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
of $6.25, at any time commencing thirteen (13) months from the
effective date of the prospectus of the public offering
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( , 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
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
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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,
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
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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
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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.
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,
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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 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 - 26543) (the "Registration
Statement") filed pursuant to the Act with respect to the Warrants
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(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 $6.25 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:
(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:
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(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
(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
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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
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,
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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
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
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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
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
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(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
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:
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(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
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.
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(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.
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 the 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.
14
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.
(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
15
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
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.
16
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 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
17
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.
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
18
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:
19
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 $6.25 (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
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[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