WARRANT AGREEMENT
BETWEEN
INTERNATIONAL CONTROLS CORP.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY,
AS WARRANT AGENT
____________________
Dated as of __________, 1994
TABLE OF CONTENTS
Page
PARTIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 1
DEFINITIONS
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . 1
Blackout Notice . . . . . . . . . . . . . . . . . . . . . . 2
Blackout Termination Notice . . . . . . . . . . . . . . . . 2
Business Day. . . . . . . . . . . . . . . . . . . . . . . . 2
Change of Control . . . . . . . . . . . . . . . . . . . . . 2
Common Stock. . . . . . . . . . . . . . . . . . . . . . . . 2
Company . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Current Market Value. . . . . . . . . . . . . . . . . . . . 2
Demand Notice . . . . . . . . . . . . . . . . . . . . . . . 2
Demand Registration Statement . . . . . . . . . . . . . . . 2
Election to Exercise. . . . . . . . . . . . . . . . . . . . 2
Eligible Guarantor Institution. . . . . . . . . . . . . . . 2
Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . 2
Exercisability Date . . . . . . . . . . . . . . . . . . . . 2
Exercise Date . . . . . . . . . . . . . . . . . . . . . . . 2
Exercise Event. . . . . . . . . . . . . . . . . . . . . . . 2
Exercise Price. . . . . . . . . . . . . . . . . . . . . . . 3
Expiration Date . . . . . . . . . . . . . . . . . . . . . . 3
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . 3
Independent Financial Expert. . . . . . . . . . . . . . . . 3
Non-Surviving Combination . . . . . . . . . . . . . . . . . 3
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Offering Notice . . . . . . . . . . . . . . . . . . . . . . 3
participating Holders . . . . . . . . . . . . . . . . . . . 3
Person. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Piggy Back Registration Statement . . . . . . . . . . . . . 3
Prospectus. . . . . . . . . . . . . . . . . . . . . . . . . 3
Public Offering . . . . . . . . . . . . . . . . . . . . . . 3
Registrar . . . . . . . . . . . . . . . . . . . . . . . . . 4
Registration Statement. . . . . . . . . . . . . . . . . . . 4
(i)
Page
Required Filing Dates . . . . . . . . . . . . . . . . . . . 4
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Securities Act. . . . . . . . . . . . . . . . . . . . . . . 4
Separated or Separation . . . . . . . . . . . . . . . . . . 4
Separation Date . . . . . . . . . . . . . . . . . . . . . . 4
Survivor. . . . . . . . . . . . . . . . . . . . . . . . . . 4
Underwriting Agreement. . . . . . . . . . . . . . . . . . . 4
Value Report. . . . . . . . . . . . . . . . . . . . . . . . 4
Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . 4
Warrant Agent Office. . . . . . . . . . . . . . . . . . . . 4
Warrant Certificates. . . . . . . . . . . . . . . . . . . . 4
Warrant Endorsement . . . . . . . . . . . . . . . . . . . . 4
Warrant Exercise Office . . . . . . . . . . . . . . . . . . 4
Warrant Register. . . . . . . . . . . . . . . . . . . . . . 4
Warrant Shares. . . . . . . . . . . . . . . . . . . . . . . 4
Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 2
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
Section 2.1. Issuance of Warrants. . . . . . . . . . . . . . . . . . . . 5
Section 2.2. Form of Warrant Certificates. . . . . . . . . . . . . . . . 5
Section 2.3. Execution of Warrant Certificates . . . . . . . . . . . . . 5
Section 2.4. Countersignature and Delivery . . . . . . . . . . . . . . . 6
Section 2.5. Temporary Warrant Certificates. . . . . . . . . . . . . . . 6
Section 2.6. Transfers of Warrants Prior to the Separation of Warrants
and Notes; Separation of Warrants and Notes . . . . . . . . 7
Section 2.7. Registration; Registration of Transfers and Exchanges . . . 8
Section 2.8. Lost, Stolen, Destroyed, Defaced or Mutilated
Warrant Certificates. . . . . . . . . . . . . . . . . . . . 9
Section 2.9. Offices for Exercise, etc.. . . . . . . . . . . . . . . . . 10
ARTICLE 3
DURATION, EXERCISE OF WARRANTS AND
EXERCISE PRICE
Section 3.1. Duration of Warrants, Exercise Price, Exercise, Settlement
and Delivery. . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.2. Cancellation of Warrant Certificates. . . . . . . . . . . . 12
(ii)
Page
ARTICLE 4
CERTAIN RIGHTS OF HOLDERS
Section 4.1. Demand Registration Rights and Piggy Back
Registration Rights.. . . . . . . . . . . . . . . . . . . . 13
Section 4.2 Rights in the Event of a Non-Surviving Combination. . . . . 15
Section 4.3. No Voting Rights. . . . . . . . . . . . . . . . . . . . . . 15
Section 4.4. Right of Action . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 5
REGISTRATION PROCEDURES AND CERTAIN
OBLIGATIONS OF THE COMPANY IN
CONNECTION WITH A PUBLIC OFFERING
Section 5.1. Generally . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.2. Underwriting Agreement. . . . . . . . . . . . . . . . . . . 17
Section 5.3. Other Obligations of the Company. . . . . . . . . . . . . . 20
Section 5.4. Representations of the Company. . . . . . . . . . . . . . . 21
ARTICLE 6
ADJUSTMENTS
Section 6.1. Adjustments . . . . . . . . . . . . . . . . . . . . . . . . 22
(a) Stock Dividends; Stock Splits; Reverse Stock Splits;
Reclassifications . . . . . . . . . . . . . . . . . . 22
(b) Rights; Options; Warrants. . . . . . . . . . . . . . . 22
(c) Issuance of Common Stock at Lower Values . . . . . . . 23
(d) Distributions of Debt, Assets, Subscription Rights or
Convertible Securities . . . . . . . . . . . . . . . . 25
(e) Expiration of Rights, Options and Conversion
Privileges . . . . . . . . . . . . . . . . . . . . . . 26
(f) Current Market Value . . . . . . . . . . . . . . . . . 26
(g) De Minimis Adjustments . . . . . . . . . . . . . . . . 27
Section 6.2. Valuation of Common Stock . . . . . . . . . . . . . . . . . 27
Section 6.3. Notice of Adjustment. . . . . . . . . . . . . . . . . . . . 28
Section 6.4. Statement on Warrants . . . . . . . . . . . . . . . . . . . 29
Section 6.5. Fractional Interests. . . . . . . . . . . . . . . . . . . . 29
ARTICLE 7
WARRANT AGENT
Section 7.1. Nature of Duties and Responsibilities Assumed . . . . . . . 29
Section 7.2. Right to Consult Counsel. . . . . . . . . . . . . . . . . . 30
(iii)
Page
Section 7.3. Compensation and Reimbursement. . . . . . . . . . . . . . . 31
Section 7.4. Warrant Agent May Hold Company Securities . . . . . . . . . 31
Section 7.5. Resignation and Removal; Appointment of Successor . . . . . 31
ARTICLE 8
COVENANTS OF THE COMPANY
Section 8.1. Reservation of Common Stock for Issuance on and
Obligation to Register Upon Exercise of Warrants. . . . . . 32
Section 8.2. Notice of Dividends . . . . . . . . . . . . . . . . . . . . 32
Section 8.3. Reports to Holders. . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 9
MISCELLANEOUS
Section 9.1. Money and Other Property Deposited with the Warrant Agent . 33
Section 9.2. Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . 34
Section 9.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 9.4. Applicable Law. . . . . . . . . . . . . . . . . . . . . . . 34
Section 9.5. Persons Benefitting . . . . . . . . . . . . . . . . . . . . 35
Section 9.6. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 35
Section 9.7. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 9.8. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 35
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
EXHIBIT A FORM OF WARRANT CERTIFICATE . . . . . . . . . . . . . . . . . . A-1
(iv)
WARRANT AGREEMENT, dated as of __________, 1994, between International
Controls Corp., a Florida corporation (the "Company"), and American Stock
Transfer & Trust Company, as Warrant Agent (the "Warrant Agent").
WHEREAS, the Company has entered into an underwriting agreement, dated
as of _________, 1994, with Alex. Brown & Sons Incorporated ("Alex Brown") and
SPP Hambro & Co. ("Hambro," and together with Alex Brown, the "Underwriters") in
which the Company has agreed to sell to the Underwriters, 100,000 Units, each
Unit consisting of (i) $1,000 principal amount of __% Senior Subordinated Notes
due 2004 (the "Notes") of the Company and (ii) 100,000 Warrants, as hereinafter
described (such warrants being hereinafter referred to as the "Warrants" and the
certificates evidencing the Warrants being hereinafter referred to as "Warrant
Certificates"), each representing the right to purchase _____ shares of Common
Stock, subject to adjustment in accordance with the terms hereof. The Notes
will be issued under an indenture to be dated as of _____________, 1994 (the
"Indenture"), between the Company and Marine Midland Bank, as trustee (the
"Trustee"); and
WHEREAS, prior to the separation of Notes from Warrants as described
herein, the Units shall be physically represented by Notes containing thereon an
endorsement representing beneficial ownership of the related Warrants on deposit
with the Warrant Agent, as custodian for the registered holders of such Notes;
and
WHEREAS, the Warrants and the Notes shall not be separately
transferable until the Separation Date (as defined herein); and
WHEREAS, the Company desires the Warrant Agent as warrant agent to
assist the Company in connection with the issuance, exchange, cancellation,
replacement and exercise of the Warrants, and in this Agreement wishes to set
forth, among other things, the terms and conditions on which the Warrants may be
issued, exchanged, cancelled, replaced and exercised;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.1. DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings:
AFFILIATE: of any Person, any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For purposes
of this definition, "control" when used with respect to any Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
BLACKOUT NOTICE: the meaning set forth in Section 4.1(d).
BLACKOUT TERMINATION NOTICE: the meaning set forth in Section 4.1(d).
BUSINESS DAY: any day on which (i) banks in New York City, (ii) the
principal national securities exchange or market (if any) on which the Common
Stock is listed or admitted to trading and (iii) the principal national
securities exchange or market (if any) on which the Warrants are listed or
admitted to trading are open for business.
CHANGE OF CONTROL: the meaning set forth in the Indenture.
COMMON STOCK: the Common Stock, par value $0.01 per share, of the
Company and any other capital stock of the Company into which such common stock
may be converted or reclassified or that may be issued in respect of, in
exchange for, or in substitution of, such common stock by reason of any stock
splits, stock dividends, distributions, mergers, consolidations or other like
events.
COMPANY: the meaning set forth in the preamble to this Agreement, and
its successors and assigns (including, without limitation, any Survivor).
CURRENT MARKET VALUE: the meaning set forth in Section 6.1(f).
DEMAND NOTICE: the meaning set forth in Section 4.1(a).
DEMAND REGISTRATION STATEMENT: the meaning set forth in Section 4.1.
ELECTION TO EXERCISE: the meaning set forth in Section 3.1(c).
ELIGIBLE GUARANTOR INSTITUTION: an "eligible guarantor institution"
within the meaning of Rule 17Ad-15 under the Exchange Act.
EXCHANGE ACT: the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
EXERCISABILITY DATE: the date of the occurrence of an Exercise Event.
EXERCISE DATE: the meaning set forth in Section 3.1(d).
EXERCISE EVENT: ___________, 1999 or the earlier occurrence of:
(i) a Change of Control or (ii) a Public Offering.
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EXERCISE PRICE: the meaning set forth in Section 3.1(b).
EXPIRATION DATE: the meaning in Section 3.1(a).
HOLDERS: from time to time, the registered holders of the Warrants
and, unless otherwise provided or indicated herein, the registered holders of
the Warrant Shares.
INDENTURE: the meaning set forth in the preamble to this Agreement.
INDEPENDENT FINANCIAL EXPERT: a nationally recognized investment
banking firm, ranking in the top ten (as determined by the Securities Industry
Association, Inc. or a similar securities information data company) as lead
manager for primary common stock offerings in the year prior to the year in
which it is called upon to give independent financial advice to the Company as
described herein and that does not (and whose directors, officers, employees and
Affiliates do not) have a direct or indirect financial interest in the Company
or any of its Affiliates, that has not been and at the time it is called upon to
give independent financial advice to the Company, is not (and none of whose
directors, officers, employees or Affiliates is) a promoter, director or officer
of the Company or any of its Affiliates or an underwriter or placement agent
with respect to any of the securities of the Company or any of its Affiliates,
and that does not provide any advice or opinions to the Company or any of its
Affiliates excepts as an Independent Financial Expert.
NON-SURVIVING COMBINATION: any merger, consolidation or other
business combination by the Company with one or more Persons (other than a
wholly owned subsidiary of the Company) in which the other Person is the
Survivor, or a sale of all or substantially all of the assets of the Company to
one or more such other Persons.
NOTES: the meaning set forth in the preamble to this Agreement.
OFFERING NOTICE: the meaning set forth in Section 4.1(b).
PARTICIPATING HOLDERS: the meaning set forth in Section 5.1(a).
PERSON: any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
PIGGY BACK REGISTRATION STATEMENT: the meaning set forth in Section
4.1(b).
PROSPECTUS: the meaning set forth in Section 4.1(b).
PUBLIC OFFERING: the meaning set forth in the Indenture.
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REGISTRAR: the meaning set forth in Section 2.7.
REGISTRATION STATEMENT: the meaning set forth in Section 4.1(b).
REQUIRED FILING DATES: the meaning set forth in Section 8.3.
SEC: the Securities and Exchange Commission, as from time to time
constituted and created under the Exchange Act, or any successor thereto.
SECURITIES ACT: the Securities Act of 1933, as amended, together with
the rules and regulations promulgated thereunder.
SEPARATED or SEPARATION: the meaning set forth in Section 2.6.
SEPARATION DATE: the meaning in Section 2.6.
SURVIVOR: the meaning set forth in Section 4.2(b).
UNDERWRITING AGREEMENT: the meaning set forth in Section 5.1(b).
VALUE REPORT: the meaning set forth in Section 6.2(a).
WARRANT AGENT: the meaning set forth in the preamble to this
Agreement or the successor or successors of such Warrant Agent appointed in
accordance with the terms hereof.
WARRANT AGENT OFFICE: the corporate trust office of the Warrant Agent
in the Borough of Manhattan, The City of New York.
WARRANT CERTIFICATES: the meaning set forth in the preamble to this
Agreement.
WARRANT ENDORSEMENT: the meaning set forth in Section 2.6.
WARRANT EXERCISE OFFICE: the meaning set forth in Section 3.1(c).
WARRANT REGISTER: the meaning set forth in Section 2.7.
WARRANT SHARES: the shares of Common Stock and other property or
assets issuable or issued upon the exercise of the Warrants.
WARRANTS: the meaning set forth in the preamble to this Agreement.
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ARTICLE 2
ISSUANCE, FORM, EXECUTION, DELIVERY AND
REGISTRATION OF WARRANT CERTIFICATES
Section 2.1. ISSUANCE OF WARRANTS. Warrants shall be originally
issued in connection with the issuance of the Notes and shall not be separately
transferable from the Notes until on or after the Separation Date as provided in
Section 2.6.
Each Warrant Certificate shall evidence the number of Warrants
specified therein, and each Warrant evidenced thereby shall represent the right,
subject to the provisions contained herein and therein, to purchase from the
Company (and the Company shall issue and sell to such Holder) ____ fully paid
and non-assessable shares of Common Stock at the Exercise Price.
Section 2.2. FORM OF WARRANT CERTIFICATES. The Warrant Certificates
shall be in registered form only, substantially in the form set forth in Exhibit
A hereto. Each Warrant Certificate may have imprinted or otherwise reproduced
thereon such letters, numbers or other marks of identification and such legends
or endorsements as may be required to comply with any applicable law, rule or
regulation or with the rules of any securities exchange or as may be determined,
consistent with the provisions of this Agreement, by the officers executing any
such Warrant Certificate, as evidenced by their execution of such Warrant
Certificate.
The definitive Warrant Certificates shall be printed, lithographed or
engraved in steel engraved borders or may be produced in any other manner, all
as determined by the officers executing such Warrant Certificates, as evidenced
by their execution of such Warrant Certificates.
Section 2.3. EXECUTION OF WARRANT CERTIFICATES. The Warrant
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, any Vice Chairman, its Chief Executive Officer, its President or any Vice
President and attested by its Secretary or any Assistant Secretary, under its
corporate seal. Such signatures may be manual or facsimile signatures of the
present or any future such officers. The seal of the Company may be in the form
of a facsimile thereof and may be impressed, affixed, imprinted or otherwise
reproduced on the Warrant Certificates.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer of the Company before the
Warrant Certificate so signed shall be countersigned and delivered by the
Warrant Agent or disposed of by the Company, such Warrant Certificate
nevertheless may be countersigned and delivered or disposed of as though the
person who signed such Warrant Certificate had not ceased to be such officer of
the Company; and any Warrant Certificate may be signed on behalf of the Company
by such persons as, at the actual date of the execution
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of such Warrant Certificate, shall be the proper officers of the Company,
although at the date of the execution and delivery of this Agreement any such
person was not such an officer.
Section 2.4. COUNTERSIGNATURE AND DELIVERY. Warrant Certificates
shall be manually countersigned and dated the date of such countersignatures by
the Warrant Agent and shall not be valid for any purpose unless so
countersigned. The Warrant Certificates shall be numbered and shall be
registered in the Warrant Register.
The Warrant Agent is authorized, upon receipt from the Company at any
time and from time to time of any Warrant Certificates, duly executed as
provided in Section 2.3, to countersign the Warrant Certificates and deliver
them upon the written order of the Company, which order shall be signed by the
Company's Chairman of the Board, any Vice Chairman, its Chief Executive Officer,
its President or any Vice President and attested by its Secretary or any
Assistant Secretary, without any further action by the Company. Such
countersignature shall be by a duly authorized signatory of the Warrant Agent
(although it shall not be necessary for the same signatory to sign all Warrant
Certificates) and shall be conclusive evidence that the Warrant Certificate so
countersigned has been duly delivered hereunder.
In case any authorized signatory of the Warrant Agent who shall have
countersigned any of the Warrant Certificates shall cease to be such authorized
signatory before the Warrant Certificate shall be disposed of by the Company,
such Warrant Certificate nevertheless may be delivered or disposed of as though
the person who countersigned such Warrant Certificate had not ceased to be such
authorized signatory of the Warrant Agent; and any Warrant Certificate may be
countersigned on behalf of the Warrant Agent by such persons as, at the actual
time of the countersignature of such Warrant Certificates, shall be the duly
authorized signatories of the Warrant Agent, although at the time of the
execution and delivery of this Agreement any such person is not such an
authorized signatory.
The Warrant Agent's countersignature on all Warrant Certificates shall
be in substantially the form set forth in Exhibit A hereto.
Section 2.5. TEMPORARY WARRANT CERTIFICATES. Pending the
preparation of definitive Warrant Certificates, the Company may execute, and the
Warrant Agent shall countersign and deliver, temporary Warrant Certificates,
which are printed, lithographed, typewritten or otherwise produced,
substantially of the tenor of the definitive Warrant Certificates in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Warrant
Certificates may determined, as evidenced by their execution of such Warrant
Certificates.
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If temporary Warrant Certificates are issued, the Company will cause
definitive Warrant Certificates to be prepared without unreasonable delay.
After the preparation of definitive Warrant Certificates, the temporary Warrant
Certificates shall be exchangeable for definitive Warrant Certificates upon
surrender of the temporary Warrant Certificates at any office or agency
maintained by the Company for that purpose pursuant to Section 2.9. Subject to
the provisions of Section 9.2, such exchange shall be without charge to the
holder. Upon surrender for cancellation of any one or more temporary Warrant
Certificates, the Company shall execute, and the Warrant Agent shall countersign
and deliver in exchange therefor, one or more definitive Warrant Certificates
representing in the aggregate a like number of Warrants. Until so exchanged,
the holder of a temporary Warrant Certificate shall in all respects be entitled
to the same benefits under this Agreement as a Holder of a definitive Warrant
Certificate.
Section 2.6. TRANSFERS OF WARRANTS PRIOR TO THE SEPARATION OF
WARRANTS AND NOTES; SEPARATION OF WARRANTS AND NOTES
Notwithstanding the provisions of Section 2.7 and subject to the
fourth sentence of this paragraph, the Warrant Certificates will be held by the
Warrant Agent, as custodian, for the holders of the Units, until the Separation
Date. Until the Separation Date, beneficial ownership of the Warrants will be
evidenced solely by the certificates for Notes registered in the names of the
holders of the Notes, which certificates will bear thereon an endorsement
substantially in the form set forth in Section 202 of the Indenture (the
"Warrant Endorsement"), and the right to receive or exercise Warrants shall be
transferable only in connection with the transfer of such Notes. On the
Separation Date, each Unit shall be deemed to separate into a Note and a Warrant
(the "Separation," with the Notes and Warrants thereafter referred to as
"Separated") and from and after the time of Separation, each certificate for a
Note or Notes shall represent beneficial ownership of such Note or Notes only,
and the Warrants, the Notes and the respective rights pertaining thereto shall
be independently transferable. On or as soon as practicable after the
Separation Date, and without further action on the part of the registered
holders of the Notes, the Warrant Agent, as custodian, shall deliver (or cause
to be delivered) Warrant Certificates executed by the Company and countersigned
by the Warrant Agent in the names of such registered holders of Notes as of the
close of business on the date of Separation (or, in the case of any transfers,
their transferees) for such aggregate number of Warrants as shall equal _____
Warrants for each $1,000 principal amount of Notes Separated, bearing numbers or
other distinguishing symbols not contemporaneously outstanding, to the persons
entitled thereto.
All Notes containing a Warrant Endorsement presented for transfer
prior to the Separation Date shall be duly endorsed by the registered holder or
holders thereof, by the duly appointed legal representative thereof or by a duly
authorized attorney, and such signature shall be guaranteed by an Eligible
Guarantor Institution and accompanied by a
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written instrument or instruments of transfer, in form satisfactory to the
Company, the Warrant Agent, the Trustee and the Registrar.
"Separation Date" shall mean __________, 1994 or such earlier date as
(i) the Underwriters may determine or (ii) the Exercisability Date.
The provisions of Article 7 shall apply to the Warrant Agent when
acting in its capacity as custodian hereunder with the same effect as would
apply when acting in its capacity as Warrant Agent hereunder.
Section 2.7. REGISTRATION; REGISTRATION OF TRANSFERS AND EXCHANGES.
The Company will keep, at the office or agency maintained by the Company for
such purpose, a register or registers in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of, and registration of transfer and exchange of, Warrants as provided in this
Article. Each Person designated by the Company from time to time as a Person
authorized to register the transfer and exchange of the Warrants is hereinafter
called, individually and collectively, the "Registrar." The Company hereby
initially appoints the Warrant Agent as Registrar. Upon written notice to the
Warrant Agent and any acting Registrar, the Company may appoint a successor
Registrar for such purposes.
The Company will at all times designate one Person (who may be the
Company and who need not be a Registrar) to act as repository of a master list
of names and addresses of the Holders (the "Warrant Register"). The Warrant
Agent will act as such repository unless and until some other person is, by
written notice from the Company to the Warrant Agent and the Registrar,
designated by the Company to act as such. The Company shall cause each
Registrar to furnish to such repository, on a current basis, such information as
to all registrations of transfer and exchanges effected by such Registrar, as
may be necessary to enable such repository to maintain the Warrant Register on
as current a basis as is practicable.
Upon due presentation for registration of transfer of any Warrant
Certificate at any such office or agency to be maintained for the purpose as
provided in Section 2.9, the Company shall execute and the Warrant Agent shall
countersign and deliver (or cause to be delivered) in the name of the transferee
or transferees a new Warrant Certificate or Warrant Certificates for a like
aggregate number of Warrants bearing numbers or other distinguishing symbols not
contemporaneously outstanding.
Any Warrant Certificate or Warrant Certificates may be exchanged for a
Warrant Certificate or Warrant Certificates in other authorized denominations,
representing in the aggregate a like number of Warrants. A Warrant Certificate
or Warrant Certificates to be so exchanged shall be surrendered at any office or
agency to be maintained by the Company for such purpose as provided in
Section 2.9, and the Company shall execute and the Warrant Agent shall
countersign and deliver (or cause to
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be delivered) in exchange therefor a Warrant Certificate or Warrant Certificates
bearing numbers or other distinguishing symbols not contemporaneously
outstanding.
The Company, the Warrant Agent, the Registrar and any agent of the
Company, the Warrant Agent or the Registrar may deem and treat the Person in
whose name any Warrant Certificate shall be registered in the Warrant Register
as the absolute owner of such Warrant Certificate (notwithstanding any notation
of ownership or other writing thereon) for the purpose of any exercise thereof
or any distribution to the Holder thereof and for all other purposes; and none
of the Company, the Warrant Agent, the Registrar, any agent of the Company, the
Warrant Agent or the Registrar shall be affected by any notice to the contrary.
Prior to the Separation of Warrants underlying a Unit, the registered holder of
the Note containing a Warrant Endorsement relating to such Warrants shall be
deemed the Holder of such Warrants for all purposes hereunder.
All Warrants presented for registration of transfer or exchange shall
(if so required by the Company, the Registrar or the Warrant Agent) be duly
endorsed by the Holder or Holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney, such signature to be
guaranteed by an Eligible Guarantor Institution, and shall be accompanied by a
written instrument or instruments of transfer or exchange, in form satisfactory
to the Company, the Warrant Agent and the Registrar.
No service charge shall be made for any transfer or exchange of
Warrant Certificates or any issuance of Warrant Certificates in connection with
the Separation, but the Company may require payment of a sum sufficient to cover
any stamp or other governmental charge or tax that may be imposed in connection
with any such transfer or exchange.
The Warrant Agent is hereby authorized to countersign, in accordance
with the provisions of this Agreement, and deliver the new Warrant Certificates
required pursuant to the provisions of this Section 2.7.
Section 2.8. LOST, STOLEN, DESTROYED, DEFACED OR MUTILATED WARRANT
CERTIFICATES. Upon receipt by the Company and the Warrant Agent (or any agent
of the Company or the Warrant Agent, if requested by the Company) of evidence
satisfactory to them of the loss, theft, destruction, defacement or mutilation
of any Warrant Certificate and of security and/or indemnity satisfactory to them
and, in the case of mutilation or defacement, upon surrender thereof to the
Warrant Agent for cancellation, then, in the absence of notice to the Company or
the Warrant Agent that such Warrant Certificate has been acquired by a BONA FIDE
purchaser or holder in due course, the Company shall execute, and an authorized
signatory of the Warrant Agent shall manually countersign and deliver, in
exchange for or in lieu of the lost, stolen, destroyed, defaced or mutilated
Warrant Certificate, a new Warrant Certificate representing a like number of
Warrants, bearing a number or other distinguishing symbol not contemporaneously
outstanding.
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Upon the issuance of any new Warrant Certificate under this Section 2.8, the
Company may require payment from the Holder of such Warrant Certificate of a sum
sufficient to cover any tax, stamp tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the fees and
expenses of the Warrant Agent and the Registrar) in connection therewith. Every
substitute Warrant Certificate executed and delivered pursuant to this
Section 2.8 in lieu of any lost, stolen or destroyed Warrant Certificate shall
constitute an additional contractual obligation of the Company, whether or not
the lost, stolen or destroyed Warrant Certificate shall be at any time
enforceable by anyone, and shall be entitled to the benefits of (but shall be
subject to all the limitations of rights set forth in) this Agreement equally
and proportionately with any and all other Warrant Certificates duly executed
and delivered hereunder. The provisions of this Section 2.8 are exclusive with
respect to the replacement of lost, stolen, destroyed, defaced or mutilated
Warrant Certificates and shall preclude (to the extent lawful) any and all other
rights or remedies notwithstanding any law or statute existing or hereafter
enacted to the contrary with respect to the replacement of lost, stolen,
destroyed, defaced or mutilated Warrant Certificates.
The Warrant Agent is hereby authorized to countersign, in accordance
with the provisions of this Agreement, and deliver the new Warrant Certificates
required pursuant to the provisions of this Section 2.8.
Section 2.9. OFFICES FOR EXERCISE, ETC. So long as any of the
Warrants remain outstanding, the Company will designate and maintain in the
Borough of Manhattan, The City of New York: (i) an office or agency where the
Warrant Certificates may be presented for exercise, (ii) an office or agency
where the Warrant Certificates may be presented for registration of transfer and
for exchange (including the exchange of temporary Warrant Certificates for
definitive Warrant Certificates pursuant to Section 2.5) and (iii) an office or
agency where notices and demands to or upon the Company in respect of the
Warrants or of this Agreement may be served. The Company may from time to time
change or rescind such designation, as it may deem desirable or expedient,
PROVIDED THAT an office or agency shall at all times be maintained in the
Borough of Manhattan, The City of New York, as provided in the first sentence of
this Section 2.9. In addition to such office or offices or agency or agencies,
the Company may from time to time designate and maintain one or more additional
offices or agencies within or outside The City of New York, where Warrant
Certificates may be presented for exercise or for registration of transfer or
for exchange, and the Company may from time to time change or rescind such
designation, as it may deem desirable or expedient. The Company will give to
the Warrant Agent written notice of the location of any such office or agency
and of any change of location thereof. The Company hereby designates the
Warrant Agent at the Warrant Agent Office, as the initial agency maintained for
each such purpose. In case the Company shall fail to maintain any such office
or agency or shall fail to give such notice of the location or of any change in
the location thereof, presentations and demands may be made and notice may be
served at the Warrant Agent
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Office and the Company appoints the Warrant Agent as its agent to receive all
such presentations, surrenders, notices and demands.
ARTICLE 3
DURATION, EXERCISE OF WARRANTS AND EXERCISE PRICE
Section 3.1. DURATION OF WARRANTS, EXERCISE PRICE, EXERCISE,
SETTLEMENT AND DELIVERY. (a) Subject to the terms and conditions established
herein, the Warrants shall be exercisable on any Business Day on or after the
Exercisability Date and shall expire at 5:00 p.m., New York City time, on
__________, 1999 (the "Expiration Date"). All Warrants not exercised before the
close of business on the Expiration Date shall become void, and all rights of
Holders under Warrant Certificates evidencing such Warrants and under this
Agreement shall cease.
(b) Each Holder shall have the right to purchase from the
Company in respect of each Warrant _____ fully paid and non-assessable shares of
Common Stock at an exercise price of $0.01 per share (the "Exercise Price").
The number of shares of Common Stock for which a Warrant may be exercised shall
be subject to adjustment from time to time as set forth in Article 7 hereof.
Under certain circumstances (as described in Article 7), Holders may also be
entitled to other securities or property upon exercise of their Warrants.
(c) Warrants may be exercised on or after the Exercisability
Date by (i) surrendering at any office or agency maintained for that purpose by
the Company pursuant to Section 2.9 (each a "Warrant Exercise Office") the
Warrant Certificate evidencing such Warrants with the form of election to
purchase Warrant Shares set forth on the reverse side of the Warrant Certificate
(the "Election to Exercise") duly completed and signed by the Holder or Holders
thereof or by the duly appointed legal representative thereof or by a duly
authorized attorney, and in the case of a transfer, such signature shall be
guaranteed by an Eligible Guarantor Institution, and (ii) paying in full the
Exercise Price for each such Warrant exercised and any other amounts required to
be paid pursuant to Section 2.7. Each Warrant may be exercised only in whole.
(d) Simultaneously with the exercise of each Warrant, payment in
full of the Exercise Price shall be made in cash or by certified or official
bank check to be delivered to the office or agency where the Warrant Certificate
is being surrendered. No payment or adjustment shall be made on account of any
dividends on the Warrant Shares issued upon exercise of a Warrant.
(e) Upon such surrender of a Warrant Certificate and payment and
collection of the Exercise Price at any Warrant Exercise Office (other than any
Warrant Exercise Office that also is an office of the Warrant Agent), such
Warrant Certificate and payment shall be promptly delivered to the Warrant
Agent. The "Exercise
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Date" for a Warrant shall be the date when all of the items referred to in the
first sentence of paragraphs (c) and (d) of this Section 3.1 are received by the
Warrant Agent at or prior to 2:00 p.m., New York City time, on a Business Day
and the exercise of the Warrants will be effective as of such Exercise Date. If
any items referred to in the first sentence of paragraphs (c) and (d) are
received after 2:00 p.m., New York City time, on a Business Day, the exercise of
the Warrants to which such item relates will be effective on the next succeeding
Business Day. Notwithstanding the foregoing, in the case of an exercise of
Warrants on the Expiration Date, if all of the items referred to in the first
sentence of the preceding paragraph are received by the Warrant Agent at or
prior to 5:00 p.m. New York City time, on the Expiration Date, the exercise of
the Warrants to which such items relate will be effective on the Expiration
Date.
(f) Upon the exercise of a Warrant in accordance with the terms
hereof, the receipt of a Warrant Certificate and payment of the Exercise Price,
the Warrant Agent shall: (i) cause an amount equal to the Exercise Price to be
paid to the Company by crediting the same to the account designated by the
Company in writing to the Warrant Agent for that purpose; (ii) advise the
Company immediately by telephone of the amount so deposited to the Company's
account and promptly confirm such telephonic advice in writing; and (iii) as
soon as practicable, advise the Company in writing of the number of Warrants
exercised in accordance with the terms and conditions of this Agreement and the
Warrant Certificates, the instructions of such exercising Holder with respect to
delivery of the shares of Common Stock to which such Holder is entitled upon
such exercise, and such other information as the Company shall reasonably
request.
(g) Subject to Article 6, as soon as practicable after the
exercise of any Warrant or Warrants in accordance with the terms hereof, the
Company shall issue or cause to be issued to or upon the written order of the
exercising Holder, a certificate or certificates evidencing the Warrant Shares
to which such Holder is entitled, in fully registered form, registered in such
name or names as may be directed by such Holder pursuant to the Election to
Exercise, as set forth on the reverse of the Warrant Certificate or on the
Warrant Endorsement. Such certificate or certificates evidencing the Warrant
Shares shall be deemed to have been issued and any persons who are designated to
be named therein shall be deemed to have become the holder of record of such
Warrant Shares as of the close of business on the Exercise Date. After such
exercise of any Warrant or Warrants, the Company shall also issue or cause to be
issued to or upon the written order of the exercising Holder, a new Warrant
Certificate, countersigned by the Warrant Agent pursuant to written instruction,
evidencing the number of Warrants, if any, remaining unexercised unless such
Warrants shall have expired.
Section 3.2. CANCELLATION OF WARRANT CERTIFICATES. In the event the
Company shall purchase or otherwise acquire Warrants, the Warrant Certificates
evidencing such Warrants may thereupon be delivered to the Warrant Agent, and if
so delivered, shall be cancelled by it and retired. The Warrant Agent shall
cancel all
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Warrant Certificates properly surrendered for exchange, substitution, transfer
or exercise. The Warrant Agent shall destroy cancelled Warrant Certificates
held by it and deliver a certificate of destruction to the Company.
ARTICLE 4
CERTAIN RIGHTS OF HOLDERS
Section 4.1. DEMAND REGISTRATION RIGHTS AND PIGGY BACK REGISTRATION
RIGHTS. (a) At any time at least 120 days following a Public Offering, Holders
holding outstanding Warrant Shares having an aggregate fair market value (in the
good faith opinion of the Company) of $5.0 million or more, either by direct
ownership of such Warrant Shares or by right to acquire such Warrant Shares upon
exercise of the Warrants, may request that the Company cause a registration
statement (the "Demand Registration Statement") to be filed to provide for the
sale of such Warrant Shares by sending written notice of the request to the
Company (the "Demand Notice"). Subject to Section 4.1(d), the Company will use
reasonable efforts to have the Demand Registration Statement filed with the SEC
within 45 days of the Demand Notice, to have the Demand Registration Statement
declared effective by the SEC as soon as practicable thereafter, and to keep the
Demand Registration Statement continuously effective for a period of at least
[180] days (but not beyond the date all such Warrant Shares are sold under the
Demand Registration Statement); PROVIDED THAT, if the Company shall determine
for any good reason to delay registration of such Warrant Shares, the Company
shall give notice of such determination to the Holders. The Company shall not
be required to effect more than two registrations pursuant to this Section
4.1(a) in the aggregate for all Holders. Subject to Section 4.1(d) below, the
Company agrees to supplement or amend the Demand Registration Statement, if
required by the Securities Act.
(b) If the Company, at any time on or after the date any Demand
Registration Statement is not effective, proposes to register any of its Common
Stock under the Securities Act (other than pursuant to Section 4.1(a)) and the
gross proceeds to the Company of such Public Offering are expected to exceed $20
million, the Company will give written notice (the "Offering Notice") to all
Holders at least 20 days prior to the initial filing of a registration statement
with the SEC pertaining thereto (the "Piggy Back Registration Statement").
Holders may elect to have their Warrant Shares included in the Piggy Back
Registration Statement by giving written notice to the Company within five days
of the Offering Notice. Subject to Section 4.1(d), the Company will use its
reasonable efforts to have the Piggy Back Registration Statement declared
effective by the SEC as soon as practicable thereafter and to keep the Piggy
Back Registration Statement effective for a period of at least [180] days but
not beyond the date all such shares of Underlying Common Stock are sold under
the Piggy Back Registration Statement); PROVIDED THAT, if the Company shall
determine for any reason not to register or to delay registration of such Common
Stock, the Company shall give notice of such
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determination to the Holders. The Demand Registration Statement and the Piggy
Back Registration Statement, together with all amendments and supplements,
including post-effective amendments, in each case including any prospectus
contained therein (including any preliminary prospectus and all amendments and
supplements to any prospectus, including post-effective amendments)
(collectively, the "Prospectus"), all exhibits thereto or to the Prospectus and
all material incorporated by reference therein or to the Prospectus, is referred
to as the "Registration Statement."
(c) If in connection with a registration pursuant to Section
4.1(b) the underwriter for the Public Offering or the underwriter managing the
Public Offering informs the Company of its belief that the number of Warrant
Shares requested to be included in such registration exceeds the number which
can be sold in (or during the time of) such Public Offering without adversely
affecting the distribution of the securities being offered, then the Company
will notify the participating Holders and will include in such registration
shares of Common Stock on a pro rata basis among all Persons participating in
the Public Offering on the basis of the number of shares of Common Stock
requested to be included by all such Persons. If any Warrant Shares that were
requested to be included in a Registration Statement are so excluded, the
participating Holder of such Warrant Shares shall continue to have the right to
require registration of the sale of such Warrant Shares under Section 4.1(b).
(d) (i) If, after the Registration Statement has been declared
effective, a stop order, injunction or other order or requirement of the SEC or
any other governmental agency or court is issued which suspends the
effectiveness of the Registration Statement, (1) upon receipt of notice from
the Company, the participating Holders will discontinue any disposition of
Warrant Shares pursuant to the Registration Statement until receipt of notice
from the Company that the suspension of the effectiveness of the Registration
Statement has been withdrawn and (2) the Company will use all reasonable efforts
to obtain the withdrawal of such order or to meet such requirement at the
earliest possible time.
(ii) If, after the Registration Statement has become
effective, an event occurs as a result of which the Company determines that the
Registration Statement or the related Prospectus contains any untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or a corporate
development occurs, as a result of which the Company determines to suspend sales
pursuant to the Registration Statement, the Company will notify the Holders
thereof and, if applicable, use all reasonable efforts to prepare and promptly
file a post-effective amendment or a supplement to the Registration Statement or
the related Prospectus or promptly file any other required document so that, as
thereafter delivered to purchasers of the Common Stock, such Prospectus will not
contain any untrue statement of a material fact or omit to state any material
fact required to be
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stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company will use
all reasonable efforts to have the post-effective amendment to the Registration
Statement declared effective by the SEC as soon as practicable after the filing
thereof. During any period when sales pursuant to the Registration Statement
have been suspended, the Company may not offer or sell any of its securities
pursuant to any other registration statement. The Company will promptly notify
the participating Holders of its intention to effect any such delay or
suspension (a "Blackout Notice") and of the date on which such effective
amendment or supplement has been filed with or declared effective by the SEC or
of the termination of any such suspension (a "Blackout Termination Notice").
Upon receipt of a Blackout Notice, the participating Holders will discontinue,
as of the date specified in such Blackout Notice, any disposition of Warrant
Shares pursuant to the Registration Statement until receipt of a Blackout
Termination Notice.
(iii) If the offering of Warrant Shares pursuant to a
Registration Statement under Section 4.1(a) or (b) above is interfered with as
set forth in Section 4.1(d)(i) or (ii), then the Company shall extend the period
during which the Registration Statement shall be maintained effective pursuant
to this Agreement by the number of days during the period of such interference.
Section 4.2. RIGHTS IN THE EVENT OF A NON-SURVIVING COMBINATION.
(a) If the Company proposes, prior to the Expiration Date, to enter into a
transaction that would constitute a Non-Surviving Combination if consummated,
the Company shall give written notice thereof to the Holders, promptly after an
agreement is reached with respect to the Non-Surviving Combination but in no
event less than 30 days prior to the closing thereof. Such notice shall
describe the transaction in reasonable detail and specify the consideration to
be received by the Holders. The Company shall also furnish to each Holder all
notices and materials furnished to its stockholders in connection with such
transaction.
(b) The Company agrees that it will not enter into an agreement
providing for a Non-Surviving Combination, unless the party to such transaction
that is the surviving entity (the "Survivor") shall (i) agree in writing to be
bound by the terms of this Agreement as if it were an original signatory hereto
and (ii) be obligated to distribute or pay to each Holder upon the exercise of
such Holder's Warrants on or after the date that such Non-Surviving Combination
is effected the number of shares of stock or other securities or other property
(including any money) of the Survivor that would have been distributable or
payable on account of the Warrant Shares if such Holder's Warrants had been
exercised immediately prior to such Non-Surviving Combination (or, if
applicable, the record date therefor).
Section 4.3. NO VOTING RIGHTS. Prior to the exercise of the
Warrants, no Holder, as such, shall be entitled to any rights of a stockholder
of the Company,
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including, without limitation, the right to vote, to consent, to exercise any
preemptive right, to receive any notice of meetings of stockholders for the
election of directors of the Company or any other matter or to receive any
notice of any proceedings of the Company, except as may be specifically provided
for herein.
Section 4.4. RIGHT OF ACTION. All rights of action in respect of
this Agreement are vested in the Holders, and any Holder, without the consent of
the Warrant Agent or any other Holder, may, in such Holder's own behalf and for
such Holder's own benefit, enforce, and may institute and maintain any suit,
action or proceeding against the Company suitable to enforce, or otherwise in
respect of, such Holder's right to exercise, exchange or tender for purchase
such Holder's Warrants in the manner provided in this Agreement.
ARTICLE 5
REGISTRATION PROCEDURES AND CERTAIN OBLIGATIONS OF THE
COMPANY IN CONNECTION WITH A PUBLIC OFFERING
Section 5.1. GENERALLY. No Holder may participate in any Public
Offering pursuant to Section 4.1 unless:
(a) Such Holder executes a power of attorney appointing one or
more attorneys designated by the Holders participating in such Public Offering
(the "participating Holders") proposing to sell a majority of the Warrant Shares
proposed to be sold by all participating Holders. Each such attorney shall be
authorized, on customary terms, to execute the Underwriting Agreement referred
to below on behalf of each participating Holder and to otherwise act for the
participating Holders in connection with such Public Offering.
(b) Such Holder, through one of its powers of attorney, enters
into an underwriting agreement (the "Underwriting Agreement") with the Company,
the other participating Holders, any selling stockholders and the underwriters,
which Underwriting Agreement shall comply with the provisions of Section 5.2.
(c) Such Holder executes all questionnaires and other documents
required by such power of attorney or the Underwriting Agreement to be executed
by such Holder and such other agreements and instruments as are customary or
appropriate for selling stockholders to execute in connection with secondary
public offerings.
(d) Such Holder provides to the Company such information with
respect to such Holder for inclusion in the Registration Statement as may be
required pursuant to the Securities Act or as may be reasonably requested by the
Company or the managing underwriter and cooperates with the Company in the
preparation of, and during the effectiveness of, the Registration Statement.
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Section 5.2. UNDERWRITING AGREEMENT. In connection with any Public
Offering in which there are participating Holders, the Company shall enter into
the Underwriting Agreement, which shall contain the following provisions (unless
otherwise expressly agreed to by the Company and a majority of the participating
Holders) and other customary provisions satisfactory to the Company, the
attorney executing the Underwriting Agreement on behalf of the participating
Holders and the other parties thereto:
(a) Each participating Holder shall make customary
representations and warranties, but no participating Holder, as such, shall be
required to make any representation or warranty as to the accuracy or
completeness of the Registration Statement (except as to written information
furnished to the Company by such participating Holder expressly for use
therein).
(b) Each participating Holder will agree that it will not,
directly or indirectly, sell, offer to sell, grant any option for the sale of,
or otherwise dispose of, any Common Stock or any Warrants for a period of 180
days from the effective date of the Registration Statement, subject to customary
exceptions to be set forth in the Underwriting Agreement, except with the
written consent of the managing underwriter.
(c) Each participating Holder will agree to pay and bear all
costs and expenses incident to the delivery of the securities to be sold by it,
including any stock transfer taxes payable upon the sale of such securities to
the underwriters and the underwriting discounts or commissions payable to the
underwriters and that the Company or parties other than the participating
Holders shall be responsible for all other expenses of such Public Offering;
PROVIDED THAT the Company shall only be responsible for the reasonable fees and
expenses of one counsel retained by the participating Holders and approved by
the Company.
(d) The Company will agree to indemnify and hold harmless each
participating Holder, each underwriter participating in such offering, and each
Person, if any, who controls any participating Holder or any such underwriter
within the meaning of Section 15 of the Securities Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of an untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement (or
any amendment thereto), or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading or arising out of an untrue statement of a material fact
included in any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
-17-
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or of any claim whatsoever based upon
any such untrue statement or omission, or any such alleged untrue statement or
omission, if such settlement is effected with the written consent of the
Company; and
(iii) against any and all expense whatsoever, as
incurred (including fees and disbursements of counsel chosen by the
participating Holders and by the underwriters), reasonably incurred in
investigating, preparing or defending against any litigation, or investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any claim whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such expense
is not paid under subparagraph (i) or (ii) above, PROVIDED THAT the Company
shall not be responsible for the fees and expenses of more than one such counsel
unless the representation of the participating Holders and the underwriters by
the same counsel would be inappropriate due to actual or potential differing
interests between them; PROVIDED, HOWEVER, that this indemnity will not apply to
any loss, liability, claim, damage or expense of any participating Holder or any
underwriter to the extent arising out of an untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by any such participating
Holder or underwriter expressly for use in the Registration Statement (or any
amendment thereto), or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto); PROVIDED, FURTHER, that the foregoing
indemnity with respect to any untrue statement or omission or alleged untrue
statement or omission made in a preliminary prospectus shall not inure to the
benefit of any underwriter (or any person controlling such underwriter) from
whom the Person asserting any such loss, liability, claim, damage or expense
purchased any of the securities that are the subject thereof if a copy of the
prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given to such Person, if
such is required by law, at or prior to the written confirmation of the sale of
the securities to such Person and if the prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, liability,
claim, damage or expense.
(e) Each participating Holder will agree severally, and not
jointly, to indemnify and hold harmless the Company, its directors, each of its
officers who signed a Registration Statement, each underwriter participating in
such offering and the other participating Holders, and each person, if any, who
controls the Company, any such underwriter and any other participating Holder
within the meaning of Section 15 of the Securities Act, against any and all
loss, liability, claim, damage and expense described in the indemnity contained
in Section 5.2(d), as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), or any preliminary prospectus or the
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Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such
participating Holder expressly for use in the Registration Statement (or any
amendment thereto), or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto); PROVIDED, HOWEVER, that the foregoing
indemnity with respect to any untrue statement or omission or alleged untrue
statement or omission made in a preliminary prospectus shall not inure to the
benefit of any underwriter (or any Person controlling such underwriter) from
whom the person asserting any such loss, liability, claim, damage or expense
purchased any of the securities that are the subject thereof if a copy of the
prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given to such Person, if
such is required by law, at or prior to the written confirmation of the sale of
the securities to such Person and if the prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss, liability,
claim, damage or expense.
(f) The obligations of the Company under Section 5.2(d) and of
the participating Holders under Section 5.2(e) to indemnify any underwriter who
participates in an offering (or any person, if any, controlling such underwriter
within the meaning of Section 15 of the Securities Act) shall be conditioned
upon the agreement by such underwriter to indemnify and hold harmless the
Company, its directors, each of its officers who signed a Registration
Statement, and each participating Holder, and each person, if any, who controls
the Company or any such participating Holder within the meaning of Section 15 of
the Securities Act, against any and all loss, liability, claims, damage and
expense described in the indemnity contained in Section 5.2(d), as incurred, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, made in the Registration Statement (or any amendment
thereto), or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by such underwriter expressly for use in the
Registration Statement (or any amendment thereto), or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
(g) The parties will agree that each indemnified party will give
prompt notice to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought pursuant to the Underwriting Agreement,
but failure to so notify an indemnifying party shall not relieve it from any
liability which it may have otherwise than on account of such indemnity
agreement. An indemnifying party may participate at its own expense in the
defense of such action. In no event will the indemnifying party or parties be
liable for the fees and expenses of more than one counsel for all indemnified
parties in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances.
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(h) In order to provide for just and equitable contribution in
circumstances under which the indemnity provided for above is for any reason
held to be unenforceable although applicable in accordance with its terms, the
Company, the participating Holders and the underwriters shall agree to
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by such indemnity incurred by the Company, the
participating Holders and the underwriters, as incurred, in such proportions
that (i) the underwriters are responsible for that portion represented by the
percentage that the underwriting discount appearing on the cover page of the
prospectus bears to the public offering price appearing thereon, and (ii) the
Company and the participating Holders are responsible for the balance, PROVIDED
THAT each participating Holder shall only be responsible in an amount equal to
that portion of the balance that is in the same proportion to such balance as
the net proceeds to such participating Holder bears to the net proceeds of the
Public Offering, up to an amount equal to the net proceeds realized by such
participating Holder; PROVIDED, FURTHER, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(i) If the managing underwriter for the Public Offering requests
that the participants in such offering grant the underwriters an over-allotment
or "green shoe" option for the purpose of covering over-allotments that may be
made by the underwriters in connection with such Public Offering, then a portion
of the shares proposed to be sold by each participating Holder, which portion
shall not exceed the maximum amount then permitted by the rules of the National
Association of Securities Dealers, Inc. and shall equal, as nearly as possible,
the portion of the shares proposed to be sold by other sellers in the offering
that is applied to the same purpose, shall be made subject to such
over-allotment option, unless otherwise agreed in the Underwriting Agreement.
Section 5.3. OTHER OBLIGATIONS OF THE COMPANY. In addition, in
connection with any Registration Statement, the Company shall:
(a) Use all reasonable efforts (i) to register or qualify the
shares of Common Stock (including any Warrant Shares) that are the subject of
the Registration Statement, by the time the Registration Statement is declared
effective by the SEC, under all applicable state securities or "Blue Sky" laws
of such jurisdictions as each underwriter, if any, or any participating Holder
shall request in writing, PROVIDED THAT the Company shall not be obligated to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so
subject; (ii) to keep each such registration or qualification effective during
the period the Registration Statement is required to be kept effective; and
(iii) to do any and all other acts and things which may be reasonably necessary
or advisable to enable such
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underwriter, if any, and participating Holder to consummate the disposition of
the Common Stock that is the subject of such Registration Statement in each such
jurisdiction; and
(b) Notify the participating Holders (i) when the Registration
Statement has become effective and when any post-effective amendments and
supplements thereto become effective and (ii) if, between the effective date of
the Registration Statement and the closing of any sale of the Common Stock that
is the subject of such Registration Statement, the representations and
warranties of the Company contained in the Underwriting Agreement cease to be
true and correct in all material respects or if the Company receives any
notification with respect to the suspension of the qualification of the Common
Stock that is the subject of such Registration Statement for sale in any
jurisdiction or the initiation of any proceeding for such purpose.
Section 5.4. REPRESENTATIONS OF THE COMPANY. The Company represents
and warrants to, and agrees with, each Holder that:
(a) The Registration Statement and the Prospectus contained
therein, when it becomes effective or is filed with the SEC, as the case may be,
and, at the time of the closing under the Underwriting Agreement will conform in
all material respects to the requirements of the Securities Act and will not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and at all times subsequent to the effective date of such
Registration Statement when a Prospectus would be required to be delivered under
the Securities Act, other than during a Blackout Period under Section 4.1(d),
such Registration Statement and Prospectus will conform in all material respects
to the requirements of the Securities Act and will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing; PROVIDED, HOWEVER, that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished in writing to the
Company by any participating Holder or any underwriter expressly for use
therein.
(b) Any documents incorporated by reference in the Prospectus,
when it becomes or became effective or are or were filed with the SEC, as the
case may be, will conform or conformed in all material respects to the
requirements of the Securities Act or the Exchange Act, as applicable, and none
of such documents will contain or contained an untrue statement of a material
fact or will omit or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; PROVIDED,
HOWEVER, that this representation and warranty shall not apply to any statements
or omissions made in reliance upon and in conformity with information
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furnished in writing to the Company by any participating Holder or any
underwriter expressly for use therein.
ARTICLE 6
ADJUSTMENTS
Section 6.1. ADJUSTMENTS. The number of shares of Common Stock
issuable upon exercise of each Warrant shall be subject to adjustment from time
to time as follows:
(a) STOCK DIVIDENDS; STOCK SPLITS; REVERSE STOCK SPLITS;
RECLASSIFICATIONS. In case the Company shall (i) pay a dividend or make any
other distribution with respect to its Common Stock in shares of its capital
stock, (ii) subdivide its outstanding Common Stock, (iii) combine its
outstanding Common Stock into a smaller number of shares or (iv) issue any
shares of its capital stock in a reclassification of the Common Stock (including
any such reclassification in connection with a merger, consolidation or other
business combination in which the Company is the continuing corporation), the
number of shares of Common Stock issuable upon exercise of each Warrant
immediately prior to the record date for such dividend or distribution or the
effective date of such subdivision or combination shall be adjusted so that the
Holder of each Warrant shall thereafter be entitled to receive the kind and
number of shares of Common Stock or other securities of the Company that such
Holder would have owned or have been entitled to receive after the happening of
any of the events described above, had such Warrant been exercised immediately
prior to the happening of such event or any record date with respect thereto.
An adjustment made pursuant to this Section 6.1(a) shall become effective
immediately after the effective date of such event retroactive to the record
date, if any, for such event.
(b) RIGHTS; OPTIONS; WARRANTS. In case the Company shall issue
rights, options, warrants or convertible or exchangeable securities (other than
a convertible or exchangeable security subject to Section 6.1(a)) to all holders
of its Common Stock, entitling them to subscribe for or purchase Common Stock at
a price per share that is lower (at the record date for such issuance) than the
Current Market Value per share of Common Stock, the number of shares of Common
Stock thereafter issuable upon the exercise of all Warrants then outstanding
shall be determined by multiplying the number of shares of Common Stock
theretofore issuable upon the exercise of all Warrants then outstanding by a
fraction, of which the numerator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights, options, warrants or
convertible or exchangeable securities plus the number of additional shares of
Common Stock offered for subscription or purchase or to be issued upon
conversion or exchange of such convertible or exchangeable securities and of
which the denominator shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights, options,
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warrants or convertible or exchangeable securities plus the number of shares of
Common Stock which the aggregate consideration to be received by the Company in
connection with such issuance would purchase at the then Current Market Value
per share of Common Stock.
Any adjustment to the number of shares of Common Stock issuable upon
exercise of all Warrants then outstanding made pursuant to this Section 6.1(b)
shall be allocated among the Warrants then outstanding on a pro rata basis.
For purposes of this Section 6.1(b), the consideration received by the
Company in connection with the issuance of rights, options, warrants or
convertible or exchangeable securities shall be deemed to be the consideration
received by the Company for such rights, options, warrants or convertible or
exchangeable securities, plus the consideration or premiums stated in such
rights, options, warrants or exchangeable securities to be paid for the shares
of Common Stock covered thereby. Any adjustment pursuant to this Section 6.1(b)
shall be made whenever any such rights, options, warrants or convertible or
exchangeable securities are issued, but shall also become effective
retroactively in respect of exercises made between the record dates for the
determination of stockholders entitled to receive such rights, options, warrants
or convertible or exchangeable securities and the date such rights, options,
warrants or convertible or exchangeable securities are issued.
The provisions of this Section 6.1(b) shall not apply to shares issued
to management of the Company pursuant to an employee stock option plan or
similar plan providing for options or other similar rights to purchase (or
issuances pursuant to incentive bonus plans) covering not in the aggregate in
excess of [15%] of the fully diluted shares of Common Stock then outstanding on
the date hereof.
(c) ISSUANCE OF COMMON STOCK AT LOWER VALUES. In case the
Company shall, in a transaction in which Section 6.1(b) is inapplicable, issue
or sell shares of Common Stock or rights, options warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase shares
of Common Stock, at a price per share of Common Stock (determined in the case of
such rights, options, warrants or convertible or exchangeable securities, by
dividing (A) the total amount receivable by the Company in consideration of the
sale and issuance of such rights, options, warrants or convertible or
exchangeable securities, plus the total consideration, if any, payable to the
Company upon exercise, conversion or exchange thereof, by (B) the total number
of shares of Common Stock covered by such rights, options, warrants or
convertible or exchangeable securities) that is lower than the then Current
Market Value per share of the Common Stock in effect immediately prior to such
sale or issuance, then the number of shares of Common Stock thereafter issuable
upon the exercise of all Warrants then outstanding shall be determined by
multiplying the number of shares of Common Stock theretofore issuable upon
exercise of all Warrants then outstanding by a
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fraction, of which the numerator shall be the number of shares of Common Stock
outstanding on the date of issuance of such shares of Common Stock or rights,
options, warrants or convertible or exchangeable securities, plus the number of
additional shares of Common Stock offered for subscription or purchase or to be
issued upon conversion or exchange of such convertible or exchangeable
securities and of which the denominator shall be the number of shares of Common
Stock outstanding on the date of issuance of such shares of Common Stock or
rights, options, warrants or convertible securities, plus the number of
additional shares of Common Stock offered for subscription or purchase or to be
issued upon conversion or exchange of such convertible or exchangeable
securities and of which the denominator shall be the number of shares of Common
Stock outstanding on the date of issuance of such shares of Common Stock or
rights, options, warrants or convertible or exchangeable securities, plus the
number of shares which the aggregate consideration to be received by the Company
in connection with such issuance would purchase at the then Current Market Value
per share of Common Stock.
For the purposes of such adjustments, the shares of Common Stock which
the holder of any such rights, options, warrants or convertible or exchangeable
securities shall be entitled to subscribe for or purchase shall be deemed to be
issued and outstanding as of the date of the sale and issuance of the rights,
warrants or convertible or exchangeable securities and the consideration
received by the Company therefor shall be deemed to be the consideration
received by the Company for such rights, options, warrants or convertible or
exchangeable securities, plus the consideration or premiums stated in such
rights, options, warrants or convertible or exchangeable securities to be paid
for the shares of Common Stock covered thereby.
In case the Company shall issue and sell shares of Common Stock or
rights, options, warrants or convertible or exchangeable securities containing
the right to subscribe for or purchase shares of Common Stock for a
consideration consisting, in whole or in part, of property other than cash or
its equivalent, then in determining the "price per share of Common Stock" and
the "consideration" receivable by or payable to the Company for purposes of the
first sentence of this Section 6.1(c), the Board of Directors of the Company
shall determine, in good faith, the fair value of such property. In case the
Company shall issue and sell rights, options, warrants or convertible or
exchangeable securities containing the right to subscribe for or purchase shares
of Common Stock, together with one or more other securities as part of a unit at
a price per unit, then in determining the "price per share of Common Stock" and
the "consideration" receivable by or payable to the Company for purposes of the
first sentence of this Section 6.1(c), the Board of Directors of the Company
shall determine, in good faith, the fair value of the rights, options, warrants
or convertible or exchangeable securities then being sold as part of such unit.
-24-
Any adjustment to the number of shares of Common Stock issuable upon
exercise of all Warrants then outstanding made pursuant to this Section 6.1(c)
shall be allocated among each Warrant then outstanding on a pro rata basis.
(d) DISTRIBUTIONS OF DEBT, ASSETS, SUBSCRIPTION RIGHTS OR
CONVERTIBLE SECURITIES. In case the Company shall fix a record date for the
making of a distribution to all holders of shares of its Common Stock of
evidences of indebtedness of the Company, assets or securities (excluding those
referred to in Section 6.1(a), (b) and (c)) (any such evidences of indebtedness,
assets or securities, the "assets or securities"), then, at the election of the
Company, either (i) the number of shares of Common Stock issuable after such
record date upon exercise of each Warrant shall be adjusted by multiplying the
number of shares of Common Stock issuable upon the exercise of such Warrant
immediately prior to such record date by a fraction, the numerator of which
shall be the then Current Market Value per share of Common Stock on the record
date for such distribution and the denominator of which shall be the then
Current Market Value per share of Common Stock on the record date for such
distribution less an amount equal to the then fair value (as determined by the
Independent Financial Expert, except for immaterial amounts which may be
determined by the Board of Directors of the Company acting in good faith) of the
assets or securities applicable to one share of Common Stock, or (ii) adequate
provision shall be made so that the Holder of each Warrant then outstanding
shall have the right to receive, in addition to shares of Common Stock (in the
event of an exercise of the Warrants) or the repurchase price (in the event of a
repurchase of the Warrants), at the election of the Company, either (A) the
assets or securities to which such Holder would have been entitled as a holder
of Common Stock if such Holder had exercised his Warrants immediately prior to
the record date for such distribution or (B) the cash equivalent of such assets
or securities.
If the Company elects to adjust the number of shares of Common Stock
issuable upon the exercise of the Warrants pursuant to clause (i) above, such
adjustment shall be made whenever any such distribution is made, and shall
become effective on the date of distribution retroactive to the record date for
the determination of stockholders entitled to receive such distribution;
PROVIDED, HOWEVER, that the Company shall deliver to any Holder who exercises a
Warrant after any such record date, but prior to the related distribution, a due
bill or other appropriate instrument evidencing such Holder's right to receive
such distribution upon its occurrence.
Notwithstanding the foregoing, the Company shall not elect the
adjustment provided for in clause (i) above if the then fair value (as
determined by the Independent Financial Expert) of the assets or securities
applicable to one share of Common Stock is equal to or greater than the then
Current Market Value per share of Common Stock on the record date of such
distribution.
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(e) EXPIRATION OF RIGHTS, OPTIONS AND CONVERSION PRIVILEGES.
Upon the expiration of any rights, options, warrants or conversion or exchange
privileges that have previously resulted in an adjustment hereunder, if any
thereof shall not have been exercised, the number of shares of Common Stock
issuable upon the exercise of each Warrant shall, upon such expiration, be
readjusted and shall thereafter, upon any future exercise, be such as they would
have been had they been originally adjusted (or had the original adjustment not
been required, as the case may be) as if (i) the only shares of Common Stock so
issued were the shares of Common Stock, if any, actually issued or sold upon the
exercise of such rights, options, warrants or conversion or exchange rights and
(ii) such shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise plus the
consideration, if any, actually received by the Company for issuance, sale or
grant of all such rights, options, warrants or conversion or exchange rights
whether or not exercised; PROVIDED THAT no such readjustment shall have the
effect of decreasing the number of shares issuable upon exercise of each Warrant
by a number, in excess of the number of the adjustment initially made in respect
to the issuance, sale or grant of such rights, options, warrants or conversion
or exchange rights.
(f) CURRENT MARKET VALUE. For the purposes of any computation
under this Article 6, the Current Market Value per share of Common Stock or of
any other equity security (herein collectively referred to as a "security") as
of the date herein specified shall be:
(i) if the security is not registered under the Exchange
Act, the value of the security (A) determined in good faith in the most recently
completed arm's-length transaction between the Company and an unaffiliated third
party in which such determination is necessary and the closing of which shall
have occurred within the six months preceding such date, (B) if no such
transaction shall have occurred within such six-month period, determined as of a
date within the six months preceding such date by an Independent Financial
Expert in accordance with the criteria for such valuation set out in
Section 6.2, but giving effect to any discount attributable to any lack of
liquidity of the Common Stock (in the event of more than one such determination,
the determination for the later date shall be used) or (C) if no such
determination shall have been made within such six-month period, determined as
of such date by an Independent Financial Expert in accordance with the criteria
for such valuation set out in Section 6.2, but giving effect to any discount
attributable to any lack of liquidity of the Common Stock; PROVIDED, HOWEVER,
that in determining the value of the Common Stock under Section 6.5, if the
foregoing subparagraphs (A) and (B) shall not be applicable, the Current Market
Value per share of Common Stock shall be determined in good faith by the Board
of Directors of the Company, or
(ii) if the security is registered under the Exchange Act,
deemed to be the average of the daily market prices of the security for the ten
consecutive
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trading days immediately preceding the day as of which "Current Market Value" is
being determined or, if the security has been registered under the Exchange Act
for less than ten consecutive trading days before such date, then the average of
the daily market prices for all of the trading days before such date for which
daily market prices are available. The market price for each such trading day
shall be: (A) in the case of a security listed or admitted to trading on any
securities exchange, the closing price, regular way, on such day, or if no sale
takes place on such day, the average of the closing bid and asked prices on such
day, (B) in the case of a security not then listed or admitted to trading on any
securities exchange, the last reported sale price on such day, or if no sale
takes place on such day, the average of the closing bid and asked prices on such
day, as reported by a reputable quotation source designated by the Company,
(C) in the case of a security not then listed or admitted to trading on any
securities exchange and as to which no such reported sale price or bid and asked
prices are available, the average of the reported high bid and low asked prices
on such day, as reported by a reputable quotation service, or a newspaper of
general circulation in the Borough of Manhattan, City and State of New York,
customarily published on each Business Day, designated by the Company, or if
there shall be no bid and asked prices on such day, the average of the high bid
and low asked prices, as so reported, on the most recent day (not more than ten
days prior to the date in question) for which prices have been so reported, and
(D) if there are no bid and asked prices reported during the ten days prior to
the date in question, the Current Market Value of the security shall be
determined as if the security were not registered under the Exchange Act.
(g) DE MINIMIS ADJUSTMENTS. Except as provided in
Section 6.1(c), with reference to adjustments required by such Section 6.1(c),
no adjustment in the number of shares of Common Stock issuable hereunder shall
be required unless such adjustment would required an increase or decrease of at
least one percent (1%) in the number of shares of Common Stock issuable upon the
exercise of each Warrant, PROVIDED, HOWEVER, that any adjustments which by
reason of this Section 6.1(g) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
shall be made to the nearest [one-thousandth] of a share.
Section 6.2. VALUATION OF COMMON STOCK. (a) The value of the
Common Stock shall be determined by an Independent Financial Expert, which shall
be selected by the Board of Directors of the Company, and retained on customary
terms and conditions, using one or more valuation methods that the Independent
Financial Expert, in its best professional judgment, determines to be most
appropriate but without giving effect to any discount attributable to any lack
of liquidity of the Common Stock or to the fact that the Company may have no
class of equity securities registered under the Exchange Act. The Company shall
cause the Independent Financial Expert to deliver to the Company, with a copy to
the Warrant Agent, a value report (the "Value Report") stating the methods of
valuation considered or used and the value of the Common Stock as of the
valuation date,
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and containing a statement as to the nature and scope of the examination or
investigation upon which the determination of value was made. The Independent
Financial Expert shall consult with management of the Company in order to allow
management to comment on the Independent Financial Expert's valuation. The
Independent Financial Expert may revise its Value Report based on such
consultation. If the Independent Financial Expert becomes aware of any material
changes since the valuation date, after reasonable inquiry with respect thereto,
in the business, financial condition or prospects of the Company, such
Independent Financial Expert shall specify such material changes in the Value
Report. Any Value Report or revision thereof shall be deemed final unless
revised within five days after delivery to the Company. The Warrant Agent shall
furnish a copy of the Value Report to each Holder as soon as practicable after
receipt thereof.
(b) The Independent Financial Expert shall not be liable to the
Company or the Holders for the contents of the Value Report if the Independent
Financial Expert shall have prepared such Value Report in good faith.
(c) The Independent Financial Expert shall be compensated by the
Company for the opinions and services it provides as an Independent Financial
Expert.
Section 6.3. NOTICE OF ADJUSTMENT. Whenever the number of shares of
Common Stock or other stock or property issuable upon the exercise of each
Warrant is adjusted, as herein provided, the Company shall cause the Warrant
Agent promptly to mail in accordance with Section 9.3 to each Holder notice of
such adjustment or adjustments and shall deliver to the Warrant Agent a
certificate of a firm of independent public accountants selected by the Board of
Directors of the Company (who may be the regular accountants employed by the
Company) setting forth the number of shares of Common Stock or other stock or
property issuable upon the exercise of each Warrant after such adjustment,
setting forth a brief statement of the facts requiring such adjustment and
setting forth the computation by which such adjustment was made. The Warrant
Agent shall be entitled to rely on such certificate and shall be under no duty
or responsibility with respect to any such certificate, except to exhibit the
same from time to time to any Holder desiring an inspection thereof during
reasonable business hours. The Warrant Agent shall not at any time be under any
duty or responsibility to any Holders to determine whether any facts exist that
may require any adjustment of the number of shares of Common Stock or other
stock or property issuable on exercise of the Warrants, or with respect to the
nature or extent of any such adjustment when made, or with respect to the method
employed in making such adjustment or the validity or value (or the kind or
amount) of any shares of Common Stock or other stock or property which may be
issuable on exercise of the Warrants. The Warrant Agent shall not be
responsible for any failure of the Company to make any cash payment or to issue,
transfer or deliver any shares of Common Stock or stock certificates or other
common stock or properties upon the exercise of any Warrant.
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Section 6.4. STATEMENT ON WARRANTS. Irrespective of any adjustment
in the number or kind of shares issuable upon the exercise of the Warrants,
Warrants theretofore or thereafter issued may continue to express the same price
and number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
Section 6.5. FRACTIONAL INTERESTS. The Company shall not be
required to issue fractional shares of Common Stock on the exercise of Warrants.
If more than one Warrant shall be presented for exercise in full at the same
time by the same Holder, the number of full shares of Common Stock which shall
be issuable upon such exercise thereof shall be computed on the basis of the
aggregate number of shares of Common Stock acquirable on exercise of the
Warrants so presented. If any fraction of a share of Common Stock would, except
for the provisions of this Section 6.5 be issuable on the exercise of any
Warrant (or specified portion thereof), the Company shall pay an amount in cash
calculated by it to be equal to the then Current Market Value per share of
Common Stock multiplied by such fraction computed to the nearest whole cent.
The Holders, by their acceptance of the Warrant Certificates, expressly waive
any and all rights to receive any fraction of a share of Common Stock or a stock
certificate representing a fraction of a share of Common Stock.
ARTICLE 7
WARRANT AGENT
Section 7.1. NATURE OF DUTIES AND RESPONSIBILITIES ASSUMED. The
Company hereby appoints the Warrant Agent to act as agent of the Company as set
forth in this Agreement. The Warrant Agent hereby accepts the appointment as
agent of the Company and agrees to perform that agency upon the terms and
conditions herein set forth, by all of which the Company and the Holders, by
their acceptance thereof, shall be bound. The Warrant Agent shall not by
countersigning Warrant Certificates or by any other act hereunder be deemed to
make any representations as to validity or authorization of the Warrants or the
Warrant Certificates (except as to its countersignature thereon) or of any
securities or other property delivered upon exercise or tender of any Warrant,
or as to the accuracy of the computation of the number or kind or amount of
stock or other securities or other property deliverable upon exercise of any
Warrant, the independence of any Independent Financial Expert or the correctness
of the representations of the Company made in such certificates that the Warrant
Agent receives. The Warrant Agent shall not have any duty to calculate or
determine any adjustments with respect to the kind and amount of shares or other
securities or any property receivable by Holders upon the exercise or tender of
Warrants required from time to time, and the Warrant Agent shall have no duty or
responsibility in determining the accuracy or correctness of such calculation.
The Warrant Agent shall not (i) be liable for any recital or statement of fact
contained herein or in the Warrant Certificates or for any action taken,
suffered or omitted by it in good faith on the belief that any Warrant
Certificate or any other
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documents or any signatures are genuine or properly authorized, (ii) be
responsible for any failure on the part of the Company to comply with any of its
covenants and obligations contained in this Agreement or in the Warrant
Certificates or (iii) be liable for any act or omission in connection with this
Agreement except for its own negligence or willful misconduct. The Warrant
Agent is hereby authorized to accept instructions with respect to the
performance of its duties hereunder from the Chairman of the Board, any Vice
Chairman, the Chief Executive Officer, the President, any Vice President or the
Secretary of the Company and to apply to any such officer for instructions
(which instructions will be promptly given in writing when requested) and the
Warrant Agent shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with the instructions of any such officer, but
in its discretion the Warrant Agent may in lieu thereof accept other evidence of
such or may require such further or additional evidence as it may deem
reasonable.
The Warrant Agent may execute and exercise any of the rights and
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys, agents or employees, provided reasonable care has been
exercised in the selection and in the continued employment of any such attorney,
agent or employee. The Warrant Agent shall not be under any obligation or duty
to institute, appear in or defend any action, suit or legal proceeding in
respect hereof, unless first indemnified to its satisfaction, but this provision
shall not affect the power of the Warrant Agent to take such action as the
Warrant Agent may consider proper, whether with or without such indemnity. The
Warrant Agent shall promptly notify the Company in writing of any claim made or
action, suit or proceeding instituted against it arising out of or in connection
with this Agreement.
The Company will perform, execute, acknowledge and deliver or cause to
be performed, executed, acknowledged and delivered all such further acts,
instruments and assurances as may reasonably be required by the Warrant Agent in
order to enable it to carry out or perform its duties under this Agreement.
The Warrant Agent shall act solely as agent of the Company hereunder.
The Warrant Agent shall have no duties except for such duties as are
specifically set forth herein, and no implied covenants or obligations shall be
read into this Agreement against the Warrant Agent, whose duties and obligations
shall be determined solely by the express provisions hereof.
Section 7.2. RIGHT TO CONSULT COUNSEL. The Warrant Agent may at any
time consult with legal counsel satisfactory to it (who may be legal counsel for
the Company), and the Warrant Agent shall incur no liability or responsibility
to the Company or to any Holder for any action taken, suffered or omitted by it
in good faith in accordance with the opinion or advice of such counsel.
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Section 7.3. COMPENSATION AND REIMBURSEMENT. The Company agrees to
pay to the Warrant Agent from time to time compensation for all services
rendered by it hereunder as the Company and the Warrant Agent may agree from
time to time, and to reimburse the Warrant Agent for reasonable expenses and
disbursements incurred in connection with the execution and administration of
this Agreement (including the reasonable compensation and the expenses of its
counsel), and further agrees to indemnify the Warrant Agent for, and to hold it
harmless against, any loss, liability or expense incurred without negligence,
bad faith or willful misconduct on its part, arising out of or in connection
with the acceptance and administration of this Agreement, including the costs
and expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
Section 7.4. WARRANT AGENT MAY HOLD COMPANY SECURITIES. The Warrant
Agent and any stockholder, director, officer or employee of the Warrant Agent
may buy, sell or deal in any of the Warrants or other securities of the Company
or its Affiliates or become pecuniarily interested in transactions in which the
Company or its Affiliates may be interested, or contract with or lend money to
the Company or its Affiliates or otherwise act as fully and freely as though it
were not the 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 7.5. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Warrant Agent and no appointment of a
successor warrant agent shall become effective until the acceptance of
appointment by the successor warrant agent as provided herein. The Warrant
Agent may resign its duties and be discharged from all further duties and
liability hereunder (except liability arising as a result of the Warrant Agent's
own negligence or willful misconduct) after giving at least 60 days written
notice to the Company. The Company may remove the Warrant Agent upon written
notice, and the Warrant Agent shall thereupon in like manner be discharged from
all further duties and liabilities hereunder, except as aforesaid. The Warrant
Agent shall, at the Company's expense, cause to be mailed (by first-class mail,
postage prepaid) to each Holder at his last address as shown on the Warrant
Register a copy of said notice of resignation or notice of removal, as the case
may be. Upon such resignation or removal, the Company shall appoint in writing
a new warrant agent. If the Company shall fail to make such appointment within
a period of 30 days after it has been notified in writing of such resignation by
the resigning Warrant Agent or after such removal, then any Holder may apply to
any court of competent jurisdiction for the appointment of a new warrant agent.
Any new warrant agent, whether appointed by the Company or by such a court,
shall be a corporation doing business under the laws of the United States or any
state thereof, in good standing and having a combined capital and surplus of not
less than $50,000,000. The combined capital and surplus of any such new warrant
agent shall be deemed to be the combined capital and surplus as set forth in the
most recent annual report of its condition published by such warrant agent prior
to its appointment, PROVIDED
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THAT such reports are published at least annually pursuant to law or to the
requirements of a federal or state supervising or examining authority. After
acceptance in writing of such appointment by the new warrant agent, it shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named herein as the Warrant Agent, without any further
assurance, conveyance, act or deed; but if for any reason it shall be necessary
or expedient to 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 resigning or removed Warrant Agent.
Not later than the effective date of any such appointment, the Company shall
give notice thereof to the resigning or removed Warrant Agent. Failure to give
any notice provided for in this Section 7.5, however, or any defect therein,
shall not affect the legality or validity of the resignation of the Warrant
Agent or the appointment of a new warrant agent, as the case may be.
(b) Any corporation into which the Warrant Agent or any new
warrant agent may be merged or any corporation resulting from any consolidation
to which the Warrant Agent or any new warrant agent shall be a party, shall be a
successor Warrant Agent under this Agreement without any further act, PROVIDED
THAT such corporation would be eligible for appointment as successor to the
Warrant Agent under the provisions of Section 7.5(a). Any such successor
Warrant Agent shall promptly cause notice of its succession as Warrant Agent to
be mailed (by first-class mail, postage prepaid) to each Holder of a Warrant at
such Holder's last address as shown on the Warrant Register.
ARTICLE 8
COVENANTS OF THE COMPANY
Section 8.1. RESERVATION OF COMMON STOCK FOR ISSUANCE ON AND
OBLIGATION TO REGISTER UPON EXERCISE OF WARRANTS. (a) The Company covenants
that it will at all times reserve and keep available, free from pre-emptive
rights, out of its authorized but unissued Common Stock, solely for the purpose
of issue upon exercise of Warrants as herein provided, such number of shares of
Common Stock as shall then be issuable upon the exercise of all outstanding
Warrants. The Company covenants that all shares of Common Stock which shall be
so issuable shall, upon such issue, be duly and validly issued and fully paid
and non-assessable.
(b) To the extent required by applicable law and notwithstanding the
provisions of Section 4.1, the Company will register or otherwise qualify the
issuance of any Warrant Shares upon exercise of the Warrants pursuant to the
provisions of the Securities Act and any other applicable federal or state
securities laws.
Section 8.2. NOTICE OF DIVIDENDS. At any time when the Company
declares any dividend on its Common Stock, it shall give notice to the Holders
of all then
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outstanding Warrants of any such declaration not less than 30 days prior to the
related record date for payment of the dividend so declared.
Section 8.3. REPORTS TO HOLDERS. Whether or not the Company is
subject to Section 13(a) or 15(d) of the Exchange Act, the Company will, to the
extent permitted under the Exchange Act, file with the SEC the annual reports,
quarterly reports and other documents which the Company would have been or is
required to file with the SEC pursuant to such Section 13(a) or 15(d) if the
Company were or is so subject, such documents to be filed with the SEC on or
prior to the respective dates (the "Required Filing Dates") by which the Company
would have been or is required so to file such documents if the Company were or
is so subject. The Company will also in any event (x)(i) within 15 days of each
Required Filing Date file with the Warrant Agent copies of the annual reports,
quarterly reports and other documents which the Company would have been or is
required to file, as the case may be, with the SEC pursuant to Section 13(a) or
15(d) of the Exchange Act if the Company were or is subject to such Section and
(ii) within the earlier of 30 days after the filing of such report or other
document with the Warrant Agent and 45 days of each such Required Filing Date
transmit such report or document by mail to all Holders, as their names and
addresses appear in the Warrant Register, without cost to such Holders and
(y) if filing such documents by the Company with the SEC is not permitted under
the Exchange Act, promptly upon written request supply copies of such documents
to any prospective Holder at the Company's cost.
ARTICLE 9
MISCELLANEOUS
Section 9.1. MONEY AND OTHER PROPERTY DEPOSITED WITH THE WARRANT
AGENT. Any moneys, securities or other property which at any time shall be
deposited by the Company or on its behalf with the Warrant Agent pursuant to
this Agreement shall be and are hereby assigned, transferred and set over to the
Warrant Agent in trust for the purpose for which such moneys, securities or
other property shall have been deposited; but such moneys, securities or other
property need not be segregated from other funds, securities or other property
except to the extent required by law. The Warrant Agent shall distribute any
money deposited with it for payment and distribution to the Holders by mailing
in accordance with Section 9.3 a check in such amount as is appropriate, to each
such Holder at the address shown on the Warrant Register, or as it may be
otherwise directed in writing by such Holder, upon surrender of such Holder's
Warrants or Warrant Certificates, as the case may be. Any money deposited with
the Warrant Agent for payment and distribution to the Holders that remains
unclaimed for two years after the date the money was deposited with the Warrant
Agent shall be paid to the Company upon its request therefor.
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Section 9.2. PAYMENT OF TAXES. The Company shall pay all taxes
(other than income taxes) and other governmental charges that may be imposed on
the Company or on the Warrants or on any securities deliverable upon exercise of
Warrants with respect thereto. The Company shall not be required, however, to
pay any tax or other charge imposed in connection with any transfer involved in
the issue of any certificate for shares of Common Stock or other securities
underlying the Warrants or payment of cash to any Person other than the Holder
of a Warrant Certificate surrendered upon the exercise or purchase of a Warrant,
and in case of such transfer or payment, the Warrant Agent and the Company shall
not be required to issue any stock certificate or pay any cash until such tax or
charge has been paid or it has been established to the Warrant Agent's and the
Company's satisfaction that no such tax or other charge is due.
Section 9.3. NOTICES. (a) Except as otherwise provided in
Section 9.3(b), any notice, demand or delivery authorized by this Agreement
shall be sufficiently given or made when mailed if sent by first-class mail,
postage prepaid, addressed to any Holder at such Holder's address shown on the
Warrant Register and to the Company or the Warrant Agent as follows:
If to the Company International Controls Corp.
2016 North Pitcher Street
Kalamazoo, MI 49007
Attention: President
If to the Warrant Agent American Stock Transfer & Trust Company
40 Wall Street
New York, NY 10005
Attention: Vice President
or such other address as shall have been furnished to the party giving or making
such notice, demand or delivery.
(b) Any notice required to be given by the Company to the
Holders pursuant to this Agreement shall be made by mailing by registered mail,
return receipt requested, to the Holders at their respective addresses shown on
the Warrant Register. The Company hereby irrevocably authorizes the Warrant
Agent, in the name and at the expense of the Company, to mail any such notice
upon receipt thereof from the Company. Any notice that is mailed in the manner
herein provided shall be conclusively presumed to have been duly given when
mailed, whether or not the Holder receives the notice.
SECTION 9.4. APPLICABLE LAW. THIS AGREEMENT AND EACH WARRANT ISSUED
HEREUNDER AND ALL RIGHTS ARISING HEREUNDER SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK,
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WITHOUT GIVING EFFECT TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
Section 9.5. PERSONS BENEFITTING. This Agreement shall be binding
upon and inure to benefit of the Company and the Warrant Agent, and their
respective successors, assigns, beneficiaries, executors and administrators, and
the Holders. Nothing in this Agreement is intended or shall be construed to
confer upon any Person, other than the Company, the Warrant Agent and the
Holders, any right, remedy or claim under or by reason of this Agreement or any
part hereof.
Section 9.6. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together constitute one and the same instrument.
Section 9.7. AMENDMENTS. The Company may, without the consent of
the Holders, by supplemental agreement or otherwise, make any changes or
corrections in this Agreement that it shall have been advised by counsel (a) are
required to cure any ambiguity or to correct or supplement any provision herein
which may be defective or inconsistent with any other provision herein or
(b) add to the covenants and agreements of the Company for the benefit of the
Holders, or surrender any rights or power reserved to or conferred upon the
Company in this Agreement; PROVIDED THAT in each case such changes or
corrections shall not adversely affect the interests of the Holders in any
material respect. The Warrant Agent shall join with the Company in the
execution and delivery of any such supplemental agreements unless it adversely
affects the Warrant Agent's own rights, duties or immunities hereunder, in which
case the Warrant Agent may, but shall not be required to, join in such execution
and delivery.
Section 9.8. HEADINGS. The descriptive headings of the Sections of
this Agreement are inserted for convenience and shall not control or affect the
meaning or construction of any of the provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
INTERNATIONAL CONTROLS CORP.
By _____________________________________
Name:
Title
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Warrant Agent
By _____________________________________
Name:
Title
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EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
[FACE]
CUSIP # [ ]
[ ] Warrants
WARRANT CERTIFICATE
INTERNATIONAL CONTROLS CORP.
This Warrant Certificate certifies that [ ], or
registered assigns, is the registered holder of [ ] Warrants (the "Warrants")
to purchase shares of Common Stock, par value $0.01 per share (the "Common
Stock"), of INTERNATIONAL CONTROLS CORP., a Florida corporation (the "Company").
Each Warrant entitles the holder to purchase from the Company at any time on or
after the Exercisability Date referred to on the reverse hereof to 5:00 p.m.,
New York City time, on _____________ ___, 1999 (the "Expiration"), ____ fully
paid and non-assessable shares of Common Stock at the exercise price (the
"Exercise Price") of $0.01 per share upon surrender of this Warrant Certificate
and payment of the Exercise Price at any office or agency maintained for that
purpose by the Company (the "Warrant Agent Office"), subject to the conditions
set forth herein and in the Warrant Agreement. The Exercise Price may be
payable by certified check or official bank check or by such other means as is
acceptable to the Company in the lawful currency of the United States of America
which as of the date of payment is legal tender for payment of public or private
debts. The Company has initially designated the corporate trust office of the
Warrant Agent in the Borough of Manhattan, The City of New York, as the initial
Warrant Agent Office. The number of shares (and to the extent applicable, other
securities or property) issuable upon exercise of the Warrants is subject to
adjustment upon the occurrence of certain events set forth in the Warrant
Agreement.
Any Warrants not exercised on or prior to 5:00 p.m., New York City
time, on ______________ ___, 1999 shall thereafter be void.
Reference is hereby made to the further provisions on the reverse
hereof which provisions shall for all purposes have the same effect as though
fully set forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent, as such term is used in the Warrant Agreement.
A-1
THIS WARRANT CERTIFICATE SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO CONFLICTS OF
LAWS PRINCIPLES THEREOF.
WITNESS the facsimile seal of the Company and facsimile signatures of
its duly authorized officers.
Dated:
INTERNATIONAL CONTROLS CORP.
By: __________________________
Title
Attest:
By: ___________________________
Title
Countersigned:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Warrant Agent
By: ___________________________
Authorized Signature
A-2
[FORM OF WARRANT CERTIFICATE]
[REVERSE]
INTERNATIONAL CONTROLS CORP.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring at 5:00 p.m., New York City time, on
________________ ___, 1999 (the "Expiration Date"), each of which represents the
right to purchase from the Company at any time on a Business Day (as defined
below) or after the Exercisability Date (as defined below) and on or prior to
the Expiration Date ____ fully paid and non-assessable shares of Common Stock of
the Company (and any other securities or property purchasable upon exercise of
such Warrant at the time of such exercise as provided in the Warrant Agreement)
(and for purposes hereof all references to "Common Stock" shall include such
securities or property), subject to adjustment as set forth in the Warrant
Agreement, at the Exercise Price. The Warrants are issued pursuant to a Warrant
Agreement dated as of _________________ ___, 1994 (the "Warrant Agreement"),
duly executed and delivered by the Company to American Stock Transfer & Trust
Company, as Warrant Agent (the "Warrant Agent"), which Warrant Agreement is
hereby incorporated by reference in and made a part of this instrument and is
hereby referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Warrant Agent, the Company
and the Holders (the words "Holders" or "Holder" meaning the registered holders
or registered holder) of the Warrants.
"Exercisability Date" means the date of the occurrence of an Exercise
Event. "Exercise Event" means ______________, 1999 or the earlier occurrence of
(i) a Change of Control or (ii) a Public Offering.
"Business Day" shall mean any day on which (i) banks in New York City,
(ii) the principal national securities exchange or market (if any) on which the
Common Stock is listed or admitted to trading and (iii) the principal national
securities exchange or market (if any) on which the Warrants are listed or
admitted to trading are open for business.
Warrants may be exercised by (i) surrendering at any Warrant Agent
Office this Warrant Certificate with the form of Election to Exercise set forth
hereon duly completed and executed and (ii) paying in full the Exercise Price
for each such Warrant exercised and any other amounts required to be paid
pursuant to the Warrant Agreement.
If all of the items referred to in the preceding paragraph are
received by the Warrant Agent at or prior to 2:00 p.m., New York City time, on a
Business Day, the exercise of the Warrant to which such items relate will be
effective on such Business Day. If any items referred to in the preceding
paragraph are received after 2:00 p.m.,
A-3
New York City time, on a Business Day, the exercise of the Warrants on the
Expiration Date, if all of the items referred to in the preceding paragraph are
received by the Warrant Agent at or prior to 5:00 p.m., New York City time, on
such Expiration Date, the exercise of the Warrants to which such items relate
will be effective on the Expiration Date.
As soon as practicable after the exercise of any Warrant or Warrants,
the Company shall issue or cause to be issued to or upon the written order of
the Holder of this Warrant Certificate, a certificate or certificates evidencing
the share or shares of Common Stock to which such holder is entitled, in fully
registered form, registered in such name or names as may be directed by such
Holder pursuant to the Election to Exercise as set forth on the reverse of this
Warrant Certificate. Such certificate or certificates evidencing such Common
Stock shall be deemed to have been issued and any persons who are designated to
be named therein shall be deemed to have become the holder of record of such
Common Stock as of the close of business on the exercise date.
The Company will not be required to issue fractional shares of Common
Stock upon exercise of the Warrants or distribute stock certificates that
evidence fractional shares of Common Stock. In lieu of fractional shares of
Common Stock, there shall be paid to the Holder of this Warrant Certificate at
the time such Warrant Certificate is exercised an amount in cash equal to the
same fraction of the Current Market Value (as defined in the Warrant Agreement)
per share on the Business Day preceding the date this Warrant Certificate is
surrendered for exercise.
Warrant Certificates, when surrendered at any office or agency
maintained by the Company for the purpose by the Holder thereof in person or by
legal representative or attorney duly authorized in writing, may be exchanged
for a new Warrant Certificate or new Warrant Certificates evidencing in the
aggregate a like number of Warrants, in the manner and object to the limitations
provided in the Warrant Agreement, without charge except for any tax or other
governmental charge imposed in connection therewith.
Upon due presentment for registration of transfer of this Warrant
Certificate at any office or agency maintained by the Company for that purpose,
a new Warrant Certificate evidencing in the aggregate a like number of Warrants
shall be issued to the transferee in exchange for this Warrant Certificate,
subject to the limitations provided in the Warrant Agreement, without charge
except for any tax or other governmental charge imposed in connection therewith.
In the event of a merger, consolidation, sale of assets or other
business combination by the Company with one or more persons (other than a
wholly owned subsidiary of the Company) in which consideration is distributed to
the holders of the Common Stock in exchange for all or substantially all of
their equity interest in the Company (a "Non-Surviving Combination"), the Holder
hereof will be entitled to receive
A-4
the shares of stock or other securities or other property (including any money)
as it would have received had the Holder exercised its Warrants immediately
prior to such Non-Surviving Combination or, if applicable, the record date
therefor.
Under certain circumstances, the Holder hereof may require the Company
to register such Holder's shares of Common Stock to which such Holder is
entitled upon exercise of any of the Warrants represented by this Warrant
Certificate in connection with a Public Offering.
The Company and the Warrant Agent may deem and treat the Holder hereof
as the absolute owner of this Warrant Certificate (notwithstanding any notation
of ownership or further writing hereon made by anyone) for the purpose of any
exercise hereof and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary.
A-5
(FORM OF ELECTION TO EXERCISE)
(To be executed upon exercise of Warrants on the exercise date)
The undersigned hereby irrevocably elects to exercise ___________ of
the Warrants represented by this Warrant Certificate and purchase the whole
number of shares of Common Stock issuable upon the exercise of such Warrants and
herewith tenders payment for such shares in the amount of $_______ in cash or by
certified or official bank check, in accordance with the terms hereof. The
undersigned requests that a certificate representing such shares be registered
in the name _______________________ whose address is
______________________________________________ and that such certificate be
delivered to _______________________________________ whose address is
__________________________. Any cash payments to be paid in lieu of a
fractional share of Common Stock should be made to _________________ whose
address is _____________________________ and the check representing payment
thereof should be delivered to ________________________ whose address is
_________________.
Dated _____________________, 19____
Name of Holder of
Warrant Certificate: ____________________________________________
(Please Print)
Tax Identification or
Social Security Number: _________________________________________
Address: ________________________________________________________
________________________________________________________
________________________________________________________
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 whatever and if the certificate
representing the Common Stock 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, or if any
cash payment to be paid in lieu of a fractional
share is to be made to a person other than the
registered holder of this Warrant Certificate, the
signature of the
A-6
holder hereof must be guaranteed as provided in the
Warrant Agreement.
Dated _____________________, 19____
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 whatever.
Signature Guaranteed: ___________________________________________
A-7
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED the undersigned hereby sells, assigns, and
transfers unto the Assignee(s) named below (including the undersigned with
respect to any Warrants constituting a part of the Warrants evidenced by the
Warrant Certificate not being assigned hereby) all of the rights of the
undersigned under the Warrant Certificate, with respect to the number of
Warrants set forth below:
Social Security
or other
identifying
Names of number of Number of
Assignees Address Assignee(s) Warrants
- --------- ------- --------------- ---------
and does hereby irrevocably constitute and appoint ________________________ the
undersigned's attorney to make such transfer on the books of International
Controls Corp. maintained for that purpose with full power of substitution in
the premises.
Dated: ___________________, 19___
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 whatever.
Signature Guaranteed: ___________________________________________