Exhibit 1.02
WARRANT EXERCISE FEE AGREEMENT
AGREEMENT dated as of the ___ of _________, 1996, by and among
Royce Investment Group, Inc. ("Royce"), Eastco Industrial Safety
Corp. (the "Company") and American Stock Transfer & Trust Company
(the "Warrant Agent").
W I T N E S S E T H:
WHEREAS, on ________________, 1996, the Company entered into a Standby
Agreement with Royce pursuant to which the Company has distributed to its
stockholders non-transferable Rights to purchase 703,591 Units (as defined
below) and Royce has agreed to purchase the Unsubscribed Units; and
WHEREAS, in connection with the Rights offering each stockholder has
received Rights on the basis of four Rights for every five shares of Common
Stock owned by them; and
WHEREAS, each Right allows the stockholder to purchase one Unit at a
price of $5.00 per Unit with each Unit consisting of one share of the Company's
Common Stock ("Common Stock"), and one Class B Common Stock Purchase Warrant
(the "Class B Warrants"); and
WHEREAS, the Company has entered into an agreement dated as of
___________, 1996 by and between the Company and the Warrant Agent (the "Warrant
Agreement"), covering 703,591 Class B Warrants (plus an additional 70,359 Class
B Warrants that may be issued upon exercise of the Underwriter's Warrants); and
WHEREAS, each Class B Warrant entitles the holder to purchase one share
of Common Stock at an exercise price of $6.25 per share commencing on
_______________ (12 months from the effective date of the Registration
Statement) and expiring on the close of business on ________________ (36 months
from the effective date of the Registration Statement; and
WHEREAS, the parties hereto wish to provide Royce, a member of the
National Association of Securities Dealers, Inc. ("NASD") with certain rights on
an exclusive basis in connection with the exercise of the Class B Warrants
during the exercise period.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
Section 1. Description of the Class B Warrants. The Company's Class B
Warrants may be exercised on or after ____________, 199__ and expire at 5:00
p.m. New York time on ____________, ______ (the "Expiration Date"), subject to
(i) the Company's right to extend the Expiration Date, at which time all rights
evidenced by the Class B Warrants shall cease and the Class B Warrants shall
become void and (ii) certain redemption rights commencing on or after
___________, _____ (18 months from
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the effective date of the Registration Statement, but no sooner than 12 months
from the date the Warrants first become exercisable). In accordance with the
provisions of the Warrant Agreement, the holder of each Class B Warrant shall
have the right to purchase from the Company, and the Company shall issue and
sell to such holders of Class B Warrants, one fully paid and non-assessable
share of the Company's Common Stock for every Class B Warrant exercised at an
Exercise Price of $6.25 per share, subject to adjustment as provided in the
Warrant Agreement.
Section 2. Notification of Exercise. Within five (5) days of the last
day of each month commencing ___________, 199__ (12 months from the date of the
Company's Prospectus), the Warrant Agent or the Company will notify Royce of
each Class B Warrant certificate which has been properly completed and delivered
for exercise by holders of Class B Warrants during each such month, the
determination of the proper completion to be in the sole and absolute reasonable
discretion of the Company and the Warrant Agent. The Company or the Warrant
Agent will provide Royce with such information, in connection with the exercise
of each Class B Warrant, as Royce shall reasonably request.
Section 3. Payment to Royce. The Company hereby agrees to pay to Royce
an amount equal to seven (7%) percent of the then exercise price (i.e. $.4375
per share based on the initial exercise price of the Class B Warrants which is
$6.25 per share) for each Class B Warrant exercised (the "Exercise Fee") a
portion of which may be allowed by Royce to the dealer who solicited the
exercise (which may also be Royce) provided that:
(a) such Class B Warrant is exercised no earlier than one year from
the effective date of the Company's Registration Statement;
(b) at the time of exercise, the market price of the Company's Common
Stock is higher than the applicable Exercise Price of the Class B Warrant being
exercised;
(c) the holders of Class B Warrants being exercised have indicated in
writing, either in the Form of Election contained on the specimen Class B
Warrant Certificate attached hereto as Exhibit A, or by written documents signed
and dated by the holders and specifically stating that the exercise of such
Class B Warrants were solicited by Royce or another member of the NASD; and
(d) Royce delivers a certificate to the Company within five (5)
business days of receipt of information relating to such exercised Class B
Warrants from the Company or the Warrant Agent in the form attached hereto as
Exhibit B, stating that:
(1) the Class B Warrants exercised were not held in a
discretionary account;
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(2) Royce did not, (unless granted an exemption by the
Securities and Exchange Commission from the provisions thereof), within the
applicable number of business days under Rule 10b-6 immediately preceding the
date of exercise of the Class B Warrant bid for or purchase the Common Stock of
the Company or any securities of the Company immediately convertible into or
exchangeable for the Common Stock (including the Class B Warrants) or otherwise
engage in any activity that would be prohibited by Rule 10b-6 under the
Securities Exchange Act of 1934, as amended, with one engaged in a distribution
of the Company's securities; and
(3) in connection with the solicitation, it disclosed the
compensation it would receive upon exercise of the Class B Warrant.
Section 4. Payment of the Exercise Fee. The Company hereby agrees to
pay over to Royce within two (2) business days after receipt by the Company of
the certificate described in Section 3(d) above, the Exercise Fee out of the
proceeds it received from the applicable Exercise Price paid for the Class B
Warrants to which the certificate relates.
Section 5. Inspection of Records. Royce may at any time during business
hours, at its expense, examine the records of the Company and the Warrant Agent
which relate to the exercise of the Class B Warrants.
Section 6. Termination. Royce shall be entitled to terminate this
Agreement prior to the exercise of all Class B Warrants at any time upon five
(5) business days' prior notice to the Company and the Warrant Agent.
Notwithstanding any such termination notice, Royce shall be entitled to receive
an Exercise Fee for the exercise of any Class B Warrant for which it has already
delivered to the Company prior to any such termination the certificate required
by Section 3(d) of this Agreement.
Section 7. Notices. Any notice or other communication required or
permitted to be given pursuant to this Agreement shall be in writing and shall
be deemed sufficiently given if sent by first class certified mail, return
receipt requested, postage prepaid, addressed as follows: if to the Company at
130 West 10th Street, Huntington Station, New York 11746, copy to Herbert W.
Solomon, Esq., Hollenberg Levin Solomon Ross Belsky & Daniels, LLP 585 Stewart
Avenue, Garden City, New York 11530-4732; if to Royce at 199 Crossways Park
Drive, Woodbury, NY 11797; and if to the Warrant Agent at American Stock
Transfer & Trust Company, 40 Wall Street, New York, N. Y. l0005, or such other
address as such party shall have given notice to other parties hereto in
accordance with this Section. All such notices or other communications shall be
deemed given three (3) business days after mailing, as aforesaid.
Section 8. Supplements and Amendments. The Company, the Warrant Agent
and Royce may from time-to-time supplement or amend this Agreement by a written
instrument signed by the party to be
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charged, without the approval of any holders of Class B Warrants in order to
cure any ambiguity or to correct or supplement any provisions contained herein
or to make any other provisions in regard to matters or questions arising
hereunder which the Company, the Warrant Agent and Royce may deem necessary or
desirable and which do not adversely affect the interests of the holders of
Class B Warrants.
Section 9. Assignment. This Agreement may not be assigned by any party
without the express written approval of all other parties, except that Royce may
assign this Agreement to its successors.
Section 10. Governing Law. This Agreement will be deemed made under the
laws of the State of New York with respect to matters of contract law and for
all purposes shall be governed by and construed in accordance with the internal
laws of said State, without regard to the conflicts of laws provisions thereof.
Section 11. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give any person or corporation other than the Company, the
Warrant Agent and Royce any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit of,
and be binding upon, the Company, the Warrant Agent and Royce and their
respective successors and permitted assigns.
Section 12. Descriptive Headings. The descriptive headings of the
sections of this Agreement are inserted for convenience only and shall not
control or affect the meanings or construction of any of the provisions hereof.
Section 13. Superseding Agreement. This Agreement supersedes any and
all prior agreements between the parties with respect to the subject matter
hereof.
Section 14. Exclusive Agreement. It is understood that this agreement
is on an exclusive basis to solicit the exercise of the Class B Warrants and
that the Company may not engage other broker-dealers to solicit the exercise of
Class B Warrants without the consent of Royce.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
EASTCO INDUSTRIAL SAFETY CORP.
By:
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ROYCE INVESTMENT GROUP, INC.
By:
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AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
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CERTIFICATE
The undersigned, being the ________________ of Royce Investment Group, Inc.
("Royce") pursuant to Section 3(d) of the Warrant Exercise Fee Agreement
relating to the exercise of Warrants dated ____________, 1996 between Eastco
Industrial Safety Corp. (the "Company") and American Stock Transfer & Trust
Company (the "Warrant Agent") hereby certifies that:
1. The Company or the Warrant Agent has notified Royce that
______________ Class B Warrants (as defined in the Agreement) have been
exercised during _____________, 199___.
2. The exercise of ______________ of such Class B Warrants
was solicited by Royce.
3. Such Class B Warrants were not held in a discretionary
account.
4. ______________ did not, within _____ business days immediately
preceding _______________ 199___, bid for or purchase the Common Stock of the
Company or any securities of the Company immediately convertible into or
exchangeable for the Common Stock (including Class B Warrants) or otherwise
engage in any activity that would be prohibited by Rule 10b-6 under the
Securities Exchange Act of 1934, as amended, to one engaged in a distribution of
the Company's securities.
5. In connection with the solicitation of the exercise of
the Class B Warrants, _____________ disclosed the compensation it
will receive to holders of the Class B Warrants.
DATED: __________________, 199___
ROYCE INVESTMENT GROUP, INC.
By:
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