Notice, and (ii) the Company has received payment in the amount of
the applicable Exercise Price in accordance with this Section (a),
notwithstanding that certificates representing such Warrant Shares
shall not then be actually delivered to the Holder. If the stock
transfer books of the Company shall be closed on the date of
receipt of this Warrant, the Exercise Notice and the Exercise Price
as aforesaid, the Holder shall be deemed to be the holder of such
shares of Common Stock on the next succeeding day on which the
stock transfer books of the Company shall be opened. If
this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the right of the Holder to
purchase the balance of the Warrant Shares purchasable hereunder.
In the event this Warrant shall not be exercised on or before five
(5) years after the date of issue, this Warrant shall become void
and all rights hereunder shall cease. Each date of
exercise of this Warrant shall be referred to as an “
Exercise Date .” Notwithstanding
anything to the contrary provided herein or elsewhere upon exercise
of this Warrant, the Company shall issue certificates representing
the Warrant Shares no later than ten (10) Business Days (as defined
in the Purchase Agreement) following exercise (three (3) business
days if the Company is either subject to the reporting requirements
of the Federal Securities Laws or the Common Stock is quoted or
traded on any trading medium).
(1)
Method of Payment. The Holder at its option may
use any combination of the payment methods set forth in the
following paragraphs (A) and (B):
(A)
Payment Exercise . Payment of the Exercise Price
for the number of Warrant Shares purchased shall be made in cash,
by money order, certified or bank cashier's check or wire transfer
(in each case in lawful currency of the United States of
America).
(B)
Conversion Exercise . As an alternative to
payment in the manner provided in paragraph (1)(A) above, the
Holder may, in lieu of payment of such Exercise Price, elect not to
receive all of such Warrant Shares but only to receive that number
of such Warrant Shares as shall be determined in accordance with
the following formula:
X = Y*(A-B)
A
Where:
X
= the
number of Warrant Shares to be issued to the Holder pursuant to
this paragraph (B);
Y
= the
number of Warrant Shares for which this Warrant is being exercised
as of the applicable Exercise Date;
A
= the
Fair Market Value as of the applicable Exercise Date of a share of
the Stock constituting such Warrant Shares; and
B
= the
Exercise Price in effect as of the applicable Exercise Date of a
share of the Stock constituting such Warrant Shares.
The Holder may elect to exercise this Warrant as
to the number of Warrant Shares computed in the manner set forth in
this paragraph (B) by surrendering this Warrant to the Company at
its principal office, together with (i) a properly completed and
duly executed notice of exercise using the Form of Conversion
Exercise attached hereto as Annex B , which notice shall
specify the number of Warrant Shares for which this Warrant is then
being exercised, the number of such Warrant Shares that the Holder
is electing not to receive and the aggregate Fair Market Value of
such number of Warrant Shares that the Holder is electing not to
receive, (ii) if requested by the Company, a duly executed
instrument or certificate, in form and substance satisfactory to
the Company, pursuant to which the Holder makes such
representations and warranties to the Company and provides or
confirms such information concerning the Holder, as the Company may
reasonably request (including, without limitation, such
representations and warranties and such information as may be
required in order to confirm compliance with applicable securities
laws), and (iii) if applicable, the payment of any transfer taxes
required to be paid by the Holder. Payment of such transfer taxes
shall be made in cash, by money order, certified or bank cashier's
check or wire transfer (in each case in lawful currency of the
United States of America).
“ Fair Market Value ”
shall mean (i) the last reported sale price per share of Common
Stock on the Nasdaq National Market System or any national
securities exchange in which such Common Stock is quoted or listed,
as the case may be, on the date immediately preceding the Exercise
Date or, if no such sale price is reported on such date, such price
on the next preceding business day in which such price was
reported, (ii) if the Common Stock is not quoted or listed on the
Nasdaq National Market, Nasdaq Small Cap Market or any national
securities exchange, then the closing bid price or last sale price,
as the case may be, on the NASD Bulletin Board, the Pink Sheets or
any other trading or quotation medium, (iii) if the Common Stock is
not traded and/or quoted as provided in subsection (ii) of this
paragraph, the fair market value of a share of Common Stock, as
determined in good faith by mutual agreement of the Board of
Directors of the Company (the “ Board ”)
and Holders of the then issued and outstanding Warrants
representing no less than 75% of the Warrant Shares held (the
“ Required Holders .
(2)
Expenses of Issuance . The Company shall issue
the Warrant Shares upon exercise of this Warrant without charge to
Holder for any issuance tax or other cost incurred by the Company
in connection with such exercise and the related issuance of the
Warrant Shares. Each of the Warrant Shares shall, upon
payment of the Exercise Price therefor, be fully paid and
nonassessable and free from all liens, and charges and/or
pre-emptive or similar rights with respect to the issuance
thereof.
(3)
Withholding Taxes . Holder shall satisfy any
federal, state, local or foreign withholding tax obligations
arising from the exercise of the Warrant or the subsequent
disposition of the Shares.
(b)
Reservation of Warrant Shares . The Company agrees that at
all times there shall be authorized and reserved for issuance upon
exercise of this Warrant such number of Warrant Shares as shall be
required for issuance or delivery upon exercise of this
Warrant.
(c)
Fractional Shares . This Warrant shall be exercisable in
such manner as not to require the issuance of fractional shares or
scrip representing fractional shares. If, as a result of adjustment
in the Exercise Price or the number of Warrant Shares to be
received upon exercise of this Warrant fractional shares would be
issuable, no such fractional shares shall be issued. In lieu
thereof the Company shall pay the Holder an amount in cash equal to
the Fair Market Value of one share of Common Stock.
(d)
Exchange or Assignment of Warrant . Holder may sell, assign,
transfer, pledge, hypothecate, encumber or otherwise dispose of,
voluntarily or involuntarily, directly or indirectly (each, a
“ Transfer ”) this Warrant (or a portion
thereof), to any person (each, a “ Permitted
Transferee ”); provided, however, that (x) any such
Permitted Transferee shall have agreed in writing to be bound by
the terms of this Agreement with respect to the Warrant Shares and
(y) any transfer to a Permitted Transferee shall not be in
violation of applicable federal or state securities
laws. Any permitted assigned of the Warrant shall be
completed with a Form of Assignment attached hereto as Annex
C .
(e)
Rights of the Holder; Limitation on Liability . The Holder
shall not, prior to exercise of this Warrant, by virtue hereof, be
entitled to any rights of a shareholder in the Company, either at
law or equity, and the rights of the Holder are limited to those
expressed in the Warrant. No provision hereof, in
absence of an affirmative action by the Holder to purchase the
Warrant Shares, and no enumeration herein of rights or privileges
by the Holder, shall give rise to any liability of the Holder for
the Exercise Price of the Warrant Shares.
(f)
Adjustment of Exercise Rights . The Exercise Price or the
number of Warrant Shares to be received upon the exercise of this
Warrant, or both shall be subject to adjustment from time to time
as follows:
(l) Dividends
. In case any additional shares of Common Stock or any
obligation or stock convertible into or exchangeable for shares of
Common Stock (such convertible or exchangeable obligations or stock
being hereinafter called “ Convertible
Securities ”) shall be issued as a dividend on the
outstanding shares of any class of stock of the Company, the
Exercise Price then in effect shall be decreased proportionately
and the number of Warrant Shares then exercisable hereunder shall
be increased proportionately. Anything herein to the contrary
notwithstanding, the Company shall not be required to make any
adjustment in the Exercise Price in the case of the issuance at any
time or from time to time of any Warrant Shares pursuant to any
exercise of this Warrant.
(2) Effect of
“Split-ups” and “Split-down” and Certain
Dividends . In case at any time or from time to time the
Company shall subdivide as a whole, by reclassification, by the
issuance of a stock dividend on the Common Stock payable in Common
Stock, or otherwise, the number of shares of Common Stock then
outstanding into a greater number of shares of Common Stock, with
or without par value, the Exercise Price then in effect shall be
reduced proportionately, and the number of Warrant Shares then
exercisable hereunder shall be increased proportionately. In case
at any time or from time to time the Company shall consolidate as a
whole, by reclassification or otherwise, the number of shares of
Common Stock then outstanding into a lesser number of shares of
Common Stock, with or without par value, the Exercise Price then in
effect shall be increased proportionately and the number
of
