Exhibit 4.2
DISCAS, INC.
A DELAWARE CORPORATION
AMERICAN STOCK TRANSFER & TRUST COMPANY
WARRANT AGENT
AND
ROAN CAPITAL PARTNERS L.P.
WARRANT AGREEMENT
TABLE OF CONTENTS
Section Page
1. Appointment of Warrant Agent.......................................... 1
2. Form of Warrant....................................................... 1
3. Countersignature and Registration..................................... 2
4. Transfers and Exchanges............................................... 2
5. Exercise of Warrants; Payment of Warrant Solicitation Fee............. 2
6. Payment of Taxes...................................................... 4
7. Mutilated or Missing Warrants......................................... 5
8. Reservation of Common Stock........................................... 5
9. Warrant Price: Adjustments............................................ 6
10. Fractional Interests.................................................. 11
11. Notices to Warrantholders............................................. 11
12. Disposition of Proceeds on Exercise of Warrants....................... 12
13. Redemption of Warrants................................................ 12
14. Merger or Consolidation or Change of Name of Warrant Agent............ 13
15. Duties of Warrant Agent............................................... 13
16. Change of Warrant Agent............................................... 15
17. Identity of Transfer Agent............................................ 16
18. Notices............................................................... 16
19. Supplements and Amendments............................................ 17
20. New York Contract..................................................... 17
21. Benefits of this Agreement............................................ 17
22. Successors............................................................ 17
WARRANT AGREEMENT, dated as of __________ __, 1997, by and among
DISCAS, INC., a Delaware corporation (the "Company"), AMERICAN STOCK TRANSFER &
TRUST COMPANY, as warrant agent (hereinafter called the "Warrant Agent"), and
ROAN CAPITAL PARTNERS L.P., the representative (the "Representative") of the
several Underwriters (the "Underwriters").
WHEREAS, the Company proposes to issue and sell, through an initial
public offering by the Underwriters pursuant to an Underwriting Agreement dated
__________ __, 1997, an aggregate of up to 920,000 shares of common stock,
$.0001 par value per share (the "Common Stock"), and up to 920,000 Common Stock
Purchase Warrants (the "Warrants") of the Company; and in connection with such
offering the Company has agreed to issue to the Representative or its designees
an option to purchase 80,000 shares of Common Stock and 80,000 Warrants (the
"Representative's Warrant") and the Company will issue an additional 800,000
Warrants upon the automatic conversion of 800,000 currently existing and
outstanding warrants upon closing of the initial public offering of the
Warrants and the Common Stock;
WHEREAS, each Warrant will entitle the holder to purchase one share of
Common Stock;
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act in connection with the
issuance, registration, transfer, exchange and exercise of the Warrants;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as Warrant Agent for the Company in accordance with
the instructions hereinafter set forth in this Agreement, and the Warrant Agent
hereby accepts such appointment.
Section 2. Form of Warrant. The text of the Warrants and of the form
of election to purchase Common Stock to be printed on the reverse thereof shall
be substantially as set forth in Exhibit A attached hereto. Each Warrant shall
entitle the registered holder thereof to purchase one share of Common Stock at
a purchase price
1
of $5.00, at any time commencing thirteen (13) months from the effective date
of the prospectus of the public offering (__________ __, 1997) ("Effective
Date") until 5:00 p.m. Eastern time, on __________ __, 2002. The warrant
exercise price and the number of shares of Common Stock issuable upon exercise
of the Warrants are subject to adjustment upon the occurrence of certain
events, all as hereinafter provided. The Warrants shall be executed on behalf
of the Company by the manual or facsimile signature of the present or any
future President or Vice President of the Company, and attested to by the
manual or facsimile signature of the present or any future Secretary or
Assistant Secretary of the Company.
Warrants shall be dated as of the issuance by the Warrant Agent either
upon initial issuance or upon transfer or exchange.
In the event the aforesaid expiration dates of the Warrants fall on a
Saturday or Sunday, or on a legal holiday on which the New York Stock Exchange
is closed, then the Warrants shall expire at 5:00 p.m. Eastern time on the next
succeeding business day.
Section 3. Countersignature and Registration. The Warrant Agent shall
maintain books for the transfer and registration of the Warrants. Upon the
initial issuance of the Warrants, the Warrant Agent shall issue and register
the Warrants in the names of the respective holders thereof. The Warrants shall
be countersigned manually or by facsimile by the Warrant Agent (or by any
successor to the Warrant Agent then acting as warrant agent under this
Agreement) and shall not be valid for any purpose unless so countersigned. The
Warrants may, however, be so countersigned by the Warrant Agent (or by its
successor as Warrant Agent) and be delivered by the Warrant Agent,
notwithstanding that the persons whose manual or facsimile signatures appear
thereon as proper officers of the Company shall have ceased to be such officers
at the time of such countersignature or delivery.
Section 4. Transfers and Exchanges. The Warrant Agent shall transfer,
from time to time, any outstanding Warrants upon the books to be maintained by
the Warrant Agent for that purpose, upon surrender thereof for transfer
properly endorsed or accompanied by appropriate instructions for transfer. Upon
any such transfer, a new Warrant shall be issued to the transferee and the
surrendered Warrant shall be cancelled by the Warrant Agent. Warrants so
cancelled shall be delivered by the Warrant Agent to the Company
2
from time to time upon request. Warrants may be exchanged at the option of the
holder thereof, when surrendered at the office of the Warrant Agent, 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 shares of
Common Stock.
Section 5. Exercise of Warrants; Payment of Warrant Solicitation Fee.
Subject to the provisions of this Agreement, each registered holder of Warrants
shall have the right, which may be exercised commencing at the opening of the
business on ___________ __, 1998, to purchase from the Company (and the Company
shall issue and sell to such registered holder of Warrants) the number of fully
paid and non-assessable shares of Common Stock specified in such Warrants upon
surrender of such Warrants to the Company at the office of the Warrant Agent,
with the form of election to purchase on the reverse thereof duly filled in and
signed, and upon payment to the Company of the warrant price, determined in
accordance with the provisions of Sections 9 and 10 of this Agreement, for the
number of shares of Common Stock in respect of which such Warrants are then
exercised. Payment of such warrant price shall be made in cash or by certified
check or bank draft to the order of the Company. Subject to Section 6, upon
such surrender of Warrants and payment of the warrant price, the Company shall
issue and cause to be delivered with all reasonable dispatch to or upon the
written order of the registered 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 shares of Common Stock so purchased upon the exercise of
such Warrants. 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 of Common Stock 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 a portion of the shares specified therein and, in the event that
any Warrant is exercised in respect of less than all of the shares of Common
Stock specified therein at any time prior to the date of expiration of the
Warrants, a new Warrant or Warrants will be issued to the registered holder for
the remaining number of shares of Common Stock specified in the Warrant so
surrendered, and the Warrant Agent is hereby irrevocably authorized to
countersign and to deliver the required new Warrants pursuant to the provisions
of this Section and of Section 3 of this Agreement and the Company,
3
whenever requested by the Warrant Agent, will supply the Warrant Agent with
Warrants duly executed on behalf of the Company for such purpose. Anything in
the foregoing to the contrary notwithstanding, no Warrant will be exercisable
unless at the time of exercise the Company has filed with the Securities and
Exchange Commission a registration statement under the Securities Act of 1933
(the "Act") covering the shares of Common Stock issuable upon exercise of such
Warrant and such registration statement shall have been declared effective,
such shares have been so registered or qualified or deemed to be exempt under
the securities laws of the state of residence of the holder of such Warrant.
The Company shall use its best efforts to have all shares so registered or
qualified on or before the date on which the Warrants become exercisable.
(a) If at the time of exercise of any Warrant after __________ __,
1998 (i) the market price of the Company's Common Stock is equal to or greater
than the then exercise price of the Warrant, (ii) the exercise of the Warrant
is solicited by the Underwriter at such time as it is a member of the National
Association of Securities Dealers, Inc. ("NASD"), (iii) the Warrant is not held
in a discretionary account, (iv) disclosure of the compensation arrangement is
made in documents provided to the
4
holders of the Warrants, (v) the Underwriter is designated in writing as the
soliciting broker and (vi) the solicitation of the exercise of the Warrant is
not in violation of Regulation M (as such rule or any successor rule may be in
effect as of such time of exercise) promulgated under the Securities Exchange
Act of 1934, then the Underwriter soliciting such Warrant shall be entitled to
receive from the Company upon exercise of each of the Warrants so exercised a
fee of seven percent (7%) of the aggregate price of the Warrants so exercised
(the "Exercise Fee"). The procedures for payment of the warrant solicitation
fee are set forth in Section 5(b) below.
(b) (1) Within five (5) days of the last day of each month
commencing with __________ __, 1998, the Warrant Agent will notify the
Representative of each Warrant Certificate which has been properly completed
for exercise by holders of Warrants during the last month. The Company and
Warrant Agent shall determine, in their sole and absolute discretion, whether a
Warrant Certificate has been properly completed. The Warrant Agent will provide
the Representative with such information, in connection with the exercise of
each Warrant, as the Representative shall reasonably request.
(2) The Company hereby authorizes and instructs the Warrant
Agent to deliver to the soliciting Underwriter the Exercise Fee promptly after
receipt by the Warrant Agent from the Company of a check payable to the order
of the soliciting Underwriter in the amount of the Exercise Fee. In the event
that an Exercise Fee is paid to the Underwriter with respect to a Warrant which
the Company or the Warrant Agent determines is not properly completed for
exercise or in respect of which the Underwriter is not entitled to an Exercise
Fee, the soliciting Underwriter will return such Exercise Fee to the Warrant
Agent which shall forthwith return such fee to the Company.
The Representative and the Company may at any time after __________
__, 1998, and during business hours, examine the records of the Warrant Agent,
including its ledger of original Warrant certificates returned to the Warrant
Agent upon exercise of Warrants. Notwithstanding any provision to the contrary,
the provisions of paragraph 5(a) and 5(b) may not be modified, amended or
deleted without the prior written consent of the Representative.
5
Section 6. Payment of Taxes. The Company will pay any documentary
stamp taxes attributable to the initial issuance of Common Stock issuable upon
the exercise of Warrants; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates of shares of Common
Stock in a name other than that of the registered holder of Warrants in respect
of which such shares are issued, and in such case neither the Company nor the
Warrant Agent shall be required to issue or deliver any certificate for shares
of Common Stock or any Warrant until the person requesting the same has paid to
the Company the amount of such tax or has established to the Company's
satisfaction that such tax has been paid.
Section 7. 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 the Warrant Agent shall countersign and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant,
or in lieu of and in substitution for the Warrant lost, stolen or destroyed, a
new Warrant of like tenor and representing an equivalent right or interest, but
only upon receipt of evidence satisfactory to the Company and the Warrant Agent
of such loss, theft or destruction and, in case of a lost, stolen or destroyed
Warrant, indemnity, if requested, also satisfactory to them. Applicants for
such substitute Warrants shall also comply with such other reasonable
regulations and pay such reasonable charges as the Company or the Warrant Agent
may prescribe.
Section 8. Reservation of Common Stock. There have been reserved, and
the Company shall at all times keep reserved, out of the authorized and
unissued shares of Common Stock, a number of shares of Common Stock sufficient
to provide for the exercise of the rights of purchase represented by the
Warrants, and the transfer agent for the shares of Common Stock and every
subsequent transfer agent for any shares of the Company's Common Stock issuable
upon the exercise of any of the rights of purchase aforesaid are irrevocably
authorized and directed at all times to reserve such number of authorized and
unissued shares of Common Stock as shall be required for such purpose. The
Company agrees that all shares of Common Stock issued upon
6
exercise of the Warrants shall be, at the time of delivery of the certificates
of such shares, validly issued and outstanding, fully paid and nonassessable
and listed on any national securities exchange upon which the other shares of
Common Stock are then listed. So long as any unexpired Warrants remain
outstanding, the Company will file such post-effective amendments to the
registration statement (Form SB-2, Registration No. 333 - ______) (the
"Registration Statement") filed pursuant to the Act with respect to the
Warrants (or other appropriate registration statements or post-effective
amendment or supplements) as may be necessary to permit it to deliver to each
person exercising a Warrant, a prospectus meeting the requirements of Section
10(a)(3) of the Act and otherwise complying therewith, and will deliver such
prospectus to each such person. To the extent that during any period it is not
reasonably likely that the Warrants will be exercised, due to market price or
otherwise, the Company need not file such a post-effective amendment during
such period. The Company will keep a copy of this Agreement on file with the
transfer agent for the shares of Common Stock and with every subsequent
transfer agent for any shares of the Company's Common Stock issuable upon the
exercise of the rights of purchase represented by the Warrants. The Warrant
Agent is irrevocably authorized to requisition from time to time from such
transfer agent stock certificates required to honor outstanding Warrants. The
Company will supply such transfer agent with duly executed stock certificates
for that purpose. All Warrants surrendered in the exercise of the rights
thereby evidenced shall be cancelled by the Warrant Agent and shall thereafter
be delivered to the Company, and such cancelled Warrants shall constitute
sufficient evidence of the number of shares of Common Stock which have been
issued upon the exercise of such Warrants. Promptly after the date of
expiration of the Warrants, the Warrant Agent shall certify to the Company the
total aggregate amount of Warrants then outstanding, and thereafter no shares
of Common Stock shall be subject to reservation in respect of such Warrants
which shall have expired.
Section 9. Warrant Price: Adjustments.
(a) The warrant price at which Common Stock shall be purchasable
upon the exercise of the Warrants shall be $5.00 at any time from __________
__, 1998 until 5:00 Eastern time on __________ __, 2002 or after adjustment, as
provided in this Section, shall be such price as so adjusted (the "Warrant
Price").
(b) The Warrant Price shall be subject to adjustment from time to
time as follows:
7
(i) In case the Company shall at any time after the date hereof
pay a dividend in shares of Common Stock or make a distribution in shares of
Common Stock, then upon such dividend or distribution the Warrant Price in
effect immediately prior to such dividend or distribution shall forthwith be
reduced to a price determined by dividing:
(A) an amount equal to the total number of shares of Common
Stock outstanding immediately prior to such dividend or distribution multiplied
by the Warrant Price in effect immediately prior to such dividend or
distribution, by
(B) the total number of shares of Common Stock outstanding
immediately after such issuance or sale.
For the purposes of any computation to be made in accordance with the
provisions of this clause:
(i) The following provisions shall be applicable: Common Stock
issuable by way of dividend or other distribution on any stock of the Company
shall be deemed to have been issued immediately after the opening of business
on the date following the date fixed for the determination of stockholders
entitled to receive such dividend or other distribution.
(ii) In case the Company shall at any time subdivide or combine
the outstanding Common Stock, the Warrant Price shall forthwith be
proportionately decreased in the case of subdivision or increased in the case
of combination to the nearest one cent. Any such adjustment shall become
effective at the time such subdivision or combination shall become effective.
(iii) Within a reasonable time after the close of each
quarterly fiscal period of the Company during which the Warrant Price has been
adjusted as herein provided, the Company shall:
(A) File with the Warrant Agent a certificate signed by the
President or Vice President of the Company and by the Treasurer or Assistant
Treasurer or the Secretary or an Assistant Secretary of the Company, showing in
detail the facts requiring all such adjustments occurring during such period
and the Warrant Price after each such adjustment; and
8
(B) The Warrant Agent shall have no duty with respect to
any such certificate filed with it except to keep the same on file and
available for inspection by holders of Warrants during reasonable business
hours, and the Warrant Agent may conclusively rely upon the latest certificate
furnished to it hereunder. The Warrant Agent shall not at any time be under any
duty or responsibility to any holder of a Warrant to determine whether any
facts exist which may require any adjustment of the Warrant Price, or with
respect to the nature or extent of any adjustment of the Warrant Price when
made, or with respect to the method employed in making any such adjustment, or
with respect to the nature or extent of the property or securities deliverable
hereunder. In the absence of a certificate having been furnished, the Warrant
Agent may conclusively rely upon the provisions of the Warrants with respect to
the Common Stock deliverable upon the exercise of the Warrants and the
applicable Warrant Price thereof.
(C) Notwithstanding anything contained herein to the
contrary, no adjustment of the Warrant Price shall be made if the amount of
such adjustment shall be less than $.05, but in such case any adjustment that
would otherwise be required then to be made shall be carried forward and shall
be made at the time and together with the next subsequent adjustment which,
together with any adjustment so carried forward, shall amount to not less than
$.05.
(c) In the event that the number of outstanding shares of Common
Stock is increased by a stock dividend payable in Common Stock or by a
subdivision of the outstanding Common Stock, then, from and after the time at
which the adjusted Warrant Price becomes effective pursuant to Subsection (b)
of this Section by reason of such dividend or subdivision, the number of shares
of Common Stock issuable upon the exercise of each Warrant shall be increased
in proportion to such increase in outstanding shares. In the event that the
number of shares of Common Stock outstanding is decreased by a combination of
the outstanding Common Stock, then, from and after the time at which the
adjusted Warrant Price becomes effective pursuant to Subsection (b) of this
Section by reason of such combination, the number of shares of Common Stock
issuable upon the exercise of each Warrant shall be decreased in proportion to
such decrease in the outstanding shares of Common Stock.
(d) In case of any reorganization or reclassification of the
outstanding Common Stock (other than a change in par value, or
9
from par value to no par value, or as a result of a subdivision or
combination), or in case of any consolidation of the Company with, or merger of
the Company into, another corporation (other than a consolidation or merger in
which the Company is the continuing corporation and which does not result in
any reclassification of the outstanding Common Stock), or in case of any sale
or conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, the holder of each Warrant then
outstanding shall thereafter have the right to purchase the kind and amount of
shares of Common Stock and/or other securities and property receivable upon
such reorganization, reclassification, consolidation, merger, sale or
conveyance by a holder of the number of shares of Common Stock which the holder
of such Warrant shall then be entitled to purchase; such adjustments shall
apply with respect to all such changes occurring between the date of this
Warrant Agreement and the date of exercise of such Warrant.
(e) Subject to the provisions of this Section 9, in case the
Company shall, at any time prior to the exercise of the Warrants, make any
distribution of its assets to holders of its Common Stock as a liquidating or a
partial liquidating dividend, then the holder of Warrants who exercises his
Warrants after the record date for the determination of those holders of Common
Stock entitled to such distribution of assets as a liquidating or partial
liquidating dividend shall be entitled to receive for the Warrant Price per
Warrant, in addition to each share of Common Stock, the amount of such
distribution (or, at the option of the Company, a sum equal to the value of any
such assets at the time of such distribution as determined by the Board of
Directors of the Company in good faith), which would have been payable to such
holder had he been the holder of record of the Common Stock receivable upon
exercise of his Warrant on the record date for the determination of those
entitled to such distribution.
(f) In case of the dissolution, liquidation or winding-up of the
Company, all rights under the Warrants shall terminate on a date fixed by the
Company, such date to be no earlier than ten (10) days prior to the
effectiveness of such dissolution, liquidation or winding-up and not later than
five (5) days prior to such effectiveness. Notice of such termination of
purchase rights shall be given to the last registered holder of the Warrants,
as the same shall appear on the books of the Company
10
maintained by the Warrant Agent, by registered mail at least thirty (30) days
prior to such termination date.
(g) In case the Company shall, at any time prior to the expiration
of the Warrants and prior to the exercise thereof, offer to the holders of its
Common Stock any rights to subscribe for additional shares of any class of the
Company, then the Company shall give written notice thereof to the last
registered holder thereof not less than thirty (30) days prior to the date on
which the books of the Company are closed or a record date is fixed for the
determination of the stockholders entitled to such subscription rights. Such
notice shall specify the date as to which the books shall be closed or record
date fixed with respect to such offer of subscription and the right of the
holder thereof to participate in such offer of subscription shall terminate if
the Warrant shall not be exercised on or before the date of such closing of the
books or such record date.
(h) Any adjustment pursuant to the aforesaid provisions shall be
made on the basis of the number of shares of Common Stock which the holder
thereof would have been entitled to acquire by the exercise of the Warrant
immediately prior to the event giving rise to such adjustment.
(i) Irrespective of any adjustments in the Warrant Price or the
number or kind of shares purchasable upon exercise of the Warrants, Warrants
previously or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the similar Warrants initially
issuable pursuant to this Warrant Agreement.
(j) The Company may retain a firm of independent public accountants
(who may be any such firm regularly employed by the Company) to make any
computation required under this Section, and any certificate setting forth such
computation signed by such firm shall be conclusive evidence of the correctness
of any computation made under this Section.
(k) If at any time, as a result of an adjustment made pursuant to
paragraph (d) above, the holders of a Warrant or Warrants shall become entitled
to purchase any securities other than shares of Common Stock, thereafter the
number of such securities so purchasable upon exercise of each Warrant and the
Warrant Price for such shares shall be subject to adjustment from
11
time to time in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Common Stock contained in paragraphs (b) and
(c).
(l) No adjustment to the Purchase Price of the Warrants or to the
number of shares of Common Stock purchasable upon the exercise of such Warrants
will be made, however under the following circumstances:
(i) upon the grant or exercise of any of the options presently
outstanding (or options which may hereafter be granted and/or exercised) under
the Company's 1997 Stock Option Plan for officers, directors and/or employees,
consultants and similar situated parties of the Company; or
(ii) upon the sale or exercise of the Warrants; or
(iii) upon exercise of the Representative's Warrant as
otherwise described in the Company's Prospectus dated __________ __, 1997; or
(iv) upon exercise or sale of the Warrants issuable upon
exercise of the Representative's Warrant; or
(v) upon any amendment to or change in the term of any rights
or warrants to subscribe for or purchase, or options for the purchase of Common
Stock or convertible securities, including, but not limited to, any extension
of any expiration date of any such right, warrant or option, any change in any
exercise or purchase price provided for in any such right, warrant or option,
any extension of any date through which any convertible securities are
convertible into or exchangeable for Common Stock or any change in the rate at
which any convertible securities are convertible into or exchangeable for
Common Stock.
Section 10. Fractional Interests. The Warrants may only be exercised
to purchase full shares of Common Stock and the Company shall not be required
to issue fractions of shares of Common Stock on the exercise of Warrants.
However, if a Warrantholder exercises all Warrants then owned of record by him
and such exercise would result in the issuance of a fractional share, the
Company will pay to such Warrantholder, in lieu of the issuance of any
fractional share otherwise issuable, an amount of cash based on the market
12
value of the Common Stock of the Company on the last trading day prior to the
exercise date.
Section 11. Notices to Warrantholders.
(a) Upon any adjustment of the Warrant Price and the number of
shares of Common Stock issuable upon exercise of a Warrant, then and in each
such case, the Company shall give written notice thereof to the Warrant Agent,
which notice shall state the Warrant Price resulting from such adjustment and
the increase or decrease, if any, in the number of shares purchasable at such
price upon the exercise of a Warrant, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based. The
Company shall also mail such notice to the holders of the Warrants at their
respective addresses appearing in the Warrant register. Failure to give or mail
such notice, or any defect therein, shall not affect the validity of the
adjustments.
(b) In case at any time:
(i) the Company shall pay dividends payable in stock upon its
Common Stock or make any distribution (other than regular cash dividends) to
the holders of its Common Stock; or
(ii) the Company shall offer for subscription pro rata to all
of the holders of its Common Stock any additional shares of stock of any class
or other rights; or
(iii) there shall be any capital reorganization or
reclassification of the capital stock of the Company, or consolidation or
merger of the Company with, or sale of substantially all of its assets to
another corporation; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; then in any one or more of such
cases, the Company shall give written notice in the manner set forth in Section
1 l(a) of the date on which (A) a record shall be taken for such dividend,
distribution or subscription rights, or (B) such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up shall take place, as the case may be. Such notice shall also specify
the date as of which the holders of Common Stock of record shall participate in
such dividend, distribution or subscription
13
rights, or shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding-up as the case
may be. Such notice shall be given at least thirty (30) days prior to the
action in question and not less than thirty (30) days prior to the record date
in respect thereof. Failure to give such notice, or any defect therein, shall
not affect the legality or validity of any of the matters set forth in this
Section 11(b).
(c) The Company shall cause copies of all financial statements and
reports, proxy statements and other documents that are sent to its stockholders
to be sent by first-class mail, postage prepaid, on the date of mailing to such
stockholders, to each registered holder of Warrants at his address appearing in
the Warrant register as of the record date for the determination of the
stockholders entitled to such documents.
Section 12. Disposition of Proceeds on Exercise of Warrants.
(a) The Warrant Agent shall promptly forward to the Company all
monies received by the Warrant Agent for the purchase of shares of Common Stock
through the exercise of such Warrants.
(b) The Warrant Agent shall keep copies of this Agreement available
for inspection by holders of Warrants during normal business hours.
Section 13. Redemption of Warrants. The Warrants are redeemable by the
Company commencing on __________ __, 1998, and prior to their expiration on
__________ __, 2002, in whole or in part, on not less than thirty (30) days'
prior written notice at a redemption price of $.10 per Warrant at any time;
provided that the closing bid price per share on the Nasdaq SmallCap Market, or
the last sale price, if listed on the Nasdaq National Market or a national
exchange (the "Market Place"), of the Common Stock for a period of twenty (20)
consecutive trading days ending within fifteen (15) days prior to the date of
any redemption notice, exceeds 150% of the current Warrant exercise price. Any
redemption in part shall be made pro rata to all Warrant holders. The
redemption notice shall be mailed to the holders of the Warrants at their
respective addresses appearing in the Warrant register. Holders of the Warrants
will have exercise rights until the close of business on the date fixed for
redemption.
14
The Warrants underlying the Representative's Warrant shall not be
subject to redemption by the Company until they have been exercised and the
underlying Warrants are outstanding.
Section 14. Merger or Consolidation or Change of Name of Warrant Agent.
Any corporation or company which may succeed to the corporate trust business of
the Warrant Agent by any merger or consolidation or otherwise shall be the
successor to the Warrant Agent hereunder without the execution or filing of any
paper or any further act on the part of any of the parties hereto, provided
that such corporation would be eligible for appointment as a successor Warrant
Agent under t he provisions of Section 16 of this Agreement. In case at the
time such successor to the Warrant Agent shall succeed to the agency created by
this Agreement, any of the Warrants shall have been countersigned but not
delivered, any such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent and deliver such Warrants so
countersigned.
In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrants shall have been countersigned but not
delivered, the Warrant Agent may adopt the countersignature under its prior
name and deliver Warrants so countersigned. In all such cases such Warrants
shall have the full force provided in the Warrants and in the Agreement.
Section 15. Duties of Warrant Agent. The Warrant Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Warrants, by their
acceptance thereof, shall be bound:
(a) The statements of fact and recitals contained herein and in the
Warrants shall be taken as statements of the Company, and the Warrant Agent
assumes no responsibility for the correctness of any of the same except as such
describe the Warrant Agent or action taken or to be taken by it. The Warrant
Agent assumes no responsibility with respect to the distribution of the
Warrants except as herein expressly provided.
(b) The Warrant Agent shall not be responsible for any failure of
the Company to comply with any of the covenants in this Agreement or in the
Warrants to be complied with by the Company.
15
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any holder of
any Warrant in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or the advice of such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to
the Company or to any holder of any Warrant for any action taken in reliance on
any notice, resolution, waiver, consent, order, certificate or other instrument
believed by it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(e) The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the execution of
this Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges incurred by the Warrant Agent in the
execution of this Agreement and to indemnify the Warrant Agent and save it
harmless against any and all liabilities, including judgments, costs and
reasonable counsel fees, for anything done or omitted by the Warrant Agent in
the execution of this Agreement except as a result of the Warrant Agent's
negligence, willful misconduct or bad faith.
(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expenses unless the Company or one or more registered holders of Warrants shall
furnish the Warrant Agent with reasonable security and indemnity for any costs
and expenses which may be incurred (for which there is no obligation of the
Company to do so, except as provided herein) but this provision shall not
affect the power of the Warrant Agent to take such action as the Warrant Agent
may consider proper, whether with or without any such security or indemnity.
All rights of action under this Agreement or under any of the Warrants may be
enforced by the Warrant Agent without the possession of any of the Warrants or
the production thereof at any trial or other proceeding, and any such action,
suit or proceeding instituted by the Warrant Agent shall be brought in its name
as Warrant Agent, and any recovery of judgment shall be for the ratable benefit
of the registered holders of the Warrants, as their respective rights and
interests may appear.
(g) The Warrant Agent and any stockholder, director, officer,
partner or employee of the Warrant Agent may buy, sell or
16
deal in any of the Warrants or other securities of the Company or become
pecuniarily interested in any transaction in which the Company may be
interested, or contract with or lend money to or otherwise act as fully and
freely as though it were not the Warrant Agent under this Agreement. Nothing
herein shall preclude the Warrant Agent from acting in any other capacity for
the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent and its
duties shall be determined solely by the provisions hereof.
(i) The Warrant Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys, agents or employees, and the Warrant Agent shall not be
answerable or accountable for any such attorneys, agents or employees or for
any loss to the Company, provided reasonable care had been exercised in the
selection and continued employment thereof.
(j) Any request, direction, election, order or demand of the
Company shall be sufficiently evidenced by an instrument signed in the name of
the Company by its President or a Vice President or its Secretary or an
Assistant Secretary or its Treasurer or an Assistant Treasurer (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Warrant Agent by a
copy thereof certified by the Secretary or an Assistant Secretary of the
Company.
Section 16. Change of Warrant Agent. The Warrant Agent may resign and
be discharged from its duties under this Agreement by giving to the Company
notice in writing, and to the holders of the Warrants notice by mailing such
notice to the holders at their respective addresses appearing on the Warrant
register, of such resignation, specifying a date when such resignation shall
take effect. The Warrant Agent may be removed by like notice to the Warrant
Agent from the Company and the like mailing of notice to the holders of the
Warrants. If the Warrant Agent shall resign or be removed or shall otherwise
become incapable of action, the Company shall appoint a successor to the
Warrant Agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after such removal or after it has been notified in
writing of such resignation or
17
incapacity by the resigning or incapacitated Warrant Agent or after the Company
has received such notice from a registered holder of a Warrant (who shall, with
such notice, submit his Warrant for inspection by the Company), then the
registered holder of any Warrant may apply to any court of competent
jurisdiction for the appointment of a successor to the Warrant Agent. Any
successor Warrant Agent, whether appointed by the Company or by such a court,
shall be a bank or trust company, in good standing, incorporated under any
state or federal law. After appointment, the successor Warrant Agent shall be
vested with the same powers, rights, duties and responsibility as if it had
been originally named as Warrant Agent without further act or deed and the
former Warrant Agent shall deliver and transfer to the successor Warrant Agent
all cancelled Warrants, records and property at the time held by it hereunder,
and execute and deliver any further assurance or conveyance necessary for the
purpose. Failure to file or mail any notice provided for in this Section,
however, or any defect therein, shall not affect the validity of the
resignation or removal of the Warrant Agent or the appointment of the successor
Warrant Agent, as the case may be.
Section 17. Identity of Transfer Agent. Forthwith upon the appointment
of any transfer agent for the shares of Common Stock or of any subsequent
transfer agent for the shares of Common Stock or other shares of the Company's
Common Stock issuable upon the exercise of the` rights of purchase represented
by the Warrants, the Company will file with the Warrant Agent a statement
setting forth the name and address of such transfer agent.
Section 18. Notices. Any notice pursuant to this Agreement to be given
by the Warrant Agent, or by the registered holder of any Warrant to the
Company, shall be sufficiently given if sent by first-class mail, postage
prepaid, addressed (until another is filed in writing by the Company with the
Warrant Agent) as follows:
Discas, Inc.
567-1 South Leonard Street
Waterbury, Connecticut 06708
Attention: Mr. Patrick A. DePaolo, President
and a copy thereof to:
Epstein Becker & Green, P.C.
250 Park Avenue
New York, New York 10177
Attention: Joseph A. Smith, Esq.
18
Any notice pursuant to this Agreement to be given by the Company or by
the registered holder of any Warrant to the Warrant Agent shall be sufficiently
given if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing by the Warrant Agent with the Company) as follows:
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
Attention: Mr. George Karfunkel
Any notice pursuant to this Agreement to be given to the Warrant Agent
or by the Company to the Representative shall be sufficiently given if sent by
first-class mail, postage prepaid, addressed (until another address if filed in
writing with the Warrant Agent) as follows:
Roan Capital Partners L.P.
40 East 52nd Street
New York, New York 10022
Attention: Mr. Timothy Ryan
and a copy thereof to:
Gusrae, Kaplan & Bruno
120 Wall Street
New York, New York 10005
Attention: Alexander Bienenstock, Esq.
Section 19. Supplements and Amendments. The Company, the Warrant Agent
and the Representative 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 Warrant Agent and the
Representative may deem necessary or desirable and which shall not be
inconsistent with the provisions of the Warrants and which shall not adversely
affect the interest of the holders of Warrants.
Section 20. New York Contract. This Agreement and each Warrant issued
hereunder shall be deemed to be a contract made under the laws of the State of
New York and shall be construed in accordance with the laws of New York
applicable to agreements to be performed wholly within New York.
Section 21. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the
Representative, the Company and the Warrant Agent and the registered holders of
the Warrants any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for
the sole and exclusive benefit of the Company, the Warrant Agent and the
registered holders of the Warrants.
Section 22. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company, the Representative or the
Warrant Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
IN WITNESS WHEREOF, the parties have entered into this Agreement on
the date first above written.
DISCAS, INC.
By:
-------------------------------------
Patrick A. DePaolo, President
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
-------------------------------------
Name:
Title:
ROAN CAPITAL PARTNERS L.P.
By:
-------------------------------------
Name:
Title:
20
EXHIBIT A
[Form of Face of Warrant Certificate]
No. W Warrants
VOID AFTER ________ ___,2002
WARRANT CERTIFICATE FOR PURCHASE OF COMMON STOCK
DISCAS, INC.
THIS CERTIFIES THAT FOR VALUE RECEIVED ________________________________________
_______________________________________________________________________________
or registered assigns (the "Registered Holder") is the owner of the number of
Redeemable Common Stock Purchase Warrants ("Warrants") specified above. Each
Warrant initially entitles the Registered Holder to purchase, subject to the
terms and conditions set forth in this Certificate and the Warrant Agreement
(as hereinafter defined), one fully paid and nonassessable share of Common
Stock, $.0001 par value per share ("Common Stock"), of DISCAS, INC., a Delaware
corporation (the "Company"), at any time between the Initial Warrant Exercise
Date and the Expiration Date (as hereinafter defined), upon the presentation
and surrender of this Warrant Certificate with the Subscription Form on the
reverse hereof duly executed, at the corporate office of AMERICAN STOCK
TRANSFER & TRUST COMPANY as Warrant Agent, or its successor (the "Warrant
Agent"), accompanied by payment of $5.00 (the "Purchase Price") in lawful money
of the United States of America in cash or by official bank or certified check
made payable to Discas, Inc.
This Warrant Certificate and each Warrant represented hereby are
issued pursuant to and are subject in all respects to the terms and conditions
set forth in the Warrant Agreement (the "Warrant Agreement") dated __________
__, 1997, by and between the Company and the Warrant Agent.
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price or the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modifications or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional shares of Common Stock will be issued. In
the case of the exercise of less than all the Warrants represented hereby, the
Company shall cancel this Warrant Certificate upon the surrender hereof and
shall execute and deliver a new Warrant Certificate or Warrant Certificates of
like tenor, which the Warrant Agent shall countersign, for the balance of such
Warrants.
A-1
The term "Initial Warrant Exercise Date" shall mean __________ __,
1998.
The term "Expiration Date" shall mean 5:00 p.m. New York time) on
__________ __, 2002, or such earlier date as the Warrants shall be redeemed. If
such date shall in the State of New York be a holiday or a day on which the
banks are authorized to close, then the Expiration Date shall mean 5:00 p.m.
(New York time) the next following day which in the State of New York is not a
holiday or a day on which banks are authorized to close.
The Company shall not be obligated to deliver any securities pursuant
to the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, as amended, with respect to such securities is then
effective. This Warrant shall not be exercisable by a Registered Holder in any
state where such exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the surrender hereof by
the Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to
represent such number of Warrants as shall be designated by such Registered
Holder at the time of such surrender. Upon due presentment with any transfer
fee in addition to any tax or other governmental charge imposed in connection
therewith, for registration of transfer of this Warrant Certificate at such
office, a new Warrant Certificate or Warrant Certificates representing an equal
aggregate number of Warrants will be issued to the transferee in exchange
therefor, subject to the limitations provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the
Registered Holder shall not be entitled to any rights of a stockholder of the
Company, including, without limitation, the right to vote or to receive
dividends or other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided in the Warrant
Agreement.
This Warrant may be redeemed at the option of the Company, at a
redemption price of $.10 per Warrant any time after _________ __, 1998,
provided the per share Market Price (as defined in the Warrant Agreement) for
the securities issuable upon exercise of such Warrant shall exceed 150% of the
current Warrant exercise price on each of the twenty (20) consecutive trading
days during a period ending within fifteen (15) days prior to the date on which
notice of redemption is given. Notice of redemption shall be given
A-2
not later than the thirtieth day before the date fixed for redemption, all as
provided in the Warrant Agreement. On and after the date fixed for redemption,
the Registered Holder shall have no rights with respect to this Warrant except
to receive the $.10 per Warrant upon surrender of this Certificate.
Prior to due presentment for registration of transfer hereof, the
Company and the Warrant Agent may deem and treat the Registered Holder as the
absolute owner hereof and of each Warrant represented hereby (notwithstanding
any notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary.
The Company has agreed to pay a fee of 7% of the Purchase Price upon
certain conditions as specified in the Warrant Agreement upon the exercise of
any Warrants represented hereby.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
This Warrant Certificate is not valid unless countersigned by the
Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or in facsimile by two of its officers thereunto
duly authorized and a facsimile of its corporate seal to be imprinted hereon.
DISCAS, INC.
By:
-----------------------------------
By:
-----------------------------------
Dated:
-----------------------
[Seal]
COUNTERSIGNED:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Warrant Agent
By:
-----------------------------------------
Authorized Officer
A-3
[Form of Reverse of Warrant Certificate]
NOTICE OF ELECTION TO EXERCISE
To Be Executed by the Registered Holder
in Order to Exercise Warrants
THE UNDERSIGNED REGISTERED HOLDER hereby irrevocably elects to
exercise _______________ Warrants represented by this Warrant Certificate, and
to purchase the securities issuable upon the exercise of such Warrants, and
requests that certificates for such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER and be
delivered to:
---------------------------------------
---------------------------------------
---------------------------------------
---------------------------------------
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
The undersigned represents that the exercise of the Warrants evidenced
hereby was solicited by a member of the National Association of Securities
Dealers, Inc. ("NASD"), whose name appears in the space below. If not solicited
by an NASD member, please write "unsolicited" in the space below. Unless
otherwise indicated, it will be assumed that the exercise was solicited by Roan
Capital Partners L.P.
----------------------------------------
(Name of NASD Member, if other than
Roan Capital Partners L.P., or
"unsolicited")
----------------------------------------
Dated:
------------------ ----------------------------------------
----------------------------------------
Address
----------------------------------------
Taxpayer Identification Number
----------------------------------------
Signature Guaranteed
----------------------------------------
A-4
ASSIGNMENT
To Be Executed by the Registered Holder in Order to Assign Warrants
FOR VALUE RECEIVED, __________________________________ hereby sells,
assigns, and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF TRANSFEREE
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
(please print or type name and address)
__________ of the Warrants represented by this Warrant Certificate, and hereby
irrevocably constitutes and appoints _________________________ Attorney to
transfer this Warrant Certificate on the books of the Company, with full power
of substitution in the premises.
Dated:
------------------ ----------------------------------
Signature Guaranteed:
----------------------------------
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY AN ELIGIBLE INSTITUTION (AS DEFINED IN RULE 17Ad-15 UNDER THE
SECURITIES AND EXCHANGE ACT OF 1934) WHICH MAY INCLUDE A COMMERCIAL BANK OR
TRUST COMPANY, SAVINGS ASSOCIATION, CREDIT UNION OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.
A-5