Exhibit 10.3
EXHIBIT C
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF
ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND, AMONG
OTHER RESTRICTIONS, HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED,
SOLD, OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED, OR
HYPOTHECATED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT, OR AN EXEMPTION FROM REGISTRATION, UNDER SUCH ACT
___________ NPDC Warrants
NATIONAL PATENT DEVELOPMENT CORPORATION
WARRANT CERTIFICATE
This warrant certificate ("NPDC Warrant Certificate") certifies that,
for value received, [PURCHASER] or registered assigns (the "Holder") is the
owner of the number of warrants ("NPDC Warrants") specified above, each of which
entitles the Holder subscribe for and to purchase, at any time during the
Exercise Period (as hereinafter defined), one fully paid and non-assessable
share of Class A Common Stock, $.01 par value ("NPDC Common Stock"), of National
Patent Development Corporation, a Delaware corporation ("NPDC"), at an initial
purchase price as determined as set forth below, subject to adjustment as
hereinafter provided.
1. Issue; Exercise Price; Agent
1.1 The NPDC Warrants evidenced hereby are part of the issue of a number of NPDC
Warrants as determined pursuant to the Note and Warrant Purchase Agreement (the
"Purchase Agreement"), dated August 8, 2003, among NPDC, its parent GP
Strategies Corporation, a Delaware corporation, MXL Industries, Inc., a Delaware
corporation, the purchasers named therein, and Gabelli Funds, LLC, as agent (the
"Agent").
1.2 Each NPDC Warrant entitles the Holder to subscribe for and purchase one
share of NPDC Common Stock at an initial purchase price equal to 160% of the
Current Market Price (as defined below), subject to adjustment as hereinafter
provided (the "Exercise Price"). The Exercise Price and number of shares of NPDC
Common Stock issuable upon exercise of each NPDC Warrant (the "NPDC Warrant
Shares") are subject to adjustment as provided below.
1.3 Each Holder, by accepting this NPDC Warrant Certificate, appoints and
authorizes the Agent as the agent of the Holder, to take such action as agent on
its behalf and to exercise such powers as are delegated to the Agent by the
terms of the Purchase Agreement. Without limiting the foregoing, each Holder
acknowledges that the NPDC Warrants may be amended by action of the Agent, with
the consent of holders of a majority of the then-outstanding NPDC Warrants, and
that all Holders of NPDC Warrants will be bound by any such amendment.
2. Exercise; Expiration Date
2.1 The NPDC Warrants are exercisable, at the option of the Holder, at any time
after the last day of the Exercise Price Measurement Period (as defined below)
and on or before the Expiration Date (the "Exercise Period"), upon surrender of
this NPDC Warrant Certificate to NPDC together with a duly completed notice of
exercise, in the form attached hereto as Exhibit A (the "Notice of Exercise"),
and payment, in the manner provided below, of an amount equal to the Exercise
Price multiplied by the number of NPDC Warrants to be exercised. Such delivery
shall be made at NPDC's office at 777 Westchester Avenue, Fourth Floor, White
Plains, New York 10604, or such other place as may be designated by NPDC by
notice to the Holder. The "Exercise Date" shall mean the date on which such
Notice of Exercise and payment are delivered to NPDC.
2.2 The "Expiration Date" shall mean 5:00 p.m. New York time on the fifth
anniversary of the Closing Date (as defined in the Purchase Agreement) or, if
such date is not a Business Day, then 5:00 p.m. New York time the next following
Business Day. "Business Day" shall mean any date which in the State of New York
is not a holiday or a day on which banks are authorized to close.
2.3 The Exercise Price for any NPDC Warrants shall be paid by delivery to NPDC,
together with the Notice of Exercise, of a certified or cashier's check or
checks, in lawful money of the United States of America.
2.4 Upon each exercise of the Holder's rights to purchase NPDC Warrant Shares,
the Holder shall be deemed to be the holder of record of the NPDC Warrant Shares
issuable upon such exercise, notwithstanding that the transfer books of NPDC
shall then be closed or certificates representing such NPDC Warrant Shares shall
not then have been actually delivered to the Holder. As soon as practicable, but
no later than five Business Days, after each such exercise, NPDC shall issue and
deliver to the Holder a certificate or certificates for the NPDC Warrant Shares
issuable upon such exercise, registered in the name of the Holder. In the case
of exercise of less than all the NPDC Warrants represented by this NPDC Warrant
Certificate, NPDC shall cancel this NPDC Warrant Certificate upon the surrender
hereof and shall execute and deliver to the Holder a new NPDC Warrant
Certificate for the balance of such NPDC Warrants.
2.5 The issuance of any NPDC Warrant Shares or other securities upon the
exercise of NPDC Warrants and the delivery of certificates or other instruments
representing such securities shall be made without charge to the Holder for any
tax or other charge in respect of such issuance. NPDC shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of any certificate in a name other than that of the
Holder and NPDC shall not be required to issue or deliver any such certificate
unless and until the person or persons requesting the issue thereof shall have
paid to NPDC the amount of such tax or shall have established to the
satisfaction of NPDC that such tax has been paid.
2.6 No fractional shares of NPDC Common Stock will be issued in connection with
any exercise hereof of NPDC Warrants, but, in lieu of such fractional shares,
NPDC shall make a cash payment therefor in an amount equal to the product of the
applicable fraction and the Current Market Price as of the Exercise Date.
3. Registration and Transfer
3.1 NPDC shall maintain a register (the "Register") for the registration and
transfer of the NPDC Warrants and the registration and transfer of NPDC Warrant
Shares.
3.2 Prior to due presentment for registration of transfer of this NPDC Warrant
Certificate, or the NPDC Warrant Shares issued upon exercise of the NPDC
Warrants evidenced hereby, NPDC may deem and treat the registered Holder thereof
in the Register as the absolute owner thereof. NPDC shall be entitled to treat
the registered holder of any NPDC Warrant on the Register as the owner in fact
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to or interest in such NPDC Warrant on the part of any other person,
and shall not be liable for any registration or transfer of NPDC Warrants which
are registered or to be registered in the name of a fiduciary or the nominee of
a fiduciary unless made with the actual knowledge that a fiduciary or nominee is
committing a breach of trust in requesting such registration or transfer, or
with the knowledge of such facts that its participation therein amounts to bad
faith. In all cases of transfer by an attorney, executor, administrator,
guardian, or other legal representative, duly authenticated evidence of his or
its authority shall be produced.
3.3 Neither the NPDC Warrants evidenced hereby nor the NPDC Warrant Shares
issuable upon exercise hereof have been registered under the Securities Act of
1933, as amended (the "Securities Act"). The Holders are entitled to the
benefits of the Registration Rights Agreement, dated ____________, 2003 (the
"Registration Rights Agreement"), made by NPDC in favor of the Holders. The
Registration Rights Agreement provides, among other things, for certain
restrictions on the disposition of the NPDC Warrants and the NPDC Warrant
Shares, and each Holder, by acceptance of a NPDC Warrant Certificate, accepts
the restrictions and other provisions of the Registration Rights Agreement.
Without limiting the foregoing:
(a) No Holder may make any disposition of NPDC Warrants unless
such disposition is (i) to an investment company registered
under the Investment Company Act of 1940, as amended, which is
advised by Gabelli Funds, LLC, (ii) of all of the NPDC
Warrants held by such Holder, (iii) to one or more transferees
each of whom, after giving effect to such disposition, will
hold a number of NPDC Warrants at least equal to one-fifteenth
of the number of NPDC Warrants originally issued, or (iv)
required to enable such Holder to comply with any legal or
regulatory restrictions.
(b) In addition, no Holder shall make any disposition of any NPDC
Warrants or NPDC Warrant Shares unless:
(i) (A) each transferee is an accredited investor, as such term is
defined in Regulation D promulgated under the Securities Act, and has
indicated in the Form of Assignment attached hereto as Exhibit B (the
"Form of Assignment") the basis on which such transferee is an
accredited investor, (B) each transferee has agreed in writing to be
bound by the terms of this NPDC Warrant Certificate, the Registration
Rights Agreement, and the Purchase Agreement, including, without
limitation, the provisions thereof with respect to the Agent and the
obligations as a Security Holder (as defined in the Purchase
Agreement) under the Purchase Agreement, (C) such Holder shall have
notified NPDC of the proposed disposition, and (D) such Holder shall
have furnished NPDC with an opinion of counsel (which opinion may be
delivered by in-house counsel of Holder) in the form set forth as
Exhibit C, or otherwise reasonably satisfactory to NPDC, that such
disposition will not require registration of the securities to be
disposed of under the Securities Act, provided that no such opinion
shall be required if such transfer is pursuant to (I) Rule 144(k)
promulgated under the Securities Act or (II) Rule 144A promulgated
under the Securities Act; or
(ii) in the case of a disposition of NPDC Warrant Shares, such
disposition is pursuant to and in compliance with Rule 144 promulgated
under the Securities Act, provided that NPDC may require that such
Holder shall have furnished NPDC with an opinion of counsel (which
opinion may be delivered by in-house counsel of Holder) in the form
set forth as Exhibit C, or otherwise reasonably satisfactory to NPDC,
that such disposition is in accordance with such Rule, provided that
no such opinion shall be required if such transfer is pursuant to Rule
144(k) promulgated under the Securities Act; or
(iii) in the case of a disposition of NPDC Warrant Shares, there
is then in effect a registration statement under the Securities Act
covering such proposed disposition and such disposition is made in
accordance with such registration statement.
The execution and delivery of the Form of Assignment by the transferor and
transferee indicating the satisfaction of the requirements of Sections
3.3(a), (b)(i)(A), (b)(i)(B), (b)(i)(C), and, if applicable, (b)(i)(D)(I)
or (b)(i)(D)(II) shall be sufficient to satisfy such requirements with
respect to the transfer of NPDC Warrants (except (other than with respect
to Section 3(b)(i)(D)(II)) to the extent NPDC has notified the Holder
promptly after receipt of such Form of Assignment that to NPDC's knowledge
such requirements are not met, specifying in such notice the reason NPDC
believes such requirements are not met).
3.4 Each NPDC Warrant Certificate, and each certificate representing NPDC
Warrant Shares, shall be stamped or otherwise imprinted with a legend
substantially similar to the following (in addition to any legend required under
other applicable securities laws):
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND, AMONG OTHER
RESTRICTIONS, HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD, OR
OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR AN EXEMPTION FROM
REGISTRATION, UNDER SUCH ACT
3.5 NPDC shall register in the Register any permitted transfer of a NPDC Warrant
Certificate, upon surrender of same to NPDC with a written instrument of
transfer, in the form attached as Exhibit B, duly executed by the registered
Holder or by a duly authorized attorney thereof and (unless being transferred to
NPDC) by the transferee or by a duly authorized attorney thereof, together with
such other documents as may be required for such transfer as provided above.
Upon any such registration of transfer, new NPDC Warrant Certificate(s) shall be
issued to the transferee(s) and the surrendered NPDC Warrant Certificate shall
be canceled by NPDC. A NPDC Warrant Certificate may also be exchanged, at the
option of the Holder, for new NPDC Warrant Certificates representing in the
aggregate the number of NPDC Warrants evidenced by the NPDC Warrant Certificate
surrendered.
3.6 Upon receipt by NPDC of reasonable evidence of the ownership of and the
loss, theft, destruction, or mutilation of any NPDC Warrant Certificate and, in
the case of loss, theft, or destruction, of indemnity reasonably satisfactory to
NPDC, or, in the case of mutilation, upon surrender and cancellation of the
mutilated NPDC Warrant Certificate, NPDC shall execute and deliver in lieu
thereof a new NPDC Warrant Certificate representing an equal number of NPDC
Warrants.
3.7 Upon any transfer of NPDC Warrants or NPDC Warrant Shares pursuant to
Section 3.3(b)(i), the transferee shall be entitled to all of the benefits
enjoyed by the transferor under the Purchase Agreement and the Registration
Rights Agreement, and the transferor shall be relieved of any obligations under
the Purchase Agreement arising after the date of such transfer.
4. Stock Fully Paid; Reservation of Shares; Covenants
4.1 NPDC covenants that it will at all times reserve and keep available out of
its authorized NPDC Common Stock, solely for the purpose of issue upon exercise
of the NPDC Warrants, such number of NPDC Warrant Shares as shall then be
issuable upon the exercise of all outstanding NPDC Warrants.
4.2 NPDC covenants that all NPDC Warrant Shares issued upon exercise of the NPDC
Warrants shall be duly and validly issued and, upon payment for such shares as
set forth herein, fully paid and non-assessable and free from all taxes, liens,
and charges with respect to the issue thereof, and that upon issuance such
shares shall be listed on each national securities exchange, if any, on which
the other shares of outstanding NPDC Common Stock of NPDC are then listed.
4.3 NPDC shall not by any action, including, without limitation, amending its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other
action, avoid or seek to avoid the observance or performance of any of the terms
of this NPDC Warrant Certificate, 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 the Holder hereof against
impairment.
4.4 In case NPDC shall at any time (a) declare a stock dividend upon the NPDC
Class B Common Stock payable in shares of NPDC Class B Common Stock or (b) make
any distribution upon the NPDC Class B Common Stock payable in shares of NPDC
Class B Common Stock or (c) subdivide the outstanding shares of NPDC Class B
Common Stock into a greater number of shares or (d) combine the outstanding
shares of NPDC Class B Common Stock into a smaller number of shares, then and in
any of such events NPDC shall make, declare, or effect a similar but ratable
stock dividend or distribution or subdivision or combination of the shares of
NPDC Common Stock but payable in shares of NPDC Common Stock.
5. Adjustment of Exercise Price and Number of NPDC Warrant Shares
5.1 The number of NPDC Warrant Shares or other securities or assets issuable
upon the exercise of each NPDC Warrant and the Exercise Price shall be subject
to adjustment from time to time upon the happening of certain events as follows:
(a) Recapitalization, Reorganization, Reclassification,
Consolidation, Merger, or Sale.
(i) If NPDC, at any time after the Spin-Off Date (as defined
in the Purchase Agreement) while any NPDC Warrants are outstanding,
shall do any of the following (each a "Triggering Event"):
(A) consolidate with or merge into any other Person and NPDC
shall not be the continuing or surviving corporation of such
consolidation or merger;
(B) permit any other Person to consolidate with or merge into
NPDC and NPDC shall be the continuing or surviving Person
but, in connection with such consolidation or merger, any
capital stock of NPDC shall be changed into or exchanged for
securities of any other Person or cash or any other property
(excluding issuance by NPDC of its capital stock in a merger
or consolidation so long as the outstanding capital stock of
NPDC is not changed or exchanged);
(C) transfer all or substantially all of its properties or
assets to any other Person;
(D) effect a capital reorganization or reclassification of its
capital stock; or
(E) enter into any other transaction similar to any of the
foregoing (provided that a Triggering Event shall not
include a consolidation or merger to which any subsidiary of
NPDC is a party so long as NPDC is not also a party to such
consolidation or merger),
then, and in the case of each such Triggering Event, proper
provision shall be made so that, upon the basis and the terms
and in the manner provided in this NPDC Warrant Certificate,
the Holder of the NPDC Warrants represented by this NPDC
Warrant Certificate shall be entitled.
(F) upon the exercise hereof at any time after the consummation of such
Triggering Event, with respect to any NPDC Warrants which are not
exercised prior to such Triggering Event, or are not redeemed in
connection with such Triggering Event, to receive at the Exercise Price
in effect at the time immediately prior to the consummation of such
Triggering Event, the securities, cash, and property to which such
Holder would have been entitled upon the consummation of such
Triggering Event if such Holder had exercised such NPDC Warrants
immediately prior thereto, subject to adjustments and increases
(subsequent to such corporate action) as nearly equivalent as possible
to the adjustments and increases provided for in this Section 5, or
(G) to sell such NPDC Warrants (or, at such Holder's election, a portion
thereof) to the Person continuing after or surviving such Triggering
Event, or to NPDC (if NPDC is the continuing or surviving Person), at a
sales price payable in cash or Marketable Securities or a combination
thereof (as determined by such Person or NPDC, as the case may be)
equal to (I)the sum of the amount of cash and the fair market value (as
determined in the good faith judgment of the Board of Directors of
NPDC) of the property and/or securities to which a holder of the number
of shares of NPDC Common Stock which would otherwise have been
delivered upon the exercise of such NPDC Warrants (or the portion
thereof so sold) would have been entitled upon the effective date or
closing of any such Triggering Event less (II)an amount equal to the
aggregate Exercise Price in effect immediately prior to such Triggering
Event applicable to all of such NPDC Warrants (or the portion thereof
so sold).
(ii) Notwithstanding anything contained in this NPDC Warrant Certificate to
the contrary, NPDC will not effect any Triggering Event unless, prior
to the consummation thereof, (A) each Person (other than NPDC) which
may be required to deliver any securities, cash, or property upon the
exercise of NPDC Warrants, as provided herein, or otherwise under this
NPDC Warrant Certificate, shall assume, by written instrument delivered
to, and reasonably satisfactory to, the Holder, (I) the obligations of
NPDC under this NPDC Warrant Certificate (and, if NPDC shall survive
the consummation of such Triggering Event, such assumption shall be in
addition to, and shall not release NPDC from, any continuing
obligations of NPDC under this NPDC Warrant Certificate) and (II) the
obligation to deliver to such Holder such shares of securities, cash,
or property as, in accordance with the provisions of Section 5.1(a)(i),
such Holder shall be entitled to receive, and (B) such Person shall
have delivered to such Holder an opinion of counsel for such Person
(which may be in-house counsel), which counsel shall be reasonably
satisfactory to such Holder, stating that this NPDC Warrant Certificate
shall thereafter continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of this Section
5.1(a)) shall be applicable to the securities, cash, or property which
such Person may be required to deliver upon any exercise of the NPDC
Warrants or the exercise of any rights provided in this NPDC Warrant
Certificate.
(b) Subdivision or Combination of Shares. If NPDC, at any time after the
Spin-Off Date while any NPDC Warrants are outstanding, shall subdivide
or combine any shares of NPDC Common Stock, (i) in case of subdivision
of shares, the number of NPDC Warrant Shares issuable upon exercise of
each NPDC Warrant immediately prior to such subdivision shall be
proportionately increased (as at the effective date of such subdivision
or, if NPDC shall take a record of the holders of the NPDC Common Stock
for the purpose of so subdividing, as at the applicable record date,
whichever is earlier) to reflect the increase in the total number of
shares of NPDC Common Stock outstanding as a result of such
subdivision, or (ii) in the case of a combination of shares, the number
of NPDC Warrant Shares issuable upon exercise of each NPDC Warrant
immediately prior to such subdivision shall be proportionately reduced
(as at the effective date of such combination or, if NPDC shall take a
record of the holders of the NPDC Common Stock for the purpose of so
combining, as at the applicable record date, whichever is earlier) to
reflect the reduction in the total number of shares of NPDC Common
Stock outstanding as a result of such combination.
(c) Stock Dividends. If NPDC, at any time after the Spin-Off Date while any
NPDC Warrants are outstanding, shall pay a dividend in, or make any
other distribution to its stockholders (without consideration therefor)
of, shares of NPDC Common Stock, the number of NPDC Warrant Shares
issuable upon exercise of each NPDC Warrant shall be adjusted, as at
the date NPDC shall take a record of the holders of NPDC's capital
stock for the purpose of receiving such dividend or other distribution
(or, if no such record is taken, as at the date of such payment or
other distribution), such that each NPDC Warrant shall thereafter
evidence the right to purchase a number of NPDC Warrant Shares
determined by multiplying the number of NPDC Warrant Shares issuable
upon the exercise of each NPDC Warrant in effect immediately prior to
such record date (or if no such record is taken, then immediately prior
to such payment or other distribution) by a fraction, (i) the numerator
of which shall be the total number of shares of NPDC Common Stock
outstanding immediately after such dividend or distribution (plus, in
the event that NPDC paid cash for fractional shares, the number of
additional shares which would have been outstanding had NPDC issued
fractional shares in connection with said dividends) and (ii) the
denominator of which shall be the total number of shares of NPDC Common
Stock outstanding immediately prior to such dividend or distribution.
(d) Other Distributions. If NPDC, at any time after the Spin-Off Date,
shall distribute to all holders of NPDC Common Stock, or all holders of
NPDC Common Stock shall otherwise become entitled to receive, shares of
capital stock of NPDC (other than dividends or distributions on the
NPDC Common Stock referred to in Section 5.1(c)), evidences of its
indebtedness, cash, assets (other than dividends or distributions
payable in shares of NPDC Common Stock), rights, options, or warrants
providing the right to subscribe for or purchase any shares of NPDC's
capital stock or evidences of its indebtedness, or securities
convertible into or exchangeable for shares of NPDC Common Stock, the
Exercise Price shall be adjusted by multiplying the Exercise Price in
effect immediately prior to such event by a fraction, (i) the
numerator of which shall be the Current Market Price on the record
date for the determination of shareholders entitled to receive such
distribution, less the fair market value (as determined in good faith
by the Board of Directors of NPDC) of the portion of the shares of
NPDC's capital stock other than NPDC Common Stock, evidences of
indebtedness, assets, or such rights, options, warrants, or
convertible securities, or the amount of such cash, distributable with
respect to each share of NPDC Common Stock, and (ii) the denominator
of which shall be the Current Market Price on such record date. Such
adjustment shall be made whenever any such distribution is made, and
shall become effective retroactively as of the record date for the
determination of shareholders entitled to receive such distribution.
(e) Adjustment of NPDC Warrant Shares. Upon each adjustment of the Exercise
Price as a result of Section 5.1(d), each NPDC Warrant shall thereafter
evidence the right to purchase, at the Exercise Price as adjusted as
provided therein, a number of Warrant Shares equal to the product
obtained by multiplying (i) the number of shares issuable upon exercise
of one NPDC Warrant prior to such adjustment by (ii) a fraction, the
numerator of which is the Exercise Price in effect immediately prior to
such adjustment and the denominator of which is the Exercise Price in
effect immediately after such adjustment.
(f) Adjustment Exercise Price. All calculations under this Section 5.1
shall be made to the nearest cent or to the nearest one-ten thousandth
of a share, as the case may be; provided, however that, no adjustment
in the Exercise Price shall be required if such adjustment is less than
$.01; and provided, further, that any adjustments which by reason of
this Section 5.1(f) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.
(g) Changes to NPDC Warrant Certificate. Anything in this Section 5.1 to
the contrary notwithstanding, NPDC shall be entitled, but shall not be
required, to make such changes in the number of NPDC Warrant Shares
issuable upon the exercise of each NPDC Warrant, or in the Exercise
Price, in addition to those required by this Section 5.1, as NPDC in
its discretion shall determine to be advisable so that any dividend or
distribution in shares of NPDC Common Stock, subdivision,
reclassification, or combination of shares of NPDC Common Stock,
issuance of rights, warrants, or options to purchase NPDC Common Stock,
or distribution of shares of stock other than NPDC Common Stock, cash,
evidences of indebtedness or assets, or convertible or exchangeable
securities made by NPDC to the holders of the NPDC Common Stock shall
not result in any tax to the holders of the NPDC Common Stock or
securities convertible into NPDC Common Stock.
(h) Other Action Affecting NPDC Common Stock. If, after the Spin-Off Date,
NPDC shall take any action affecting the NPDC Common Stock, other than
an action described in any of Sections 5.1(a) through (d), inclusive,
and the failure to make any adjustment would not fairly protect the
purchase rights represented by this NPDC Warrant Certificate in
accordance with the essential intent and principle of this Section 5.1,
then the number of NPDC Warrant Shares issuable upon exercise of each
NPDC Warrant and the Exercise Price, as applicable, shall be adjusted
in such manner and at such time as the Board of Directors of NPDC may
in good faith determine to be equitable in the circumstances.
5.2 Notice of Adjustments. Whenever the Exercise Price or the number of NPDC
Warrant Shares issuable upon the exercise of each NPDC Warrant is adjusted as
provided in this Section 5 hereof (for purposes of this Section 5.2, each an
"adjustment"), NPDC shall cause its Chief Financial Officer to prepare and
execute a certificate setting forth, in reasonable detail, the event requiring
the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated (including a description of the basis on which the
Board made any determination hereunder), and the Exercise Price or the number of
NPDC Warrant Shares issuable upon the exercise of each NPDC Warrant after giving
effect to such adjustment, and shall cause copies of such certificate to be
delivered to the Holder at the address of the Holder shown on the Register,
promptly after each adjustment. Any dispute between NPDC and the Holder with
respect to the matters set forth in such certificate may at the option of the
Holder be submitted to the independent accounting firm then regularly engaged by
NPDC, which firm shall be requested to deliver a written opinion as to such
matters to NPDC and the Holder within 30 days after submission to it of such
dispute. Such opinion shall be final and binding on the parties hereto. The fees
and expenses of such accounting firm shall be paid by NPDC.
5.3 If, at any time after the Spin-Off Date and prior to the expiration or
exercise of the NPDC Warrants, NPDC shall:
(a) pay any dividend or make any distribution on the NPDC Common Stock;
(b) issue any rights, warrants, or other securities to all holders of NPDC
Common Stock entitling them to purchase any additional shares of NPDC
Common Stock or any other rights, warrants, or other securities;
(c) effect any reclassification or change of the outstanding NPDC Common
Stock, or any consolidation, merger, sale, lease, or conveyance of
property described in Section 5.1; or
(d) effect any liquidation, dissolution, or winding-up of NPDC;
then, and in any one or more of such cases, NPDC shall mail written notice
thereof to the Holder at the Holder's address as it shall appear in the
Register, mailed at least 10 days prior to (i) the date as of which the holders
of record of shares of NPDC Common Stock to be entitled to receive any such
dividend, distribution, rights, warrants, or other securities are to be
determined or (ii) the date on which any such reclassification, change,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up is expected to become effective.
5.4 The form of NPDC Warrant Certificate need not be changed because of any
change in the Exercise Price or the number of NPDC Warrant Shares or other
securities or assets issuable upon the exercise of a NPDC Warrant, and NPDC
Warrant Certificates issued before or after such change may state the same
Exercise Price, the same number of NPDC Warrants, and the same number of NPDC
Warrant Shares issuable upon exercise of NPDC Warrants as are stated in the NPDC
Warrant Certificates theretofore issued. NPDC may, however, at any time, in its
sole discretion, make any change in the form of NPDC Warrant Certificate that it
may deem appropriate in view of any such change and that does not affect the
substance thereof, and any NPDC Warrant Certificates thereafter issued or
countersigned, whether in exchange or substitution for an outstanding NPDC
Warrant Certificate or otherwise, may be in the form as so changed.
5.5 In any case in which this Section 5 shall require that an adjustment in the
Exercise Price be made effective as of a record date for a specified event, NPDC
may elect to defer, until the occurrence of such event, issuing to the Holder,
if the Holder exercised NPDC Warrants after such record date, the shares of NPDC
Common Stock, if any, issuable upon such exercise over and above the number of
NPDC Warrant Shares, if any, issuable upon such exercise on the basis of the
Exercise Price in effect prior to such adjustment; provided, however, that NPDC
shall deliver to the Holder a due bill or other appropriate instrument
evidencing the Holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
6. Definitions.
6.1 For purpose of this NPDC Warrant Certificate, the following terms have the
following meanings:
The "Current Market Price" on any date shall mean the average of the
daily closing prices of the NPDC Common Stock for the 20 consecutive trading
days immediately preceding the date in question, except that, for purposes of
Section 1.2 only, the "Current Market Price" shall mean the average of the daily
closing prices of the NPDC Common Stock over the 20 consecutive trading days
commencing on the record date for the Spin-Off (as defined in the Purchase
Agreement) (the "Exercise Price Measurement Period"). The closing price of the
NPDC Common Stock for each day shall be the last reported sales price regular
way of such stock or, if no such reported sale of such stock takes place on such
day, the closing bid price regular way of such stock, in either case on the
principal national securities exchange (including, for purposes hereof, Nasdaq)
on which the NPDC Common Stock is listed or admitted to trading or, if such
stock is not listed or admitted to trading on any national securities exchange,
the highest reported closing bid price for such stock as furnished by the Nasdaq
or a similar organization if Nasdaq is no longer reporting such information. If
on any such date the NPDC Common Stock is not listed or admitted to trading on
any United States national securities exchange and is not quoted by Nasdaq or
any similar organization, the fair value of a share of such stock on such date,
as determined in good faith by the Board of Directors of NPDC, whose
determination shall be conclusive absent manifest error, shall be used.
"Person" means an individual, a corporation, a partnership, a trust, a
limited liability company, an unincorporated organization, or a government
organization or an agency or political subdivision thereof.
"Marketable Securities" means securities of a class which are
registered under the Securities Act, whether or not such securities are actually
registered under the Securities Act, so long as such securities may be
registered under the Securities Act pursuant to currently exercisable demand
registration rights.
7. Miscellaneous
7.1 The Holder of any NPDC Warrant shall not have, solely on account of such
status, any rights of a stockholder of NPDC, either at law or in equity, or to
any notice of meetings of stockholders or of any other proceedings of NPDC,
except as provided in this NPDC Warrant Certificate.
7.2 This NPDC Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
7.3 NPDC stipulates that the remedies at law of the Holder in the event of any
default or threatened default by NPDC in the performance of or compliance with
any of the terms of this NPDC Warrant Certificate are not and will not be
adequate and that, to the fullest extent permitted by law, such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise. Time is of the essence in this NPDC Warrant Certificate.
7.4 This NPDC Warrant Certificate, the NPDC Warrants, and all other rights
evidenced hereby shall inure to the benefit of and be binding upon the permitted
successors and assigns of NPDC, the Holder, and (to the extent provided herein)
the holders of NPDC Warrant Shares issued pursuant hereto, and shall be
enforceable by any such Holder or holder of NPDC Warrant Shares.
7.5 If, in any action before any court or agency legally empowered to enforce
any provision contained herein, any provision hereof is found to be
unenforceable, then such provision shall be deemed modified to the extent
necessary to make it enforceable by such court or agency. If any such provision
is not enforceable as set forth in the preceding sentence, the unenforceability
of such provision shall not affect the other provisions of this NPDC Warrant
Certificate, but this NPDC Warrant Certificate shall be construed as if such
unenforceable provision had never been contained herein.
7.6 The headings of the Sections of this NPDC Warrant Certificate are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this NPDC Warrant Certificate.
IN WITNESS WHEREOF, NPDC has caused this NPDC Warrant Certificate to be
duly executed by its officers thereunto duly authorized and its corporate seal
to be affixed hereon, as of this ______ day of ________, 200_.
NATIONAL PATENT DEVELOPMENT CORPORATION
By: __________________________________
Name:
Title:
Attest:
- ---------------------------------
Name:
Title:
EXHIBIT A
NOTICE OF EXERCISE
The undersigned hereby irrevocably elects to exercise, pursuant to Section
2 of the NPDC Warrant Certificate accompanying this Notice of Exercise, _______
NPDC Warrants of the total number of NPDC Warrants owned by the undersigned
pursuant to the accompanying NPDC Warrant Certificate (and, if such number of
NPDC Warrants is less than all of the NPDC Warrants covered by the accompanying
NPDC Warrant Certificate, that a new NPDC Warrant Certificate for the balance of
such NPDC Warrants be registered in the name of, and delivered to, the
undersigned at the address stated below), and herewith makes payment of the
Exercise Price of such shares in full by delivery of $__________ by certified or
cashier's check.
Dated: _________________
--------------------------------------
Name of Holder
--------------------------------------
Signature
--------------------------------------
If executed in a representative
or fiduciary capacity, print
name and title of individual
executing this notice on behalf
of the Holder
NOTE: The above signature should
correspond exactly with the name
on the first page of this NPDC
Warrant Certificate or with the
name of the assignee appearing
in the Form of Assignment
--------------------------------------
Social Security or Tax Identification Number of Holder
Address of Holder:
--------------------------------------
--------------------------------------
--------------------------------------
EXHIBIT B
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the attached Warrant.)
FOR VALUE RECEIVED, ______________________ (the "Holder") hereby sells,
assigns, and transfers unto
Name ________________________________
Address_______________________________
--------------------------------------
--------------------------------------
Social Security or Tax Identification Number:
--------------------------------------
____ NPDC Warrants, as defined in and represented by the accompanying NPDC
Warrant Certificate, together with all right, title, and interest therein, and
does hereby irrevocably constitute and appoint _______________ attorney to
transfer such NPDC Warrants on the books of NPDC Strategies Corporation
("NPDC"), with full power of substitution.
? [CHECK IF APPLICABLE] The undersigned is transferring the above NPDC Warrants
pursuant to the exemption from registration under the Securities Act of 1933, as
amended, provided by Section 4(1) of such Securities Act, and in connection
therewith represents that neither the undersigned, nor any person acting on
behalf of the undersigned, has solicited or will solicit any offer or published
or will publish any advertisement to sell or has offered to sell or will offer
to sell all or any part of such NPDC Warrants to any person or persons so as to
bring the sale of such NPDC Warrants by the undersigned within the registration
provisions of such Securities Act.
? [CHECK IF APPLICABLE] The undersigned is transferring the above NPDC Warrants
pursuant to the exemption from registration under the Securities Act of 1933, as
amended, provided by Rule 144(k) promulgated under such Securities Act, and in
connection therewith represents that the undersigned is not, and within the
three months prior hereto has not been, an affiliate of NPDC within the meaning
of such Rule.
9
? [CHECK IF APPLICABLE] The undersigned is transferring the above NPDC Warrants
pursuant to the exemption from registration under the Securities Act of 1933, as
amended, provided by Rule 144A promulgated under such Securities Act.
Dated: _________________
--------------------------------------
Name of Holder
--------------------------------------
Signature
--------------------------------------
If executed in a representative
or fiduciary capacity, print
name and title of individual
executing this notice on behalf
of the Holder
NOTE: The above signature should correspond exactly
with the name on the first page of this NPDC Warrant
Certificate
--------------------------------------
Social Security or Tax Identification Number of Holder
Address of Holder:
--------------------------------------
--------------------------------------
--------------------------------------
Each undersigned transferee, by execution hereof, (i) represents and
warrants to NPDC that (a) such transferee is an accredited investor, as such
term is defined in the Regulation D promulgated under the Securities Act of
1933, as amended (the "Securities Act"), pursuant to the provision or provisions
of such definition as indicated below, (b) if box (B) below is checked, the
undersigned is an investment company registered under the Investment Company Act
of 1940, as amended, which is advised by Gabelli Funds, LLC, (c) if box (C)
below is checked, the undersigned is a qualified institutional buyer, as such
term is defined in Rule 144A promulgated under the Securities Act, and is
acquiring the NPDC Warrants transferred hereby pursuant to such Rule 144A, (d)
unless the undersigned transferee is an investment company referred to in clause
(b) above, or is acquiring all of the NPDC Warrants held by the Holder, the
undersigned will hold, after giving effect to the transfer effected hereby, not
less than one-fifteenth of the number of NPDC Warrants originally issued by NPDC
on the Spin-Off Date (as defined in the NPDC Warrant Certificate), (e) the
undersigned is acquiring the NPDC Warrants, and will acquire any NPDC Warrant
Shares (as defined in the NPDC Warrant Certificate), for investment and without
a view to a distribution other than pursuant to a registration statement under
the Securities Act and applicable state securities laws, or an exemption
therefrom, and (f) the name, address, and social security or tax identification
number of the undersigned are as set forth above, and (ii) agrees to be bound by
the terms of the NPDC Warrant Certificate, the Registration Rights Agreement,
and the Purchase Agreement (each as defined in the NPDC Warrant Certificate),
including, without limitation, the provisions thereof with respect to the Agent
(as defined in such Purchase Agreement) and the obligations as a Security Holder
(as defined in the Purchase Agreement) under the Purchase Agreement.
The undersigned is an accredited investor under the following
provisions:
___ (i) a bank as defined in Section 3(a)(2) of the Securities Act, or a
savings and loan association or other institution as defined in Section
3(a)(5)(A) of the Securities Act whether acting in its individual or
fiduciary capacity; a broker or dealer registered pursuant to Section
15 of the Securities Exchange Act of 1934; an insurance company as
defined in Section 2(13) of the Securities Act; an investment company
registered under the Investment Company Act of 1940 or a business
development company as defined in Section 2(a)(48) of that Act; a Small
Business Investment Company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small Business
Investment Act of 1958; a plan established and maintained by a state,
its political subdivisions, or any agency or instrumentality of a state
or its political subdivisions, for the benefit of its employees, if
such plan has total assets in excess of $5,000,000; an employee benefit
plan within the meaning of the Employee Retirement Income Security Act
of 1974, if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is either a bank, savings
and loan association, insurance company, or registered investment
adviser, or if the employee benefit plan has total assets in excess of
$5,000,000 or, if a self-directed plan, with investment decisions made
solely by persons that are accredited investors;
___ (ii) a private business development company as defined in Section
202(a)(22) of the Investment Advisers Act of 1940;
10
___ (iii) an organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended, corporation, Massachusetts or similar
business trust, or partnership, not formed for the specific purpose of
acquiring NPDC Warrants or NPDC Warrant Shares, with total assets in
excess of $5,000,000;
___ (iv) a director or executive officer of NPDC;
___ (v) a natural person whose individual net worth, or joint net worth
with that person's spouse, at the time of his or her purchase exceeds
$1,000,000;
___ (vi) a natural person who had an individual income (not including his
or her spouse's income) in excess of $200,000 in the last two years or
joint income with his or her spouse in excess of $300,000 in each of
those years and has a reasonable expectation of reaching such income
level in the current year;
___ (vii) a trust, with total assets in excess of $5,000,000, not formed
for the specific purpose of acquiring NPDC Warrants or NPDC Warrant
Shares, whose purchase is directed by a person having such knowledge
and experience in financial and business matters that he or she is
capable of evaluating the merits and risks entailed in the purchase of
the NPDC Warrants or NPDC Warrant Shares; or
___ (viii) an entity in which all of the equity owners are accredited
investors (if this alternative is checked, the undersigned must
identify how each equity owner is qualified as an accredited investor).
(B) ? [CHECK, IF APPLICABLE] The undersigned is an investment company
registered under the Investment Company Act of 1940, as amended, which is
advised by Gabelli Funds, LLC
(C) ? [CHECK, IF APPLICABLE] The undersigned is a qualified
institutional buyer, as such term is defined in Rule 144A promulgated under the
Securities Act, and is acquiring the NPDC Warrants transferred hereby pursuant
to such Rule 144A
Dated: _________________
--------------------------------------
Name of Transferee
--------------------------------------
Signature
--------------------------------------
If executed in a representative
or fiduciary capacity, print
name and title of individual
executing this notice on behalf
of the transferee
NOTE: The above signature should correspond
exactly with the name set forth above
EXHIBIT C
FORM OF OPINION REGARDING TRANSFER
[In-house Counsel letterhead]
GP Strategies Corporation
777 Westchester Avenue, 4th Floor
White Plains, NY 10604
[Name/address of transfer agent]
Ladies and Gentlemen:
I am [insert title of opinion giver] for [insert name of transferor] ("Seller"),
and have acted as in-house counsel of Seller in connection with the sale and
transfer (the "Transaction") by Seller to [insert buyer's name] (the
"Transferee") of [ ] warrants (the "Warrants") for the purchase of shares of
Class A Common Stock (the "Common Stock"), par value $0.01 per share]/[[ ]
shares (the "Shares") of Class A Common Stock (the "Common Stock"), par value
$0.01 per share] issued by National Patent Development Corporation, a Delaware
corporation (the "Company"). Capitalized terms used and not otherwise defined
herein shall have the meaning ascribed to them in the Note and Warrant Purchase
Agreement, dated as of July __, 2003, by and among the Company, GP, MXL, the
Agent (each as defined therein) and the Purchasers listed in Schedule 1.2
thereof (the "Purchase Agreement").
In connection with this opinion, I have examined copies of the following
documents: (a) the Purchase Agreement, (b) the Note, (c) the GP Warrant
Certificate, (d) the NPDC Warrant Certificate, (e) the GP Registration Rights
Agreement, (f) the NPDC registration Rights Agreement (the documents set forth
in (a) thorough (f) being the "Transaction Documents"), and (g) [Form of
Assignment dated [ ] from Seller to Transferee, a copy of which is attached
hereto as Exhibit A (the "Form of Assignment")] /[stock certificate number [ ]
evidencing [ ] the Shares and the accompanying stock power executed by the
Seller to effect the transfer of the Shares to Transferee, copies of which are
attached hereto as Exhibit A (the "Stock Documents")].
I have also examined such certificates of public officials, such certificates of
officers of Seller and Transferee, the originals (or copies thereof) of such
other documents and records of the Seller, and such other documents and
instruments as I have deemed necessary or appropriate for purposes of this
opinion. In addition I have examined such matters of law as I have deemed
necessary or appropriate for purposes of this opinion
In rendering my opinion, I have assumed the genuineness of all signatures on all
documents so examined, the authenticity of all documents, records and
instruments submitted to me as originals and the conformity with the original
documents, records and instruments of all such documents, records and
instruments submitted to me as copies and the legal capacity to sign of all
individuals executing such documents. I have not independently verified the
foregoing assumptions.
I have also assumed that there are no oral modifications or written agreements
or understandings which limit, modify or otherwise alter the terms, provisions
and conditions of, or relate to, the transactions contemplated by the
Transaction Documents. As to various questions of fact material to my opinion, I
have assumed and have relied without independent investigation upon the accuracy
and completeness of the above-mentioned certificates and documents and upon the
representations and warranties contained in the Transaction Documents.
[Rule 144 Documents and Assumptions Applicable to Sale of Common Stock Only]
[I have also received a copy of written correspondence indicating that the
Seller has filed a notice on Form 144, dated [ ] (the "Form 144"), with the
Securities and Exchange Commission in connection with the sale of the Shares.
The Form 144 indicates that (i) the Seller intends to sell the Shares, all of
which were acquired from [ ] (the "Prior Holder") on [ ], (ii) the Seller has
not sold any shares of Common Stock during the three months preceding the filing
of the Form 144, and (iii) the aggregate number of shares of Common Stock
outstanding is [ ]. I also received a copy of a written representation letter,
dated [ ] (the "Broker's Letter"), from [ ] (the "Broker") indicating that the
sale of the Shares was made in a "brokers' transaction"1 as that term is defined
in Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"),
and that the Broker did not solicit or arrange for the solicitation of orders to
buy the Shares in anticipation of the sale of the Shares.2
The Common Stock is registered pursuant to Section 12(g) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the Company has been
subject to the reporting requirements of Section 13 of the Exchange Act for a
period of at least 90 days immediately preceding the sales of the Securities. ]
[4(1)1/2 Assumptions Applicable to Transfer of Common Stock or Warrants]
[I have further assumed, with your permission and without independent
investigation, that (i) Transferee has had a full opportunity to ask questions
and receive answers from the Seller and the Company with respect to matters
necessary for it to make an informed investment decision regarding the
[Shares/Warrants] and the Company and (ii) all of the proceeds of the
Transaction will inure solely to the benefit of the Seller and no portion
thereof will inure to the benefit of the Company.
I have relied with your permission and without independent investigation on
Transferee's representations set forth in the Form of Assignment3 that (i)
Transferee acquires the [Shares/Warrants] for its own account and not with a
view towards the distribution or resale thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act") and (ii) neither
Seller nor any agent on its behalf has solicited or will solicit any offers or
published or will publish any advertisement to sell or has offered to sell or
will offer to sell all or any part of the [Shares/Warrants] to any person or
persons so as to bring the sale of such [Shares/Warrants] by Seller within the
registration provisions of the Securities Act.
For purposes of this opinion, I have also assumed, without independent
investigation, as indicated by the legends thereon, that before the Transaction
the [Shares/Warrants] were "restricted securities" as that term is construed
under Rule 144 under the Securities Act.]
Based upon and in reliance on the foregoing, and subject to the limitations
heretofore and hereinafter expressly set forth, I am of the opinion that the
sale and transfer of the [Shares/Warrants] by the Seller to Transferee does not
require registration under the Securities Act.
My opinion is limited to the Federal laws of the United States of America and I
do not express any opinion as to the laws of any other state or jurisdiction. No
opinion is expressed as to the effect that the law of any other jurisdiction
might have upon the subject matter of the opinion expressed herein under
conflicts of laws principles or otherwise. Except for the opinions set forth in
the paragraph immediately above, I express no opinions and no opinions should be
implied. I render no opinion with respect to antitrust laws, environmental laws,
state securities laws or the law of fiduciary duty. Except as expressed in the
paragraph immediately above, I express no opinion with respect to securities
laws.
The opinion expressed herein is intended solely for your benefit in connection
with the transfer of the [Shares/Warrants] as described above and may not be
relied upon or used by or circulated, quoted or otherwise referred to any other
person or entity or for any other reason. This opinion speaks only as of the
date hereof and is limited to matters expressly stated herein and the law as in
effect on the date hereof. I disclaim any undertaking to advise you of changes
in law or facts that may be brought to my attention after the date hereof.
Very truly yours,
- --------
1 If transaction is effected through a "market maker" as that term is defined in
Rule 144, revise this paragraph accordingly.
2 This opinion should be modified to reflect any change to laws governing such
matters between the date of the Purchase Agreement and the time of its delivery.
3 In the case of a transfer of Shares where no Form of Assignment is provided,
please replace the reference to the Form of Assignment with reference to officer
certificates which the opinion giver should obtain from the Transferee and
Seller.