U.S. SECURITIES AND EXCHANGE
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): August 30, 2006
(Exact name of registrant as specified in its charter)
(Commission File No.)
(State or Other Jurisdiction of
incorporation or organization)
|(IRS Employer Identification No.)|
3189 Airway Avenue,
Building C, Costa Mesa, California 92626
(Address of principal executive offices)
(Registrants telephone number)
(Former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
|[ ]||Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)|
|[ ]||Soliciting material pursuant to Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))|
|[ ]||Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))|
|[ ]||Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))|
|Item 2.01||Entry into a Material Definitive Agreement|
|Item 2.03||Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.|
|Item 3.02||Unregistered Sales of Equity Securities|
As previously reported by Synthetic Blood International, Inc., in its annual report on Form 10-K for the fiscal year ended April 30, 2006, Prior to April 30, 2006, Synthetic Blood received cash of $163,750 and in May and June 2006, Synthetic Blood received an additional $118,200 in cash on the sale since March 2006 of unsecured one-year promissory notes in the principal amount of $309,835. The notes were issued with a 9% original issue discount totaling $27,885 and pay interest at 9% per year. With the notes Synthetic Blood issued to the purchasers of the notes warrants to purchase 9,295,055 shares of common stock exercisable over a term of five years at an exercise rice of $0.245 per share. From August 21-30, 2006, Synthetic Blood received an additional $182,576 from an investor for the purchase of an unsecured promissory note in the principal amount of $200,000 and warrants to purchase 6,000,000 shares of common stock. The terms of the note and warrants issued in August 2006, are identical to the terms of the notes and warrants issued previously and described above. Placement of the notes and warrants since the beginning of 2006 was made with the assistance of two overseas consultants, Aurelio Landholt and Andreas Carmenzind. In consideration for their services, Synthetic Blood issued to Mr. Landholt a warrant to purchase 567,124 shares exercisable for a term of two years at an exercise price of $0.245 per share and a warrant to purchase 1,932,876 shares exercisable for a term of five years at an exercise price of $0.245 per share, and issued to Mr. Camenzind a warrant to purchase 249,286 shares exercisable for a term of two years at an exercise price of $0.245 per share and a warrant to purchase 2,250,714 shares exercisable for a term of five years at an exercise price of $0.245 per share.
The securities were offered and sold in reliance on the safe harbor provided for in Regulation S adopted under the Securities Act of 1933 for sales of securities without registration in offshore transactions.
|Item 9||Financial Statements and Exhibits|
Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K.
|SEC Ref. No.||
Description of Document
|10.1||Form of 9% Unsecured Promissory Note issued to investors|
|10.2||Form of Common Stock Purchase Warrant issued to investors|
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|SYNTHETIC BLOOD INTERNATIONAL, INC.|
|Date: September 7, 2006||By:||
/s/ Robert W. Nicora
|Robert W. Nicora, President|
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE OR SOLD UNLESS A REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER OR SALE.
SYNTHETIC BLOOD INTERNATIONAL, INC.
9% UNSECURED PROMISSORY NOTE
|Costa Mesa, California||$___________________|
Issue Date: April ___, 2006
FOR VALUE RECEIVED , SYNTHETIC BLOOD INTERNATIONAL, INC., a New Jersey corporation (the Company ), hereby promises to pay to the order of ____________________________ or his/her/its permitted successors or assigns (the Holder ) the sum of ______________________________ dollars ($______________) in same day funds, on or before the date that is twelve (12) months following the Issue Date stated above (the Maturity Date ).
1. PAYMENT .
(a) Principal Payment . The Company shall pay to the Holder, in cash on or before the Maturity Date, the original principal amount of this Note (plus unpaid accrued interest thereon); provided , that if the Maturity Date is not a week day on which banks are open for the transaction of business in the state of California (a Business Day ), such payment shall be made on the next succeeding Business Day. The Principal Payment that is due in cash and that is not paid on the Maturity Date shall bear interest until paid at a default interest rate equal to twelve percent (12%) per annum (the Default Interest Rate ).
(b) Interest Accrual . This Note shall bear simple interest on the unpaid principal amount hereof ( Interest ) at an annual rate equal to nine percent (9%), computed on the basis of a 365-day year and calculated using the actual number of days elapsed since the Issue Date or the date on which Interest was most recently paid, as the case may be. The Company shall pay accrued and unpaid Interest on the Maturity Date and on any date on which the entire principal amount of this Note is paid in full.
(c) Original Issue Discount . This Note was issued with an original issue discount on the original principal amount equal to nine percent (9%) (the Issue Discount ), which is in addition to the Interest payable under this Note as provided in Section 1(b).
(d) Prepayment . At any time following the Issue Date and without prior notice to the Holder, the Company shall have the right to prepay in full (not in part) the Note by making payment to the Holder of an amount in cash equal to 120% multiplied by the then outstanding
principal amount of this Note plus all accrued and unpaid Interest, less an amount equal to the Issue Discount multiplied by a fraction, the numerator of which 365 less the number of days elapsed from the Issue Date to the date of the prepayment of this Note and the denominator of which is 365.
2. Default . The Term Event of Default shall mean any of the following events.
(a) The Company shall default in the payment when due of any principal or Interest of this Note and such default shall continue unremedied for a period of five days;
(b) The Company shall:
(i) generally fail to pay, or admit in writing its inability to pay, debts as they become due;
(ii) apply for, consent to, or acquiesce in, the appointment of a trustee, receiver, sequestrator or other custodian for the Company any of its property or make a general assignment for the benefit of creditors;
(iii) in the absence of such application, consent, or acquiescence, permit or suffer to exist the appointment of a trustee, receiver, sequestrator or other custodian for the Company or for a substantial part of its property, and such trustee, receiver, sequestrator or other custodian shall not be discharged within 60 days;
(iv) permit or suffer to exist the commencement of any bankruptcy, plan reorganization, debt arrangement or other case or proceeding under any bankruptcy or insolvency law, or any dissolution, winding up or liquidation proceeding, in respect of the Company and, if such case or proceeding is not commenced by the Company, such case or proceeding shall be consented to or acquiesced in or shall result in the entry of an order for relief or shall remain for 60 days undismissed; or
(v) take any action authorizing, or in furtherance of, any of the foregoing.
If any Event of Default described in this Section 2 shall occur, the outstanding principal amount and Interest of this Note shall automatically be and become immediately due and payable without notice, demand, or presentment. From and after the date of acceleration of the payment of principal and Interest, the unpaid balance shall accrue interest at the Default Interest Rate. The Company hereby waives all requirements as to diligence, presentment, demand of payment, protest and notice of any kind with respect to this Note.
3. MISCELLANEOUS .
(a) Failure to Exercise Rights not Waiver . No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude any other or further exercise thereof. All rights and remedies of the Holder hereunder are cumulative and not exclusive of any rights or remedies otherwise available.
(b) Notices . Any notice, demand or request required or permitted to be given by the Company or the Holder pursuant to the terms of this Note shall be in writing and shall be deemed delivered (i) when delivered personally or by verifiable facsimile transmission, unless such delivery is made on a day that is not a Business Day, in which case such delivery will be deemed to be made on the next succeeding Business Day and (ii) on the second Business Day after timely delivery to an overnight courier service, addressed as follows:
If to the Company:
Blood International, Inc.
3189 Airway Avenue, Bldg C
Costa Mesa, CA 92626
Attn: Chief Executive Officer
If to the Holder:
(c) Amendments . No amendment, modification or other change to, or waiver of any provision of, this Note may be made unless such amendment, modification or change is set forth in writing and is signed by the Company and the Holder.
(d) Transfer of Note . The Holder may sell, transfer or otherwise dispose of all or any part of this Note (including without limitation pursuant to a pledge) to any person or entity as long as such sale, transfer or disposition is the subject of an effective registration statement under the Securities Act and applicable state securities laws, or is exempt from registration thereunder. From and after the date of any such sale, transfer or disposition, the transferee hereof shall be deemed to be the holder of this Note in the principal amount acquired by such transferee, and the Company shall, as promptly as practicable, issue and deliver to such transferee a new Note identical in all respects to this Note, in the name of such transferee. The Company shall be entitled to treat the original Holder as the holder of this entire Note unless and until it receives written notice of the sale, transfer or disposition hereof.
(e) Lost or Stolen Note . Upon receipt by the Company of evidence of the loss, theft, destruction or mutilation of this Note, and (in the case of loss, theft or destruction) of indemnity or security reasonably satisfactory to the Company, and upon surrender and cancellation of the Note, if mutilated, the Company shall execute and deliver to the Holder a new Note identical in all respects to this Note.
(f) Governing Law . This Note shall be governed by and construed in accordance with the laws of the state of California applicable to contracts made and to be performed entirely within the state of California.
(g) Successors and Assigns . The terms and conditions of this Note shall inure to the benefit of and be binding upon the respective successors (whether by merger or otherwise) and permitted assigns of the Company and the Holder. The Company may not assign its rights or obligations under this Note except as specifically required or permitted pursuant to the terms hereof.
(h) Usury . This Note is subject to the express condition that at no time shall the Company be obligated or required to pay interest hereunder at a rate that could subject the Holder to either civil or criminal liability as a result of being in excess of the maximum interest rate that the Company is permitted by applicable law to contract or agree to pay. If by the terms of this Note, the Company is at any time required or obligated to pay interest hereunder at a rate in excess of such maximum rate, the rate of interest under this Note shall be deemed to be immediately reduced to such maximum rate and the interest payable shall be computed at such maximum rate and all prior interest payments in excess of such maximum rate shall be applied and shall be deemed to have been payments in reduction of the principal balance of this Note.
(g) Participation in Subsequent Financing . As long as the Note is outstanding, upon any financing by the Company involving the offer and sale by the Company of common stock or any securities of the Company that entitle the holder thereof to acquire at any time common stock, including, without limitation, any debt, preferred stock, rights, or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, common stock (a Subsequent Financing), the Holder shall have the right to exchange this Note and the right to receive payment of principal and Interest hereunder, in whole or in part, for securities offered in the Subsequent Financing on the same terms and conditions of the Subsequent Financing. At least five Business Days prior to the closing of the Subsequent Financing, the Company shall deliver to the Holder a written notice of its intention to effect a Subsequent Financing (Pre-Notice), which shall describe in reasonable detail the proposed terms of such Subsequent Financing. If the Holder desires to exchange a portion or all of the principal of this Note and accrued Interest for securities offered in the Subsequent Financing, the Holder must provide written notice to the Company (the Exchange Notice) by not later than 5:30 p.m. (California time) on the fifth Trading Day following the date the Pre-Notice is given to the Holder that the Holder is electing to make the exchange and the amount of the principal of this Note and accrued Interest that the Holder is electing to exchange. The election to exchange is irrevocable by Holder after the Exchange Notice is given to the Company, unless the Company agrees in the exercise of its sole discretion to accept a revocation by the Holder. If for any reason the Subsequent Financing does not close, any Exchange Notice shall automatically become void and the Company shall not be obligated to effect any Exchange pursuant to such notice. If the Holder elects to make an exchange in connection with a Subsequent Financing occurring prior to the Maturity Date, the dollar value of the principal amount exchanged will be reduced by an amount equal to the Issue Discount multiplied by a fraction, the numerator of which 365 less the number of days elapsed from the Issue Date to the date of the Exchange Notice and the denominator of which is 365. If the Company does not receive a timely Exchange Notice from the Holder, the Holder shall be deemed to have notified the Company that it does not elect to make an exchange. As of the date the Exchange Notice is given to the
Company, the principal amount of this Note and accrued Interest stated in the Exchange Notice shall be deemed paid in full, and no later than five Business Days following the closing of the Subsequent Financing with respect to which the Pre-Notice and Exchange Notice are given by the Company and Holder, the Company shall issue or cause to be issued to the Holder the securities to which the Holder is entitled pursuant to the exchange. For purposes of this Section 3(g) a Subsequent Financing does not include the issuance of shares of common stock or options to employees, officers, consultants, or directors of the Company pursuant to any stock or option plan or compensatory arrangement, securities upon the exercise or exchange of or conversion of any securities of the Company issued and outstanding on the Issue Date, and securities issued pursuant to acquisitions or strategic transactions.
IN WITNESS WHEREOF, the Company has caused this Note to be signed in its name by its duly authorized officer on the date first above written.
SYNTHETIC BLOOD INTERNATIONAL, INC.
Name: Robert W. Nicora
NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED 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. THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF ANY U.S. PERSON UNLESS REGISTERED UNDER THE SECURITIES ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
COMMON STOCK PURCHASE WARRANT
To Purchase __________ Shares of Common Stock of
SYNTHETIC BLOOD INTERNATIONAL, INC.
THIS COMMON STOCK PURCHASE WARRANT (the Warrant ) CERTIFIES that, for value received, _____________ (the Holder ), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or prior to ________________, 2011 (the Termination Date ) but not thereafter, to subscribe for and purchase from Synthetic Blood International, Inc., a New Jersey corporation (the Company ), up to _________________________ shares (the Warrant Shares ) of Common Stock, par value $0.01 per share, of the Company (the Common Stock ). The purchase price of one share of Common Stock (the Exercise Price ) under this Warrant is $0.245. The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided herein.
1. Title to Warrant . Prior to the Termination Date and subject to compliance with applicable laws and Section 7 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. Notwithstanding the foregoing, all subsequent offers and sales of this Warrant shall be made in compliance with Regulation S and/or pursuant to registration of the Warrant under the Securities Act or pursuant to an exemption from registration under the Securities Act. Unless registered for sale under the Securities Act, this Warrant can not be resold to U.S. Persons or within the United States and otherwise in compliance with Rule 904 of Regulation S.
2. Authorization of Shares . The Company covenants that all Warrant Shares that may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
3. Exercise of Warrant .
(a) Exercise of the purchase rights represented by this Warrant may be made at any time or times on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company); provided, however, said exercise will be void and of no effect if the Holder does not surrender this Warrant to the Company and the Company does not receive payment of the aggregate Exercise Price of the shares purchased by wire transfer or cashiers check drawn on a United States bank on or before the fifth day following the date notice of exercise is delivered to the Company. Certificates
for shares purchased hereunder shall be issued to the Holder within three business days from the delivery to the Company of the notice of exercise, surrender of this Warrant and payment of the aggregate Exercise Price as set forth above. This Warrant shall be deemed to have been exercised on the date the Exercise Price is received by the Company. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised by payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 5 prior to the issuance of such shares, have been paid.
(b) If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
(c) Notwithstanding the foregoing, this Warrant can not be exercised within the United States and the Warrant Shares can not be delivered within the United States upon exercise, other than in a transaction deemed by the Company to meet the definition of an offshore transaction pursuant to Rule 902(h) of Regulation S adopted under the Securities Act, unless the transaction is registered under the Securities Act or an exemption from such registration requirement is available.
4. No Fractional Shares or Scrip . No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.
5. Charges, Taxes and Expenses . Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided , however , that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.
6. Closing of Books . The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
7. Transfer, Division and Combination .
(a) Subject to compliance with any applicable securities laws and the conditions set forth in Sections 1 and 7(e) hereof, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
(b) This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and
denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 7(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.
(c) The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7.
(d) The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.
(e) In connection with any transfer of this Warrant the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, and (ii) that the holder or transferee execute and deliver to the Company a representation letter regarding compliance with the Securities Act in form and substance acceptable to the Company.
8. No Rights as Shareholder until Exercise . This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.
9. Loss, Theft, Destruction or Mutilation of Warrant . The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
10. Saturdays, Sundays, Holidays, etc . If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday in the United States, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.
11. Adjustments of Exercise Price and Number of Warrant Shares .
(a) Stock Splits, etc . The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company that it would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company that are purchasable hereunder, the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share
or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by a fraction, the numerator of which is the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and the denominator of which is the number of Warrant Shares or other securities of the Company that are purchasable pursuant hereto immediately after such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.
(b) Minimum Adjustment of Exercise Price . No adjustment of the Exercise Price shall be made in an amount of less than 1% of the Exercise Price in effect at the time such adjustment is otherwise required to be made, but any such lesser adjustment shall be carried forward and shall be made at the time and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to not less than 1% of such Exercise Price.
(c) Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets . In case the Company shall reorganize its capital, reclassify its capital stock, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or otherwise dispose of its property, assets or business to another corporation and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation ( Other Property ), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right thereafter to receive upon exercise of this Warrant, the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable that shall be as nearly equivalent as practicable to the adjustments provided for in this Section 11. For purposes of this Section 11, common stock of the successor or acquiring corporation shall include stock of such corporation of any class that is not preferred as to dividends or assets over any other class of stock of such corporation and that is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities that are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 11(c) shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets.
(d) Voluntary Adjustment by the Company . The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company. The Company may at any time during the term of this Warrant extend the Termination Date to any date deemed appropriate by the Board of Directors of the Company.
(e) Notice of Adjustment . Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state
the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.
(f) Notice of Corporate Action . If at any time:
(i) the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or
(ii) there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or,
(iii) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at least 20 days prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 20 days prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 13(d). The failure of the Company to give any such notice under this Section 11(f) shall not affect the effectiveness or validity of any action that would have been the subject of the notice and such failure to give notice shall not entitle the Holder to pursue any course of legal action or equitable proceeding against the Company or its successors to enjoin, prevent, or rescind any action taken without providing notice to the Holder.
12. Authorized Shares . The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the trading market upon which the Common Stock may be listed.
Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending 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 of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable there for upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.
13. Miscellaneous .
(a) Jurisdiction . All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the state of California, without regard to the principles of conflicts of law thereof.
(b) Restrictions . The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant will have restrictions upon resale imposed by state and federal securities laws.
(c) Nonwaiver and Expenses . No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holders rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
(d) Notices . Any notice, request or other document required or permitted to be given or delivered all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile and receipt is confirmed by telephone, (b) the second business day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (c) upon actual receipt by the party to whom such notice is required to be given. The Holders address for such notices and communications shall be the address of Holder as it appears in the books and records of the Company.
(e) Successors and Assigns . Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder.
(f) Amendment . This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
(g) Severability . Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
(h) Headings . The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.
Dated: April ____, 2006
SYNTHETIC BLOOD INTERNATIONAL, INC.
Name: Robert W. Nicora
NOTICE OF EXERCISE
To: Synthetic Blood International, Inc.
(1) The undersigned hereby elects to purchase ___________________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:
The Warrant Shares shall be delivered to the following:
(3) The undersigned is not a U.S. Person, was not formed for the purpose of investing in the Securities, which have not been registered under the Securities Act of 1933 in reliance upon Regulation S, and the undersigned is not acquiring the Warrant Shares by or for the benefit of a U.S. person.
(4) Attached to this Notice of Exercise is an opinion of counsel to the effect that (a) the Warrant Shares have been registered under the Securities Act of 1933, or (b) the purchase and sale of the Warrant Shares is exempt from registration under the Securities Act of 1933.
(To assign the foregoing warrant, execute
this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to
|whose address is|
Dated: _______________________, _______
Holder's Signature: ________________________________
Holder's Address: ________________________________
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.