Exhibit 10.5
Exhibit A
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR ANY STATE SECURITIES LAW. SUCH
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT OR THE
ISSUER HAS RECEIVED AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
REASONABLY ACCEPTABLE TO THE ISSUER THAT REGISTRATION IS NOT
REQUIRED UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS. THESE
SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT SECURED BY SUCH SECURITIES.
eDiets.com, Inc
.
Warrant for the Purchase of
Shares of
Common Stock
FOR VALUE RECEIVED, eDiets.com,
Inc., a Delaware corporation (the “Company”), hereby
certifies that
or his assigns, is entitled to purchase from the Company, at any
time or from time to time commencing on the date hereof (the
“Initial Exercise Date”) and expiring at 5:00 P.M., New
York City time, on the ten (10) year anniversary of the
Original Issue Date (the “Expiration Date”)
( )
fully paid and non-assessable shares of Common Stock, par value
$.001 per share, of the Company (the “Warrant Shares”)
for a per share exercise price of $1.20 (the “Per Share
Warrant Price”). The Per Share Warrant Price is subject to
adjustment as hereinafter provided. Capitalized terms used and not
otherwise defined in this Warrant shall have the meanings specified
in Section 8, unless the context otherwise
requires.
1. Exercise of Warrant
.
(a) This Warrant may be exercised,
in whole at any time or in part from time to time, commencing on
the Initial Exercise Date and expiring at 5:00 P.M., New York City
time, on the Expiration Date (with the Exercise Notice at the end
of this Warrant duly executed) at the address set forth in
Section 10 hereof, together with payment of the Per Share
Warrant Price multiplied by the number of Warrant Shares to which
such exercise relates made by delivery to the Company of one or
more types of Permitted Consideration.
(b) If this Warrant is exercised in
part, the Company will deliver to the Holder within three Trading
Days of the date such Holder delivers to the Company this Warrant
and an Exercise Notice, together with the payment of the aggregate
Per Share Warrant Price for such exercise, a new Warrant covering
the Warrant Shares that have not been exercised. By the expiration
of the third Trading Day following the Holder’s delivery of a
Warrant, together with an Exercise Notice and the payment of the
aggregate Per Share Warrant Price for such exercise, the Company
will (i) issue a certificate or certificates in the name of
the Holder for the largest
number of whole shares of the Common Stock to
which the Holder shall be entitled and, if this Warrant is
exercised in whole, in lieu of any fractional share of the Common
Stock to which the Holder shall be entitled, pay to the Holder cash
in an amount equal to the fair value of such fractional share
(determined by reference to the closing sales price of the Common
Stock on the date of the Exercise Notice), and (ii) deliver
the other securities and properties receivable upon the exercise of
this Warrant, or the proportionate part thereof if this Warrant is
exercised in part, pursuant to the provisions of this
Warrant.
(c) If, by the third Trading Day
after the date that the Holder delivers an Exercise Notice,
together with the payment of the aggregate Per Share Warrant Price
for such exercise, the Company fails to deliver the required number
of Warrant Shares in the manner required pursuant to
Section 1(b), then the Holder will have the right to rescind
such exercise.
(d) If, by the third Trading Day
after the date that the Holder delivers an Exercise Notice,
together with the payment of the aggregate Per Share Warrant Price
for such exercise, the Company fails to deliver the required number
of Warrant Shares in the manner required pursuant to
Section 1(b), and if after such third Trading Day and prior to
the receipt of such Warrant Shares, the Holder purchases (in an
open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of the Warrant
Shares which the Holder anticipated receiving upon such exercise (a
“Buy-In”), then the Company shall (1) pay in cash
to the Holder the amount by which (x) the Holder’s total
purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount
obtained by multiplying (A) the number of Warrant Shares that
the Company was required to deliver to the Holder in connection
with the exercise at issue by (B) the closing bid price of the
Common Stock at the time of the obligation giving rise to such
purchase obligation and (2) at the option of the Holder,
either reinstate the portion of the Warrant and equivalent number
of Warrant Shares for which such exercise was not honored or
deliver to the Holder the number of shares of Common Stock that
would have been issued had the Company timely complied with its
exercise and delivery obligations hereunder. The Holder shall
provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In.
(e) If, after the Required Effective
Date (as defined in the Registration Rights Agreement) the Warrant
Shares to be issued are not registered and available for resale by
the Holder pursuant to a registration statement in accordance with
the Registration Rights Agreement, then notwithstanding anything
contained herein to the contrary, the Holder may, at its election
exercised in its sole discretion, exercise a portion of this
Warrant with respect to an aggregate total of twenty-five percent
(25%) of the total Warrant Shares and, in lieu of making a
cash payment of Permitted Consideration, elect instead to receive
upon such exercise the “Net Number” of shares of Common
Stock determined according to the following formula:
For purposes of the foregoing
formula:
A = the total number of Warrant
Shares with respect to which this Warrant is then being
exercised.
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B = the average of the closing sales
prices for the five Trading Days immediately prior to (but not
including) the day that the Holder delivers the Exercise Notice at
issue.
C = the Per Share Warrant
Price.
2. Company’s Option to
Change Expiration Date .
Notwithstanding anything herein to
the contrary, in the event that (i) the closing sales price
per share of Common Stock is in excess of 150% of the Per Share
Warrant Price (as may be adjusted pursuant to Section 3) for
thirty (30) consecutive Trading Days, (ii) the Warrant
Shares are either registered for resale pursuant to an effective
registration statement naming the Holder as a selling stockholder
thereunder (and the prospectus thereunder is available for use by
the Holder as to all then available Warrant Shares) or freely
transferable without volume restrictions pursuant to Rule 144(k)
promulgated under the Securities Act, as determined by counsel to
the Company pursuant to a written opinion letter addressed and in
form and substance reasonably acceptable to the Holder and the
transfer agent for the Common Stock, during the entire sixty
(60) Trading Day period referenced in (i) above through
the expiration of the Call Date as set forth in the Company’s
notice pursuant to this Section (the “Call Condition
Period”), and (iii) the Company shall have complied in
all material respects with its obligations under this Warrant and
the Common Stock shall at all times be listed on the AMEX, New York
Stock Exchange, the Nasdaq National Market, the Nasdaq Capital
Market or the OTC Bulletin Board, then, subject to the conditions
set forth in this Section, the Company may, in its sole discretion,
elect to change the Expiration Date for the respective Warrant to
5:00 P.M., New York City time on the date that is thirty
(30) days after written notice thereof (a “Call
Notice”) is received by the Holder (the “Call
Date”) at the address last shown on the records of the
Company for the Holder or given by the Holder to the Company for
the purpose of notice; provided, that the conditions to giving such
notice must be in effect at all times during the Call Condition
Period or any such notice shall be null and void. Notwithstanding
anything herein to the contrary, if the Company changes the
Expiration Date pursuant to this Section 2, the Holder may, at
its election exercised in its sole discretion, exercise a portion
of this Warrant with respect to an aggregate total (including any
exercises made under Section 1(e)) of twenty-five percent
(25%) of the total Warrant Shares and, in lieu of making a
cash payment of Permitted Consideration, elect instead to receive
upon such exercise the “Net Number” of shares of Common
Stock determined according to the formula set forth in
Section 1(e).
3. Certain Adjustments . The
Per Share Warrant Price and number of Warrant Shares issuable upon
exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 3.
(a) If the Company, at any time
while this Warrant is outstanding, (i) pays a stock dividend
on its Common Stock or otherwise makes a distribution on any class
of capital stock that is payable in shares of Common Stock,
(ii) subdivides outstanding shares of Common Stock into a
larger number of shares, or (iii) combines outstanding shares
of Common Stock into a smaller number
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of shares, then in each such case the Per Share
Warrant Price shall be multiplied by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding
immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after
such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date
for the determination of shareholders entitled to receive such
dividend or distribution, and any adjustment pursuant to clause
(ii) or (iii) of this paragraph shall become effective
immediately after the effective date of such subdivision or
combination.
(b) If, at any time while this
Warrant is outstanding, (1) the Company effects any merger or
consolidation of the Company with or into another person,
(2) the Company effects any sale of all or substantially all
of its assets in one or a series of related transactions,
(3) any tender offer or exchange offer (whether by the Company
or another Person) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other
securities, cash or property, or (4) the Company effects any
reclassification of the Common Stock or any compulsory share
exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property
(in any such case, a “Fundamental Transaction”), then
thereafter this Warrant shall represent the right to receive, upon
exercise of this Warrant, the same amount and kind of securities,
cash or property as it would have been entitled to receive upon the
occurrence of such Fundamental Transaction if it had been,
immediately prior to such Fundamental Transaction, the holder of
the number of Warrant Shares then issuable upon exercise in full of
this Warrant (the “Alternate Consideration”). For
purposes of any such exercise, the determination of the Per Share
Warrant Price shall be appropriately adjusted to apply to such
Alternate Consideration based on the amount of Alternate
Consideration issuable in respect of one share of Common Stock in
such Fundamental Transaction, and the Company shall apportion the
Per Share Warrant Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different
components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property
to be received in a Fundamental Transaction, then the Holder shall
be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such
Fundamental Transaction. At the Holder’s option and request,
any successor to the Company or surviving entity (and, if an entity
different from the successor or surviving entity, the entity whose
capital stock or assets the Holders of Common Stock are entitled to
receive as a result of such Fundamental Transaction) in such
Fundamental Transaction shall, either (1) issue to the Holder
a new warrant substantially in the form of this Warrant and
consistent with the foregoing provisions and evidencing the
Holder’s right to purchase the Alternate Consideration for
the aggregate Per Share Warrant Price upon exercise thereof, or
(2) purchase the Warrant from the Holder for a purchase price,
payable in cash within five trading days after such request (or, if
later, on the effective date of the Fundamental Transaction), equal
to the Black Scholes value of the remaining unexercised portion of
this Warrant on the date of such request. The terms of any
agreement pursuant to which a Fundamental Transaction is effected
shall include terms requiring any such successor or surviving
entity (and, if an entity different from the successor or surviving
entity, the entity whose capital stock or assets the Holders of
Common Stock are entitled to receive as a result of such
Fundamental Transaction) to comply with the provisions of this
paragraph (b) and insuring that the Warrant (or any such
replacement security) will be similarly adjusted upon any
subsequent transaction analogous to a Fundamental
Transaction.
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(c) If, at any time while this
Warrant is outstanding, the Company shall issue additional shares
of Common Stock for
