EXHIBIT 4.4
EXHIBIT E
FORM OF COMMON STOCK PURCHASE WARRANT
THIS COMMON STOCK PURCHASE WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING
THIS COMMON STOCK PURCHASE WARRANT, AGREES FOR THE BENEFIT OF THE COMPANY THAT
SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE
COMPANY, (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT, OR (C) IF REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS. IN ADDITION, A SECURITIES PURCHASE AGREEMENT ("PURCHASE
AGREEMENT"), DATED THE DATE HEREOF, A COPY OF WHICH MAY BE OBTAINED FROM THE
COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICE, CONTAINS CERTAIN ADDITIONAL
AGREEMENTS AMONG THE PARTIES, INCLUDING, WITHOUT LIMITATION, PROVISIONS WHICH
LIMIT THE EXERCISE RIGHTS OF THE HOLDER AND SPECIFY MANDATORY REDEMPTION
OBLIGATIONS OF THE COMPANY.
_______________________________________
AVITAR, INC.
COMMON STOCK PURCHASE WARRANT
No. 1
Number of shares: 125,000 Holder: GCA Strategic Investment
Fund Limited
Expiration Date: August 5, 2009 Mechanics Building
12 Church Street
Purchase Price Per Share: $0.095 Hamilton, Bermuda HM11
For identification only. The governing terms of this Warrant are set forth
below.
Avitar, Inc., a Delaware corporation (the "Company"), hereby certifies that, for
value received, GCA Strategic Investment Fund Limited or its assigns (the
"Holder"), is entitled, subject to the terms set forth below, to purchase from
the Company at any time or from time to time after the date hereof and prior to
the fifth anniversary hereof (the "Exercise Period"), at the Purchase Price
hereinafter set forth, 0ne hundred twenty five thousand (125.000) shares of the
fully paid and nonassessable shares of common stock of the Company, $0.01 par
value per share (the "Common Stock"). The number and character of such shares of
Common Stock and the Purchase Price are subject to adjustment as provided
herein.
The purchase price per share of Common Stock issuable upon exercise of this
Warrant (the "Purchase Price") shall initially be equal to 105% of the closing
bid price for the Common Stock, as reported on Bloomberg, L.P., on the trading
day immediately prior to Closing.
Capitalized terms used herein not otherwise defined shall have the meanings
ascribed thereto in the Purchase Agreement. As used herein the following terms,
unless the context otherwise requires, have the following respective meanings:
(a) The term "Company" shall include Avitar, Inc. and any corporation that
shall succeed or assume the obligations of such corporation hereunder.
(b) The term "Common Stock" includes (a) the Company's common stock, $0.01
par value per share, (b) any other capital stock of any class or classes
(however designated) of the Company, authorized on or after the date hereof, the
Holders of which shall have the right, without limitation as to amount, either
to all or to a share of the balance of current dividends and liquidating
dividends after the payment of dividends and distributions on any shares
entitled to preference, and the Holders of which shall ordinarily, in the
absence of contingencies, be entitled to vote for the election of a majority of
directors of the Company (even though the right so to vote has been suspended by
the happening of such a contingency) and (c) any other securities into which or
for which any of the securities described in (a) or (b) may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger, sale
of assets or otherwise.
(c) The term "Other Securities" refers to any stock (other than Common
Stock) and other securities of the Company or any other person (corporate or
otherwise) that the Holder of this Warrant at any time shall be entitled to
receive, or shall have received, on the exercise of this Warrant, in lieu of or
in addition to Common Stock, or that at any time shall be issuable or shall have
been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 4 or otherwise.
1. Exercise of Warrant.
1.1 Method of Exercise.
(a) This Warrant may be exercised in whole or in part (but not as to a
fractional share of Common Stock), at any time and from time to time during the
Exercise Period by the Holder hereof by delivery of a notice of exercise (a
"Notice of Exercise") substantially in the form attached hereto as Exhibit A via
facsimile to the Company. Promptly thereafter the Holder shall surrender this
Warrant (if the entire amount of the Warrant is subject to the Notice of
Exercise) to the Company at its principal office via overnight delivery service,
accompanied by payment of the Purchase Price multiplied by the number of shares
of Common Stock for which this Warrant is being exercised (the "Exercise
Price"). Payment of the Exercise Price shall be made, at the option of the
Holder, (i) by check or bank draft payable to the order of the Company, or (ii)
by wire transfer to the account of the Company. Upon exercise, the Holder shall
be entitled to receive within three Trading Days of the Exercise Date (as
defined herein), one or more certificates, issued in the Holder's name or in
such name or names as the Holder may direct, subject to the limitations on
transfer contained herein, for the number of shares of Common Stock so
purchased. The shares of Common Stock so purchased shall be deemed to be issued
as of the close of business on the date on which the Company shall have received
from the Holder payment in full of the Exercise Price (the "Exercise Date").
(b) Upon exercise of a portion of this Warrant in accordance with the terms
hereof, records showing the amount so exercised and the date of exercise shall
be maintained on a ledger substantially in the form of Annex B attached hereto
(an originally signed and executed copy of which shall be delivered to the
Company with each Notice of Exercise). The Company shall maintain the originally
signed and executed ledger and the Holder shall maintain a copy thereof. Upon
execution of the exercise of the Warrants contemplated by the Notice of
Exercise, the Company shall deliver to the Holder a copy of Annex B signed and
executed by the Company, and the Holder shall deliver to the Company a copy of
Annex B signed by the Holder. It is specifically contemplated that the Company
shall act as the calculation agent for all exercises of this Warrant. The Holder
and any assignee, by acceptance of this Warrant, acknowledges and agrees that,
by reason of the provisions of this paragraph, following an exercise of a
portion of this Warrant, the number of shares of Common Stock represented by
this Warrant will be the amount indicated on Annex B attached hereto (which may
be less than the amount stated on the face hereof).
(c) In the event there is a dispute as to the number of shares of Common
Stock the Holder is entitled to receive upon exercise of this Warrant, the
Company shall issue to the Holder the number of shares not in dispute and the
Company and the Holder will use their best efforts to resolve such dispute
within one Business Day following the receipt of a Notice of Exercise. If such
dispute cannot be resolved within such one-day period, the Company and the
Holder shall submit the dispute to an independent accountant mutually agreed
upon by the Company and the Holder to make a final and binding determination of
the number of shares owed to the Holder. The Company shall issue shares of
Common Stock owed to Holder as a result of the resolution of the dispute within
two Business Days following the receipt of the accountant's independent
determination.
1.2 Regulation D Restrictions. The Holder hereof represents and warrants to
the Company that it has acquired this Warrant and anticipates acquiring the
shares of Common Stock issuable upon exercise of the Warrant solely for its own
account for investment purposes and not with a view to or for resale of such
securities unless such resale has been registered with the Commission or an
applicable exemption is available therefor and provided that the Holder shall
have furnished to the Company an opinion of counsel in form and substance
reasonably satisfactory to the Company, to the effect that such transfer is
exempt from the registration requirements of the Securities Act and any
applicable state securities laws.
1.3 Company Acknowledgment. The Company will, at the time of the exercise
of this Warrant, upon request of the Holder hereof, acknowledge in writing its
continuing obligation to afford to such Holder the registration rights to which
such Holder shall continue to be entitled after such exercise in accordance with
the provisions of a Registration Rights Agreement dated the date hereof (the
"Registration Rights Agreement").
1.4 Exercise. Notwithstanding the rights of the Holder to exercise all or a
portion of this Warrant as described herein, such exercise rights shall be
limited, solely to the extent set forth in the Purchase Agreement as if such
provisions were specifically set forth herein.
2. Delivery of Stock Certificates, etc., on Exercise. As soon as practicable
after the exercise of this Warrant, and in any event within three (3) Business
Days thereafter, the Company at its expense (including the payment by it of any
applicable issue, stamp or transfer taxes) will cause to be issued in the name
of and delivered to the Holder thereof, or, to the extent permissible hereunder,
to such other person as such Holder may direct, a certificate or certificates
for the number of fully paid and nonassessable shares of Common Stock (or Other
Securities) to which such Holder shall be entitled on such exercise, plus, in
lieu of any fractional share to which such Holder would otherwise be entitled,
cash equal to such fraction multiplied by the then applicable Purchase Price,
together with any other stock or other securities and property (including cash,
where applicable) to which such Holder is entitled upon such exercise pursuant
to Section 1 or otherwise.
3. Adjustment for Extraordinary Events. The Purchase Price to be paid by the
Holder upon exercise of this Warrant, and the consideration to be received upon
exercise of this Warrant, shall be adjusted in case at any time or from time to
time pursuant to Article 11 of the Purchase Agreement as if such provisions were
specifically set forth herein.
4. No Impairment. The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of this Warrant against
impairment. Without limiting the generality of the foregoing, the Company (a)
will not increase the par value of any shares of stock receivable on the
exercise of this Warrant above the amount payable therefor on such exercise, (b)
will take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and unassessable shares of
stock on the exercise of this Warrant, and (c) will not transfer all or
substantially all of its properties and assets to any other person (corporate or
otherwise), or consolidate with or merge into any other person or permit any
such person to consolidate with or merge into the Company (if the Company is not
the surviving person), unless such other person shall expressly assume in
writing and will be bound by all the terms of this Warrant.
5. Certificate as to Adjustments. In each case of any adjustment or readjustment
in the shares of Common Stock (or Other Securities) issuable on the exercise of
this Warrant, the Company will promptly cause its principal financial officer to
compute such adjustment or readjustment in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based, including a statement of (a) the consideration received or receivable by
the Company for any additional shares of Common Stock (or Other Securities)
issued or sold or deemed to have been issued or sold, (b) the number of shares
of Common Stock (or Other Securities) outstanding or deemed to be outstanding,
and (c) the Purchase Price and the number of shares of Common Stock to be
received upon exercise of this Warrant, in effect immediately prior to such
issue or sale and as adjusted and readjusted as provided in this Warrant. The
Company will forthwith mail a copy of each such certificate to the Holder of
this Warrant, and will, on the written request at any time of the Holder of this
Warrant, furnish to such Holder a like certificate setting forth the Purchase
Price at the time in effect and showing how it was calculated.
6. Notices of Record Date, etc.
In the event of
(a) any taking by the Company of a record of the Holders of any class of
securities for the purpose of determining the Holders thereof who are entitled
to receive any dividend or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all or
substantially all the assets of the Company to or consolidation or merger of the
Company with or into any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or winding-up of
the Company,
then and in each such event the Company will mail or cause to be mailed to the
Holder of this Warrant a notice specifying (i) the date on which any such record
is to be taken for the purpose of such dividend, distribution or right, and
stating the amount and character of such dividend, distribution or right, and
(ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up is to take place, and the time, if any, as of which the Holders of
record of Common Stock (or Other Securities) shall be entitled to exchange their
shares of Common Stock (or Other Securities) for securities or other property
deliverable on such reorganization, reclassification, recapitalization,
transfer, consolidation, merger, dissolution, liquidation or winding-up. Such
notice shall be mailed at least 20 days prior to the date specified in such
notice on which any action is to be taken.
7. Reservation of Stock, etc. Issuable on Exercise of Warrant. The Company will
at all times reserve and keep available, solely for issuance and delivery on the
exercise of this Warrant, all shares of Common Stock (or Other Securities) from
time to time issuable on the exercise of this Warrant.
8. Exchange of Warrant. On surrender for exchange of this Warrant, properly
endorsed and in compliance with the restrictions on transfer set forth in the
legend on the face of this Warrant, to the Company, the Company at its expense
will issue and deliver to or on the order of the Holder thereof a new Warrant of
like tenor, in the name of such Holder or as such Holder (on payment by such
Holder of any applicable transfer taxes) may direct, calling in the aggregate on
the face or faces thereof for the number of shares of Common Stock called for on
the face of the Warrant so surrendered or for such lesser number of shares of
Common Stock as may be reflected on the Warrant Exercise Ledger attached as
Annex B.
9. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft or destruction of this Warrant, on delivery of
an indemnity agreement or security reasonably satisfactory in form and amount to
the Company or, in the case of any such mutilation, on surrender and
cancellation of this Warrant, the Company at its expense will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
10. Remedies. The Company stipulates that the remedies at law of the Holder of
this Warrant in the event of any default or threatened default by the Company in
the performance of or compliance with any of the terms of this Warrant are not
and will not be adequate, and that such terms may be specifically enforced by a
decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
11. Negotiability, etc.. This Warrant is issued upon the following terms, to all
of which each Holder or owner hereof by the taking hereof consents and agrees:
(a) until this Warrant is transferred on the books of the Company, the
Company may treat the registered Holder hereof as the absolute owner hereof for
all purposes, notwithstanding any notice to the contrary; and
(b) this Warrant may not be sold, transferred or assigned except pursuant
to an effective registration statement under the Securities Act or pursuant to
an applicable exemption therefrom.
12. Registration Rights. The Company is obligated to register the shares of
Common Stock issuable upon exercise of this Warrant in accordance with the terms
of the Registration Rights Agreement.
13. Warrant Redemption. Upon occurrence of the events described in Sections 3.4
and 10.4(c) of the Purchase Agreement, the Company, at the request of Holder,
shall redeem all outstanding Warrants that remain unexercised at a redemption
price equal to the greater of (x) an appraised value of the Warrants, as
determined by Black Sholes, on the date they are called for redemption and (y)
the number of Warrants being redeemed multiplied by the excess of (A) the Market
Price of the Common Shares over (B) the exercise price of the Warrants. "Market
Price" shall mean the volume weighted average sales price as reported by
Bloomberg, L.P. for the three consecutive trading days immediately prior to the
date that the Warrants are called for redemption.
14. Notices, etc.. All notices and other communications from the Company to the
Holder of this Warrant shall be mailed by first class registered or certified
mail, postage prepaid, at such address as may have been furnished to the Company
in writing by such Holder or, until any such Holder furnishes to the Company any
address, then to, and at the address of, the last Holder of this Warrant who has
so furnished an address to the Company.
15. Miscellaneous. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This Warrant shall be construed and enforced in accordance with and
governed by the internal laws of the State of Delaware. The headings in this
Warrant are for the purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.
[Signature Page Follows]
DATED as of August _5, 2004.
AVITAR, INC.
By: Peter P. Phildius
___________________
Chairman & CEO:
[Corporate Seal]
Attest:
By: Jay C. Leatherman, Jr.
Secretary
EXHIBIT A
FORM OF NOTICE EXERCISE - WARRANT
(To be executed only upon exercise
of the Warrant in whole or in part)
To ____________________________________________
The undersigned registered Holder of the accompanying Warrant, hereby
exercises such Warrant or portion thereof for, and purchases thereunder,
__________1 shares of Common Stock (as defined in such Warrant) and herewith
makes payment therefor in the amount and manner set forth below, as of the date
written below. The undersigned requests that the certificates for such shares of
Common Stock be issued in the name of, and delivered to, whose address is .
The Exercise Price is paid as follows:
|_| Certified Bank draft payable to the Company in the amount of $______.
|_| Wire transfer to the account of the Company in the amount of $______.
Upon exercise pursuant to this Notice of Exercise, the Holder will be in
compliance with the Limitation on Exercise (as defined in the Securities
Purchase Agreement pursuant to which this Warrant was issued).
The Holder of the shares of Common Stock received upon exercise of the
Warrant (the "Common Shares"), covenants and agrees that the Common Shares are
being acquired as an investment and not with a view to the distribution thereof
in violation of the Securities Act and that the Common Shares may not be
transferred, sold, assigned, hypothecated or otherwise disposed of, in whole or
in part except as provided in the legend on the first page of this Warrant and
provided that the Holder shall have furnished the Company an opinion of counsel
in form and substance reasonably acceptable to the Company to the effect that
such transfer is exempt from the registration requirements of the Securities Act
and any applicable state securities laws.*
Date:
(Name must conform to name of Holder as
specified on the face of the Warrant)
By:
Name:
Title:
Address of Holder:
Date of exercise:
ANNEX B
WARRANT EXERCISE LEDGER
Original Number of Warrants Exercise Price New Balance Issuer Holder
Date Warrants Exercised Paid of Warrants Initials Initials
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AVITAR, INC. HOLDER:
By: _______________________ By: _____________
Name: _______________________ Name:____________
Title: ________________________ Title:___________
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1 Insert the number of shares of Common Stock as to which the accompanying
Warrant is being exercised. In the case of a partial exercise, a new
Warrant or Warrants will be issued and delivered, representing the
unexercised portion of the accompanying Warrant, to the Holder surrendering
the same.