EXHIBIT 4.6
FORM OF
WARRANT AGREEMENT
between
CARING PRODUCTS INTERNATIONAL, INC.
and
THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK
Dated as of ________________, 1997
This Warrant Agreement (this "Agreement"), dated as of ______________,
1997 is between Caring Products International, Inc., a Delaware corporation (the
"Company"), and The Bank of Nova Scotia Trust Company of New York, a trust
company incorporated under the laws of New York (the "Warrant Agent").
The Company, at or about the time that it is entering into this
Agreement, proposes to issue and sell to public investors an aggregate of
1,500,000 Units ("Units"). Each Unit consists of one share of common stock,
$0.01 par value, of the Company ("Common Stock") and one Warrant (collectively,
the "Warrants"), each Warrant exercisable to purchase one share of Common Stock
for $_____, upon the terms and conditions and subject to adjustment in certain
circumstances, all as set forth in this Agreement.
The Company proposes to issue to the Representatives of the
Underwriters in the public offering of Units referred to above warrants to
purchase up to 225,000 additional Units.
The Company wishes to retain the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, transfer, exchange and replacement of the certificates evidencing the
Warrants to be issued under this Agreement (the "Warrant Certificates") and the
exercise of the Warrants.
The Company and the Warrant Agent wish to enter into this Agreement to
set forth the terms and conditions of the Warrants and the rights of the holders
thereof ("Warrantholders") and to set forth the respective rights and
obligations of the Company and the Warrant Agent. Each Warrantholder is an
intended beneficiary of this Agreement with respect to the rights of
Warrantholders herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. APPOINTMENT OF WARRANT AGENT
The Company appoints the Warrant Agent to act as agent for the
Company in accordance with the instructions in this Agreement and the Warrant
Agent accepts such appointment.
Section 2. DATE, DENOMINATION AND EXECUTION OF WARRANT CERTIFICATES
The Warrant Certificates (and the Form of Election to Purchase and
the Form of Assignment to be printed on the reverse thereof) shall be in
registered form only and shall be substantially of the tenor and purport recited
in Exhibit A hereto, and may have such letters, numbers or other marks of
identification or designation and such legends, summaries or endorsements
printed, lithographed or engraved thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any law, or with any rule or regulation made pursuant
thereto, or with any rule or regulation of any stock exchange or any automated
quotation system on which the Common Stock or the Warrants may be listed, or to
conform to usage. Each Warrant Certificate shall entitle the registered holder
thereof, subject to the provisions of this Agreement and of the Warrant
Certificate, to purchase, on or before the close of business on __________, 2002
(the "Expiration Date"), one fully paid and non-assessable share of Common Stock
for each Warrant evidenced by such Warrant Certificate, subject to adjustments
as provided in Section 6 hereof, for the "Exercise Price," which initially shall
be $_______________, subject to adjustment as provided in Section 6 hereof.
Each Warrant Certificate issued as a part of a Unit offered to the public as
described in the recitals, above, shall be dated __________, 1997; each other
Warrant Certificate shall be dated the date on which the Warrant Agent receives
valid issuance instructions from the Company or a transferring holder of a
Warrant Certificate or, if such instructions specify another date, such other
date.
For purposes of this Agreement, the term "close of business" on
any given date shall mean 5:00 p.m., Eastern time, on such date; provided,
however, that if such date is not a business day, it shall mean 5:00 p.m.,
Eastern time, on the next succeeding business day. For purposes of this
Agreement, the term "business day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in New York are authorized or
obligated by law to be closed.
Each Warrant Certificate shall be executed on behalf of the
Company by the Chairman of the Board or its President or a Vice President,
either manually or by facsimile signature printed thereon. Each Warrant
Certificate shall be manually countersigned by the Warrant Agent and shall not
be valid for any purpose unless so countersigned. In case any officer of the
Company who shall have signed any Warrant Certificate shall cease to be such
officer of the Company before countersignature by the Warrant Agent and issue
and delivery thereof by the Company, such Warrant Certificate, nevertheless, may
be countersigned by the Warrant Agent, issued and delivered with the same force
and effect as though the person who signed such Warrant Certificate had not
ceased to be such officer of the Company.
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Section 3. SUBSEQUENT ISSUANCE OF WARRANT CERTIFICATES
Subsequent to their original issuance, no Warrant Certificates
shall be reissued except (i) Warrant Certificates issued upon transfer thereof
in accordance with Section 4 hereof, (ii) Warrant Certificates issued upon any
combination, split-up or exchange of Warrant Certificates pursuant to Section 4
hereof, (iii) Warrant Certificates issued in replacement of mutilated,
destroyed, lost or stolen Warrant Certificates pursuant to Section 5 hereof,
(iv) Warrant Certificates issued upon the partial exercise of Warrant
Certificates pursuant to Section 7 hereof, and (v) Warrant Certificates issued
to reflect any adjustment or change in the Exercise Price or the number or kind
of shares purchasable thereunder pursuant to Section 22 hereof. The Warrant
Agent is hereby irrevocably authorized to countersign and deliver, in accordance
with the provisions of said Sections 4, 5, 7 and 22, the new Warrant
Certificates required for purposes thereof, and the Company, whenever required
by the Warrant Agent, will supply the Warrant Agent with Warrant Certificates
duly executed on behalf of the Company for such purposes.
Section 4. TRANSFERS AND EXCHANGES OF WARRANT CERTIFICATES
The Warrant Agent will keep or cause to be kept books for
registration of ownership and transfer of the Warrant Certificates issued
hereunder. Such registers shall show the names and addresses of the respective
holders of the Warrant Certificates and the number of Warrants evidenced by each
such Warrant Certificate.
The Warrant Agent shall, from time to time, register the transfer
of any outstanding Warrants upon the books to be maintained by the Warrant Agent
for that purpose, upon surrender of the Warrant Certificate evidencing such
Warrants, with the Form of Assignment duly filled in and executed with such
signature guaranteed by an eligible guarantor institution with membership in the
signature guarantee medallion program and such supporting documentation as the
Warrant Agent or the Company may reasonably require, to the Warrant Agent at its
stock transfer office in New York City, New York, at any time on or before the
Expiration Date, and upon payment to the Warrant Agent for the account of the
Company of any amount equal to any applicable transfer tax. Payment of the
amount of such tax may be made in cash, by wire transfer of good funds, or by
certified or official bank check, payable in lawful money of the United States
of America to the order of the Company.
Upon receipt of a Warrant Certificate, with the Form of Assignment
duly filled in and executed, accompanied by payment of an amount equal to any
applicable transfer tax, the Warrant Agent shall promptly cancel the surrendered
Warrant Certificate and countersign and deliver to the transferee a new Warrant
Certificate for the number of full Warrants transferred to such transferee;
PROVIDED, HOWEVER, that in case the registered holder of any Warrant Certificate
shall elect to transfer fewer than all of the Warrants evidenced by such Warrant
Certificate, the Warrant Agent in addition shall promptly countersign and
deliver to such registered holder a new Warrant Certificate or Warrant
Certificates for the number of full Warrants not so transferred.
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Any Warrant Certificate or Warrant Certificates may be exchanged
at the option of the holder thereof for another Warrant Certificate or Warrant
Certificates of different denominations, of like tenor and representing in the
aggregate the same number of Warrants, upon surrender of such Warrant
Certificate or Warrant Certificates, with the Form of Assignment duly filled in
and executed, to the Warrant Agent, at any time or from time to time after the
close of business on the date hereof and prior to the close of business on the
Expiration Date. The Warrant Agent shall promptly cancel the surrendered
Warrant Certificate or Warrant Certificates and deliver the new Warrant
Certificate or Warrant Certificates pursuant to the provisions of this Section.
Section 5. MUTILATED, DESTROYED, LOST OR STOLEN WARRANT CERTIFICATES
Upon receipt by the Company and the Warrant Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
any Warrant Certificate, and in the case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to them, and reimbursement to them
of all reasonable expenses incidental thereto, and, in the case of mutilation,
upon surrender and cancellation of the Warrant Certificate, the Warrant Agent
shall countersign and deliver a new Warrant Certificate of like tenor for the
same number of Warrants.
Section 6. ADJUSTMENTS OF NUMBER AND KIND OF SHARES PURCHASABLE AND EXERCISE
PRICE
The number and kind of securities or other property purchasable
upon exercise of a Warrant and the Exercise Price shall be subject to adjustment
from time to time upon the occurrence, after the date hereof, of any of the
following events:
A. The initial Exercise Price shall be $_____. If the Company's
audited fiscal 1999 revenues do not exceed $15 million and/or its audited fiscal
1999 net income (adjusted to exclude any expenses relating to the vesting of any
employee options or warrants) before interest expense and taxes does not exceed
$1.5 million, a one-time downward adjustment of the Exercise Price to $_____.
B. In case the Company shall (1) pay a dividend in, or make a
distribution of, shares of capital stock on its outstanding Common Stock,
(2) subdivide its outstanding shares of Common Stock into a greater number of
such shares or (3) combine its outstanding shares of Common Stock into a smaller
number of such shares, the total number of shares of Common Stock purchasable
upon the exercise of each Warrant outstanding immediately prior thereto shall be
adjusted so that the holder of any Warrant Certificate thereafter surrendered
for exercise shall be entitled to receive at the same aggregate Exercise Price
the number of shares of capital stock (of one or more classes) which such
holder would have owned or have been entitled to receive immediately following
the happening of any of the events described above had such Warrant been
exercised in full immediately prior to the record date with respect to such
event. Any adjustment made pursuant to this Subsection shall, in the case of a
stock dividend or distribution, become effective as of the record date therefor
and, in the case of a subdivision or combination, be made as of the effective
date thereof. If, as a result of an adjustment made pursuant to this
Subsection, the holder of any Warrant Certificate thereafter surrendered for
exercise shall
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become entitled to receive shares of two or more classes of capital stock of the
Company, the Board of Directors of the Company (whose determination shall be
conclusive and shall be evidenced by a Board resolution filed with the Warrant
Agent) shall determine the allocation of the adjusted Exercise Price between or
among shares of such classes of capital stock.
C. In the event of a capital reorganization or a reclassification of
the Common Stock (except as provided in Subsection B above or Subsection E
below), any Warrantholder, upon exercise of Warrants, shall be entitled to
receive, in substitution for the Common Stock to which he would have become
entitled upon exercise immediately prior to such reorganization or
reclassification, the shares (of any class or classes) or other securities or
property of the Company (or cash) that he would have been entitled to receive at
the same aggregate Exercise Price upon such reorganization or reclassification
if such Warrants had been exercised immediately prior to the record date with
respect to such event. In any such case, appropriate provision (as determined
by the Board of Directors of the Company, whose determination shall be
conclusive and shall be evidenced by a certified Board resolution filed with the
Warrant Agent) shall be made for the application of this Section 6 with respect
to the rights and interests thereafter of the Warrantholders (including but not
limited to the allocation of the Exercise Price between or among shares of
classes of capital stock), to the end that this Section 6 (including the
adjustments of the number of shares of Common Stock or other securities
purchasable and the Exercise Price thereof) shall thereafter be reflected, as
nearly as reasonably practicable, in all subsequent exercises of the Warrants
for any shares or securities or other property (or cash) thereafter deliverable
upon the exercise of the Warrants.
D. Whenever the number of shares of Common Stock or other securities
purchasable upon exercise of a Warrant or the Exercise Price is adjusted as
provided in this Section 6, the Company will promptly file with the Warrant
Agent a certificate signed by a Chairman or co-Chairman of the Board or the
President or a Vice President of the Company and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of the Company
setting forth the number and kind of securities or other property purchasable
upon exercise of a Warrant, as so adjusted, or the Exercise Price as so
adjusted, stating that such adjustments in the number or kind of shares or other
securities or property of such adjustments in the Exercise Price, conform to the
requirements of this Section 6, and setting forth a brief statement of the facts
accounting for such adjustments. Promptly after receipt of such certificate,
the Company, or the Warrant Agent at the Company's request, will deliver, by
first-class, postage prepaid mail, a brief summary thereof (to be supplied by
the Company) to the registered holders of the outstanding Warrant Certificates;
PROVIDED, HOWEVER, that failure to file or to give any notice required under
this Subsection, or any defect therein, shall not affect the legality or
validity of any such adjustments under this Section 6; and PROVIDED, FURTHER,
that, where appropriate, such notice may be given in advance and included as
part of the notice required to be given pursuant to Section 12 hereof.
E. In case of any consolidation of the Company with, or merger of the
Company into, another corporation (other than a consolidation or merger which
does not result in any reclassification or change of the outstanding Common
Stock), or in case of any sale or conveyance to another corporation of the
property of the Company as an entirety or substantially
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as an entirety, the corporation formed by such consolidation or merger or the
corporation which shall have acquired such assets, as the case may be, shall
execute and deliver to the Warrant Agent a supplemental warrant agreement
providing that the holder of each Warrant then outstanding shall have the right
thereafter (until the expiration of such Warrant) to receive, upon exercise of
such Warrant, solely the kind and amount of shares of stock and other securities
and property (or cash) receivable upon such consolidation, merger, sale or
transfer by a holder of the number of shares of Common Stock of the Company for
which such Warrant might have been exercised immediately prior to such
consolidation, merger, sale or transfer. Such supplemental warrant agreement
shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided in this Section. The above provision of
this Subsection shall similarly apply to successive consolidations, mergers,
sales or transfers.
The Warrant Agent shall not be under any responsibility to
determine the correctness of any provision contained in any such supplemental
warrant agreement relating to either the kind or amount of shares of stock or
securities or property (or cash) purchasable by holders of Warrant Certificates
upon the exercise of their Warrants after any such consolidation, merger, sale
or transfer or of any adjustment to be made with respect thereto, but subject to
the provisions of Section 20 hereof, may accept as conclusive evidence of the
correctness of any such provisions, and shall be protected in relying upon, a
certificate of a firm of independent certified public accountants (who may be
the accountants regularly employed by the Company) with respect thereto.
F. Irrespective of any adjustments in the number or kind of shares
issuable upon exercise of Warrants, Warrant Certificates theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the similar Warrant Certificates initially issuable
pursuant to this Warrant Agreement.
G. The Company may retain a firm of independent public accountants of
recognized standing, which may be the firm regularly retained by the Company,
selected by the Board of Directors of the Company or the Executive Committee of
said Board, and not disapproved by the Warrant Agent, to make any computation
required under this Section, and a certificate signed by such firm shall, in the
absence of fraud or gross negligence, be conclusive evidence of the correctness
of any computation made under this Section.
H. For the purpose of this Section, the term "Common Stock" shall
mean (i) the class of stock designated as Common Stock in the Articles of
Incorporation of the Company, as amended, at the date of this Agreement, or
(ii) any other class of stock resulting from successive changes or
reclassification of such Common Stock consisting solely of changes in par value,
or from par value to no par value, or from no par value to par value. In the
event that at any time as a result of an adjustment made pursuant to this
Section, the holder of any Warrant thereafter surrendered for exercise shall
become entitled to receive any shares of capital stock of the Company other than
shares of Common Stock, thereafter the number of such other shares so receivable
upon exercise of any Warrant shall be subject to adjustment from time to time in
a manner and on terms as nearly equivalent as practicable to the provisions with
respect to the
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Common Stock contained in this Section, and all other provisions of this
Agreement, with respect to the Common Stock, shall apply on like terms to any
such other shares.
I. The Company may, from time to time and to the extent permitted by
law, reduce the exercise price of the Warrants by any amount for a period of not
less than 20 days. If the Company so reduces the exercise price of the
Warrants, it will give not less than 15 days' notice of such decrease, which
notice may be in the form of a press release, and shall take such other steps as
may be required under applicable law in connection with any offers or sales of
securities at the reduced price.
Section 7. EXERCISE AND REDEMPTION OF WARRANTS
Unless the Warrants have been redeemed as provided in this
Section 7, the registered holder of any Warrant Certificate may exercise the
Warrants evidenced thereby, in whole at any time or in part from time to time at
or prior to the close of business on the Expiration Date, subject to the
provisions of Section 9, at which time the Warrant Certificates shall be and
become wholly void and of no value. Warrants may be exercised by their holders
or redeemed by the Company as follows:
A. Exercise of Warrants shall be accomplished upon surrender of the
Warrant Certificate evidencing such Warrants, with the Form of Election to
Purchase on the reverse side thereof duly filled in and executed, to the Warrant
Agent at its stock transfer office in New York City, New York, together with
payment to the Company of the Exercise Price (as of the date of such surrender)
of the Warrants then being exercised and an amount equal to any applicable
transfer tax and, if requested by the Company, any other taxes or governmental
charges which the Company may be required by law to collect in respect of such
exercise. Payment of the Exercise Price and other amounts may be made in cash,
by wire transfer of good funds, or by certified or official bank check, payable
in lawful money of the United States of America to the order of the Company. No
adjustment shall be made for any cash dividends, whether paid or declared, on
any securities issuable upon exercise of a Warrant.
B. Upon receipt of a Warrant Certificate, with the Form of Election
to Purchase duly filled in and executed, accompanied by payment of the Exercise
Price of the Warrants being exercised (and of an amount equal to any applicable
taxes or government charges as aforesaid), the Warrant Agent shall promptly
request from the Transfer Agent with respect to the securities to be issued and
deliver to or upon the order of the registered holder of such Warrant
Certificate, in such name or names as such registered holder may designate, a
certificate or certificates for the number of full shares of the securities to
be purchased, together with cash made available by the Company pursuant to
Section 8 hereof in respect of any fraction of a share of such securities
otherwise issuable upon such exercise. If the Warrant is then exercisable to
purchase property other than securities, the Warrant Agent shall take
appropriate steps to cause such property to be delivered to or upon the order of
the registered holder of such Warrant Certificate. In addition, if it is
required by law and upon instruction by the Company, the Warrant Agent will
deliver to each Warrantholder a prospectus which complies with the provisions of
Section 9 of the
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Securities Act of 1933, as amended, and the Company agrees to supply the Warrant
Agent with sufficient number of prospectuses to effectuate that purpose.
C. In case the registered holder of any Warrant Certificate shall
exercise fewer than all of the Warrants evidenced by such Warrant
Certificate, the Warrant Agent shall promptly countersign and deliver to the
registered holder of such Warrant Certificate, or to his duly authorized
assigns, a new Warrant Certificate or Warrant Certificates evidencing the
number of Warrants that were not so exercised.
D. Each person in whose name any certificate for securities is issued
upon the exercise of Warrants shall for all purposes be deemed to have become
the holder of record of the securities represented thereby as of, and such
certificate shall be dated, the date upon which the Warrant Certificate was duly
surrendered in proper form and payment of the Exercise Price (and of any
applicable taxes or other governmental charges) was made; PROVIDED, HOWEVER,
that if the date of such surrender and payment is a date on which the stock
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares as of, and the certificate for such
shares shall be dated, the next succeeding business day on which the stock
transfer books of the Company are open (whether before, on or after the
Expiration Date) and the Warrant Agent shall be under no duty to deliver the
certificate for such shares until such date. The Company covenants and agrees
that it shall not cause its stock transfer books to be closed for a period of
more than 20 consecutive business days except upon consolidation, merger, sale
of all or substantially all of its assets, dissolution or liquidation or as
otherwise provided by law.
E. The Warrants outstanding at the time of a redemption may be
redeemed at the option of the Company, in whole or in part on a pro rata basis,
at any time if, at the time notice of such redemption is given by the Company as
provided in Paragraph F below, the Daily Price has equaled or exceeded 200% of
the then-current Exercise Price for each of the twenty (20) consecutive trading
days immediately preceding the date of such notice, at a price equal to $0.25
per Warrant (the "Redemption Price"). For the purpose of the foregoing
sentence, the term "Daily Price" shall mean, for any relevant day, the closing
bid price on that day as reported by the principal exchange or quotation system
on which prices for the Common Stock are reported. On the redemption date the
holders of record of redeemed Warrants shall be entitled to payment of the
Redemption Price upon surrender of such redeemed Warrants to the Company at the
principal office of the Warrant Agent in New York City, New York.
F. Notice of redemption of Warrants shall be given at least 30 days
prior to the redemption date by mailing, by registered or certified mail,
return receipt requested, a copy of such notice to the Warrant Agent and to all
of the holders of record of Warrants at their respective addresses appearing on
the books or transfer records of the Company or such other address designated in
writing by the holder of record to the Warrant Agent not less than 40 days prior
to the redemption date.
G. From and after the redemption date, all rights of the
Warrantholders (except the right to receive the Redemption Price) shall
terminate, but only if (a) no later than one day prior
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to the redemption date the Company shall have irrevocably deposited with the
Warrant Agent as paying agent a sufficient amount to pay on the redemption date
the Redemption Price for all Warrants called for redemption and (b) the notice
of redemption shall have stated the name and address of the Warrant Agent and
the intention of the Company to deposit such amount with the Warrant Agent no
later than one day prior to the redemption date.
H. The Warrant Agent shall pay to the holders of record of redeemed
Warrants all monies received by the Warrant Agent for the redemption of Warrants
to which the holders of record of such redeemed Warrants who shall have
surrendered their Warrants are entitled.
I. Any amounts deposited with the Warrant Agent that are not required
for redemption of Warrants may be withdrawn by the Company. Any amounts
deposited with the Warrant Agent that shall be unclaimed after six months after
the redemption date may be withdrawn by the Company, and thereafter the holders
of the Warrants called for redemption for which such funds were deposited shall
look solely to the Company for payment. The Company shall be entitled to the
interest, if any, on funds deposited with the Warrant Agent, and the holders of
redeemed Warrants shall have no right to any such interest.
J. If the Company fails to make a sufficient deposit with the Warrant
Agent as provided above, the holder of any Warrants called for redemption may at
the option of the holder (a) by notice to the Company declare the notice of
redemption a nullity as to such holder, or (b) maintain an action against the
Company for the Redemption Price. If the holder brings such an action, the
Company will pay reasonable attorneys' fees of the holder. If the holder fails
to bring an action against the Company for the Redemption Price within 60 days
after the redemption date, the holder shall be deemed to have elected to declare
the notice of redemption to be a nullity as to such holder and such notice shall
be without any force or effect as to such holder. Except as otherwise
specifically provided in this Paragraph J, a notice of redemption, once mailed
by the Company as provided in Paragraph F shall be irrevocable.
Section 8. FRACTIONAL INTERESTS
The Company shall not be required to issue any Warrant Certificate
evidencing a fraction of a Warrant or to issue fractions of shares of securities
on the exercise of the Warrants. If any fraction (calculated to the nearest
one-hundredth) of a Warrant or a share of securities would, except for the
provisions of this Section, be issuable on the exercise of any Warrant, the
Company shall, at its option, either purchase such fraction for an amount in
cash equal to the current value of such fraction computed on the basis of the
closing market price (as quoted on NASDAQ) on the trading day immediately
preceding the day upon which such Warrant Certificate was surrendered for
exercise in accordance with Section 7 hereof or issue the required fractional
Warrant or share. By accepting a Warrant Certificate, the holder thereof
expressly waives any right to receive a Warrant Certificate evidencing any
fraction of a Warrant or to receive any fractional share of securities upon
exercise of a Warrant, except as expressly provided in this Section 8.
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Section 9. RESERVATION OF EQUITY SECURITIES; SECURITIES LAW MATTERS
The Company covenants that it will at all times reserve and keep
available, free from any preemptive rights, out of its authorized and unissued
equity securities, solely for the purpose of issuance upon exercise of the
Warrants, such number of shares of equity securities of the Company as shall
then be issuable upon the exercise of all outstanding Warrants ("Equity
Securities"). The Company covenants that all Equity Securities which shall be
so issuable shall, upon such issuance, be duly authorized, validly issued, fully
paid and nonassessable.
The Company covenants that if any equity securities required to be
reserved for the purpose of issuance upon exercise of the Warrants hereunder
require registration with or approval of any governmental authority under any
federal or state law before such shares may be issued upon exercise of Warrants,
the Company will use all commercially reasonable efforts to cause such
securities to be duly registered, or approved, as the case may be, and, to the
extent practicable, the Company will take all such action in anticipation of and
prior to the exercise of the Warrants, including, without limitation, filing any
and all post-effective amendments to the Company's Registration Statement on
Form SB-2 necessary to permit a public offering of the securities underlying the
Warrants at any and all times during the term of this Agreement; PROVIDED,
HOWEVER, that in no event shall such securities be issued, and the Company is
authorized to refuse to honor the exercise of any Warrant, if such exercise
would result, in the opinion of the Company's Board of Directors upon advice of
counsel, in the violation of any law. In the case of a Warrant exercisable
solely for securities listed on a securities exchange or for which there are at
least two independent market makers, in the event that a current registration
statement is not in effect at the time when a Warrant is exercised, the Company
may, at its option, in lieu of obtaining such registration or approval, elect to
redeem Warrants submitted to the Warrant Agent for exercise for a price equal to
the difference between the closing price of the securities for which such
Warrant is exercisable on the date of such submission and the Exercise Price of
such Warrants, and in the event of such redemption, the Company will pay to the
holder of such Warrants the above-described redemption price in cash within 10
business days after receipt of notice from the Warrant Agent that such Warrants
have been submitted for exercise.
Section 10. REDUCTION OF CONVERSION PRICE BELOW PAR VALUE
Before taking any action that would cause an adjustment pursuant
to Section 6 hereof reducing the portion of the Exercise Price required to
purchase one shares of capital stock below the then par value (if any) of a
share of such capital stock, the Company will use its best efforts to take any
corporate action which, in the opinion of its counsel, may be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
shares of such capital stock.
Section 11. PAYMENT OF TAXES
The Company covenants and agrees that it will pay when due and
payable any and all federal and state documentary stamp and other original issue
taxes which may be payable in respect of the original issuance of the Warrant
Certificates, or any shares of Common Stock or other securities upon the
exercise of Warrants. The Company shall not, however, be required
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(i) to pay any tax which may be payable in respect of any transfer involved in
the transfer and delivery of Warrant Certificates or the issuance or delivery of
certificates for Common Stock or other securities in a name other than that of
the registered holder of the Warrant Certificate surrendered for purchase or
(ii) to issue or deliver any certificate for shares of Common Stock or other
securities upon the exercise of any Warrant Certificate until any such tax shall
have been paid, all such tax being payable by the holder of such Warrant
Certificate at the time of surrender.
Section 12. NOTICE OF CERTAIN CORPORATE ACTIONS
In case the Company after the date hereof shall propose (i) to
offer to the holders of Common Stock, generally, rights to subscribe to or
purchase any additional shares of any class of its capital stock, any evidences
of its indebtedness or assets, or any other rights or options or (ii) to effect
any reclassification of Common Stock (other than a reclassification involving
merely the subdivision or combination of outstanding shares of Common Stock) or
any capital reorganization, or any consolidation or merger to which the Company
is a party and for which approval of any stockholders of the Company is
required, or any sale, transfer or other disposition of its property and assets
substantially as an entirety, or the liquidation, voluntary or involuntary
dissolution nor winding-up of the Company, then, in each such case, the Company
shall file with the Warrant Agent and the Company, or the Warrant Agent on its
behalf, shall mail (by first-class, postage prepaid mail) to all registered
holders of the Warrant Certificates notice of such proposed action, which notice
shall specify the date on which the books of the Company shall close or a record
be taken for such offer of rights or options, or the date on which such
reclassification, reorganization, consolidation, merger, sale, transfer, other
disposition, liquidation, voluntary or involuntary dissolution or winding-up
shall take place or commence, as the case may be, and which shall also specify
any record date for determination of holders of Common Stock entitled to vote
thereon or participate therein and shall set forth such facts with respect
thereto as shall be reasonably necessary to indicate any adjustments in the
Exercise Price and the number or kind of shares or other securities purchasable
upon exercise of Warrants which will be required as a result of such action.
Such notice shall be filed and mailed in the case of any action covered by
clause (i) above, at least ten days prior to the record date for determining
holders of the Common Stock for purposes of such action or, if a record is not
to be taken, the date as of which the holders of shares of Common Stock of
record are to be entitled to such offering; and, in the case of any action
covered by clause (ii) above, at least 20 days prior to the earlier of the date
on which such reclassification, reorganization, consolidation, merger, sale,
transfer, other disposition, liquidation, voluntary or involuntary dissolution
of winding-up is expected to become effective and the date on which it is
expected that holders of shares of Common Stock of record on such date shall be
entitled to exchange their shares for securities or other property deliverable
upon such reclassification, reorganization, consolidation, merger, sale,
transfer, other disposition, liquidation, voluntary or involuntary dissolution
or winding-up.
Failure to give any such notice or any defect therein shall not
affect the legality or validity of any transaction listed in this Section 12.
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Section 13. DISPOSITION OF PROCEEDS ON EXERCISE OF WARRANT CERTIFICATES, ETC.
The Warrant Agent shall account promptly to the Company with
respect to Warrants exercised and concurrently pay to the Company all monys
received by the Warrant Agent for the purchase of securities or other property
through the exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement available
for inspection by Warrantholders during normal business hours at its stock
transfer office. Copies of this Agreement may be obtained upon written request
addressed to the Warrant Agent at its stock transfer office in New York City,
New York.
Section 14. WARRANTHOLDER NOT DEEMED A STOCKHOLDER
No Warrantholder, as such, shall be entitled to vote, receive
dividends or be deemed the holder of Common Stock or any other securities of the
Company which may at any time be issuable on the exercise of the Warrants
represented thereby for any purpose whatever. Nothing contained herein or in
any Warrant Certificate may be construed to confer upon any Warrantholder, as
such, any of the rights of a stockholder of the Company, any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, any right to give or withhold consent to any corporate action
(whether at any meeting of stockholders or by giving or withholding consent to
any merger, recapitalization, issuance of stock, reclassification of stock,
change of par value or change of stock to no par value, consolidation,
conveyance or otherwise), or any right to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 12 hereof). No
Warrantholder shall have any right to receive dividend or subscription rights or
any other rights that any stockholders of the Company may have, until such
Warrant Certificate shall have been exercised in accordance with the provisions
hereof and the receipt of the Exercise Price and any other amounts payable upon
such exercise by the Warrant Agent and the Common Stock purchasable upon such
exercise shall have become deliverable as provided herein.
Section 15. RIGHT OF ACTION
All rights of action in respect to this Agreement are vested in
the respective registered holders of the Warrant Certificates; and any
registered holder of any Warrant Certificate, without the consent of the Warrant
Agent or of any other holder of a Warrant Certificate, may in his own behalf for
his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company suitable to enforce, or otherwise in respect of,
his right to exercise the Warrants evidenced by such Warrant Certificate, for
the purchase of shares of the Common Stock in the manner provided in the Warrant
Certificate and in this Agreement.
Section 16. AGREEMENT OF HOLDERS OF WARRANT CERTIFICATES
Every holder of a Warrant Certificate by accepting the same
consents and agrees with the Company, the Warrant Agent and with every other
holder of a Warrant Certificate that:
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A. the Warrant Certificates are transferable on the registry books of
the Warrant Agent only upon the terms and conditions set forth in this
Agreement; and
B. the Company and the Warrant Agent may deem and treat the person in
whose name the Warrant Certificate is registered as the absolute owner of the
Warrant (notwithstanding any notation of ownership or other writing thereon made
by anyone other than the Company or the Warrant Agent) for all purposes
whatever, and neither the Company nor the Warrant Agent shall be affected by any
notice to the contrary.
Section 17. CANCELLATION OF WARRANT CERTIFICATES
In the event that the Company shall purchase or otherwise acquire
any Warrant Certificate or Warrant Certificates after the issuance thereof, such
Warrant Certificate or Warrant Certificates shall thereupon be delivered to the
Warrant Agent and be canceled by it and retired. The Warrant Agent shall also
cancel any Warrant Certificate delivered to it for exercise, in whole or in
part, or delivered to it for transfer, split-up, combination or exchange.
Warrant Certificates so canceled shall be delivered by the Warrant Agent to the
Company from time to time, or disposed of in accordance with the instructions of
the Company.
Section 18. CONCERNING THE WARRANT AGENT
The Company agrees to pay to the Warrant Agent from time to time,
on demand of the Warrant Agent, reasonable compensation for all services
rendered by it hereunder and also its reasonable expenses incurred in the
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Company also agrees to indemnify the Warrant Agent
for, and to hold it harmless against, any loss, liability or expense, incurred
without gross negligence, bad faith or willful misconduct on the part of the
Warrant Agent, arising out of or in connection with the acceptance and
administration of this Agreement.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT
Any corporation into which the Warrant Agent may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor warrant agent under
the provisions of Section 21 hereof. In case at the time such successor to the
Warrant Agent shall succeed to the agency created by this Agreement, any of the
Warrant Certificates shall have been countersigned but not delivered, any such
successor to the Warrant Agent may adopt the countersignature of the original
Warrant Agent and deliver such Warrant Certificates so countersigned; and in
case at that time any of the Warrant Certificates shall not have been
countersigned, any successor to the Warrant Agent may countersign such Warrant
Certificates either in the name of the predecessor Warrant Agent or in the name
of the successor Warrant
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Agent; and in all such cases such Warrant Certificates shall have the full force
provided in the Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed
and at such time any of the Warrant Certificates shall have been countersigned
but not delivered, the Warrant Agent may adopt the countersignature under its
prior name and deliver Warrant Certificates so countersigned; and in case at
that time any of the Warrant Certificates shall not have been countersigned, the
Warrant Agent may countersign such Warrant Certificates either in its prior name
or in its changed name; and in all such cases such Warrant Certificates shall
have the full force provided in the Warrant Certificates and in this Agreement.
Section 20. DUTIES OF WARRANT AGENT
The Warrant Agent undertakes the duties and obligations imposed by
this Agreement upon the following terms and conditions, by all of which the
Company and the holders of Warrant Certificates, by their acceptance thereof,
shall be bound:
A. The Warrant Agent may consult with counsel satisfactory to it (who
may be counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Warrant Agent as to any action
taken, suffered or omitted by it in good faith and in accordance with such
opinion; PROVIDED, HOWEVER, that the Warrant Agent shall have exercised
reasonable care in the selection of such counsel. Fees and expenses of such
counsel, to the extent reasonable, shall be paid by the Company.
B. Whenever in the performance of its duties under this Agreement,
the Warrant Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by a Chairman or co-Chairman of the Board or
the President or a Vice President or the Secretary of the Company and delivered
to the Warrant Agent; and such certificate shall be full authorization to the
Warrant Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
C. The Warrant Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
D. The Warrant Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Warrant
Certificates (except its countersignature on the Warrant Certificates and such
statements or recitals as describe the Warrant Agent or action taken or to be
taken by it) or be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the Company only.
E. The Warrant Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Warrant Agent) or in respect of the validity or
execution of any Warrant Certificate (except its
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countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Warrant Certificate; nor shall it be responsible for the making of any change in
the number of shares of Common Stock for which a Warrant is exercisable required
under the provisions of Section 6 or responsible for the manner, method or
amount of any such change or the ascertaining of the existence of facts that
would require any such adjustment or change (except with respect to the exercise
of Warrant Certificates after actual notice of any adjustment of the Exercise
Price); nor shall it by any act hereunder be deemed to make any representation
or warranty as to the authorization or reservation of any shares of Common Stock
to be issued pursuant to this Agreement or any Warrant Certificate or as to
whether any shares of Common Stock will, when issued, be validly issued, fully
paid and non-assessable.
F. The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or take any other action likely to involve
expense unless the Company or one or more registered holders of Warrant
Certificates shall furnish the Warrant Agent with reasonable security and
indemnity for any costs and expenses which may be incurred. All rights of
action under this Agreement or under any of the Warrants may be enforced by the
Warrant Agent without the possession of any of the Warrants or the production
thereof at any trial or other proceeding relative thereto, and any such action,
suit or proceeding instituted by the Warrant Agent shall be brought in its name
as Warrant Agent, and any recovery of judgment shall be for the ratable benefit
of the registered holders of the Warrant Certificates, as their respective
rights or interests may appear.
G. 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 become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to or otherwise act as fully and freely as though it were not Warrant
Agent under this Agreement. Nothing herein shall preclude the Warrant Agent
from acting in any other capacity for the Company or for any other legal entity.
H. The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from a
Chairman or co-Chairman of the Board or President or a Vice President or the
Secretary or the Controller of the Company, and to apply to such officers for
advice or instructions in connection with the Warrant Agent's duties, and it
shall not be liable for any action taken or suffered or omitted by it in good
faith in accordance with instructions of any such officer.
I. The Warrant Agent will not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrant Certificates to be complied with by the Company.
J. The Warrant Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys, agents or employees and the Warrant Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys, agents or employees or for any loss to the Company
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resulting from such neglect or misconduct; PROVIDED, HOWEVER, that reasonable
care shall have been exercised in the selection and continued employment of such
attorneys, agents and employees.
K. The Warrant Agent will not incur any liability or responsibility
to the Company or to any holder of any Warrant Certificate for any action taken,
or any failure to take action, in reliance on any notice, resolution, waiver,
consent, order, certificate, or other paper, document or instrument reasonably
believed by the Warrant Agent to be genuine and to have been signed, sent or
presented by the proper party or parties.
L. The Warrant Agent will act hereunder solely as agent of the
Company in a ministerial capacity, and its duties will be determined solely by
the provisions hereof. The Warrant Agent will not be liable for anything which
it may do or refrain from doing in connection with this Agreement except for its
own negligence, bad faith or willful conduct.
Section 21. CHANGE OF WARRANT AGENT
The Warrant Agent may resign and be discharged from its duties
under this Agreement upon 30 days' prior notice in writing mailed, by registered
or certified mail, to the Company. The Company may remove the Warrant Agent or
any successor warrant agent upon 30 days' prior notice in writing, mailed to the
Warrant Agent or successor warrant agent, as the case may be, by registered or
certified mail. If the Warrant Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Warrant Agent and shall, within 15 days following such appointment, give
notice thereof in writing to each registered holder of the Warrant Certificates.
If the Company shall fail to make such appointment within a period of 15 days
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Warrant Agent,
then the Company agrees to perform the duties of the Warrant Agent hereunder
until a successor Warrant Agent is appointed. After appointment and execution
of a copy of this Agreement in effect at that time, the successor Warrant Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Warrant Agent without further act or deed and
the office of the successor Warrant Agent named in the notice provided for in
this Section shall be the office to which notices shall be sent and Warrant
Certificates shall be tendered thereafter. The former Warrant Agent shall
deliver and transfer to the successor Warrant Agent, within a reasonable time,
any property at the time held by its hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Failure
to give any notice provided for in this Section, however, or any defect therein
shall not affect the legality or validity of the resignation or removal of the
Warrant Agent or the appointment of the successor Warrant Agent, as the case may
be.
Section 22. ISSUANCE OF NEW WARRANT CERTIFICATES
Notwithstanding any of the provisions of this Agreement or the
several Warrant Certificates to the contrary, the Company may, at its option,
issue new Warrant Certificates in such form as may be approved by its Board of
Directors to reflect any adjustment or change in
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the Exercise Price or the number or kind of shares purchasable under the several
Warrant Certificates made in accordance with the provisions of this Agreement.
Section 23. NOTICES
Notice or demand pursuant to this Agreement to be given or made
on the Company by the Warrant Agent or by the registered holder of any Warrant
Certificate shall be sufficiently given or made if sent by first-class or
registered mail, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent) as follows:
Caring Products International, Inc.
200 First Avenue West, Suite 200
Seattle, Washington 98119
Attention: Susan A. Schreter
Subject to the provisions of Section 21, any notice pursuant to
this Agreement to be given or made by the Company or by the holder of any
Warrant Certificate to or on the Warrant Agent shall be sufficiently given or
made if sent by first-class or registered mail, postage prepaid, addressed
(until another address is filed in writing by the Warrant Agent with the
Company) as follows:
The Bank of Nova Scotia Trust Company of New York
One Liberty Plaza
New York, New York 10006
Any notice or demand authorized to be given or made to the
registered holder of any Warrant Certificate under this Agreement shall be
sufficiently given or made if sent by first-class or registered mail, postage
prepaid, to the last address of such holder as it shall appear on the
registers maintained by the Warrant Agent.
Section 24. MODIFICATION OF AGREEMENT
The Warrant Agent may, without the consent or concurrence of the
Warrantholders, by supplemental agreement or otherwise, concur with the
Company in making any changes or corrections in this Agreement that the
Warrant Agent shall have been advised by counsel (who may be counsel for the
Company) are necessary or desirable to cure any ambiguity or to correct any
defective or inconsistent provision or clerical omission or mistake or
manifest error herein contained, or to make any other provisions in regard to
matters or questions arising hereunder and which shall not be inconsistent
with the provisions of the Warrant Certificates and which shall not adversely
affect the interests of the Warrantholders. As of the date hereof, this
Agreement contains the entire and only agreement, understanding,
representation, condition, warranty or covenant between the parties hereto
with respect to the matters herein, supersedes any and all other agreements
between the parties hereto relating to such matters, and may be modified or
amended only by a written agreement signed by both parties hereto pursuant to
the authority granted by the first sentence of this Section.
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Section 25. SUCCESSORS
All the covenants and provisions of this Agreement by or for the
benefit of the Company or the Warrant Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
Section 26. NEW YORK CONTRACT
This Agreement and each Warrant Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of New
York and for all purposes shall be construed in accordance with the laws of
said state.
Section 27. TERMINATION
This Agreement shall terminate as of the close of business on
the Expiration Date, or such earlier date upon which all Warrants shall have
been exercised or redeemed, except that the Warrant Agent shall account to
the Company as to all Warrants outstanding and all cash held by it as of the
close of business on the Expiration Date.
Section 28. BENEFITS OF THIS AGREEMENT
Nothing in this Agreement or in the Warrant Certificates shall
be construed to give to any person or corporation other than the Company, the
Warrant Agent, and their respective successors and assigns hereunder and the
registered holders of the Warrant Certificates any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Warrant Agent, their
respective successors and assigns hereunder and the registered holders of the
Warrant Certificates.
Section 29. DESCRIPTIVE HEADINGS
The descriptive headings of the several Sections of this
Agreement are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
Section 30. COUNTERPARTS
This Agreement may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the day and year first above written.
CARING PRODUCTS INTERNATIONAL, INC.
By:
------------------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA TRUST COMPANY
OF NEW YORK
By:
------------------------------------
Name:
Title:
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