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ACCLAIM ENTERTAINMENT, INC.
and
American Securities Transfer & Trust, Inc.
Warrant Agent
WARRANT AGREEMENT
Dated as of , 1998
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WARRANT AGREEMENT
WARRANT AGREEMENT dated as of _________________, 1998, between
ACCLAIM ENTERTAINMENT, INC., a Delaware corporation (the "Company"), and
American Securities Transfer & Trust, Inc. (the "Warrant Agent").
WHEREAS, the Company proposes to issue One Hundred Thirteen
Thousand Four Hundred Forty Six (113,446) common stock purchase warrants (the
"Warrants"), each to purchase one share of its common stock, par value $.02 per
share (the "Common Stock") (the shares of Common Stock issuable on exercise of
the Warrants being referred to herein as the "Warrant Shares"), in connection
with the settlement of a class action lawsuit (the "Action") previously pending
against Lazer-Tron Corporation, a former subsidiary of the Company, in the
California Superior Court for the Eastern Division of Alameda County (the
"Superior Court") and the settlement of a class action lawsuit previously
pending against the Company in federal district court in the Eastern District of
New York (the "Federal Court") in accordance with a Stipulation of Settlement
dated [October 8], 1997 (the "Stipulation") between the Company and the
participants in such settlement, following the "Effective Date" of the
Settlement and pursuant to the "Plan of Distribution" (as such terms are defined
in the Stipulation) and following effectiveness of the registration statement
referred in Section 2.3 hereof;
WHEREAS, the Company proposes to issue certificates evidencing
the Warrants (the "Warrant Certificates");
WHEREAS, the Company desires the Warrant Agent to act on
behalf of the Company, and the Warrant Agent is willing to so act, in connection
with the issuance, registration, division, transfer, exchange, redemption and
surrender of the Warrants, the issuance of certificates representing the
Warrants, the exercise of the warrants, and the rights of the registered holders
thereof;
WHEREAS, a registration statement covering the Warrants and
the Warrant Shares is to be filed by the Company with the United States
Securities and Exchange Commission (the "SEC" pursuant to Section 2.3 hereof);
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein contained and for the purpose of defining the terms and
provisions of the Warrants and the certificates representing the Warrants and
the respective rights and obligations thereunder of the Company, the registered
holders of the Warrants and the Warrants Agent, the parties hereto hereby agree
as follows:
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ARTICLE I
DISTRIBUTION OF WARRANT CERTIFICATES
Section 1.1 Appointment of Warrant Agent. The Company hereby
appoints the Warrant Agent to act on behalf of the Company in accordance with
the instructions hereinafter set forth, and the Warrant Agent hereby accepts
such appointment.
Section 1.2 Form of Warrant Certificates. The Warrant
Certificates shall be issued in registered form only and, together with the
forms of election to purchase Warrant Shares and of assignment to be printed on
the reverse thereof, shall be substantially in the form of Exhibit A attached
hereto and, in addition, may have such letters, numbers or other marks of
identification or designation and such legends, summaries, or endorsements
stamped, printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as, in any particular case, may be required in the opinion of counsel for the
Company, to comply with any law or with any rule or regulation of any securities
exchange, regulatory authority or agency, or to conform to customary usage. The
Warrants Certificates shall be dated the date of issuance thereof (whether upon
initial issuance, transfer, exchange or in lieu of mutilated, lost, stolen or
destroyed Warrants Certificates) and shall be numbered serially with the letter
"W".
Section 1.3 Execution of Warrant Certificates. The Warrant
Certificates shall be executed on behalf of the Company by its Chairman or
President or any Executive Vice President attested to by its Secretary or
Assistant Secretary, either manually or by facsimile signature printed thereon.
The Warrant Certificates shall be manually countersigned and (except as set
forth in Sections 1.4 and 2.2 hereof) dated the date of countersignature by the
Warrant Agent and shall not be valid for any purpose unless so countersigned and
dated. In case any authorized officer of the Company who shall have signed any
of the Warrant Certificates shall cease to be such officer of the Company either
before or after delivery thereof by the Company to the Warrant Agent, the
signature of such person on such Warrant Certificates, nevertheless, shall be
valid and such Warrant Certificates may be countersigned by the Warrant Agent,
and issued and delivered to those persons entitled to receive the Warrants
represented thereby with the same force and effect as though the person who
signed such Warrant Certificates had not ceased to be such officer of the
Company.
Section 1.4 Registration. On or prior to the 15th business day
following the entry of an order by the Superior Court approving the Settlement,
the Company shall deliver to the Warrant Agent an adequate supply of Warrant
Certificates executed on behalf of the Company as described in Section 1.3
hereof. These Warrant Certificates, shall initially be registered in the names
of those persons who are entitled under the Plan of Distribution and/or the
Stipulation to receive Warrant Certificates (the "Authorized Warrant Holders").
Each such Warrant Certificate shall have imprinted on
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its face the date of ____________, 1998 [the earlier of (i) the effectiveness of
the registration statement referenced in Section 2.3 hereof and (ii) February
18, 1998] (the "Commencement Date"). Within 15 business days (or as soon as
practicable) after written notification from the SEC that the registration of
the Warrants and Warrant Shares has been declared effective pursuant to Section
2.3 hereof, the Warrant Agent shall have mailed or caused to have been mailed
such Warrant Certificates to the Authorized Warrant Holders, provided that at
such time (i) the Warrant Agent shall have received notice that the "Federal
Court Litigation" (as defined in the Stipulation) is no longer subject to appeal
and (ii) the Authorized Warrant Holders shall have (i) delivered to the Warrant
Agent the Van Kasper Warrant or the Private Placement Warrant (as defined in the
Stipulation) to be cancelled in exchange for the Warrants issuable to such
Authorized Warrant Holders hereunder, (ii) delivered to Cotchett & Pitre, one of
Plaintiffs' Settlement Counsel (as defined in the Stipulation), a proof of claim
(a "Proof of Claim") for the Sales Agent Warrant or (iii) delivered to the
Company an affidavit and indemnity of lost security with respect thereto. In the
case and at such time as an affidavit and indemnity of lost security or a valid
copy of a Proof of Claim is delivered to the Company pursuant to this Section
1.4, the Company shall promptly instruct the Warrant Agent to issue Warrant
Certificates to such Authorized Warrant Holders.
The Warrant Agent shall maintain books for the transfer and
registration of the Warrant Certificates in accordance with its regular
practice. The Warrant Certificates shall be registered in a Warrant Register as
they are issued. The Company and the Warrant Agent shall be entitled to treat
the registered owner(s) of the Warrant Certificates (the "Holder(s)") as the
owner(s) in fact thereof (notwithstanding any notation of ownership or other
writing on the Warrant Certificates made by anyone other than the Company or the
Warrant Agent), for the purpose of any exercise thereof and for all other
purposes, and neither the Company nor the Warrant Agent shall be affected by any
notice to the contrary.
Section 1.5 Transfer of Warrants. The Warrant Certificates
shall be transferable only on the books of the Company maintained at the office
of the Warrant Agent designated for such purpose upon delivery thereof duly
endorsed by the Holder or by his duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment or authority to
transfer, which endorsement shall be guaranteed by a member firm of a national
securities exchange, a commercial bank (not a savings bank or a savings and loan
association) or trust company located in the United States or a member of the
National Association of Securities Dealers, Inc. (hereafter, "Signatures
Guaranteed"). In all cases of transfer by an attorney, the original power of
attorney, duly approved, or a copy thereof, duly certified, shall be deposited
and remain with the Warrant Agent. In case of transfer by executor,
administrators, guardians or other legal representatives, duly authenticated
evidence of their authority shall be produced, and may be required to be
deposited and remain with the Warrant Agent in its discretion.
A reasonable service charge may be imposed by the Warrant Agent upon
the
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Holder for any exchange or registration of transfer of Warrant Certificates.
The Company may require payment by a Holder of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection therewith.
ARTICLE II
WARRANT EXERCISE PRICE AND EXERCISE OF WARRANTS
Section 2.1 Exercise Price. Each Warrant Certificate shall,
when signed and countersigned as provided in Section 1.3, entitle the Holder
thereof to purchase from the Company one share of Common Stock for each Warrant
evidenced thereby, at the purchase price of Twelve Dollars ($12.00) per share
(the "Exercise Price"). Except as the context otherwise requires, the term
"Exercise Price" as used in this Agreement shall mean the purchase price of one
share of Common Stock, reflecting all appropriate adjustments made in accordance
with the provisions of Article III hereof.
Section 2.2 Exercisability of Warrants and Registration of
Warrant Shares. Each Warrant may be exercised at any time after (i) the
Commencement Date and (ii) after the Warrant Shares have been effectively
registered under the Securities Act of 1933, as amended (the "Securities Act")
pursuant to a Registration Statement (as hereinafter defined) filed with and
declared effective by the SEC, as provided in Section 2.3 hereof (provided that
at such time the Plan of Distribution shall have been approved by the Superior
Court and shall be final and non-appealable), and such other action as may be
required by Federal or state law relating to the issuance or distribution of
securities shall have been taken, until 5:00 p.m., New York City time, on the
first anniversary of the Commencement Date (the "Exercise Deadline") unless
extended in accordance with Section ___. After the Exercise Deadline, any
unexercised Warrants will be void and all rights of Holders shall cease. Each
Warrant Certificate shall have the Exercise Deadline imprinted on its face.
Subject to Section 2.3 hereof, the Company shall use reasonable good faith
efforts to keep available for delivery upon the exercise of Warrants a
prospectus that meets the requirements of Section 10 of the Securities Act,
until the earlier of the date by which all Warrants are exercised or the
Exercise Deadline, unless the Company determines that, by virtue of an amendment
of the Securities Act or otherwise, the effectiveness of such registration or
the delivery of such prospectus is not required at the time Warrant Shares are
to be issued.
In the event that, in the judgment of the Company, it is
advisable to suspend use of the prospectus described in this Section 2.2, due to
(i) any request by the SEC or any other federal or state governmental authority
for amendments or supplements to a Registration Statement or related prospectus
or for additional information; (ii) the issuance by the SEC or any other federal
or state governmental authority of any stop order suspending the effectiveness
of a Registration Statement or the initiation or threat of any proceedings for
that purpose; (iii) the receipt by the Company of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Common Stock for sale in any jurisdiction or
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the initiation or threat of any proceeding for such purpose; (iv) the existence
of any fact or the happening of any event which makes any statement of a
material fact in such Registration Statement or related prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
or which would require the making of any changes in the Registration Statement
or prospectus in order that, in the case of the Registration Statement, it will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the prospectus, it will not
contain any untrue statement of a material fact or omit to state any material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; (v) the Company's determination that
a post-effective amendment to a Registration Statement would be appropriate, or
(vi) pending material corporate developments or similar material events that
have not yet been publicly disclosed and as to which the Company believes public
disclosure will be prejudicial to the Company, the Company shall give written
notice to the Warrant Agent to the effect of the foregoing and to the effect
that the Warrants may not be exercised during such time period (the "Blackout
Period"). In the event that a Holder seeks to exercise a Warrant during the
Blackout Period, the Warrant Agent will notify the Holder, in accordance with
Section 6.15 hereof, that a Blackout Period is in effect. In no event shall the
Company call more than two (2) sixty (60) day Blackout Periods in any calendar
year, nor may it call a Blackout Period sixty (60) days prior to the Exercise
Deadline.
Section 2.3 Registration of Warrants and Warrant Shares.
(a) The Company shall, within 15 business days after the Company files
its annual report on Form 10K for the fiscal year ended August 31, 1997 (and in
no event prior to such filing), at the Company's sole cost and expense (other
than the fees and disbursements of counsel for the Holders and the underwriting
discounts, if any) prepare and file with the SEC a registration statement on
Form S-1 or any other available form approved by the SEC (the "Registration
Statement") registering the Warrants and the Warrant Shares and will use its
reasonable best efforts through its officers, directors, auditors, and counsel
to cause such Registration Statement to become effective within 120 days
thereafter.
(b) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless the Holders, its officers, directors, partners,
employees, agents, counsel, Plaintiffs' Settlement Counsel (as that term is
defined in the Stipulation) and each person, if any, who controls any such
person within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), from
and against any and all loss, liability, charge, claim, damage and expense
whatsoever (which shall include, for all purposes of this Section 2.3, but not
be limited to, attorneys' fees and any and all reasonable expenses whatsoever
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or
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litigation) as and when incurred, arising out of, based upon or in connection
with (i) any untrue statement or alleged untrue statement of a material fact
contained (A) in any Registration Statement, preliminary prospectus or final
prospectus (as from time to time amended and supplemented) or any amendment or
supplement thereto, relating to the sale of any of the Warrants or Warrant
Shares or (B) in any application or other document or communication (in this
Section 2.3 collectively called an "application") executed by or on behalf of a
Holder or based upon written information furnished by or on behalf of a Holder
filed in any jurisdiction in order to register or qualify any of the Warrants or
Warrant Shares under the securities or blue sky laws thereof or filed with the
SEC or any securities exchange; or any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
made therein not misleading, unless (x) such statement or omission was made in
reliance upon and in conformity with written information furnished to the
Company with respect to a Holder by or on behalf of such Holder expressly for
inclusion in any Registration Statement, preliminary prospectus or final
prospectus, or any amendment or supplement thereto, or in any application, as
the case may be, or (y) such loss, liability, charge, claim, damage or expense
arises out of a Holder's failure to comply with the terms and provisions of this
Agreement, or (ii) any breach of any representation, warranty, covenant or
agreement of a Holder contained in this Agreement. The foregoing agreement to
indemnify shall be in addition to any remedy a Holder may otherwise have,
including remedies arising under this Agreement.
If any action is brought against a Holder or any of its
officers, directors, partners, employees, agents or counsel, if any, or any
controlling persons of such person (an "indemnified party") in respect of which
indemnity may be sought against the Company pursuant to the foregoing paragraph,
such indemnified party or parties shall promptly notify the Company in writing
of the institution of such action (but the failure so to notify shall not
relieve the Company from any liability other than pursuant to this Section
2.3(b)) and the Company shall promptly assume the defense of such action,
including the employment of counsel (reasonably satisfactory to such indemnified
party or parties) provided that the indemnified party shall have the right to
employ its or their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such indemnified party or parties unless
the employment of such counsel shall have been authorized in writing by the
Company in connection with the defense of such action or the Company shall not
have promptly employed counsel reasonably satisfactory to such indemnified party
or parties to have charge of the defense of such action or such indemnified
party or parties shall have reasonably concluded that there may be one or more
legal defenses available to it or them or to other indemnified parties which are
different from or additional to those available to the Company, in any of which
events such fees and expenses shall be borne by the Company and the Company
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties. Anything in this Section 2.3 to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its written consent. The Company shall not,
without the prior written consent of each indemnified party that is not released
as described in this sentence, settle or compromise any action,
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or permit a default or consent to the entry of judgment in or otherwise seek to
terminate any pending or threatened action, in respect of which indemnity may be
sought hereunder (whether or not any indemnified party is a party thereto)
unless such settlement, compromise, consent or termination includes an
unconditional release of each indemnified party from all liability in respect of
such action. The Company agrees promptly to notify the Holders of the
commencement of any litigation or proceedings against the Company or any of it
officers or directors in connection with the sale of any Warrants or Common
Stock or any preliminary prospectus, prospectus, Registration Statement, or
amendment or supplement thereto, or any application relating to any sale of any
Warrants or Common Stock.
(c) The Holders agree to indemnify and hold harmless the Company, each
director of the Company, each officer of the Company who shall have signed any
Registration Statement covering the Warrants or the Common Stock held by the
Holders, each other person, if any, who controls the Company within the meaning
of Section 15 of the Securities Act or Section 20(a) of the Exchange Act and its
or their respective counsel and Plaintiffs' Settlement Counsel (as that term is
defined in the Stipulation), to the same extent as the foregoing indemnity from
the Company to the Holders in Section 2.3(b) hereof but only with respect to
statements or omissions, if any, made in any Registration Statement, preliminary
prospectus, or final prospectus (as from time to time amended and supplemented),
or any amendment or supplement thereto or in any application, in reliance upon
and in conformity with written information furnished to the Company with respect
to the Holders by or on behalf of a Holder, expressly for inclusion in any such
Registration Statement, preliminary prospectus, or final prospectus, or any
amendment or supplement thereto or in any application, as the case may be. If
any action shall be brought against the Company or any other person to be so
indemnified based on any such Registration Statement, preliminary prospectus, or
final prospectus, or any amendment or supplement thereto or in any application,
and in respect of which indemnity may be sought against a Holder pursuant to
this Section 2.3(c) a Holder shall have the rights and duties given to the
Company, and the Company and each other person so indemnified shall have the
rights and duties given to the indemnified parties, by the provisions of Section
2.3(b).
(d) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 2.3(b)
or 2.3(c) (subject to the limitations thereof) but it is found in a final
judicial determination, not subject to further appeal, that such indemnification
may not be enforced in such case, even though this Agreement expressly provides
for indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Securities Act, the Exchange Act or otherwise, then
the Company (including for this purpose any contribution made by or on behalf of
any director of the Company, any officer of the Company who signed any such
Registration Statement, any controlling person of the Company, and its or their
respective counsel) as one entity, and the Holders (including for this purpose
any contribution by or on behalf of an indemnified party) as a second entity,
shall contribute to the losses, liabilities, claims, damages and expenses
whatsoever to which any of them
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may be subject, on the basis of relevant equitable considerations such as the
relative fault of the Holders and the Company in connection with the facts which
resulted in such losses, liabilities, claims, damages and expenses. The relative
fault, in the case of an untrue statement, alleged untrue statement, omission or
alleged omission shall be determined by, among other things, whether such
statement, alleged statement, omission or alleged omission relates to
information supplied by a Holder or the Company, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement, alleged statement, omission or alleged omission. Each Holder and
the Company agree that it would be unjust and inequitable if the respective
obligations of the Holders and the Company for contribution were determined by
pro rata or per capita allocation of the aggregate losses, liabilities, claims,
damages and expenses (even if the Holders and the other indemnified parties were
treated as one entity for such purpose) or by any other method of allocation
that does not reflect the equitable considerations referred to in this Section
2.3(d). No person guilty of a fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who is not guilty of such fraudulent misrepresentation. For purposes
of this Section 2.3(d) each person, if any, who controls a Holder within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act
and each officer, director, partner, employee, agent and counsel of a Holder or
control person shall have the same rights to contribution as the Company or
control person and each person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, each officer of the Company who shall have signed any such Registration
Statement, each director of the Company, and its or their respective counsel
shall have the same rights to contribution as the Company, subject in each case
to the provisions of this Section 2.3(d). Anything in this Section 2.3(d) to the
contrary notwithstanding, no party shall be liable for contribution with respect
to the settlement of any claim or action effected without its written consent.
This Section 2.3(d) is intended to supersede any right to contribution under the
Securities Act, the Exchange Act or otherwise.
(e) Notwithstanding the foregoing provisions of this Section
2.3, in the event the Stipulation and/or the Plan of Distribution shall be the
subject of appeal by members of the Settlement Class or other persons, the
Company may in its sole discretion, cease its efforts to file or to cause the
declaration of effectiveness of the Registration Statement and/or cause the
withdrawal of such Registration Statement. Upon resolution of such appeal, the
Company shall forthwith use its reasonable best efforts to file or cause the
declaration of effectiveness of the Registration Statement.
Section 2.4 Procedure for Exercise of Warrants. (a) During the
period specified in and subject to the provisions and limitations set forth in
Section 2.2 hereof, Warrants may be exercised by surrendering the Warrant
Certificates representing such Warrants to the Warrant Agent at 938 Quail
Street, Suite 101, Lakewood, Colorado 80215 attention: Trust Department (the
"Principal Office") or at such other location as the Warrant Agent may specify
in writing to the Holders with the election to purchase form set forth on the
reverse side of the Warrant Certificate duly completed and
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executed, with Signature Guaranteed under certain circumstances as set forth in
the purchase form, accompanied by payment in full to the Warrant Agent for the
account of the Company of the Exercise Price in effect at the time of such
exercise, together with such taxes as are specified in Section 6.1 hereof, for
each share of Common Stock with respect to which such Warrants are being
exercised. Such Exercise Price and taxes shall be paid in full by certified or
official bank check, or by United States Postal Service money order, payable in
United States currency to the order of the Warrant Agent for the account of the
Company.
(b) In lieu of any cash payment to be made by a Holder of the Exercise
Price pursuant to the preceding paragraph, during the period specified in and
subject to the provisions and limitations set forth in Section 2.2 hereof, the
Holder may, at its option, exchange his Warrant, in whole or in part (a "Warrant
Exchange"), into the number of Warrant Shares determined in accordance with this
paragraph, by surrendering the Warrant to the Warrant Agent accompanied by a
notice stating such Holder's intent to effect such exchange, the number of
Warrant Shares to be exchanged and the date on which the Holder requests that
such Warrant Exchange occur (the "Notice of Exchange"). The Warrant Exchange
shall take place on the date specified in the Notice of Exchange or, if later,
the date the Notice of Exchange is received by the Company (the "Exchange
Date"). Certificates for the Common Stock issuable upon such Warrant Exchange
and, if applicable, a new warrant of like tenor evidencing the balance of the
Warrant Shares remaining subject to such Warrant, shall be issued as of the
Exchange Date and delivered to the Holder within seven (7) days following the
Exchange Date. In connection with any Warrant Exchange, a Warrant shall
represent the right to subscribe for and acquire the number of Warrant Shares
(rounded to the next highest integer) equal to (i) the number of Warrant Shares
specified by the Holder in its Notice of Exchange (the "Total Number") less (ii)
the number of Warrant Shares equal to the quotient obtained by dividing (A) the
product of the Total Number times the existing Exercise Price by (B) the then
Market Price of a share of Common Stock. As used in this Agreement, the term
"Market Price" shall mean the average closing price of the Company's Common
Stock on the Nasdaq National Market System, or, if the Company's Common Stock is
not so listed on the Nasdaq National Market, then on the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization, during the twenty (20)
consecutive business days (as such term is used on the Nasdaq National Market
System or a domestic over-the-counter market, as the case may be) ending three
days prior to the date of the "Notice of Exchange" or if later the "Exchange
Date" (as such terms are defined in Section 2.4 hereof). Upon request of the
Warrant Agent, the Company shall provide to the Warrant Agent a written
presentation of the Market Price for the period requested by the Warrant Agent.
(c) The date on which a Warrant is exercised in accordance with this
Section 2.4 is sometimes referred to herein as the "Date of Exercise" of such
Warrant. In the event that a Blackout Period, as described in Section 2.2 hereof
is in effect, the Warrant Agent will notify the Holder, in accordance with
Section 6.15 hereof, that a Blackout Period is
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in effect and that the Warrants surrendered may not be exercised during the
Blackout Period. In this event, the date that the Company notifies the Warrant
Agent that the Blackout Period has ended will be the Date of Exercise unless the
Holder notifies the Warrant Agent, in writing, prior to the end of the Blackout
Period that he withdraws his surrender of the Warrant Certificates.
Section 2.5 Issuance of Warrant Shares. As soon as practicable
after the Date of Exercise of any Warrant, the Warrant Agent shall deposit the
proceeds received, if any, from the exercise of the Warrants, and promptly,
after clearance of checks received in payment of the Exercise Price pursuant to
such Warrants, shall issue a certificate or certificates for the number of full
Warrant Shares to which the Holder thereof is entitled, registered in accordance
with the instructions set forth in the election to purchase. The Company
covenants that the Warrant Shares which shall be issuable upon exercise of the
Warrants and payment, if any, of the Exercise Price in compliance with this
Agreement and the Warrant Certificate shall, pursuant to and in accordance with
the terms of this Agreement, be validly authorized and issued, fully paid and
nonassessable, and free from all taxes, liens and charges created by the Company
in respect of the issue thereof. Certificates representing such Warrant Shares
shall be delivered by the Warrant Agent in such names and denominations as are
required for delivery to, or in accordance with the instructions of, the
Holder. Each person in whose name any such certificate for Warrant Shares issued
shall for all purposes be deemed to have become the holder of record of the
Warrant Shares represented thereby on the Date of Exercise of the Warrants
resulting in the issuance of such Warrant Shares, irrespective of the date of
issuance or delivery of such certificate for Warrant Shares; provided, however,
that if, at the date of the surrender of such Warrants and payment of the
Exercise Price, the transfer books for the Warrant Shares purchasable upon the
exercise of such Warrants shall be closed, the certificates for the Warrant
Shares in respect of which such Warrants are then exercised shall be issuable as
of the date on which such books shall next be opened (whether before or after
the Exercise Deadline) and until such date the Warrant Agent shall be under no
duty to deliver any certificate for such Warrant Shares; provided, further, that
the transfer books of record, unless otherwise required by law, shall not be
closed at any one time for a period longer than twenty (20) days.
Section 2.6 Certificates for Unexercised Warrants. Subject to
Section 2.4(b) hereof, if less than all of the Warrants represented by a Warrant
Certificate are exercised, the Warrant Agent shall execute and mail, by
first-class mail, within thirty (30) days of the Date of Exercise, to the Holder
of such Warrant Certificate, or such other person as shall be designated in the
election to purchase, a new Warrant Certificate representing the number of
Warrants not exercised. In no event shall a fraction of a Warrant be exercised,
and the Warrant Agent shall distribute no Warrant Certificates representing
fractions of Warrants under this or any other Section of this Agreement.
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Section 2.7 Reservation of Shares. The Company shall at all
times reserve and keep available for issuance upon the exercise of Warrants a
number of its authorized but unissued shares or treasury shares, or both, of
Common Stock that will be sufficient to permit the exercise in full of all
outstanding Warrants. The transfer agent for the Company's Common Stock and
every subsequent transfer agent for the Company's capital stock issuable upon
the exercise of Warrants, will be irrevocably authorized and directed at all
times to reserve a number of authorized shares as shall be required for such
purpose. The Company will keep a copy of this Agreement on file with the
transfer agent for the Company's Common Stock and with every subsequent transfer
agent for any shares of the Company's capital stock issuable upon the exercise
of the Warrants. The Warrant Agent is hereby irrevocably authorized to
requisition from time to time from such transfer agent the stock certificates
required to honor outstanding Warrants upon exercise thereof in accordance with
the terms of this Agreement. The Company will supply such transfer agent with
duly executed stock certificates for such purposes and will provide or otherwise
make available any cash which may be payable as provided in Section 3.9 hereof.
All Warrant Certificates surrendered in the exercise of the rights thereby
evidenced shall be canceled by the Warrant Agent and retained by the Warrant
Agent pursuant to Section 5.2 hereof.
Section 2.8 Disposition of Proceeds. Upon the exercise of
any Warrant, the Warrant Agent shall promptly deposit all funds received by it
for the purchase of Warrant Shares into a non-interest-bearing escrow account as
directed in writing by the Company. All funds deposited in the escrow account
shall be disbursed on a weekly basis to the Company, or as otherwise requested
by the Company in writing. A detailed accounting statement relating to the
number of Warrants exercised, names of Holders of such exercised Warrants and
the net amount of funds remitted will be given to the Company with each such
disbursement.
ARTICLE III
ADJUSTMENTS AND NOTICE PROVISIONS
Section 3.1 Adjustment of Exercise Price. Subject to the
provisions of this Article III, the Exercise Price in effect from time to time
shall be subject to adjustment, as follows:
(a) In case the Company shall (i) declare a dividend payable
in stock or make some other distribution on the outstanding shares of
its Common Stock in shares of its Common Stock, (ii) subdivide or
reclassify the outstanding shares of its Common Stock into a greater
number of shares or (iii) combine or reclassify the outstanding shares
of its Common Stock into a smaller number of shares, the Exercise
Price, in effect immediately after the record date for such dividend or
distribution or the effective date of such division, reclassification
or combination
11
shall be proportionately adjusted by multiplying the then Exercise
Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such event
and the denominator of which shall be the number of shares of Common
Stock outstanding immediately after such event, and the product so
obtained shall thereafter be the Exercise Price then in effect. Such
adjustment shall be made successively whenever any event specified
above shall occur.
(b) All calculations under this Section 3.1 shall be made to
the nearest thousandth of a cent.
Section 3.2 No Adjustments to Exercise Price. No adjustment in
the Exercise Price in accordance with the provisions of paragraph (a) of Section
3.1 hereof need be made if such adjustment would amount to a change in such
Exercise Price of less than ten cents; provided, however, that the amount by
which any adjustment is not made by reason of the provision of this Section 3.2
shall be carried forward and taken into account at the time of any subsequent
adjustment in the Exercise Price.
Section 3.3 Adjustment to Number of Shares. Upon each
adjustment of the Exercise Price pursuant to Paragraph (a) of Section 3.1, each
Warrant shall thereupon evidence the right to purchase that number of shares of
Common Stock (calculated to the nearest hundredth of a share) obtained by
multiplying the number of shares of Common Stock purchasable immediately prior
to such adjustment upon exercise of the Warrant by the Exercise Price in effect
immediately prior to such adjustment and dividing the product so obtained by the
Exercise Price in effect immediately after such adjustment.
Section 3.4 Reorganizations. In case of any capital
reorganization, consolidation or merger of the Company (other than in the cases
referred to in Section 3.1 hereof, and other than the consolidation or merger of
the Company with or into another corporation in which the Company is the
continuing corporation and which does not result in any reclassification of the
outstanding shares of Common Stock or the conversion of such outstanding shares
of Common Stock into shares of other stock or other securities or property), or
the sale of all or substantially all of the Company's stock or property, (any of
the foregoing events hereinafter referred to as a "Reorganization"), all
outstanding Warrants which have not been exercised prior to or concurrently with
the closing of any such transaction will terminate immediately upon the closing.
Additionally, in the event of sale or conveyance or other transfer of all or
substantially all of the assets of the Company as a part of a plan for
liquidation of the Company, all rights to exercise any Warrant shall terminate
thirty (30) days after the Company gives written notice to each Holder that such
sale or conveyance or other transfer has been consummated in the manner
specified in section 6.15 hereof.
12
Section 3.5 Exercise Price Not Less Than Par Value. In no
event shall the Exercise Price be adjusted below the par value per share of the
Common Stock.
Section 3.6 Notice of Certain Action. In the event the
Company shall:
(a) declare any dividend payable in stock to the holders of
its Common Stock or make any other distribution in property other than
cash to the holders of its Common Stock; or
(b) offer to the holders of its Common Stock as such rights to
subscribe for or purchase any shares of any class of stock or any other
rights or opinions; or
(c) effect any reclassification of its Common Stock (other
than a reclassification involving merely the subdivision or combination
of outstanding shares of Common Stock), Reorganization or the
liquidation, dissolution or winding up of the Company;
then, in each such case, the Company shall cause notice of such proposed action
to be mailed to the Warrant Agent. Such notice shall specify the date on which
the books of the Company shall close, or a record be taken, for determining
holders of Common Stock entitled to receive such stock dividend or other
distribution or such rights or options, or the date on which such
reclassification, Reorganization, liquidation, dissolution or winding up shall
take place or commence, as the case may be, and the date as of which it is
expected that holders shall be entitled to receive securities or other property
deliverable upon such action, if any such date has been fixed. The Company shall
also cause copies of such notice to be mailed to each Holder of a Warrant
Certificate in the manner specified in Section 6.15 hereof. Such notice shall be
mailed, in the case of any action covered by Subsection 3.6(a) or 3.6(b) above,
at least ten (10) days prior to the record date for determining holders of the
Common Stock for purposes of receiving such payment or offer, and in the case of
any action covered by Subsection 3.6(c) above, at least ten (10) days prior to
the earlier of the date upon which such action is to take place or any record
date to determine holders of Common Stock entitled to receive such securities or
other property.
Section 3.7 Notice of Adjustments. Whenever any adjustment is
made pursuant to this Article III, the Company shall cause notice of such
adjustment to be mailed to the Warrant Agent within fifteen (15) days
thereafter, such notice to include in reasonable detail (i) the events
precipitating the adjustment, (ii) the computation of any adjustments and (iii)
the Exercise Price, the number of shares or the securities or other property
purchasable upon exercise of each Warrant after giving effect to such
adjustment. The Warrant Agent shall be entitled to rely on such notice and any
adjustment therein contained and shall not be deemed to have knowledge of any
such adjustment unless and until it shall have received such notice. The Warrant
Agent shall
13
within fifteen (15) days after receipt of such notice from the Company cause a
similar notice to be mailed to each Holder.
Section 3.8 Warrant Certificate Amendments. Irrespective of
any adjustments pursuant to this Article III, Warrant Certificates theretofore
or thereafter issued need not be amended or replaced, but certificates
thereafter issued shall bear an appropriate legend or other notice of any
adjustments.
Section 3.9 Fractional Shares. The Company shall not be
required upon the exercise of any Warrant to issue fractional shares of Common
Stock which may result from adjustments in accordance with this Article III to
the Exercise Price or number of shares of Common Stock purchasable under each
Warrant. If more than one Warrant is exercised at one time by the same Holder,
the number of full shares of Common Stock which shall be deliverable shall be
computed based on the number of shares deliverable in exchange for the aggregate
number of Warrants exercised. With respect to any final fraction of a share
called for upon the exercise of any Warrant or Warrants, the Company, at its
option, shall either (i) issue a full share of Common Stock to the Holder in
respect of such fraction or (ii) pay a cash adjustment in respect of such final
fraction in an amount equal to the same fraction of the market value of a share
of Common Stock, as determined by the Warrant Agent on the basis of the market
price per share of Common Stock on the business day next preceding the date of
such exercise. For the purposes of this Section 3.9, the market price per share
of Common Stock for such day shall mean (i) the average of the high and low bid
and ask prices of the Common Stock on the Nasdaq National Market System for such
day; or (ii) if the Common Stock is not then traded on such exchange, then the
last known price paid per share by a purchaser of such stock in an arm's-length
transaction.
ARTICLE IV
OTHER PROVISIONS RELATING TO RIGHTS
OF HOLDERS OF WARRANT CERTIFICATES
Section 4.1 Rights of Warrant Holders. No Warrant Certificate
shall entitle the registered holder thereof, as such, to any of the rights of a
stockholder of the Company, including, without limitation, the right to vote, to
receive dividends and other distributions, to receive any notice of, or to
attend, meetings of stockholders or any other proceedings of the Company.
Section 4.2 Lost, Stolen, Mutilated or Destroyed Warrant
Certificates. If any Warrant Certificate shall be mutilated, apparently lost,
stolen or destroyed, the Company in its discretion may direct the Warrant Agent
to execute and deliver, in exchange and substitution for and upon cancellation
of a mutilated Warrant Certificate,
14
or in lieu of or in substitution for an apparently lost, stolen or destroyed
Warrant Certificate, a new Warrant Certificate for the number of Warrants
represented by the Warrant Certificate so mutilated, apparently lost, stolen or
destroyed but only upon receipt of evidence of such loss, theft or destruction
of such Warrant Certificate, and of the ownership thereof, and indemnity, if
requested, all satisfactory to the Company and the Warrant Agent. Applicants for
such substitute Warrant Certificates shall also comply with such other
reasonable regulations and pay such other reasonable charges incidental thereto
as the Company or Warrant Agent may prescribe. Any such new Warrant Certificate
shall constitute an original contractual obligation of the Company, whether or
not the allegedly mutilated, lost or stolen or destroyed Warrant Certificate
shall be at any time enforceable by anyone.
ARTICLE V
SPLIT UP, COMBINATION, EXCHANGE, TRANSFER
AND CANCELLATION OF WARRANT CERTIFICATES
Section 5.1 Split Up, Combination, Exchange and Transfer of
Warrant Certificates. Prior to the Exercise Deadline, Warrant Certificates,
subject to the provisions of Section 5.2, may be split-up, combined or exchanged
for other Warrant Certificates representing a like aggregate number of Warrants
or may be transferred in whole or in part. Any Holder desiring to split-up,
combine or exchange a Warrant Certificate or Warrant Certificates shall make
such request in writing delivered to the Warrant Agent at its Principal Office
and shall surrender the Warrant Certificate or Warrant Certificates so to be
split-up, combined or exchanged at said office. Subject to any applicable laws,
rules or regulations restricting transferability, any restriction on
transferability that may appear on a Warrant Certificate in accordance with the
terms hereof, or any "stop-transfer" instructions the Company may give to the
Warrant Agent to implement any such restriction (which instructions the Company
is expressly authorized to give), transfer of outstanding Warrant Certificates
may be effected by the Warrant Agent from time to time upon the books of the
Company to be maintained by the Warrant Agent for that purpose, upon a surrender
of the Warrant Certificate to the Warrant Agent at its Principal Office, with
the assignment form set forth in the Warrant Certificate duly executed and with
Signature Guaranteed. Upon any such surrender for split-up, combination,
exchange or transfer, the Warrant Agent shall execute and deliver to the person
entitled thereto a Warrant Certificate or Warrant Certificates, as the case may
be, as so requested. The Warrant Agent shall not be required to effect any
split-up, combination, exchange or transfer which will result in the issuance of
a Warrant Certificate evidencing a fraction of a Warrant. The Warrant Agent may
require the holder to pay a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any split-up, combination,
exchange or transfer of Warrant Certificates prior to the issuance of any new
Warrant Certificate.
15
Section 5.2 Cancellation of Warrant Certificates. Any Warrant
Certificate surrendered upon the exercise of Warrants or for split-up,
combination, exchange or transfer, or purchased or otherwise acquired by the
Company, shall be canceled and shall not be reissued by the Company; and, except
as provided in Section 2.6 in case of the exercise of less than all of the
Warrants evidenced by a Warrant Certificate or in Section 5.1 in case of a
split-up, combination, exchange or transfer, no Warrant Certificate shall be
issued hereunder in lieu of such canceled Warrant Certificates. Any Warrant
Certificate so canceled shall be held by the Warrant Agent (unless otherwise
directed by the Company) and destroyed not earlier than seven (7) years after
such cancellation. The Warrant Agent shall furnish to the Company written
confirmation of the destruction of the Warrant Certificates so canceled.
ARTICLE VI
PROVISIONS CONCERNING THE
AGENT AND OTHER MATTERS
Section 6.1 Payment of Taxes and Charges. The Company will
from time to time promptly pay to the Warrant Agent, or make provisions
satisfactory to the Warrant Agent for the payment of, all taxes and charges that
may be imposed by the United States or any state upon the Company or the Warrant
Agent in connection with the issuance or delivery of any Warrant Shares, but any
transfer taxes in connection with the issuance of Warrant Certificates or
certificates for Warrant Shares in any name other than that of the Holder of the
Warrant Certificates surrendered shall be paid by such Holder; and, in such
case, the Company shall not be required to issue or deliver any Warrant
Certificate or certificate for Warrant Shares until such taxes shall have been
paid or it has been established to the Company's satisfaction that no tax is
due.
Section 6.2 Resignation or Removal of Warrant Agent. The
Warrant Agent may resign its duties and be discharged from all further duties
and liabilities hereunder after giving at least thirty (30) days' notice in
writing to the Company, except that such shorter notice may be given as the
Company shall, in writing, accept as sufficient. Upon comparable notice to the
Warrant Agent, the Company may remove the Warrant Agent; provided, however, that
in such event the Company shall appoint a new Warrant Agent, as hereinafter
provided, and the removal of the Warrant Agent shall not be effective until a
new Warrant Agent has been appointed and has accepted such appointment. If the
office of Warrant Agent becomes vacant by resignation or incapacity to act or
otherwise, the Company shall appoint in writing a new Warrant Agent. If the
Company shall fail to make such appointment within a period of thirty (30) days
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Warrant Agent or by the Holder of any Warrant
Certificate, then the Holder of any Warrant Certificate may apply to any court
of competent jurisdiction for the appointment of a new Warrant Agent. Any new
Warrant Agent, whether appointed
16
by the Company or by such a court, shall be a bank which is a member of the
Federal Reserve System. Any new Warrant Agent appointed hereunder shall execute,
acknowledge and deliver to the former Warrant Agent last in office, and to the
Company, an instrument accepting such appointment under substantially the same
terms and conditions as are contained herein, and thereupon such new Warrant
Agent without any further act or deed shall become vested with the rights,
powers, duties and responsibilities of the Warrant Agent and the former Warrant
Agent shall cease to be the Warrant Agent; but if for any reason it becomes
necessary or expedient to have the former Warrant Agent execute and deliver any
further assurance, conveyance, act or deed, the same shall be done at the
expense of the Company and shall be legally and validly executed and delivered
by the former Warrant Agent.
Section 6.3 Notice of Appointment. Not later than the
effective date of the appointment of a new Warrant Agent the Company shall cause
notice thereof to be mailed to the former Warrant Agent and the transfer agent
for the Company's Common Stock, and shall forthwith cause a copy of such notice
to be mailed to each Holder of a Warrant Certificate. Failure to mail such
notice, or any defect contained therein, shall not affect the legality or
validity of the appointment of the successor Warrant Agent.
Section 6.4 Merger of Warrant Agent. Any company into which
the Warrant Agent may be merged or with which it may be consolidated or any
company resulting from any merger or consolidation to which the Warrant Agent
shall be a party, or any company to which the Warrant Agent may transfer its
stockholder services business, shall be the successor Warrant Agent under this
Agreement without further act, provided that such company would be eligible for
appointment as a successor Warrant Agent under the provisions of Section 6.2
hereof. Any such successor Warrant Agent may adopt the prior countersignature of
any predecessor Warrant Agent and distribute Warrant Certificates countersigned
but not distributed by such predecessor Warrant Agent, or may countersign the
Warrant Certificates in its own name.
Section 6.5 Company Responsibilities. The Company agrees that
it shall (i) pay the Warrant Agent the agreed upon remuneration for its services
as Warrant Agent hereunder and will reimburse the Warrant Agent upon demand for
all expenses, advances, and expenditures that the Warrant Agent may reasonably
incur in the execution of its duties hereunder (including reasonable fees and
expenses of its counsel); (ii) provide the Warrant Agent, upon request, with
sufficient funds to pay any cash due pursuant to Section 3.9 upon exercise of
Warrants; and (iii) perform, execute, acknowledge and deliver or cause to be
performed, executed, acknowledged and delivered all further and other acts,
instruments and assurances as may reasonably be required by the Warrant Agent
for the carrying out or performing by the Warrant Agent of the provisions of
this Agreement.
Section 6.6 Purchase of Warrants by the Company. The Company
shall
17
have the right, except as limited by law, other agreement or herein, to purchase
or otherwise acquire Warrants at such times, in such manner and for such
consideration as it may deem appropriate.
Section 6.7 Certification for the Benefit of Warrant Agent.
Whenever in the performance of its duties under this Agreement the Warrant Agent
shall deem it necessary or desirable that any matter be proved or established or
that any instructions with respect to the performance of its duties hereunder be
given by the Company prior to taking or suffering any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established, or such
instructions may be given, by a certificate or instrument signed by the Chairman
of the Board, the President, an Executive Vice President, the Secretary or the
Treasurer of the Company and delivered to the Warrant Agent. Such certificate or
instrument may be relied upon by the Warrant Agent for any action taken or
suffered in good faith by it under the provisions of this Agreement; but in its
discretion the Warrant Agent may in lieu thereof accept other evidence of such
matter or may require such further or additional evidence as it may deem
reasonable.
Section 6.8 Liability of Warrant Agent. The Warrant Agent
shall be liable hereunder solely for its own negligence or willful misconduct.
The Warrant Agent shall act hereunder solely as an agent in a ministerial
capacity for the Company and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or in the
Warrant Certificates (except its countersignature thereof) or be required to
verify the same, but all such statements and recitals are and shall be deemed to
have been made by the Company only. The Warrant Agent will not incur any
liability or responsibility to the Company or to any Holder of any Warrant
Certificate for any action taken, or any failure to take action, in reliance on
any paper, document or instrument reasonably believed by the Warrant Agent to be
genuine and to have been signed, sent or presented by the proper party or
parties. The Warrant Agent shall not be under any responsibility in respect of
the validity of this Agreement or the execution and delivery hereof by the
Company or in respect of the validity or execution of any Warrant Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Warrant Certificate or the Stipulation; nor shall it be responsible
for the making of any adjustment required under the provisions of Article III
hereof or responsible for the manner, method or amount of any such adjustment or
the facts that would require any such adjustment; nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or other securities
to be issued pursuant to this Agreement or any Warrant Certificate or as to
whether any shares of Common Stock or other securities will when issued be
validly authorized and issued and fully paid and nonassessable.
18
Section 6.9 Use of Attorneys, Agents and Employees. The
Warrant Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself or by or through its
attorneys, agents or employees.
Section 6.10 Indemnification. The Company agrees to indemnify
the Warrant Agent and save it harmless against any and all losses, expenses or
liabilities, including judgments, costs and reasonable counsel fees arising out
of or in connection with its acceptance of its position hereunder and in
carrying out the terms hereof, except as a result of the negligence or willful
misconduct of the Warrant Agent.
Section 6.11 Acceptance of Agency. The Warrant Agent hereby
accepts the agency established by this Agreement and agrees to perform the same
upon the terms and conditions herein set forth.
Section 6.12 Instructions from the Company. The Warrant Agent
is hereby authorized and directed to accept instructions with respect to the
performance of its duties hereunder from the Chairman of the Board, the
President, an Executive Vice President, the Secretary or the Treasurer of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and shall not be liable for any action taken or suffered to be
taken by it in good faith in accordance with instructions of any such officer or
officers.
Section 6.13 Changes to Agreement. The Warrant Agent may,
without the consent or concurrence of any Holder, by supplemental agreement or
otherwise, join with the Company in making any changes or corrections in this
Agreement that shall in the judgment of the Company (i) be required to cure any
ambiguity or to correct any defective or inconsistent provision or clerical
omission or mistake or manifest error herein contained, (ii) add to the
covenants and agreements of the Company or the Warrant Agent in this Agreement
such further covenants and agreements thereafter to be observed, or (iii) result
in the surrender of any right or power reserved to or conferred upon the Company
or the Warrant Agent in this Agreement, but which changes or corrections do not
or will not adversely affect, alter or change the rights, privileges or
immunities of the Holders of Warrant Certificates. The Warrant Agent shall be
entitled to rely on such Company counsel's written advice. Otherwise the
Agreement may be amended by the written consent of the Company and the
affirmative vote or written consent of Holders holding not less than two-thirds
of the then outstanding Warrants.
Section 6.14 Assignment. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Warrant Agent shall
bind and inure to the benefit of their respective successors and assigns.
Section 6.15 Notices. Any notice or demand required by this
Agreement
19
to be given or made by the Warrant Agent or by the Holder to or on the Company
shall be sufficiently given or made if sent by first-class or registered mail,
postage prepaid, addressed (until another address is filed in writing by the
Company with the Warrant Agent) as follows:
Acclaim Entertainment, Inc.
One Acclaim Plaza
Glen Cove, New York 11542
Attention: Gregory E. Fischbach
Any notice or demand required by this Agreement, to be given or made by the
registered Holder of any Warrant Certificate or by the Company to or on the
Warrant Agent shall be sufficiently given or made if sent by first-class or
registered mail, postage prepaid, addressed (until another address is filed in
writing with the Company by the Warrant Agent), as follows:
American Securities Transfer & Trust, Inc.
938 Quail Street
Suite 101
Lakewood, Colorado 80215
Attention: Trust Department (Acclaim Entertainment, Inc.)
Any notice or demand required by this Agreement to be given or made by the
Company or the Warrant Agent to or on the Holder of any Warrant Certificate
shall be sufficiently given or made, whether or not such Holder receives the
notice, if sent by first-class or registered mail, postage prepaid, addressed to
such Holder at his last address as shown on the books of the Company maintained
by the Warrant Agent.
Section 6.16 Defects in Notice. Failure to file any
certificate or notice or to mail any notice, or any defect in any certificate or
notice pursuant to this Agreement shall not affect in any way the rights of any
Holder or the legality or validity of any adjustment made pursuant to Section
3.1 hereof, or any transaction giving rise to any such adjustment, or the
legality or validity of any action taken or to be taken by the Company.
Section 6.17 Governing Law. The validity, interpretation and
performance of this Agreement, of each Warrant Certificate issued hereunder and
of the respective terms and provisions thereof shall be governed by the internal
laws of the State of Delaware, without reference to principles of conflict of
laws.
Section 6.18 Standing. Nothing in this Agreement expressed
and nothing that may be implied from any of the provisions hereof is intended,
or shall be construed, to confer upon, or give to, any person or corporation
other than the Company, the
20
Warrant Agent, and the Holders any right, remedy or claim under or by reason of
this Agreement or of any covenant, condition, stipulation, promise or agreement
contained herein; and all covenants, conditions, stipulations, promises and
agreements contained in this Agreement shall be for the sole and exclusive
benefit of the Company and the Warrant Agent and their successors, and the
Holders.
Section 6.19 Headings. The descriptive headings of the
articles and sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the provisions
hereof.
Section 6.20 Counterparts. This Agreement may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original; but such counterparts shall together constitute but one and the same
instrument.
Section 6.21 Conflict of Interest. The Warrant Agent and any
stockholder, director, officer or employee of the Warrant Agent may buy, sell or
deal in any of the Warrant Certificates or other securities of the Company or
become pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to the Company or otherwise act as
fully and freely as though the Warrant Agent were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.
Section 6.22 Availability of the Agreement. The Warrant Agent
shall keep copies of this Agreement available for inspection by holders of
Warrants during normal business hours at its stock transfer department. Copies
of this Agreement may be obtained upon written request addressed to the Company
at the address set forth in Section 6.15.
21
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, and their corporate seals affixed and attested,
all as of the day and year first above written.
ACCLAIM ENTERTAINMENT, INC.
By:
---------------------------------------
Title:
[Corporate Seal]
Attests:
- -----------------------
Title:
AMERICAN SECURITIES TRANSFER &
TRUST, INC.
By:
---------------------------------------
Title:
[Corporate Seal]
Attest:
- -----------------------
Title:
22
[FORM OF WARRANT CERTIFICATE]
EXERCISABLE ON OR AFTER _______________, 1998
VOID AFTER 5:00 P.M., NEW YORK CITY TIME
ON ____________, 1999
W________________ ____________ Warrants
ACCLAIM ENTERTAINMENT, INC.
WARRANTS TO PURCHASE SHARES OF COMMON STOCK
THIS CERTIFIES THAT, FOR VALUE RECEIVED CUSIP __________
_______________________, or his, her or its registered assigns, is the
registered holder of the number of Warrants (the "Warrants") set forth above.
Each Warrant entitles the holder thereof to purchase from Acclaim Entertainment,
Inc., a corporation incorporated under the laws of the State of Delaware (the
"Company"), subject to the terms and conditions set forth hereinafter and in the
Warrant Agreement hereinafter referred to, one fully paid and nonassessable
share of Common Stock, $.02 par value per share, of the Company (the "Common
Stock"). The Warrants may be exercised at any time or from time to time on or
after __________, 1998 (the "Commencement Date") and must be exercised before
5:00 P.M., New York City time, on __________, 1999 (the "Exercise Deadline").
Upon the Exercise Deadline, all rights evidenced by the Warrants shall cease and
the Warrants shall become void, and the holders thereof shall have no rights
thereunder. Subject to the provisions of the Warrant Agreement, the holder of
each Warrant shall have the right to purchase from the Company until the
Exercise Deadline (and the Company shall issue and sell to such holder of a
Warrant) one fully paid and nonassessable share of Common Stock (a "Warrant
Share") at an exercise price (the "Exercise Price") of $12.00 upon surrender of
this Warrant Certificate to the Company at the office of the Warrant Agent (as
defined in the Warrant Agreement) designated by the Warrant Agent for such
purpose with the form of election to purchase appearing on this Warrant
Certificate duly completed and signed, together with (i) payment of the Exercise
Price in cash or certified or official bank check payable to the order of the
Warrant Agent or (ii), in lieu of any cash payment to be made pursuant to sub
paragraph (i) hereof, an election made by the holder of this Warrant Certificate
to exchange his Warrant, in whole or in part (a "Warrant Exchange"), into the
number of Warrant Shares determined in accordance with this paragraph, by
surrendering this Warrant Certificate to the Warrant Agent stating such holder's
intent to effect such exchange, the number of Warrant Shares to be exchanged and
the date on which the Holder requests that such Warrant Exchange occur (the
"Notice of Exchange"). The Warrant Exchange shall take place on the date
specified in the Notice of Exchange or, if later, the date the Notice of
Exchange is received by the Company (the "Exchange Date"). Certificates for the
Common Stock issuable upon such Warrant Exchange and, if applicable, a new
warrant of like tenor evidencing the balance of the Common Stock remaining
subject to such Warrant, shall be issued as of the Exchange Date and delivered
to the holder within seven (7) days following the Exchange Date. In connection
with any Warrant Exchange, a Warrant shall represent the right to subscribe for
and acquire the number of Warrant Shares (rounded to the next highest integer)
equal to (i) the number of Warrant Shares specified by the Holder in its Notice
of Exchange (the "Total Number") less (ii) the number of Warrant Shares equal to
the quotient obtained by dividing (A) the product of the Total Number times the
existing Exercise Price by (B) the then Market Price (as defined in the Warrant
Agreement) of a share of Common Stock.
The Exercise Price or number of Warrant Shares for which the Warrants
are exercisable are subject to change or adjustment upon the occurrence of
certain events set forth in the Warrant Agreement.
REFERENCE IS MADE TO THE PROVISIONS OF THIS WARRANT CERTIFICATE SET
FORTH ON THE REVERSE SIDE HEREOF, AND SUCH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH ON THE FRONT OF THIS
CERTIFICATE.
This Warrant shall be governed by and construed in accordance with the
laws of the State of Delaware.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be executed by its duly authorized officers.
Dated:___________________________ ACCLAIM ENTERTAINMENT, INC.
By:___________________________________
Its___________________________________
ATTEST:
By:________________________
Countersigned:
AMERICAN SECURITIES TRANSFER &
TRUST, INC., AS WARRANT AGENT
By: ____________________________
Its ____________________________
[Reverse Side]
This Warrant Certificate is subject to all of the terms and conditions
of the Warrant Agreement, dated as of ________________, 1998 (the "Warrant
Agreement"), between the Company and the Warrant Agent, to all of which terms
and conditions the registered holder of the Warrant consents by acceptance
hereof. The Warrant Agreement is incorporated herein by reference and made a
part hereof and reference is made to the Warrant Agreement for a full
description of the rights, limitations of rights, obligations, duties and
immunities of the Warrant Agent, the Company and the registered holders of
Warrant Certificates. Copies of the Warrant Agreement are available for
inspection at the principal office of the Warrant Agent or may be obtained upon
written request addressed to the Warrant Agent at its principal stockholder
services office in 938 Quail Street, Suite 101, Lakewood, Colorado 80215 or may
be obtained upon written request addressed to the Company at One Acclaim Plaza,
Glen Cove, New York, 11542, Attn: Gregory E. Fischbach.
The Company shall not be required upon the exercise of the Warrants
evidenced by this Warrant Certificate to issue fractional shares, but shall make
adjustment therefor in cash on the basis of the current market value of any
fractional interest as provided in the Warrant Agreement.
This Warrant Certificate may be exchanged or transferred, at the option
of the holder, upon presentation and surrender hereof to the Warrant Agent, for
other Warrant Certificates of different denominations, entitling the holder
hereof to purchase in the aggregate the same number of Warrant Shares. If the
Warrants evidenced by this Warrant Certificate shall be exercised in part, the
holder hereof shall be entitled to receive upon surrender hereof another Warrant
Certificate or Certificates evidencing the number of Warrants not so exercised.
The holder of this Warrant Certificate shall not, by virtue hereof, be
entitled to any of the rights of a stockholder in the Company, either at law or
in equity, including, without limitation, the right to vote, to receive
dividends and other distributions, or to attend or receive any notice of
meetings of stockholders or any other proceedings of the Company, and the rights
of the holder are limited to those expressed in the Warrant Agreement.
If this Warrant Certificate shall be surrendered for exercise within
any period during which the transfer books for the Company's Common Stock are
closed for any purpose, the Company shall not be required to make delivery of
certificates for shares purchasable upon such transfer until the date of the
reopening of said transfer books.
Every holder of this Warrant Certificate, by accepting the same,
consents and agrees with the Company, the Warrant Agent and with every other
holder of a Warrant Certificate that:
(a) this Warrant Certificate is transferable on the registry
books of the Warrant Agent only upon the terms and conditions set forth
in the Warrant Agreement and
(b) the Company and the Warrant Agent may deem and treat the
person in whose name this Warrant Certificate is registered as the
absolute owner hereof (notwithstanding any notation of ownership or
other writing hereon made by anyone other than the Company or the
Warrant Agent) for all purposes whatever and neither the Company nor
the Warrant Agent shall be affected by any notice to the contrary.
This Warrant Certificate shall not be valid or enforceable for any
purpose until it shall have been countersigned by the Warrant Agent.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM = as tenants in common
TEN ENT = as tenants by the entireties
JT TEN = as joint tenants with right of survivorship
and not as tenants in common
COM PROP = as community property
UNIF GIFT MIN ACT = _______________ Custodian ______________
(Custodian) (Minor)
under Uniform Gifts to Minors Act
________________________________________
(State)
Additional abbreviations may also be used though not in the above list.
PURCHASE FORM
Dated: ________________, 19___
The undersigned hereby irrevocably exercises this Warrant to purchase
__________ shares of Common Stock and herewith makes payment of $__________ in
payment of the Exercise Price thereof on the terms and conditions specified in
this Warrant Certificate, surrenders this Warrant Certificate and all right,
title and interest herein to the Company and directs that the Warrant Shares
deliverable upon the exercise of such Warrants be registered in the name and at
the address specified below and delivered thereto.
Name:___________________________________________________________________________
(Please Print)
Address:________________________________________________________________________
City, State and Zip Code:_______________________________________________________
Taxpayer Identification or Social Security Number:______________________________
Signature_________________________________
If such number of Warrant Shares is less than the aggregate number of Warrant
Shares purchasable hereunder, the undersigned requests that a new Warrant
Certificate representing the balance of such Warrant Shares to be registered in
the name and at the address specified below and delivered thereto.
Name:___________________________________________________________________________
(Please Print)
Address:________________________________________________________________________
City, State and Zip Code:_______________________________________________________
Taxpayer Identification or Social Security Number:______________________________
Signature_________________________________
NOTE: The above signature must correspond with the name as written upon the
face of this Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever. If the certificate
representing the Warrant Shares or any Warrant Certificate representing
Warrants not exercised is to be registered in a name other than that in
which this Warrant Certificate is registered, the signature of the
holder hereof must be guaranteed.
Signature Guaranteed:
__________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY
AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15
WARRANT ASSIGNMENT FORM
FOR VALUE RECEIVED _________________________________________________
hereby sells, assigns and transfers to:
Name:___________________________________________________________________________
(Please Print)
Address:________________________________________________________________________
City, State and Zip Code:_______________________________________________________
Taxpayer Identification or Social Security Number:______________________________
the right to purchase up to _____________________ Warrant Shares represented by
this Warrant and does hereby irrevocably constitute and appoint
___________________________________________________________ Attorney-in-fact to
transfer said Warrant on the behalf of the Company, with full power of
substitution in the premises.
Dated:_______________________ ___________________________________________
Signature of registered holder
NOTE: The above signature must correspond with the name as written upon the
face of this Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever.
Signatures Guaranteed:
___________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS
AND CREDIT UNIONS WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15