EXHIBIT 4.1
WARRANT AGREEMENT
This WARRANT AGREEMENT ("Agreement") dated as of May __, 1995, is among
Datametrics Corporation, a Delaware corporation (the "Company"), Pennsylvania
Merchant Group Ltd ("PMG") and Cruttenden Roth Incorporated ("Cruttenden")
(Cruttenden and PMG are each sometimes referred to herein as a "Representative"
and are collectively referred to herein as, the "Representatives").
The Company proposes to issue warrants to the Representatives (the
"Warrants") to purchase, at a price of $.001 per Warrant, up to an aggregate of
200,000 shares (hereinafter, and as the number thereof may be adjusted hereto,
the "Warrant Shares"), of the Company's Common Stock, $.01 par value per share
(the "Common Stock"), each Warrant initially entitling the holder thereof to
purchase one share of Common Stock.
WHEREAS, the Representatives have agreed pursuant to the Underwriting
Agreement dated May __, 1995, (the "Underwriting Agreement") to act as the
representatives of the several underwriters in connection with the proposed
public offering by the Company of up to 2,300,000 shares in the aggregate of
Common Stock, including 300,000 of such shares covered by an over-allotment
option (the "Public Offering").
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein and in the Underwriting Agreement set forth and for other good and
valuable consideration, the parties hereto agree as follows:
1. Issuance of Warrants; Form of Warrant. The Company will issue and
deliver to each Representative, Warrants to purchase 100,000 Warrant Shares on
the Closing Date referred to in the Underwriting Agreement in consideration for,
and as part of the Representatives' compensation in connection with, the
Representatives acting as the representatives of the several underwriters for
the Public Offering pursuant to the Underwriting Agreement. The text of the
Warrants and of the form of election to purchase shares shall be substantially
as set forth in Exhibit A attached hereto. The Warrants shall be executed on
behalf of the Company by the manual or facsimile signature of the present or any
future Chairman of the Board, President or Vice President of the Company, under
its corporate seal, affixed or in facsimile, attested by the manual or facsimile
signature of the Secretary or an Assistant Secretary of the Company.
Warrants bearing the manual or facsimile signatures of individuals who were
at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any one of them shall have ceased to
hold such offices prior to the delivery of such Warrants or did not hold such
offices on the date of this Agreement. Warrants shall be dated as of the date of
execution thereof by the Company either upon initial issuance or upon division,
exchange, substitution or transfer.
2. Registration. The Warrants shall be numbered and shall be registered
on the books of the Company (the "Warrant Register") as they are issued. The
Company shall be entitled to treat the registered holder of any Warrant on the
Warrant Register (the "Holder") as the owner in fact therefor for all purposes
and shall not be bound to recognize any equitable or other claim to or interest
in such Warrant on the part of any other person, and shall not be liable for any
registration
or transfer of Warrants which are registered or are to be registered in the name
of a fiduciary or the nominee of a fiduciary unless made with the actual
knowledge that a fiduciary or nominee is committing a breach of trust in
requesting such registration or transfer, or with the knowledge of such facts
that its participation therein amounts to bad faith. Warrants to purchase
100,000 shares each shall be registered initially in the name of "Cruttenden
Roth Incorporated" and "Pennsylvania Merchant Group Ltd" in the denominations
set forth on Schedule I hereto, or in such other denominations as Cruttenden and
PMG may request in writing to the Company.
3. Exchange of Warrant Certificates. Subject to any restriction upon
transfer set forth in this Agreement, each Warrant certificate may be exchanged
for another certificate or certificates entitling the Holder thereof to purchase
a like aggregate number of Warrant Shares as the certificate or certificates
surrendered then entitled such Holder to purchase. Any Holder desiring to
exchange a Warrant certificate or certificates shall make such request in
writing delivered to the Company, and shall surrender, properly endorsed, the
certificate or certificates to be so exchanged. Thereupon, the Company shall
execute and deliver to the person entitled thereto a new Warrant certificate or
certificates, as the case may be, as so requested.
4. Transfer of Warrants. Until May __, 1996, the Warrants will not be
transferable except to directors, bona fide officers or partners of, or
successors to, the Representatives who agree in writing to be bound by the terms
hereof, and after May __, 1996, the Warrants will not be transferable except to
the foregoing persons and employees of the Representatives who agree in writing
to be bound by the terms hereof. The Warrants shall be transferable only on the
Warrant Register upon delivery thereof duly endorsed by the Holder or by his
duly authorized attorney or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer. In all cases of transfer by an
attorney, the original power of attorney, duly approved, or an official copy
thereof, duly certified, shall be deposited with the Company. In case of
transfer by executors, administrators, guardians or other legal representatives,
duly authenticated evidence of their authority shall be produced, and may be
required to be deposited with the Company in its discretion. Upon any
registration of transfer, the Company shall deliver a new Warrant or Warrants to
the person entitled thereto. The Warrants may be exchanged at the option of the
Holder thereof, for another Warrant or other Warrants of different
denominations, of like tenor and representing in the aggregate the right to
purchase a like number of Warrant Shares upon surrender to the Company or its
duly authorized agent.
5. Term of Warrants; Exercise of Warrants.
5.1 Each Warrant entitles the registered owner thereof to purchase one
share of Common Stock at any time from 10:00 a.m., Philadelphia time, on
__________, 1996 (the "Initiation Date") until 6:00 p.m., Philadelphia time, on
__________, 2000 (the "Expiration Date") at a purchase price of $____, subject
to adjustment (the "Warrant Price").
5.2 The Warrant Price and the number of Warrant Shares issuable upon
exercise of Warrants are subject to adjustment upon the occurrence of certain
events, pursuant to the provisions of Section 11 of this Agreement. Subject to
the provisions of this Agreement, each Holder of Warrants shall have the right,
which may be exercised as expressed in such Warrants, to purchase from the
Company (and the Company shall issue and sell to such Holder of Warrants) the
number of fully paid and nonassessable Warrant Shares specified in such
Warrants, upon surrender to the Company, or its duly authorized agent, of such
Warrants, with the form of election to
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purchase on the reverse thereof duly filled in and signed, and upon payment to
the Company of the Warrant Price, as adjusted in accordance with the provisions
of Section 11 of this Agreement, for the number of Warrant Shares in respect of
which such Warrants are then exercised. Payment of such Warrant Price shall be
made in cash or by certified or official bank check, or a combination thereof.
No adjustment shall be made for any dividends on any Warrant Shares of stock
issuable upon exercise of a Warrant.
5.3 Upon such surrender of Warrants, and payment of the Warrant Price
as aforesaid, the Company shall issue and cause to be delivered with all
reasonable dispatch to or upon the written order of the Holder of such Warrants
and in such name or names as such registered Holder may designate, a certificate
or certificates for the number of full Warrant Shares so purchased upon the
exercise of such Warrants, together with cash, as provided in Section 12 of this
Agreement, in respect of any fraction of a share otherwise issuable upon such
surrender and, if the number of Warrants represented by a Warrant Certificate
shall not be exercised in full, a new Warrant Certificate, executed by the
Company for the balance of the number of whole Warrant Shares represented by the
Warrant Certificate.
5.4 If permitted by applicable law, such certificate or certificates
shall be deemed to have been issued and any person so designated to be named
therein shall be deemed to have become a holder of record of such shares as of
the date of the surrender of such Warrants and payment of the Warrant Price as
aforesaid. The rights of purchase represented by the Warrants shall be
exercisable, at the election of the registered Holders thereof, either as an
entirety or from time to time for only part of the shares specified therein and,
in the event that any Warrant is exercised in respect of less than all of the
Warrant Shares specified therein at any time prior to the Expiration Date, a new
Warrant or Warrants will be issued for the remaining number of Warrant Shares
specified in the Warrant so surrendered.
6. Compliance with Government Regulations. The Company covenants that if
any shares of Common Stock required to be reserved for purposes of exercise or
conversion of Warrants require, under any Federal or state law or applicable
governing rule or regulation of any national securities exchange, registration
with or approval of any governmental authority, or listing on any such national
securities exchange before such shares may be issued upon exercise, the Company
will in good faith and as expeditiously as possible endeavor to cause such
shares to be duly registered, approved or listed on the relevant national
securities exchange, as the case may be; provided, however, that (except to the
extent legally permissible with respect to Warrants of which the Representatives
are the Holders) in no event shall such shares of Common Stock be issued, and
the Company is hereby authorized to suspend the exercise of all Warrants, for
the period during which such registration, approval or listing is required but
not in effect.
7. Payment of Taxes. The Company will pay all documentary stamp taxes, if
any, attributable to the initial issuance of Warrant Shares upon the exercise of
Warrants; provided, however, that the Company shall not be required to pay any
tax or taxes which may be payable in respect of any transfer involved in the
issue or delivery of any Warrants or certificate for Warrant Shares in a name
other than that of the registered Holder of such Warrants.
8. Mutilated or Missing Warrants. In case any of the Warrants shall be
mutilated, lost, stolen or destroyed, the Company may in its discretion issue
and deliver in exchange and substitution for and upon cancellation of the
mutilated Warrant, or in lieu of and substitution for the Warrant
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lost, stolen or destroyed, a new Warrant of like tenor and representing an
equivalent right or interest; but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction of such Warrant
and, if requested, indemnity or bond also reasonably satisfactory to the
Company. An applicant for such substitute Warrants shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Company may prescribe.
9. Reservation of Warrant Shares. There have been reserved out of the
authorized and unissued shares of Common Stock, a number of shares sufficient to
provide for the exercise of the rights of purchase represented by the Warrants,
and the transfer agent for the Common Stock ("Transfer Agent") and every
subsequent Transfer Agent for any shares of the Company's capital stock issuable
upon the exercise of any of the rights of purchase aforesaid are hereby
irrevocably authorized and directed at all times until the Expiration Date to
reserve such number of authorized and unissued shares as shall be required for
such purpose. The Company will keep a copy of this Agreement on file with the
Transfer Agent and with every subsequent Transfer Agent for any shares of the
Company's capital stock issuable upon the exercise of the rights of purchase
represented by the Warrants. The Company will supply such Transfer Agent with
duly executed stock certificates for such purposes and will itself provide or
otherwise make available any cash which may be issuable as provided in Section
12 of this Agreement. The Company will furnish to such Transfer Agent a copy of
all notices of adjustments, and certificates related thereto, transmitted to
each Holder pursuant to Section 11.2 of this Agreement. All Warrants
surrendered in the exercise of the rights thereby evidenced shall be cancelled.
10. Obtaining Stock Exchange Listings. The Company will from time to time
take all action which may be necessary so that the Warrant Shares, immediately
upon their issuance upon the exercise of Warrants, will be listed on the
principal securities exchanges and markets within the United States of America,
if any, on which other shares of Common Stock are then listed.
11. Adjustment of Warrant Price and Number of Warrant Shares. The number
and kind of securities purchasable upon the exercise of each Warrant and the
Warrant Price shall be subject to adjustment from time to time upon the
happening of certain events as hereinafter defined. For purposes of this
Section 11, "Common Stock" means shares now or hereafter authorized of any class
of common stock of the Company and any other stock of the Company, however
designated, that has the right (subject to any prior rights of any class or
series of preferred stock) to participate in any distribution of the assets or
earnings of the Company without limit as to per share amount.
11.1 Mechanical Adjustments. The number of Warrant Shares purchasable
upon the exercise of each Warrant and the Warrant Price shall be subject to
adjustment as follows:
(a) In case the Company shall (i) pay a dividend in shares of
Common Stock or make a distribution in shares of Common Stock, (ii) subdivide
its outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock or (iv) issue by reclassification of its shares of Common Stock
other securities of the Company (including any such reclassification in
connection with a consolidation or merger in which the Company is the surviving
corporation), the number of Warrant Shares purchasable upon exercise of each
Warrant immediately prior thereto shall be adjusted so that the Holder of each
Warrant shall be entitled to receive the kind and number of Warrant Shares or
other securities of the Company which he would have owned or would have been
entitled to receive after the happening of any of the events described above,
had such Warrants been exercised immediately prior to the happening of such
event or any record date
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with respect thereto. An adjustment made pursuant to this paragraph (a) shall
become effective immediately after the effective date of such event retroactive
to the record date, if any, for such event. Such adjustment shall be made
successively whenever any event listed above shall occur.
(b) In case the Company shall distribute to all holders of its shares of
Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the surviving corporation)
evidences of its indebtedness or assets (excluding cash dividends or
distributions payable out of consolidated earnings or earned surplus and
dividends or distributions referred to in paragraph (a) above or in the
paragraph immediately following this paragraph) or rights, options or warrants,
or convertible or exchangeable securities containing the right to subscribe for
or purchase shares of Common Stock, then in each case the number of Warrant
Shares thereafter purchasable upon the exercise of each Warrant shall be
determined by multiplying the number of Warrant Shares theretofore purchasable
upon the exercise of each Warrant by a fraction, the numerator of which shall be
the then current market price per share of Common Stock (as defined in paragraph
(c) below) on the date of such distribution, and the denominator of which shall
be the then current market price per share of Common Stock, less the then fair
value (as determined by the Board of Directors of the Company, whose
determination shall be conclusive) of the portion of the assets or evidences of
indebtedness so distributed or of such subscription rights, options or warrants,
or of such convertible or exchangeable securities applicable to one share of
Common Stock. 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.
In the event of a distribution by the Company to all holders of its shares
of Common Stock of stock of a subsidiary or securities convertible into or
exercisable for such stock, then in lieu of an adjustment in the number of
Warrant Shares purchasable upon the exercise of each Warrant, the Holder of each
Warrant, upon the exercise thereof at any time after such distribution, shall be
entitled to receive from the Company, such subsidiary or both, as the Company
shall determine, the stock or other securities to which such Holder would have
been entitled if such Holder had exercised such Warrant immediately prior
thereto, all subject to further adjustment as provided in this Section 11.1;
provided, however, that no adjustment in respect of dividends or interest on
such stock or other securities shall be made during the term of a Warrant or
upon the exercise of a Warrant.
(c) For the purpose of any computation under paragraph (b) of this Section,
the current market price per share of Common Stock at any date shall be the
average of the daily closing prices for 20 consecutive trading days commencing
30 trading days before the date of such computation. The closing price for each
day shall be the last such reported sales price regular way or, in case no such
reported sale takes place on such day, the average of the closing bid and asked
prices regular way for such day, in each case on the principal national
securities exchange on which the shares of Common Stock are listed or admitted
to trading or, if not listed or admitted to trading, the average of the closing
bid and asked prices of the Common Stock in the over-the counter market as
reported by the NASDAQ National Market System or any comparable system or if not
approved for quotation on the NASDAQ National Market System or any comparable
system, the average of the closing bid and asked prices as furnished by two
members of the National Association of Securities Dealers, Inc. selected from
time to time by the Company for that purpose.
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(d) No adjustment in the number of Warrant Shares purchasable hereunder
shall be required unless such adjustment would require an increase or decrease
of at least one percent (1%) in the number of Warrant Shares purchasable upon
the exercise of each Warrant; provided, however, that any adjustments which by
reason of this paragraph (d) 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.
(e) Whenever the number of Warrant Shares purchasable upon the exercise of
each Warrant is adjusted, as herein provided, the Warrant Price payable upon
exercise of each Warrant shall be adjusted by multiplying such Warrant Price
immediately prior to such adjustment by a fraction, the numerator of which shall
be the number of Warrant Shares purchasable upon the exercise of each Warrant
immediately prior to such adjustment, and the denominator of which shall be the
number of Warrant Shares purchasable immediately thereafter.
(f) No adjustment in the number of Warrant Shares purchasable upon the
exercise of each Warrant need be made under paragraph (b) if the Company issues
or distributes to each Holder of Warrants the rights, options, warrants, or
convertible or exchangeable securities, or evidences of indebtedness or assets
referred to in those paragraphs which each Holder of Warrants would have been
entitled to receive had the Warrants been exercised prior to the happening of
such event or the record date with respect thereto. No adjustment need be made
for a change in the par value of the Warrant Shares.
(g) In the event that at any time, as a result of an adjustment made
pursuant to paragraph (a) above, the Holders shall become entitled to purchase
any securities of the Company other than shares of Common Stock, thereafter the
number of such other shares so purchasable upon exercise of each Warrant and the
Warrant Price of such shares 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 Warrant Shares contained in paragraphs (a) through (f),
inclusive, above, and the provisions of Sections 5, 11.2 and 11.3, with respect
to the Warrant Shares, shall apply on like terms to such other securities.
(h) Upon the expiration of any rights, options, warrants or conversion or
exchange privileges, if any thereof shall not have been exercised, the Warrant
Price and the number of shares of Common Stock purchasable upon the exercise of
each Warrant shall, upon such expiration, be readjusted and shall thereafter be
such as it would have been had it 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 aggregate consideration, if any, actually received by the Company for
the issuance, sale or grant of all such rights, options, warrants or conversion
or exchange rights whether or not exercised; provided, however, that no such
readjustment shall have the effect of increasing the Warrant Price or decreasing
the number of shares of Common Stock purchasable upon the exercise of each
Warrant by an amount in excess of the amount of the adjustment initially made in
respect to the issuance, sale or grant of such rights, options, warrants or
conversion or exchange rights.
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11.2 Notice of Adjustment. Whenever the number of Warrant Shares,
purchasable upon the exercise of each Warrant or the Warrant Price of such
Warrant Shares is adjusted, as herein provided, the Company shall promptly mail
by first class, postage prepaid, to each Holder notice of such adjustment or
adjustments and a certificate of a firm of independent public accounts selected
by the Board of Directors of the Company (who may be the regular accountants
employed by the Company) setting forth the number of Warrant Shares purchasable
upon the exercise of each Warrant and the Warrant Price of such Warrant Shares
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. Such certificate shall be conclusive evidence of the correctness of such
adjustment.
11.3 No Adjustment for Dividends. Except as provided in Section 11.1, no
adjustments in respect of any dividends shall be made during the term of a
Warrant or upon the exercise of a Warrant.
11.4 Preservation of Purchase Rights Upon Merger, Consolidation, etc. In
case of any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale, transfer or lease to another
corporation of all or substantially all the property of the Company, the Company
or such successor or purchasing corporation, as the case may be, shall execute
with each Holder an agreement that each Holder shall have the right thereafter
upon payment of the Warrant Price in effect immediately prior to such action to
purchase upon exercise of each Warrant the kind and amount of shares and other
securities, cash and property which he would have owned or would have been
entitled to receive after the happening of such consolidation, merger, sale,
transfer or lease had such Warrant been exercised immediately prior to such
action; provided, however, that no adjustment in respect of dividends, interest
or other income on or from such shares or other securities, cash and property
shall be made during the term of a Warrant or upon the exercise of a Warrant.
Such agreement shall provide for adjustments, which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
11. The provisions of this Section 11.4 shall similarly apply to successive
consolidations, mergers, sales transfer or leases.
11.5 Statements on Warrants. Irrespective of any adjustments in the
Warrant Price or the number or kind of shares purchasable 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.
12. Fractional Interests. The Company shall not be required to issue
fractional Warrant Shares 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 Warrant Shares which shall be issuable upon the exercise thereof
shall be computed on the basis of the aggregate number of Warrant Shares
purchasable on exercise of the Warrants so presented. If any fraction of a
Warrant Share would, except for the provisions of this Section 12, be issuable
on the exercise of any Warrant (or specified portion thereof), the Company shall
pay an amount in cash equal to the closing price for one share of the Common
Stock, as defined in paragraph (c) of Section 11.1, on the trading day
immediately preceding the date the Warrant is presented for exercise, multiplied
by such faction.
13. Registration Under the Securities Act of 1933. The Representatives
each represent and warrant, severally and not jointly, to the Company that they
will not dispose of the Warrants or the Warrant Shares except pursuant to (i) an
effective registration statement under the Securities Act
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of 1933, as amended (the "Act'), including a post-effective amendment to the
Registration Statement, (ii) Rule 144 under the Act (or any similar rule under
the Act relating to the disposition of securities), or (iii) an opinion of
counsel, reasonably satisfactory to counsel of the Company that an exemption
from such registration is available.
14. Certificate to Bear Legends. The Warrant shall be subject to a stop-
transfer order and the certificate or certificates therefore shall bear the
following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SAID SECURITIES
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT.
The Warrant Shares or other securities issued upon exercise of the Warrant
shall be subject to a stop-transfer order and the certificate or certificates
evidencing any such Warrant Shares or securities shall bear the following
legend:
THE SHARES [OR OTHER SECURITIES] REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SAID
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT.
15. Registration Rights.
15.1 Demand Registration Rights. The Company covenants and agrees
with each Representative and any subsequent Holders of the Warrants and/or
Warrants Shares that, on one occasion, within 60 days after receipt of a written
request from either of the Representatives or from Holders of more than 25% in
interest of the aggregate of Warrants and/or Warrant Shares issued pursuant to
this Agreement that either of the Representatives or such Holders of the
Warrants and/or Warrant Shares desires and intends to transfer more than 25% in
interest of the aggregate number of the Warrants and/or Warrant Shares under
such circumstances that a public offering, within the meaning of the Act, will
be involved, the Company shall, on that one occasion, file a registration
statement (and use its best efforts to cause such registration statement to
become effective under the Act at the Company's expense) with respect to the
offering and sale or other disposition of the Warrant Shares (the "Offered
Warrant Shares"); provided, however, that the Company shall have no obligation
to comply with the foregoing provisions of this Section 15.1 if in the opinion
of counsel to the Company reasonably acceptable to the Holder or Holders, from
whom such written requests has been received, registration under the Act is not
required for the transfer of the Offered Warrant Shares in the manner proposed
by such person or persons or that a post-effective amendment to an existing
registration statement would be legally sufficient for such transfer (in which
latter event the Company shall promptly file such post-effective amendment (and
use its best efforts to cause such amendment to become effective under the
Act)). Notwithstanding the foregoing, the Company shall not be obligated to
file a registration statement with respect to the Offered Warrant Shares on more
than one occasion.
The Company may defer the filing of a registration statement for up to
90 days after the request for registration is made if the Board of Directors
determines in good faith that such
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registration or post-effective amendment would adversely affect or otherwise
interfere with a proposed or pending transaction by the Company, including
without limitation a material financing or a corporate reorganization, or during
any period of time in which the Company is in possession of material inside
information concerning the Company or its securities, which information the
Company determines in good faith is not ripe for disclosure.
The Company shall not be required (i) to maintain the effectiveness of the
registration statement beyond the earlier to occur of 90 days after the
effective date of the registration statement or the date on which all of the
Offered Warrant Shares have been sold (the "Termination Date"); provided,
however, that if at the Termination Date the Offered Warrant Shares are covered
by a registration statement which also covers other securities and which is
required to remain in effect beyond the Termination Date, the Company shall
maintain in effect such registration statement as it relates to Offered Warrant
Shares for so long as such registration statement (or any substitute
registration statement) remains or is required to remain in effect for any such
other securities, or (ii) to honor any request to register Warrant Shares
pursuant to this Section 15.1 received later than five (5) years from the
effective date of the Company's Registration Statement on Form S-2 (File No. 33-
_____) (the "Effective Date") or (iii) to cause any registration statement with
respect to the Warrant Shares to become effective prior to the Initiation Date.
All expenses of registration pursuant to this Section 15.1 shall be borne by the
Company.
The Company shall be obligated pursuant to this Section 15.1 to include in
the registration statement Warrant Shares that have not yet been purchased by a
Holder of Warrants so long as such Holder of Warrants submits an undertaking to
the Company that such Holder intends to exercise Warrants representing the
number of Warrant Shares to be included in such registration statement prior to
the consummation of the public offering with respect to such Warrant Shares. In
addition, such Holder of Warrants is permitted to pay the Company the Warrant
Price for such Warrant Shares upon the consummation of the public offering with
respect to such Warrant Shares.
15.2 Piggy-back Registration Rights. The Company covenants and agrees
with the Holders and any subsequent Holders of the Warrants and/or Warrant
Shares that in the event the Company proposes to file a registration statement
under the Act with respect to any class of security (other than in connection
with an exchange offer, a non-cash offer or a registration statement on Form S-8
or other unsuitable registration statement form) which becomes or which the
Company believes will become effective at any time after the Initiation Date
then the Company shall in each case give written notice of such proposed filing
to the Holders of Warrants and Warrant Shares at least 30 days before the
proposed filing date and such notice shall offer to such Holders the opportunity
to include in such registration statement such number of Warrant Shares as they
may request, unless, in the opinion of counsel to the Company reasonably
acceptable to any such holder of Warrants or Warrant Shares who wishes to have
Warrant Shares included in such registration statement, registration under the
Act is not required for the transfer of such Warrants and/or Warrant Shares in
the manner proposed by such Holders. The Company shall not be required to honor
any such request (a) to register any such Warrant Shares if the request is
received later than seven (7) years from the Effective Date, (b) to register any
such Warrant Shares if the Company is not notified in writing of any such
request pursuant to this Section 15.2 within at least 20 days after the Company
has given notice to the Holders of the filing, and (c) to register Warrant
Shares that represent in the aggregate fewer than 25% of the aggregate number of
Warrant Shares. The Company shall permit, or shall cause the managing
underwriter of a proposed offering to permit, the Holders of Warrant Shares
requested to be included in the registration (the "Piggy-back Shares,") to
include such Piggy-
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back Shares in the proposed offering on the same terms and conditions as
applicable to securities of the Company included therein or as applicable to
securities of any person other than the Company and the Holders of Piggy-back
Shares if the securities of any such person are included therein.
Notwithstanding the foregoing, if any such managing underwriter shall advise the
Company in writing that it believes that the distribution of all or a portion of
the Piggy-back Shares requested to be included in the registration statement
concurrently with the securities being registered by the Company would
materially adversely affect the distribution of such securities by the Company
for its own account, then the Holders of such Piggy-back Shares shall delay
their offering and sale of Piggy-back Shares (or the portion thereof so
designated by such managing underwriter) for such period, not to exceed 120
days, as the managing underwriter shall request provided that no such delay
shall be required as to Piggy-back Shares if any securities of the Company are
included in such registration statement for the account of any person other than
the Company and the Holders of Piggy-back Shares. In the event of such delay,
the Company shall file such supplements, post-effective amendments or separate
registration statement, and take any such other steps as may be necessary to
permit such Holders to make their proposed offering and sale for a period of 90
days immediately following the end of such period of delay ("Piggy-back
Termination Date"); provided, however, that if at the Piggy-back Termination
Date the Piggy-back Shares are covered by a registration statement which is, or
required to remain, in effect beyond the Piggy-back Termination Date, the
Company shall maintain in effect the registration statement as it relates to the
Piggy-back Shares for so long as such registration statement remains or is
required to remain in effect for any of such other securities. All expenses of
registration pursuant to this Section 15.2 shall be borne by the Company, except
that underwriting commissions and expenses attributable to the Piggy-back Shares
and fees and disbursements of counsel (if any) to the Holders requesting that
such Piggy-back Shares be offered will be borne by such Holders.
The Company shall be obligated pursuant to this Section 15.2 to include in
the Piggy-back Offering, Warrant Shares that have not yet been purchased by a
holder of Warrants so long as such Holder of Warrants submits an undertaking to
the Company that such Holder intends to exercise Warrants representing the
number of Warrant Shares to be included in such Piggy-back Offering prior to the
consummation of such Piggy-back Offering. In addition, such Holder of Warrants
is permitted to pay the Company the Warrant Price for such Warrant Shares upon
the consummation of the Piggy-back Offering.
If the Company decides not to proceed with a Piggy-back Offering, the
Company has no obligation to proceed with the offering of the Piggy-back Shares,
unless the Holders of the Warrants and/or Warrant Shares otherwise comply with
the provisions of Section 15.1 hereof (without regard to the 60 days' written
request required thereby). Notwithstanding any of the foregoing contained in
this Section 15.2, the Company will have no obligation to offer registration
rights to the Piggy-back Shares two (2) years after the Expiration Date.
15.3 In connection with the registration of Warrants Shares in accordance
with Section 15.1 and 15.2 above, the Company agrees to:
(a) Use its best efforts to register or qualify the Warrant
Shares for offer or sale under the state securities or Blue Sky laws
of such states which the Holders of such Warrant Shares shall
designate, until the dates specified in Section 15.1 and 15.2 above in
connection with registration under the Act; provided, however, that in
no event shall the Company be obligated to qualify to do business in
any jurisdiction
10
where it is not now so qualified or to take any action which would
subject it to general service of process in any jurisdiction where it
is not now so subject or to register or get a license as a broker or
dealer in securities in any jurisdiction where it is not so registered
or licensed or to register or qualify the Warrant Shares for offer or
sale under the state securities or Blue Sky laws of any state other
than the states in which some or all of the shares offered or sold in
the Public Offering were registered or qualified for offer and sale.
(b)(i) In the event of any post-effective amendment or other
registration with respect to any Warrant Shares pursuant to Section
15.1 or 15.2 above, the Company will indemnify and hold harmless any
Holder whose Warrant Shares are being so registered, and each person,
if any, who controls such Holder within the meaning of the Act,
against any losses, claims, damages or liabilities, joint or several,
to which such Holder or such controlling person may be subject, under
the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material
fact contained, on the effective date thereof, in any such
registration statement, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; and will reimburse each
such Holder and each such controlling person for any legal or other
expenses reasonably incurred by such Holder or such controlling person
in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will
not be liable in such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission
made in any such registration statement, any preliminary prospectus or
final prospectus, or any amendment or supplement thereto, in reliance
upon and in conformity with written information furnished by such
Holder expressly for use in the preparation thereof. The Company will
not be liable to a claimant to the extent of any misstatement
corrected or remedied in any amended prospectus if the Company timely
delivers a copy of such amended prospectus to such indemnified person
and such indemnified person does not timely furnish such amended
prospectus to such claimant. The Company shall not be required to
indemnify any Holder or controlling person for any payment made to any
claimant in settlement of any suit or claim unless such payment is
approved by the Company.
(ii) Each such Holder of Warrants and/or Warrant Shares will
indemnify and hold harmless the Company, each of its directors, each
of its officers who have signed any such registration statement, and
each person, if any, who controls the Company within the meaning of
the Act, against any losses, claims, damages or liabilities to which
the Company, or any such director, officer or controlling person may
become subject under the Act, or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue or alleged untrue statement of any
material fact contained in any such registration statement, any
preliminary prospectus or final prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or
11
the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or
alleged omission was made in any such registration statement, any
preliminary prospectus or final prospectus, or any amendment or
supplement thereto, in reliance upon and in conformity with written
information furnished by such Holder expressly for use in the
preparation thereof; and will reimburse any legal or other expenses
reasonably incurred by the Company, or any such director, officer or
controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that
the indemnity agreement contained in this subparagraph (ii) shall not
apply to amounts paid to any claimant in settlement of any suit or
claim unless such payment is first approved by such Holder.
(iii) In order to provide for just and equitable contribution in
any action in which a claim for indemnification is made pursuant to
this clause (b)(iii) of Section 15.3 but is judicially determined (by
the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in
such case notwithstanding the fact that this clause (b)(iii) of
Section 15.3 provides for indemnification in such case, all the
parties hereto shall contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after
contribution from others) in such proportion so that each Holder whose
Warrant Shares are being registered is responsible pro rata for the
portion represented by the public offering price received by such
Holder from the sale of such Holder's Warrant Shares, and the Company
is responsible for the remaining portion; provided, however, that (i)
no Holder shall be required to contribute any amount in excess of the
public offering price received by such Holder from the sale of such
Holder's Warrant Shares and (ii) no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who is not guilty of
such fraudulent misrepresentation. This subsection (b)(iii) shall not
be operative as to any Holder of Warrant Shares to the extent that the
Company has received indemnity under this clause (b)(iii) of Section
15.3.
16. No Rights as Stockholder; Notices to Holders. Nothing contained in
this Agreement or in any of the Warrants shall be construed as conferring upon
the Holders or their transferee(s) the right to vote or to receive dividends or
to consent to or receive notice as stockholders in respect of any meeting of
stockholders for the election of directors of the Company or any other matter,
or any rights whatsoever as stockholders of the Company. If, however, at any
time prior to the expiration of the Warrants and prior to their exercise, any of
the following events shall occur:
(a) the Company shall declare any dividend payable in any
securities upon its shares of Common Stock or make any distribution
(other than a cash dividend) to the holders of its shares of Common
Stock; or
(b) the Company shall offer to the holders of its shares of
Common Stock any additional shares of Common Stock or securities
convertible into or exchangeable for shares of Common Stock or any
right to subscribe to or purchase any thereof; or
12
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation, merger, sale, transfer
or lease of all or substantially all of its property, assets, and
business as an entirety) shall be proposed,
then in any one or more of said events the Company shall (i) give notice in
writing of such event to the Holders, as provided in Section 17 hereof and (ii)
if there are more than 100 Holders, cause notice of such event to be published
once in The Wall Street Journal (national edition), such giving of notice and
publication to be completed at least 20 days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, or subscription rights, or
for the determination of stockholders entitled to vote on such proposed
dissolution, liquidation or winding up. Such notice shall specify such record
date or the date of closing the transfer books, as the case may be. Failure to
publish, mail or receive such notice or any defect therein or in the publication
or mailing thereof shall not affect the validity of any action taken in
connection with such dividend, distribution or subscription rights, or such
proposed dissolution, liquidation or winding up.
17. Notices. Any notice pursuant to this Agreement to be given or made by
the registered Holder of any Warrant to or on the Company shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed as
follows:
CRUTTENDEN ROTH INCORPORATED and PENNSYLVANIA MERCHANT GROUP LTD
18301 Von Karman, Suite 100 Suite 390, Fidelity Court
Irvine, California 92715 259 Radnor-Chester Road
Attention: Mr. Byron C. Roth Radnor, Pennsylvania 19087
Attention: Mr. Peter S. Rawlings
Notices or demands authorized by this Agreement to be given or made by the
Company to the registered Holder of any Warrant shall be sufficiently given or
made (except as otherwise provided in this Agreement) if sent by first-class
mail, postage prepaid, addressed to such Holder at the address of such Holder as
shown on the Warrant Register.
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania without giving
effect to principles of conflicts of laws.
19. Opinion of Counsel. Counsel to the Company shall deliver to the
Representatives as of the date hereof an opinion, satisfactory to counsel for
the Representatives, to the effect that: (i) the Company has full corporate
power and authority to execute, deliver and perform its obligations under this
Agreement and the Warrants; (ii) the Warrants and this Agreement have been duly
authorized by all necessary corporate action; (iii) this Agreement has been and
the Warrants, when issued in accordance with the terms of this Agreement, will
have been duly executed and delivered and do, and will, constitute legal, valid
and binding obligations of the Company enforceable against the Company in
accordance with their respective terms, subject to applicable bankruptcy,
reorganization, insolvency, moratorium and similar laws and to general
principles of equity which are within the discretion of courts of applicable
jurisdiction and except that rights of indemnity and contribution under Section
15.3 herein may be limited by federal or state securities laws or public policy;
(iv) the Company has reserved out of its authorized and unissued shares of
Common Stock a number of shares sufficient to provide for the exercise of the
rights of purchase represented by the
13
Warrants; and (iv) the Warrant Shares, when issued upon exercise of the Warrants
in accordance with the terms of the Warrants and this Agreement, will be validly
issued, fully paid and nonassessable.
20. Supplements and Amendments. The Company and the Representatives may
from time to time supplement or amend this Agreement in order to cure any
ambiguity or to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provision herein, or to make any
other provisions in regard to matters or questions arising hereunder which the
Company and the Representatives may deem necessary or desirable and which shall
not be inconsistent with the provisions of the Warrants and which shall not
adversely affect the interests of the Holders. This Agreement may also be
supplemented or amended from time to time by a writing executed by or on behalf
of the Company and all of the Holders.
21. Successors. All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Holders shall bind and inure to the
benefit of their respective successors and assigns hereunder. Assignments by
the Holders of their rights hereunder shall be made in accordance with Section 4
hereof.
22. Merger or Consolidation of the Company. So long as Warrants remain
outstanding, the Company will not merge or consolidate with or into, or sell,
transfer or lease all or substantially all of its property to, any other
corporation unless the successor or purchasing corporation, as the case may be
(if not the Company), shall expressly assume, by supplemental agreement executed
and delivered to the Holders, the due and punctual performance and observance of
each and every covenant and condition of this Agreement to be performed and
observed by the Company.
23. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Holders, 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 and
the Holders of the Warrants and Warrant Shares.
24. Captions. The captions of the sections and subsections of this
Agreement have been inserted for convenience only and shall have no substantive
effect.
25. Counterparts. This Agreement may be executed in any number of
counterparts each of which when so executed shall be deemed to be an original;
but such counterparts together shall constitute but one and the same instrument.
14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day, month and year first above written.
CRUTTENDEN ROTH INCORPORATED
Attest:
___________________________ By:________________________________
Name:
Title:
PENNSYLVANIA MERCHANT GROUP LTD
Attest:
___________________________ By:________________________________
Name:
Title:
DATAMETRICS CORPORATION
Attest:
___________________________ By:________________________________
Name:
Title:
15
SCHEDULE I
Pennsylvania Merchant Group Ltd............................ 100,000 Warrants
Cruttenden Roth Incorporated............................... 100,000 Warrants
16
EXHIBIT A
[Form of Warrant Certificate]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. SAID SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER
SAID ACT.
EXERCISABLE ON OR BEFORE __________, 2000.
No. 100,000 Warrants
Warrant Certificate
DATAMETRICS CORPORATION
This Warrant Certificate certifies that [Cruttenden Roth
Incorporated/Pennsylvania Merchant Group Ltd] or registered assigns, is the
registered holder of Warrants expiring _________, 2000 (the "Warrants") to
purchase Common Stock, $.01 par value per share (the "Common Stock"), of
Datametrics Corporation, a Delaware corporation (the "Company"). Each Warrant
entitles the holder upon exercise to receive from the Company from 10:00 a.m.,
Philadelphia time, on __________, 1996 through and until 6:00 p.m., Philadelphia
time, on _________, 2000, one fully paid and nonassessable share of Common Stock
(a "Warrant Share") at the initial exercise price (the "Exercise Price") of
$______ payable in lawful money of the United States of America upon surrender
of this Warrant Certificate and payment of the Exercise Price at the office of
the Company designated for such purpose, but only subject to the conditions set
fort herein and in the Warrant Agreement referred to on the reverse hereof. The
Exercise Price and number of Warrant Shares issuable upon exercise of the
Warrants are subject to adjustment upon the occurrence of certain events set
forth in the Warrant Agreement.
No Warrant may be exercised after 6:00 p.m., Philadelphia time, on
__________, 2000, and to the extent not exercised by such time such Warrants
shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse hereof and such further 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 Company.
17
IN WITNESS WHEREOF, DATAMETRICS CORPORATION has caused this Warrant
Certificate to be signed by its Vice President and by its Secretary and has
caused its corporate seal to be affixed hereunto or imprinted hereon.
Dated: __________, 1995
DATAMETRICS CORPORATION
By: ______________________________
Vice President
By: ______________________________
Secretary
18
[Form of Warrant Certificate]
[Reverse]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring __________, 2000 entitling the holder on
exercise to receive shares of Common Stock, $.01 par value per share, of the
Company (the "Common Stock"), and are issued or to be issued pursuant to a
Warrant Agreement, dated as of __________, 1995 (the "Warrant Agreement"), duly
executed and delivered by the Company, 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 Company and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Warrants. A copy of the Warrant Agreement may be obtained by the holder
hereof upon written request to the Company.
The Warrants may be exercised at any time on or before __________,
2000. The holder of Warrants evidenced by this Warrant Certificate may exercise
them by surrendering this Warrant Certificate, with the form of election to
purchase set forth hereon properly completed and executed, together with payment
of the Exercise Price in cash at the office of the Company designated for such
purpose. In the event that upon any exercise of Warrants evidenced hereby the
number of Warrants exercised shall be less than the total number of Warrants
evidenced hereby, there shall be issued to the holder hereof or his assignee a
new Warrant Certificate evidencing the number of Warrants not exercised. No
adjustment shall be made for any dividends on any Common Stock issuable upon
exercise of this Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
The holders of the Warrants are entitled to certain registration
rights with respect to the Common Stock purchasable upon exercise thereof. Said
registration rights are set forth in full in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Company by
the registered holder thereof in person or by legal representative or attorney
duly authorized in writing, may be exchanged, in the manner and subject to the
limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
certificate at the office of the Company a new Warrant certificate or Warrant
certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to other transferee(s) 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.
19
The Company may deem and treat the registered holder(s) thereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
Neither the Warrants nor this Warrant Certificate entitles any holder hereof to
any rights of a stockholder of the Company.
20
[Form of Election to Purchase]
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive ________ shares of Common
Stock and herewith tenders payment for such shares to the order of Datametrics
Corporation, in the amount of $_______ in accordance with the terms hereof. The
undersigned requests that a certificate for such shares be registered in the
name of ____________________, whose address is _________________________________
and that such shares be delivered to ______________________________ whose
address is ____________________________________. If said number of shares is
less than all of the shares of Common Stock purchasable hereunder, the
undersigned requests that a new Warrant certificate representing the remaining
balance of such shares be registered in the name of _______________, whose
address is _________________________, and that such Warrant certificate be
delivered to _____________________, whose address is ___________________________
_______.
Signature:
Date:
Signature Guaranteed:
21