WARRANT AGREEMENT
WARRANT AGREEMENT (the "Warrant Agreement") is dated as of December 18,
1995 between EDITEK, INC., a Delaware corporation (the "Company") and Samuel C.
Powell and his authorized, registered successors or assigns (the "Warrant
Holder").
Subject to adjustment as hereinafter provided, the Company proposes to
issue to Warrant Holder certain warrants as hereinafter described (the
"Warrants") to purchase up to an aggregate of 32,679 shares (the "Warrant
Shares") of the Company's Common Stock, par value $.15 per share (the "Common
Stock"), exercisable at $2.96 per Warrant Share, and each Warrant entitles the
holder thereof to purchase one share of Common Stock.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth and for other good and valuable consideration, the
parties hereto agree as follows:
1. Issuance of Warrants; Form of Warrant. The Company will issue, sell
and deliver the Warrant Certificate evidencing the Warrants to the Warrant
Holder or at its direction, to its bona fide officers and directors upon
execution of this Warrant Agreement. The text of the Warrant Certificate
(hereinafter referred to as "Warrant" or "Warrant Certificate") and the form of
election to purchase shares to be attached thereto shall be substantially as set
forth in Exhibit A attached hereto. The Warrants shall be executed on behalf of
the Company by the manual or facsimile signature of the present or any future
President or Vice President of the Company, under its corporate seal, affixed or
in facsimile, attested by the manual or facsimile signature of the present or
any future Secretary or Assistant Secretary of the Company.
2. Registered Form. The Warrants shall be registered in a Warrant
register as they are issued. The Company shall be entitled to treat the
registered holder (the "Warrant Holder") of any Warrant on the Warrant register
as the owner in fact thereof for all purposes and shall not be bound to
recognize any equitable or other claim to or interest in such Warrant on the
part of any other person. The Warrants shall be registered initially in the name
of Samuel C. Powell.
3. Transfer of Warrants. The Warrants and the Warrant Shares will not
be transferable, in part or in whole, except (i) in compliance with the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
promulgated thereunder, and any applicable state securities laws and (ii) only
on the books of the Company upon delivery thereof duly endorsed by the Warrant
Holder or by its duly authorized attorney or representative, or accompanied by
proper evidence of succession, assignment or authority to transfer. In all cases
of transfer by an attorney, the original power of attorney, duly approved, or an
official copy thereof, duly certified, shall be deposited with the Company. In
case of transfer by executors, administrators, guardians or other legal
representatives, duly
authenticated evidence of their authority shall be produced, and may be required
to be deposited with the Company in its discretion. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the persons
entitled thereto. The Warrants may be exchanged at the option of the then
Warrant Holder thereof, for another Warrant, or other Warrants of different
denominations, of like tenor and representing in the aggregate the right to
purchase a like number of Warrant Shares upon surrender to the Company or its
duly authorized agent. Notwithstanding the foregoing, the Company shall have no
obligation to cause Warrants to be transferred on its books to any person,
unless the Warrant Holder or Warrant Holders thereof shall furnish to the
Company evidence of compliance with the Act in accordance with the provisions of
Section 10 of this Agreement.
4. Term of Warrants; Exercise of Warrants. Each Warrant entitles the
Warrant Holder thereof to purchase one share of Common Stock at a purchase price
of $2.96 per share (the "Exercise Price") at any time after December 18, 1995
(the "Effective Date") until 5:00 p.m., New York City time, on March 17, 1999
(the "Expiration Date"). The Exercise Price and the number of Warrant Shares
issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events, pursuant to the provisions of Section 8 of this
Agreement. Subject to the provisions of this Agreement, each Warrant Holder
shall have the right, which may be exercised as set forth in such Warrants, to
purchase from the Company (and the Company shall issue and sell to such Warrant
Holder) the number of fully paid and nonassessable shares of Common Stock
specified in such Warrant, upon surrender to the Company, or its duly authorized
agent of such Warrants, with the form of election to purchase attached thereto
duly completed and signed, with signatures guaranteed by a member firm of a
national securities exchange, a commercial bank (not a savings bank or savings
and loan association) or trust company located in the United States or a member
of the NASD, and upon payment to the Company of the Exercise Price, as adjusted
(if applicable) in accordance with provisions of Section 8 of this Agreement,
times the number of Warrant Shares in respect of which such Warrants are then
exercised. Payment of such Exercise Price may be made in cash or by check
payable to the order of the Company. No adjustment shall be made for any
dividends on any shares of stock issuable upon exercise of a Warrant. Upon each
surrender of Warrants and payment of the Exercise Price as aforesaid, the
Company shall issue and cause to be delivered with all reasonable dispatch to or
upon the written order of the Warrant Holder of such Warrants and (subject to
receipt of evidence of compliance with the Act in accordance with the provisions
of Section 10 of this Agreement) in such name or names as such Warrant Holder
may designate, a certificate or certificates for the number of full Warrant
Shares so purchased upon the exercise of such Warrants, together with cash, as
provided in Section 9 of this Agreement, in respect of any fractional Warrant
Shares otherwise issuable upon such surrender. 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 Warrant Shares
as of the date of the surrender of Warrants and payment of the Exercise Price as
aforesaid; provided, however, that if, at the date of surrender of such Warrants
and payment of such Exercise Price, the transfer books for the Common Stock or
other class of stock purchasable upon the exercise of such Warrants shall be
issuable, shall be closed, the certificates for the shares
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shall be issuable as of the date on which such books are reopened and until such
time the Company shall be under no duty to deliver any certificate for such
Warrant Shares; provided, further, that the transfer books, unless otherwise
required by law, shall not be closed at any one time for a period longer than 20
days. The rights of purchase represented by the Warrants shall be exercisable,
at the election of the Warrant Holders thereof, either in full or from time to
time in part and, in the event that any Warrant is exercised in respect of less
than all of the Warrant Shares purchasable on such exercise at any time prior to
the Expiration Date, a new Warrant or Warrants will be issued for the remaining
number of Warrant Shares specified in the Warrant so surrendered.
5. Payment of Taxes. The Company will pay all documentary stamp taxes,
if any, attributable to the issuance of Warrant Shares upon the exercise of
Warrants; provided, however, that the Company shall not be required to pay any
tax or taxes which may be payable in respect of any transfer involved in the
issue or delivery of any certificates for Warrant Shares, and the Company shall
not be required to issue or deliver any certificate for such Warrant Shares
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.
6. Mutilated or Missing Warrants. In case any of the Warrants shall be
mutilated, lost, stolen or destroyed, the Company may, in its discretion, issue
and deliver in exchange and substitution for and upon cancellation of the
mutilated Warrant, or in lieu of and substitution for the Warrant lost, stolen
or destroyed, a new Warrant for the number of Warrants represented by the
Warrant so mutilated, lost, stolen or destroyed but only upon receipt of
sufficient evidence of such loss, theft or destruction of such Warrant, and the
ownership thereof, and an agreement to indemnify the Company, if required, all
satisfactory to the Company. An applicant for such substitute Warrants shall so
comply with such other reasonable regulations and pay such other reasonable
charges incidental thereto as the Company may prescribe.
7. Reservation of Warrant Shares, etc. The Company shall at all times
after the Effective Date keep reserved, out of the authorized and unissued
Common Stock, a number of shares of Common Stock sufficient to provide for the
exercise of the rights of purchase represented by the outstanding Warrants.
American Stock Transfer & Trust Company, transfer agent for the Common Stock
(the "Transfer Agent"), and every subsequent transfer agent, if any, for shares
of the Company's capital stock issuable upon the exercise of any of the rights
of purchase aforesaid, will be irrevocably authorized and directed at all times
until the Expiration Date to reserve such number of authorized and unissued
shares as shall be required for such purpose. The Company will itself provide or
otherwise make available any cash which may be distributable as provided in
Section 9 of this Agreement. All Warrants surrendered in the exercise of the
rights thereby evidenced shall be canceled, and such canceled Warrants shall
constitute sufficient evidence of the number of shares of Common Stock that have
been issued upon the exercise of such Warrants. No shares of Common
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Stock shall be subject to reservation in respect of unexercised Warrants
subsequent to the Expiration Date.
8. Adjustments of Exercise Price and Number of Warrant Shares. The
Exercise Price and the number and kind of securities purchasable upon exercise
of each Warrant shall be subject to adjustment from time to time upon the
happening of certain events, as follows:
(a) In case the Company shall (i) declare a dividend on its
Common Stock in shares of Common Stock or make a distribution in shares of
Common Stock, (ii) subdivide its outstanding shares of Common Stock into a
greater number of shares, (iii) combine its outstanding shares of Common Stock
into a smaller number of shares of Common Stock or (iv) issue by
reclassification of its shares of Common Stock other securities of the Company
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), the number of
Warrants Shares purchasable upon exercise of each Warrant immediately prior to
the record or effective date therefor shall be adjusted so that the Warrant
Holder of each Warrant shall be entitled to receive the kind and number of
Warrant Shares or other securities of the Company which such Warrant Holder
would have owned or have been entitled to receive after the happening of any of
the events described above, had such Warrant been exercised immediately prior to
the happening of such event or any record date with respect thereto. An
adjustment made pursuant to this paragraph (a) shall become effective
immediately after the effective date of such event retroactive to immediately
after the record date, if any, for such event.
(b) Whenever the number of Warrant Shares purchasable upon the
exercise of each Warrant is adjusted, as herein provided, the Exercise Price
shall adjusted by multiplying such exercise Price immediately prior to such
adjustment by a fraction, the numerator of which shall be the number of shares
purchasable upon the exercise of each Warrant immediately prior to such
adjustment, and the denominator of which shall be the number of Warrant Shares
so purchasable immediately thereafter.
(c) For the purpose of this Section 8, the term "shares of
Common Stock" shall mean (i) the class of stock designated as the Common Stock
of the Company at the date of this Agreement or (ii) any other class of stock
resulting from successive changes or reclassification of such shares consisting
solely of changes in par value, or from par value to no par value, or from no
par value to par value. In the event that at any time, as a result of an
adjustment made pursuant to paragraph (a) above, the Warrant Holders shall
become entitled to purchase any shares of capital stock of the Company other
than shares of Common Stock, thereafter the number of such other shares so
purchasable upon exercise of each Warrant and the Exercise Price of such shares
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Warrant
Shares contained in paragraphs (a) through (b), inclusive, above, and paragraphs
(d) through (f), inclusive, of this Section 8, and the provisions of Sections 4,
5, 7 and 12, with respect to the Warrant Shares, shall apply on like terms to
any such other shares.
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(d) The Company may at its option, at any time during the term
of the Warrants, reduce the then current Exercise Price to any amount deemed
appropriate by the Board of Directors of the Company; provided, however, that in
no event shall the Exercise Price be adjusted below the par value per share of
the Common Stock.
(e) In case of any consolidation or merger of the Company with
or into another corporation r 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 Company or such successor or purchasing corporation (or an
affiliate of such successor or purchasing corporation), as the case may be,
agrees that such Warrant Holder shall have the right for thirty (30) days
thereafter upon payment of the Exercise Price in effect immediately prior to
such action to purchase upon exercise of each Warrant the kind and amount of
shares and other securities and property (including cash) which he would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had such Warrant been exercised
immediately prior to such action. The provisions of this paragraph (e) shall
similarly apply to successive consolidations, mergers, sales or conveyances.
(f) Notwithstanding any adjustments in the Exercise Price or
the number or kind of shares purchasable upon the exercise of the Warrants
pursuant to this Agreement, certificates for Warrants issued prior or subsequent
to such adjustments many continue to express the same price and number and kind
of shares as are stated in the Warrants initially issuable pursuant to this
Agreement.
9. Fractional Interests. The Company shall not be required to issue
fractions of shares of Common Stock on the exercise of Warrants. If more than
one Warrant shall be presented for exercise in full at the same time by the same
Warrant Holder, the number of Warrant Shares which shall be issuable upon the
exercise thereof shall be computed on the basis of the aggregate number of
Warrant Shares purchasable on exercise of the Warrants so presented. If any
fraction of a share of Common Stock would, except for the provisions of this
Section 9, be issuable on the exercise of any Warrant (or specified portions
thereof), the Company shall purchase such fraction for an amount in cash equal
to the same fraction of the current market price per share of Common Stock on
the date of exercise which price shall be the last sale price, or in case no
sale takes place on such day, the average of the closing bid and asked prices on
the principal national securities exchange on which the Common Stock of the
Company is traded, or if not traded on any national exchange, then the average
of the closing bid and asked prices as quoted on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") or as reported by the
National Quotation Bureau, Inc. or similar reporting organization.
10. Restriction on Dispositions. The Warrants and the Warrant Shares
have not been registered under the Act. The Warrant Holder represents and
warrants to the Company that it understands that neither the Warrants nor the
Warrant Shares may be transferred except pursuant to (i) an effective
Registration Statement under the Act, or (ii) any available
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rule or exemption from registration under the Act permitting such disposition of
securities and an opinion of counsel, reasonably satisfactory to counsel for the
Company, that an exemption from such registration is available.
11. Certificates to Bear Legends. The Warrants shall be subject to a
stop-transfer order and the certificate or certificates therefor shall bear the
following legend:
NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO
(i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933 OR (ii) ANY AVAILABLE RULE OR EXEMPTION FROM REGISTRATION UNDER
SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES AND AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THIS COMPANY, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
The Warrant Shares or other securities issued upon exercise of the
Warrants shall be subject to a stop-transfer order and the certificate or
certificates evidencing any such Warrant Shares or securities shall bear a
legend in substantially the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 OR (ii) ANY AVAILABLE RULE OR EXEMPTION FROM
REGISTRATION UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES
AND AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THIS
COMPANY, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
12. Representations and Warranties of Warrant Holder. In connection
with the issuance of the Warrants, the Warrant Holder represents to the Company
by acceptance of the Warrants as follows:
(a) The Warrant Holder is aware of the Company's business
affairs and financial condition, and has acquired information about the Company
sufficient to reach an informed and knowledgeable decision to acquire the
Warrants. The Warrant Holder is acquiring the Warrants for its own account for
investment purposes only and not with view to, or for the resale in connection
with, any "distribution" thereof in violation of the Act.
(b) The Warrant Holder understands that the Warrants and
Warrant Shares have not been registered under the Act in reliance upon a
specific exemption therefrom, which exemption depends upon, among other things,
the bona fide nature of the Warrant Holder's investment intent as expressed
herein.
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(c) The Warrant Holder further understands that the Warrants
and any Warrant Shares to be issued upon exercise hereof must be held
indefinitely unless subsequently registered under the Act and either registered
or qualified under any applicable state securities laws, or unless exemptions
from such registration and qualification are otherwise available.
(d) The Warrant Holder agrees that it will not dispose of any
of the Warrants or Warrant Shares except pursuant to (i) an effective
registration statement under the Act (and, in such case, in compliance with all
prospectus delivery or other requirements to sell pursuant to such registration
statement), (ii) Rule 144 under the Act (or any similar rule under the Act
relating to the disposition of securities) or (iii) an opinion of counsel that
an exemption from registration is available.
13. Registration Rights. The Company hereby covenants and agrees to
grant certain registration rights to the Warrant Holder with respect to the
Warrant Shares, as follows:
(a) If the Company proposes to register any of its securities,
either for its own account or the account of others, solely for cash under the
Securities Act of 1933, as amended (the "Securities Act"), either for its own
account or the account of others (other than any registration effected by the
Company to implement an employee benefit plan or for a transaction to which Rule
145 or any similar rule under the Securities Act is applicable), it will give
written notice to the Warrant Holder of its intention to do so. Upon the written
request of the Warrant Holder received by the Company within ten (10) days after
the date of any such notice (which request shall specify the amount of Warrant
Shares intended to be disposed of by the Warrant Holder and the intended method
of disposition thereof), the Company will use its best efforts to effect the
registration, in a registration statement (the "Registration Statement")
covering the securities to be offered by the Company, of the securities which
the Company has been so requested to register by the Warrant Holder and other
security holders; provided, that if, at any time after giving written notice of
its intention to register any securities and prior to the effective date of the
Registration Statement, the Company shall determine for any reason not to
register or to delay registration of such securities, the Company may, at its
election, give written notice of such determination to each holder whose
securities are to be included in the Registration Statement and, thereupon, (i)
in the case of a determination not to register, shall be relieved of its
obligation to register any securities in connection with such registration, and
(ii) in the case of a determination to delay registering, shall be permitted to
delay registering any securities for the same period as the delay in registering
such other securities; provided further, that in the case of an underwritten
registration, the Company shall not be required to register securities in excess
of the amount, if any, which the principal underwriter shall reasonably and in
good faith agree in writing to include in such registration. Any Warrant Shares
and any securities of any other security holder who holds securities requested
to be included in such registration which are not included for this reason shall
be included (subject, first, to the inclusion of all securities the Company
proposes to register and sell, if any) on a pro rata
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basis in proportion to the respective holdings of securities requested to be
included in such registration. The Warrant Holder shall be entitled to exercise
the registration rights described herein only once; provided that the
Registration Statement becomes and remains effective for at least ninety (90)
days. The Company shall pay its own expenses in connection with such
registration; the Warrant Holder shall pay all fees and expenses of the Warrant
Holder's own counsel and the Warrant Holder's proportionate share of all
registration and qualification fees and expenses (including underwriters'
discounts and commissions) and other expenses that result from the inclusion of
the Warrant Shares in such registration. The Warrant Holder shall provide the
Company in a signed writing such information about the Warrant Holder as in the
opinion of securities counsel to the Company shall be either necessary or
reasonably appropriate to enable the Company to comply with the Securities Act
and applicable state securities laws.
(b) The Company shall use its best efforts to register, qualify or
obtain exemption from registration or qualification for, the Warrant Shares
covered by the Registration Statement under such other securities or blue sky
laws of such jurisdictions as the Company determines to register securities to
be sold by the Company.
(c) Notwithstanding the foregoing, the Company (i) shall not be
obligated to register Warrant Shares held by the Warrant Holder if the Company
shall furnish the Warrant Holder with a written opinion of counsel reasonably
satisfactory to the Warrant Holder, that the Warrant Shares sought to be
registered may be publicly offered, sold and distributed without registration
under the Securities Act pursuant to Rule 144 without restriction as to the
amount of securities that can be sold; and (ii) if the registration herein
described is an underwritten offering, shall have no obligation to register the
Warrant Holder's Warrant Shares, unless the Warrant Holder enters into an
underwriting agreement in customary form with the underwriter or underwriters
selected for the offering by the Company, and enters into such other agreements
(including, but not limited to, holdback or lock-up agreements and a customary
and reasonable agreement to indemnify the Company and any underwriter) and
provides such documents as are customary and reasonable for underwritten
offerings.
14. Notices to Warrant Holders. Nothing contained in this Agreement or
in any of the Warrants shall be construed as conferring upon the Warrant Holders
thereof the right to vote or to receive dividends or to consent or to receive
notice as stockholders in respect of the meetings of stockholders or the
election of directors of the Company or any other matter, or any rights
whatsoever as stockholders of the Company; provided, however, that in the event
a meeting of the stockholders shall be called to consider and take action on a
proposal for the voluntary dissolution of the Company, other than in connection
with a consolidation, merger, sale or transfer of all of substantially all of
its assets, business and good will as an entirety, then and in that event the
Company shall cause a notice thereof to be sent by first-class mail, postage
prepaid, at least 10 days prior to the date fixed as a record date or the date
of closing the transfer books in relation to such meeting, to each registered
Warrant Holder of Warrants at such Warrant Holder's address appearing on the
Warrant register; but
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failure to mail or to receive such notice or any defect therein or in the
mailing thereof shall not affect the validity of any action taken in connection
with such voluntary dissolution. If such notice shall have been so given and if
such voluntary dissolution shall be authorized at such meeting or any
adjournment thereof, then from and after the date on which such voluntary
dissolution shall have been duly authorized by the shareholders, the Warrants
and all other rights with respect thereto shall cease and terminate.
15. Notices. Any notice pursuant to this Agreement to be given or made
to the Company by the Warrant Holder of any Warrants shall be sufficiently given
or made if sent by first-class mail, postage prepaid, addressed as follows:
EDITEK, Inc.
1238 Anthony Road
Burlington, North Carolina 27215
Attention: Vice President-Finance
Notices or demands authorized by this Agreement to be given or made by
the Company to the Warrant Holder and/or Warrant Shares shall be sufficiently
given or made (except as otherwise provided in this Agreement) if sent by
first-class mail, postage prepaid, addressed to such Warrant Holder at the
address of such Warrant Holder as shown on the Warrant register.
16. Governing Law. This Agreement and the Warrant issued hereunder
shall be governed by and construed in accordance with the substantive laws of
the State of Delaware.
17. Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original; but
such counterparts together shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day, month and year first above written.
COMPANY:
EDITEK, Inc.
By:_________________________________
Peter J. Health, Vice President
Finance & CFO
WARRANT HOLDER:
-----------------------------------
Samuel C. Powell
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