WARRANT
THE SECURITIES
REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A
FORM REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT
REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR
UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
IR BIOSCIENCES HOLDINGS,
INC.
Warrant To Purchase Common
Stock
|
Warrant
No.: IRBO-2-2
|
Number of
Shares: 750,000
|
|
|
Warrant
Exercise
Price:
$2.00
|
|
|
Expiration
Date:
December
31, 2012
|
Date of
Issuance: August 8, 2008
IR Biosciences
Holdings, Inc., a Delaware corporation (the “ Company
”), hereby certifies that, for good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, YA Global Investments, L.P. (the “
Holder ”), the registered holder hereof or its
permitted assigns, is entitled, subject to the terms set forth
below, to purchase from the Company upon surrender of this Warrant,
at any time or times on or after the date hereof, but not after
11:59 P.M. Eastern Time on the Expiration Date (as defined
herein) 750,000 fully paid and nonassessable shares of Common Stock
(as defined herein) of the Company (the “ Warrant
Shares ”) at the exercise price per share provided in
Section 1(b) below or as subsequently adjusted; provided,
however, that in no event shall the holder be entitled to exercise
this Warrant for a number of Warrant Shares in excess of that
number of Warrant Shares which, upon giving effect to such
exercise, would cause the aggregate number of shares of Common
Stock beneficially owned by the holder and its affiliates to exceed
9.99% of the outstanding shares of the Common Stock following such
exercise, except within sixty (60) days of the Expiration Date
(however, such restriction may be waived by Holder (but only as to
itself and not to any other holder) upon not less than 65 days
prior notice to the Company). For purposes of the
foregoing proviso, the aggregate number of shares of Common Stock
beneficially owned by the holder and its affiliates shall include
the number of shares of Common Stock issuable upon exercise of this
Warrant with respect to which the determination of such proviso is
being made, but shall exclude shares of Common Stock which would be
issuable upon (i) exercise of the remaining, unexercised
Warrants beneficially owned by the holder and its affiliates and
(ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company beneficially owned
by the holder and its affiliates (including, without limitation,
any convertible notes or preferred stock) subject to a limitation
on conversion or exercise analogous to the limitation contained
herein. Except as set forth in the preceding sentence,
for purposes of this paragraph, beneficial ownership shall be
calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended. For purposes of this
Warrant, in determining the number of outstanding shares of Common
Stock a holder may rely on the number of outstanding shares of
Common Stock as reflected in (1) the Company’s most recent
Form 10-QSB or Form 10-KSB, as the case may be, (2) a more recent
public announcement by the Company or (3) any other notice by the
Company or its transfer agent setting forth the number of shares of
Common Stock outstanding. Upon the written request of
any holder, the Company shall promptly, but in no event later than
one (1) Business Day following the receipt of such notice, confirm
in writing to any such holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding
shares of Common Stock shall be determined after giving effect to
the exercise of Warrants (as defined below) by such holder and its
affiliates since the date as of which such number of outstanding
shares of Common Stock was reported.
(a) This Warrant is
issued in connection with the transactions contemplated by that
certain Securities Purchase Agreement (“ Securities
Purchase Agreement ”) dated January 3, 2008 between the
Company and the Buyers listed on Schedule I thereto or issued in
exchange or substitution thereafter or replacement
thereof. Each Capitalized term used, and not otherwise
defined herein, shall have the meaning ascribed thereto in the
Securities Purchase Agreement.
(b) Definitions
. The following words and terms as used in this Warrant
shall have the following meanings:
(i) “
Approved Stock Plan ” means a stock option plan that
has been approved by the Board of Directors of the
Company.
(ii) “
Business Day ” means any day other than Saturday,
Sunday or other day on which commercial banks in the City of New
York are authorized or required by law to remain closed.
(iii) “ Closing
Bid Price ” means the closing bid price of Common Stock
as quoted on the Principal Market (as reported by Bloomberg
Financial Markets (“ Bloomberg ”) through its
“Volume at Price” function).
(iv) “ Common
Stock ” means (i) the Company’s common stock,
par value $0.001 per share, and (ii) any capital stock into
which such Common Stock shall have been changed or any capital
stock resulting from a reclassification of such Common
Stock.
(v) “
Convertible Debentures ” means the Convertible
Debentures issued in pursuant to the Securities Purchase
Agreement.
(vi) “
Excluded Securities ” means, (a) shares issued or
deemed to have been issued by the Company pursuant to an Approved
Stock Plan, (b) shares of Common Stock issued or deemed to be
issued by the Company upon the conversion, exchange or exercise of
any right, option, obligation or security outstanding on the date
prior to date of the Securities Purchase Agreement, provided that
the terms of such right, option, obligation or security are not
amended or otherwise modified on or after the date of the
Securities Purchase Agreement, and provided that the conversion
price, exchange price, exercise price or other purchase price is
not reduced, adjusted or otherwise modified and the number of
shares of Common Stock issued or issuable is not increased (whether
by operation of, or in accordance with, the relevant governing
documents or otherwise) on or after the date of the Securities
Purchase Agreement, and (c) the shares of Common
Stock issued or deemed to be issued by the Company upon conversion
of the Convertible Debentures or exercise of the
Warrants.
(vii) “
Expiration Date ” means December 31, 2012.
(viii) “
Issuance Date ” means the date hereof.
(ix) “
Options ” means any rights, warrants or options to
subscribe for or purchase Common Stock or Convertible Securities
and which are not Excluded Securities.
(x) “
Person ” means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or
agency thereof.
(xi) “ Primary
Market ” means on any of (a) the American Stock Exchange,
(b) New York Stock Exchange, (c) the Nasdaq Global Select Market,
(d) the Nasdaq Global Market, (e) the Nasdaq Capital Market, or (e)
the Over-the-Counter Bulletin Board (“ OTCBB
”)
(xii) “
Securities Act ” means the Securities Act of 1933, as
amended.
(xiii) “
Warrant ” means this Warrant and all Warrants issued
in exchange, transfer or replacement thereof.
(xiv) “ Warrant
Exercise Price ” shall be $2.00 or as subsequently
adjusted as provided in Section 8 hereof.
(c) Other Definitional
Provisions.
(i) Except as
otherwise specified herein, all references herein (A) to the
Company shall be deemed to include the Company’s successors
and (B) to any applicable law defined or referred to herein
shall be deemed references to such applicable law as the same may
have been or may be amended or supplemented from time to
time.
(ii) When used in this
Warrant, the words “ herein ”, “
hereof ”, and “ hereunder ”
and words of similar import, shall refer to this Warrant as a whole
and not to any provision of this Warrant, and the words “
Section ”, “ Schedule ”, and
“ Exhibit ” shall refer to Sections of, and
Schedules and Exhibits to, this Warrant unless otherwise
specified.
(iii) Whenever the
context so requires, the neuter gender includes the masculine or
feminine, and the singular number includes the plural, and vice
versa.
Section 2. Exercise of
Warrant .
(a) Subject to the
terms and conditions hereof, this Warrant may be exercised by the
holder hereof then registered on the books of the Company, pro rata
as hereinafter provided, at any time on any Business Day on or
after the opening of business on such Business Day, commencing with
the first day after the date hereof, and prior to 11:59 P.M.
Eastern Time on the Expiration Date (i) by delivery of a written
notice, in the form of the subscription notice attached as
Exhibit A hereto (the “ Exercise Notice
”), of such holder’s election to exercise this Warrant,
which notice shall specify the number of Warrant Shares to be
purchased, payment to the Company of an amount equal to the
Warrant Exercise Price(s) applicable to the Warrant Shares being
purchased, multiplied by the number of Warrant Shares (at the
applicable Warrant Exercise Price) as to which this Warrant is
being exercised (plus any applicable issue or transfer taxes)
(the “ Aggregate Exercise Price ”) in cash or
wire transfer of immediately available funds and the surrender of
this Warrant (or an indemnification undertaking with respect to
this Warrant in the case of its loss, theft or destruction) to a
common carrier for overnight delivery to the Company as soon as
practicable following such date (“ Cash Basis ”)
or (ii) if at the time of exercise, the Warrant Shares are not
subject to an effective registration statement by delivering an
Exercise Notice and in lieu of making payment of the Aggregate
Exercise Price in cash or wire transfer, elect instead to receive
upon such exercise the “Net Number” of shares of Common
Stock determined according to the following formula (the “
Cashless Exercise ”):
Net Number = (A x B) – (A x
C)
For purposes of the foregoing
formula:
A = the total number of Warrant Shares with
respect to which this Warrant is then being exercised.
B = the Closing Bid Price of the Common Stock on
the date of exercise of the Warrant.
C = the Warrant Exercise Price then in effect
for the applicable Warrant Shares at the time of such
exercise.
In the event of any exercise of the
rights represented by this Warrant in compliance with this Section
2, the Company shall on or before the fifth (5th) Business Day
following the date of receipt of the Exercise Notice, the Aggregate
Exercise Price and this Warrant (or an indemnification undertaking
with respect to this Warrant in the case of its loss, theft or
destruction) and the receipt of the representations of the holder
specified in Section 6 hereof, if requested by the Company (the
“ Exercise Delivery Documents ”), and if the
Common Stock is DTC eligible, credit such aggregate number of
shares of Common Stock to which the holder shall be entitled to the
holder’s or its designee’s balance account with The
Depository Trust Company; provided, however, if the holder who
submitted the Exercise Notice requested physical delivery of any or
all of the Warrant Shares, or, if the Common Stock is not DTC
eligible then the Company shall, on or before the
fifth (5 th )
Business Day following receipt of the Exercise Delivery Documents,
issue and surrender to a common carrier for overnight delivery to
the address specified in the Exercise Notice, a certificate,
registered in the name of the holder, for the number of shares of
Common Stock to which the holder shall be entitled pursuant to such
request. Upon delivery of the Exercise Notice and
Aggregate Exercise Price referred to in clause (i) or (ii)
above the holder of this Warrant shall be deemed for all corporate
purposes to have become the holder of record of the Warrant Shares
with respect to which this Warrant has been
exercised. In the case of a dispute as to the
determination of the Warrant Exercise Price, the Closing Bid Price
or the arithmetic calculation of the Warrant Shares, the Company
shall promptly issue to the holder the number of Warrant Shares
that is not disputed and shall submit the disputed determinations
or arithmetic calculations to the holder via facsimile within one
(1) Business Day of receipt of the holder’s Exercise
Notice.
(b) If the holder and
the Company are unable to agree upon the determination of the
Warrant Exercise Price or arithmetic calculation of the Warrant
Shares within one (1) day of such disputed determination or
arithmetic calculation being submitted to the holder, then the
Company shall immediately submit via facsimile (i) the disputed
determination of the Warrant Exercise Price or the Closing Bid
Price to an independent, reputable investment banking firm or (ii)
the disputed arithmetic calculation of the Warrant Shares to its
independent, outside accountant. The Company shall cause
the investment banking firm or the accountant, as the case may be,
to perform the determinations or calculations and notify the
Company and the holder of the results no later than forty-eight
(48) hours from the time it receives the disputed determinations or
calculations. Such investment banking firm’s or
accountant’s determination or calculation, as the case may
be, shall be deemed conclusive absent manifest error.
(c) Unless the rights
represented by this Warrant shall have expired or shall have been
fully exercised, the Company shall, as soon as practicable and in
no event later than five (5) Business Days after any exercise and
at its own expense, issue a new Warrant identical in all respects
to this Warrant exercised except it shall represent rights to
purchase the number of Warrant Shares purchasable immediately prior
to such exercise under this Warrant exercised, less the number of
Warrant Shares with respect to which such Warrant is
exercised.
(d) No fractional
Warrant Shares are to be issued upon any pro rata exercise of this
Warrant, but rather the number of Warrant Shares issued upon such
exercise of this Warrant shall be rounded up or down to the nearest
whole number.
(e) If the Company or
its Transfer Agent shall fail for any reason or for no reason to
issue to the holder within ten (10) days of receipt of the
Exercise Delivery Documents, a certificate for the number of
Warrant Shares to which the holder is entitled or to credit the
holder’s balance account with The Depository Trust Company
for such number of Warrant Shares to which the holder is entitled
upon the holder’s exercise of this Warrant, the Company
shall, in addition to any other remedies under this Warrant or
otherwise available to such holder, pay as additional damages in
cash to such holder on each day the issuance of such certificate
for Warrant Shares is not timely effected an amount equal to 0.025%
of the product of (A) the sum of the number of Warrant Shares not
issued to the holder on a timely basis and to which the holder is
entitled, and (B) the Closing Bid Price of the Common Stock for the
trading day immediately preceding the last possible date which the
Company could have issued such Common Stock to the holder without
violating this Section 2.
(f) If within ten (10)
days after the Company’s receipt of the Exercise Delivery
Documents, the Company fails to deliver a new Warrant to the holder
for the number of Warrant Shares to which such holder is entitled
pursuant to Section 2 hereof, then, in addition to any other
available remedies under this Warrant, or otherwise available to
such holder, the Company shall pay as additional damages in cash to
such holder on each day after such tenth (10
th ) day that such delivery of such new Warrant is
not timely effected in an amount equal to 0.25% of the product of
(A) the number of Warrant Shares represented by the portion of
this Warrant which is not being exercised and (B) the Closing
Bid Price of the Common Stock for the trading day immediately
preceding the last possible date which the Company could have
issued such Warrant to the holder without violating this
Section 2.
Section 3. Covenants as
to Common Stock . The Company hereby covenants and
agrees as follows:
(a) This Warrant is,
and any Warrants issued in substitution for or replacement of this
Warrant will upon issuance be, duly authorized and validly
issued.
(b) All Warrant Shares
which may be issued upon the exercise of the rights represented by
this Warrant will, upon issuance, be validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with
respect to the issue thereof.
(c) During the period
within which the rights represented by this Warrant may be
exercised, the Company will at all times have authorized and
reserved at least one hundred percent (100%) of the number of
shares of Common Stock needed to provide for the exercise of the
rights then represented by this Warrant and the par value of said
shares will at all times be less than or equal to the applicable
Warrant Exercise Price. If at any time the Company does
not have a sufficient number of shares of Common Stock authorized
and available, then the Company shall call and hold a special
meeting of its stockholders within sixty (60) days of that
time for the sole purpose of increasing the number of authorized
shares of Common Stock.
(d) If at any time
after the date hereof the Company shall file a registration
statement, the Company shall include the Warrant Shares issuable to
the holder, pursuant to the terms of this Warrant and shall
maintain, so long as any other shares of Common Stock shall be so
listed, such listing of all Warrant Shares 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.
(e) The Company will
not, by amendment of its Articles of Incorporation 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. The Company will not increase
the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the Warrant 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.
(f) This Warrant will
be binding upon any entity succeeding to the Company by merger,
consolidation or acquisition of all or substantially all of the
Company’s assets.
Section 4. Taxes
. The Company shall pay any and all taxes, except any
applicable withholding, which may be payable with respect to the
issuance and delivery of Warrant Shares upon exercise of this
Warrant.
Section 5. Warrant Holder
Not Deemed a Stockholder . Except as otherwise
specifically provided herein, no holder, as such, of this Warrant
shall be entitled to vote or receive dividends or be deemed the
holder of shares of capital stock of the Company for any purpose,
nor shall anything contained in this Warrant be construed to confer
upon the holder hereof, as such, any of the rights of a stockholder
of the Company or any right to vote, give or withhold consent to
any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or
subscription rights, or otherwise, prior to the issuance to the
holder of this Warrant of the Warrant Shares which he or she is
then entitled to re
