Exhibit 4.3
THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), AND THEY MAY NOT BE OFFERED, SOLD, PLEDGED, HYPOTHECATED, ASSIGNED
OR TRANSFERRED EXCEPT (I) PURSUANT TO A REGISTRATION STATEMENT UNDER THE ACT
WHICH HAS BECOME EFFECTIVE AND IS CURRENT WITH RESPECT TO THESE SECURITIES, OR
(II) PURSUANT TO A SPECIFIC EXEMPTION FROM REGISTRATION UNDER THE ACT BUT ONLY
UPON A HOLDER HEREOF FIRST HAVING OBTAINED THE WRITTEN OPINION OF COUNSEL TO THE
COMPANY, OR OTHER COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY, THAT THE
PROPOSED DISPOSITION IS CONSISTENT WITH ALL APPLICABLE PROVISIONS OF THE ACT AS
WELL AS ANY APPLICABLE "BLUE SKY" OR SIMILAR STATE SECURITIES LAW.
APRIL 26, 1996
FIRST AMERICAN RAILWAYS, INC.
SERIES A REDEEMABLE COMMON STOCK
PURCHASE WARRANT
The Transferability of this Warrant is
Restricted as Provided in SECTION 3 hereof.
_______ Warrants
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged by FIRST AMERICAN RAILWAYS, INC., a Florida
corporation, and its successor by merger or consolidation (the "Company"),
______________________ is hereby granted the right to purchase, subject to
redemption hereof in accordance with SECTION 7 hereof, at the initial exercise
price of three dollars and fifty cents ($3.50) per share (subject to adjustment
as set forth herein), ____________________ (_______) shares of common stock of
the Company (the "Shares"). Each Series A Redeemable Common Stock Purchase
Warrant ("Warrant") may be exercised from the date hereof until April 26, 1998.
The Shares and the Warrants are sometimes referred to herein as the
"Securities."
Each Warrant initially is exercisable at a price of three dollars and
fifty cents ($3.50) per Share payable in cash or by certified or official bank
check in New York Clearing House funds, subject to adjustments as provided in
SECTION 6 hereof. Upon surrender of this Warrant, with the annexed Subscription
Form duly executed, together with payment of the Purchase Price (as
hereinafter defined) for the Shares purchased at the offices of the Company, the
registered holder of this Warrant (the "Holder") shall be entitled to receive a
certificate or certificates for the Shares so purchased.
1. EXERCISE OF WARRANT.
The purchase rights represented by this Warrant are exercisable at the
option of the Holder, in whole or in part (but not as to fractional Shares
underlying this Warrant), during any period in which this Warrant may be
exercised as set forth above. In the case of the purchase of less than all the
Shares purchasable under this Warrant, the Company shall cancel this Warrant
upon the surrender hereof and shall execute and deliver a new Warrant of like
tenor for the balance of the Shares purchasable hereunder.
At any time upon the exercise of any Warrants, the Company
shall, on a daily basis, within two (2) business days after any such exercise,
notify Capital Growth International, L.L.C. or its successors or assigns of the
exercise of any such Warrants and shall, on a weekly basis (subject to
collection of funds constituting the tendered Purchase Price (as defined
herein), but in no event later than five (5) business days after the last day of
the calendar week in which such funds were tendered), remit to CGI or its
successors or assigns an amount equal to five percent (5%) of the Purchase Price
of such Warrants being then exercised unless the CGI or its successors or
assigns shall have notified the Warrant agent (or the Company, if there is no
Warrant agent) that the payment of such amount with respect to any such Warrant
is violative of the rules and regulations promulgated under the Securities
Exchange Act, as amended, the rules and regulations of the National Association
of Securities Dealers. Inc. or applicable state securities or "blue sky" laws,
or the Warrants are those underlying CGI's Warrants, in any of which events the
Warrant agent (and/or the Company) shall have to pay such amount to the Company;
PROVIDED, HOWEVER, that the Warrant agent (and/or the Company, as applicable)
shall not be obligated to pay any amounts pursuant to this SECTION 1 during any
week that such amounts payable are less than one thousand dollars ($1,000) and
the Warrant agent's obligation (or Company's obligation, if there is no Warrant
agent) to make such payments shall be suspended until the amount payable
aggregates one thousand dollars ($1,000), and provided further, that, in any
event, any such payment (regardless of amount) shall be made not less frequently
than monthly.
2. ISSUANCE OF CERTIFICATES.
Upon the exercise of this Warrant and payment in full for the Shares,
the issuance of certificates for Shares underlying this Warrant shall be made
forthwith (and in any event within five (5) business days thereafter) without
charge to the Holder, including, without limitation, any tax which may be
payable in respect of the
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issuance thereof, and such certificates shall (subject to the provisions of
SECTION 3 hereof) be issued in the name of, or in such names as may be directed
by, the Holder; 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
and delivery of any such certificates in a name other than that of the Holder
and the Company shall not be required to issue or deliver such certificates
unless or until the person or persons requesting the issuance thereof shall have
paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid. The certificates
representing the Shares underlying this Warrant shall be executed on behalf of
the Company by the manual or facsimile signature of the present or any future
President or Vice President and Secretary or Assistant Secretary of the Company.
3. RESTRICTION ON TRANSFER.
Neither this Warrant nor any Share issuable upon exercise hereof has
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), and none of such securities may be offered, sold, pledged, hypothecated,
assigned or transferred except (i) pursuant to a registration statement under
the Securities Act which has become effective and is current with respect to
such securities, or, (ii) pursuant to a specific exemption from registration
under the Securities Act but only upon a Holder hereof first having obtained the
written opinion of counsel to the Company, or other counsel reasonably
acceptable to the Company, that the proposed disposition is consistent with all
applicable provisions of the Securities Act as well as any applicable "Blue Sky"
or similar state securities law. Upon exercise, in part or in whole, of this
Warrant, each certificate issued representing the Shares underlying this Warrant
shall bear a legend to the foregoing effect.
4. REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
4.1 THE COMPANY'S REGISTRATION. As soon as practicable after
the consummation of the merger of First American Railways, Inc., a Florida
corporation with and into a public corporation, including, without limitation,
Asia-American Corporation, a Nevada corporation (the "Merger") and in any event
not later than 30 days thereafter, the Company shall prepare and file with the
Securities and Exchange Commission (the "Commission"), a registration statement
and such other documents, including a prospectus, as may be necessary in the
opinion of both counsel for the Company and counsel for the Placement Agent and
the holders of the Securities and of any other securities of the Company with
registration rights similar to those granted in this Section 4 (collectively,
the "Registration Rights Holders"), in order to comply with the provisions of
the Securities Act, so as to permit a public offering and sale of their
respective securities (collectively, the
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"Registration Rights Securities") for a consecutive period ending twenty-four
(24) months after the earlier of (i) the exercise and (ii) the expiration, of
all of the Warrants and Series B redeemable warrants (when issued), or for such
longer period as long as any Registration Rights Securities held by such
Registration Rights Holders are deemed "restricted" under the Securities Act.
The costs and expenses associated with the preparation, filing and prosecution
of such registration statement(s) shall be borne by the Company.
4.2 DEMAND REGISTRATION.
(a) In the event the registration statement referred to in
Section 4.1 does not become effective within six months after the Merger or the
effectiveness thereof is not maintained, Registration Rights Holders
representing a Majority (as defined in Section 4.4(g)) of the Registration
Rights Securities shall have the right, exercisable by written notice to the
Company, to have the Company prepare and file with the Commission, a
registration statement and such other documents, including a prospectus, as may
be necessary in the opinion of both counsel for the Company and counsel for the
Placement Agent and the Registration Rights Holders in order to comply with the
provisions of the Securities Act, so as to permit a public offering and sale of
the Registration Rights Securities, for a consecutive period ending twenty-four
(24) months after the earlier of (i) the exercise and (ii) the expiration of all
of the Warrants and Series B Redeemable Warrants (when issued) held by such
Registration Rights Holders, by such Registration Rights Holders and any other
Registration Rights Holders who notify the Company within ten (10) days after
receiving notice from the Company of such registration request, as set forth
below.
(b) The Company covenants and agrees to give written
notice of any registration request under this SECTION 4.2 by any Registration
Rights Holder to all other Registration Rights Holders within ten (10) days from
the date of the receipt of any such registration request.
(c) The Company shall use its best efforts to file a
registration statement within thirty (30) days of receipt of any demand therefor
and to have any registration statement declared effective at the
earliest-possible time. The Company shall furnish each Registration Rights
Holder desiring to sell Registration Rights Securities such number of
prospectuses as shall reasonably be requested.
4.3 PIGGYBACK REGISTRATION.
(a) If, at any time commencing six months after the Merger
and expiring five (5) years from the date hereof, if any of the Registration
Rights Securities are "restricted securities" within the meaning of the rules
and regulations promulgated under
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the Securities Act, the Company proposes to register any of its securities under
the Securities Act (other than in connection with a merger, acquisition or
exchange offer on Form S-4 or pursuant to Form S-8 or successor forms) it will
give written notice by registered or certified mail, at least thirty (30) days
prior to the filing of each such registration statement, to the Registration
Rights Holders of its intention to do so. Upon the written request of any
Registration Rights Holder given within ten (10) days after receipt of any such
notice of his or her desire to include any Registration Rights Securities in
such proposed registration statement, the Company shall afford the Registration
Rights Holders the opportunity to have any such Registration Rights Securities
registered under such registration statement.
(b) Notwithstanding the provisions of this Section 4.3,
the Company shall have the right at any time after it shall have given written
notice pursuant to this Section 4.3 (irrespective of whether a written request
for inclusion of any such securities shall have been made) to elect not to file
any such proposed registration statement, or to withdraw the same after the
filing but prior to the effective date thereof.
4.4 COVENANTS WITH RESPECT TO REGISTRATION. In connection with
any registration under any of Sections 4.1, 4.2 and 4.3 hereof, the Company
covenants and agrees as follows:
(a) The Company shall pay all costs (excluding fees and
expenses of Registration Rights Holder(s)' counsel and any underwriting or
selling commissions or other charges of any broker-dealer acting on behalf of
Registration Rights Holder(s)), fees and expenses in connection with all
registration statements filed pursuant to any of Sections 4.1, 4.2 and 4.3
hereof including, without limitation, the Company's legal and accounting fees,
printing expenses and blue sky fees and expenses.
(b) The Company will take all necessary action which may
be required in qualifying or registering the securities included in a
registration statement for offering and sale under the securities or blue sky
laws of such states as reasonably are requested by the Registration Rights
Holder(s), provided that the Company shall not be obligated to qualify as a
foreign corporation to do business under the laws of any such jurisdiction.
(c) The Company shall indemnify the Registration Rights
Holder(s), each of their directors and officers and each person, if any, who
controls such Registration Rights Holder(s) within the meaning of Section 15 of
the Securities Act or Section 20(a) of the Securities and Exchange Act of 1934
(the "Exchange Act"), against all loss, claim, damage, expense or liability
(including all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may become subject
under the Securities Act, the Exchange
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Act or any other statute, common law or otherwise, arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement executed by the Company or based upon written
information furnished by the Company filed in any jurisdiction in order to
qualify the Registration Rights Securities under the securities laws thereof or
filed with the Commission, any state securities commission or agency, the
National Association of Securities Dealers, Inc., The Nasdaq Stock Market or any
securities exchange, or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements contained
therein not misleading, unless such statement or omission was made in reliance
upon and in strict conformity with written information furnished to the Company
by the Registration Rights Holder(s) expressly for me in such registration
statement, any amendment or supplement thereto or any application, as the case
may be. If any action is brought against the Registration Rights Holder(s) or
any controlling person of the Registration Rights Holder(s) in respect of which
indemnity may be sought against the Company pursuant to this Section 4.4(c), the
Registration Rights Holder(s) or such controlling person shall, within thirty
(30) days after the receipt of a summons or complaint, notify the Company in
writing of the institution of such action and the Company shall assume the
defense of such action, including the employment and payment of reasonable fees
and expenses of counsel (which counsel shall be reasonably satisfactory to the
Registration Rights Holder(s) or such controlling person), but the failure to
give such notice shall not affect such indemnified person's right to
indemnification hereunder except to the extent that the Company's defense of
such action was materially adversely affected thereby. The Registration Rights
Holder(s) or such controlling person shall have the right to employ its or their
own counsel in any such case, but the fees and expenses of such counsel shall be
at the expense of the Registration Rights Holder(s) or such controlling person
unless the employment of such counsel shall have been authorized in writing by
the Company in connection with the defense of such action, or the Company shall
not have employed counsel to have charge of the defense of such action or such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to the Company (in which case the Company shall not have the right to
direct the defense of such action on behalf of the indemnified party or
parties), in any of which events the fees and expenses of not more than one
additional firm of attorneys for all of the Registration Rights Holder(s) and/or
such controlling person shall be borne by the Company. Except as expressly
provided in the previous sentence, in the event that the Company shall have
assumed the defense of any such action or claim, the Company shall not
thereafter be liable to the Registration Rights Holder(s) or such controlling
person in investigating, preparing or defending any such action or claim. The
Company agrees to notify promptly the Registration Rights Holder(s) of the
commencement of any litigation or proceedings against the
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Company or any of its officers, directors or controlling persons in connection
with the resale of any of the Registration Rights Securities in connection with
such registration statement. The Company further agrees that upon demand by an
indemnified person, at any time or from time to time, it will promptly reimburse
such indemnified person for any loss, claim, damage, liability, cost or expense
actually and reasonably paid by the indemnified person as to which the Company
has indemnified such person pursuant hereto. Notwithstanding the foregoing
provisions of this Section 4.4(c), any such payment or reimbursement by the
Company of fees, expenses or disbursements incurred by an indemnified person in
any proceeding in which a final judgment by a court of competent jurisdiction
(after all appeals or the expiration of time to appeal) is entered against any
Registration Rights Holder or such indemnified person as a direct result of any
Registration Rights Holder or such person's gross negligence or willful
misfeasance will be promptly repaid to the Company.
(d) The Registration Rights Holder(s), and their
successors and assigns, shall severally, and not jointly, indemnify the Company,
its officers and directors and each person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, against all loss, claim, damage, expense or liability (including
all expenses reasonably incurred in investigating, preparing or defending
against any claim whatsoever) to which they may become subject under the
Securities Act, the Exchange Act or any other statute, common law or otherwise,
arising from written information furnished by or on behalf of such Registration
Rights Holder(s), or their successors or assigns, expressly for use in such
registration statement. The Registration Rights Holder(s) further agree(s) that
upon demand by an indemnified person, at any time or from time to time, they
will promptly reimburse such indemnified person for any loss, claim, damage,
liability, cost or expense actually and reasonably paid by the indemnified
person as to which the Registration Rights Holder(s) have indemnified such
person pursuant hereto. Notwithstanding the foregoing provisions of this Section
4.4(d), any such payment or reimbursement by the Registration Rights Holder(s)
of fees, expenses or disbursements incurred by an indemnified person in any
proceeding in which a final judgment by a court of competent jurisdiction (after
all appeals or the expiration of time to appeal) is entered against the Company
or such indemnified person as a direct result of the Company or such person's
gross negligence or willful misfeasance will be promptly repaid to the
Registration Rights Holder(s).
(e) Nothing contained in this Agreement shall be construed
as requiring the Registration Rights Holder(s) to convert, exchange or exercise
any securities convertible, exchangeable or exercisable for Common Stock prior
to the initial filing of any registration statement or the effectiveness
thereof.
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(f) The Company shall enter into an underwriting agreement
with the managing underwriter, if any, selected for such underwriting by
Registration Rights Holders holding a Majority of the securities requested to be
included in such underwriting. Such agreement shall be satisfactory in form and
substance to the Company each Registration Rights Holder and such managing
underwriter, and shall contain such representations, warranties and covenants by
the Company and such other terms as are customarily contained in agreements of
that type used by the managing underwriter. The Registration Rights Holders
shall be parities to any underwriting agreement relating to an underwritten sale
of their securities and may, at their option, require that any or all of the
representations, warranties and covenants of the Company to or for the benefit
of such underwriters shall also be made to and for the benefit of such
Registration Rights Holders. Such Registration Rights Holders shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriters except as they may relate to such Registration
Rights Holders and their intended methods of distribution.
(g) For purposes of this Agreement, the term "Majority" in
reference to the Registration Rights Holders shall mean in excess of fifty
percent (50%) of the then outstanding Registration Rights Securities (assuming
the exercise of all outstanding warrants, if not yet exercised) that (i) are not
held by the Company, an affiliate, officer, creditor, employee or agent thereof
or any of their respective affiliates, members of their family, persons acting
as nominees or in conjunction therewith and (ii) have not been resold to the
public pursuant to a registration statement filed, with the Commission under the
Securities Act.
5. PRICE.
5.1 INITIAL AND ADJUSTED PURCHASE PRICE. The initial purchase
price shall be three dollars and fifty cents ($3.50) per Share. The adjusted
purchase price shall be the price which shall result from time to time from any
and all adjustments of the initial purchase price in accordance with the
provisions of SECTION 6 hereof.
5.2 PURCHASE PRICE. The term "Purchase Price" herein shall mean
the initial purchase price or the adjusted purchase price, depending upon the
context.
6. ADJUSTMENT OF PURCHASE PRICE AND NUMBER OF SHARES OR COMMON STOCK
DELIVERABLE.
(a) (i) Except as hereinafter provided, in the event the
Company shall, at any time or from tune to time after the date hereof, sell any
shares of Common Stock for a consideration per share less than the Purchase
Price or issue any shares of Common Stock as a stock dividend to the holders of
Common Stock, or
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subdivide or combine the outstanding shares of Common Stock into a greater or
lesser number of shares (any such sale, issuance, subdivision or combination
being herein called a "Change of Shares"), then, and thereafter upon each
further Change of Shares, the Purchase Price for the Warrants (whether or not
the same shall be issued and outstanding) in effect immediately prior to such
Change of Shares shall be changed to a price (including any applicable fraction
of a cent to the nearest cent) determined by dividing (A) the sum of (x) the
total number of shares of Common Stock outstanding immediately prior to such
Change of Shares, multiplied by the Purchase Price in effect immediately prior
to such Change of Shares, and (y) the consideration, if any, received by the
Company upon such sale, issuance, subdivision or combination by (B) the total
number of shares of Common Stock outstanding immediately after such Change of
Shares; PROVIDED, HOWEVER, that in no event shall the Purchase Price be adjusted
pursuant to this computation to an amount in excess of the Purchase Price in
effect immediately prior to such computation, except in the case of a
combination of outstanding shares of Common Stock.
For the purposes of any adjustment to be made in accordance
with this SECTION 6(a)(i) the following provisions shall be applicable:
(A) In case of the issuance or sale of shares of Common Stock
(or of other securities deemed hereunder to involve the issuance or sale of
shares of Common Stock) for a consideration part or all of which shall be cash,
the amount of the cash portion of the consideration therefor deemed to have been
received by the Company shall be (i) the subscription price, if shares of Common
Stock are offered by the Company for subscription, or (ii) the public offering
price (before deducting therefrom any compensation paid or discount allowed in
the sale, underwriting or purchase thereof by underwriters or dealers or others
performing similar services, or any expenses incurred in connection therewith),
if such securities are sold to underwriters or dealers for public offering
without a subscription offering, or (iii) the gross amount of cash actually
received by the Company for such securities, in any other case.
(B) In case of the issuance or sale (otherwise than as a
dividend or other distribution on any stock of the Company, and otherwise than
on the exercise of options, rights or warrants or the conversion or exchange of
convertible or exchangeable securities) of shares of Common Stock (or of other
securities deemed hereunder to involve the issuance or sale of shares of Common
Stock) for a consideration part or all of which shall be other than cash, the
amount of the consideration therefor other than cash deemed to have been
received by the Company shall be the value of such consideration as determined
in good faith by the Board of Directors of the Company on the basis of a record
of values of similar property or services.
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(C) Shares of 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 day following the record
date for the determination of shareholders entitled to receive such dividend or
other distribution and shall be deemed to have been issued without
consideration.
(D) The reclassification of securities of the Company other
than shares of Common Stock into securities including shares of Common Stock
shall be deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on the
date fixed for the determination of security holders entitled to receive such
shares, and the value of the consideration allocable to such shares of Common
Stock shall be determined as provided in subsection (B) of this SECTION 6(a)(i).
(E) The number of shares of Common Stock at any one time
outstanding shall be deemed to include the aggregate maximum number of shares
issuable (subject to readjustment upon the actual issuance thereof) upon the
exercise of options, rights or warrants and upon the conversion or exchange of
convertible or exchangeable securities.
(ii) Upon each adjustment of the Purchase Price
pursuant to this SECTION 6, the number of shares of Common Stock purchasable
upon the exercise of each Warrant shall be the number derived by multiplying the
number of shares of Common Stock purchasable immediately prior to such
adjustment by the Purchase Price in effect prior to such adjustment and dividing
the product so obtained by the applicable adjusted Purchase Price.
(b) In case the Company shall at any time after the
date hereof issue options, rights or warrants to subscribe for shares of Common
Stock, or issue any securities convertible into or exchangeable for shares of
Common Stock, for a consideration per share (determined as provided in SECTION
6(a)(i) hereof and as provided below) less than the Purchase Price in effect
immediately prior to the issuance of such options, rights or warrants, or such
convertible or exchangeable securities,.or without consideration (including the
issuance of any such securities by way of dividend or other distribution), the
Purchase Price for the Warrants (whether or not the same shall be issued and
outstanding) in effect immediately prior to the issuance of such options, rights
or warrants, or such convertible or exchangeable securities, as the case may be,
shall be reduced to a price determined by making the computation in accordance
with the provisions of SECTION 6(a)(i) hereof, provided that:
(A) The aggregate maximum number of shares of
Common Stock, as the case may be, issuable or that may become issuable under
such options, rights or warrants (assuming exercise
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in full even if not then currently exercisable or currently exercisable in full)
shall be deemed to be issued and outstanding at the time such options, rights or
warrants were issued, for a consideration equal to the minimum purchase price
per share provided for in such options, rights or warrants at the time of
issuance, plus the consideration, if any, received by the Company for such
options, rights or warrants; PROVIDED, HOWEVER, that upon the expiration or
other termination of such options, rights or warrants, if any thereof shall not
have been exercised, the number of shares of Common Stock deemed to be issued
and outstanding pursuant to this subsection (A) (and for the purposes of
subsection (E) of SECTION 6(a)(i) hereof) shall be reduced by the number of
shares as to which options, warrants and/or rights shall have expired, and such
number of shares shall no longer be deemed to be issued and outstanding, and the
Purchase Price then in effect shall forthwith be readjusted and thereafter be
the price that it would have been had adjustment been made on the basis of the
issuance only of the shares actually issued plus the shares remaining issuable
upon the exercise of those options, rights or warrants as to which the exercise
rights shall not have expired or terminated unexercised.
(B) The aggregate maximum number of shares of
Common Stock issuable or that may become issuable upon conversion or exchange of
any convertible or exchangeable securities (assuming conversion or exchange in
full even if not then currently convertible or exchangeable in full) shall be
deemed to be issued and outstanding at the time of issuance of such securities,
for a consideration equal to the consideration received by the Company for such
securities, plus the minimum consideration, if any, receivable by the Company
upon the conversion or exchange thereof; PROVIDED, HOWEVER, that upon the
termination of the right to convert or exchange such convertible or exchangeable
securities (whether by reason of redemption or otherwise), the number of shares
of Common Stock deemed to be issued and outstanding pursuant to this subsection
(B) (and for the purposes of subsection (E) of SECTION 6(a)(i) hereof) shall be
reduced by the number of shares as to which the conversion or exchange rights
shall have expired or terminated unexercised, and such number of shares shall no
longer be deemed to be issued and outstanding, and the Purchase Price then in
effect shall forthwith be readjusted and thereafter be the price that it would
have been had adjustment been made on the basis of the issuance only of the
shares actually issued plus the shares remaining issuable upon conversion or
exchange of those convertible or exchangeable securities as to which the
conversion or exchange rights shall not have expired or terminated unexercised.
(C) If any change shall occur in the price per
share provided for in any of the options, rights or warrants referred to in
subsection (A) of this SECTION 6(b), or in the price per share or ratio at which
the securities referred to in subsection (B) of this SECTION 6(b) are
convertible or
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exchangeable, such options, rights or warrants or conversion or exchange rights,
as the case may be, to the extent not theretofore exercised, shall be deemed to
have expired or terminated on the date when such price change became effective
in respect of shares not theretofore issued pursuant to the exercise or
conversion or exchange thereof, and the Company shall be deemed to have issued
upon such date new options, rights or warrants or convertible or exchangeable
securities.
(c) In case of any reclassification or change of
outstanding shares of Common Stock issuable upon exercise of the Warrants (other
than a change in par value, or from par value to no par value, or from no par
value to par value or as a result of a subdivision or combination), or in case
of any consolidation or merger of the Company with or into another corporation
(other than a merger with a Subsidiary in which merger the Company is the
continuing corporation and which does not result in any reclassification or
change of the then outstanding shares of Common Stock or other capital stock
issuable upon exercise of the Warrants), 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, then, as a condition of such reclassification,
change, consolidation, merger, sale or conveyance, the Company, or such
successor or purchasing corporation, as the case may be, shall make lawful and
adequate provision whereby the Registered Holder of each Warrant then
outstanding shall have the right thereafter to receive on exercise of such
Warrant the kind and amount of securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of securities issuable upon exercise of such Warrant immediately
prior to such reclassification, change, consolidation, merger, sale or
conveyance and shall forthwith file at the corporate office of the Warrant agent
(or the Company, if there is no Warrant agent) a statement signed by its
Chariman of the Board, President or a Vice President and by its Treasurer or an
Assistant Treasurer or its Secretary or an Assistant Secretary evidencing such
provision. Such provisions shall include provision for adjustments which shall
be as nearly equivalent as may be practicable to the adjustments provided for in
SECTIONS 6(a) and 6(b) hereof. The above provisions of this SECTION 6(c) shall
similarly apply to successive reclassifications and changes of shares of Common
Stock and to successive consolidations, mergers, sales or conveyances.
(d) Irrespective of any adjustments or changes in the
Purchase Price or the number of shares of Common Stock purchasable upon exercise
of the Warrants, the Warrant Certificates theretofore and thereafter issued
shall, unless the Company shall exercise its option to issue new Warrant
Certificates pursuant to the terms hereof, continue to express the Purchase
Price per share and the number of shares purchasable thereunder as the Purchase
Price per share and the number of shares purchasable thereunder
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were expressed in the Warrant Certificates when the same were originally issued.
(e) After each adjustment of the Purchase Price
pursuant to this SECTION 6, the Company will promptly prepare a certificate
signed by the Chairman of the Board, President, or a Vice President and by the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary
of the Company setting forth: (i) the Purchase Price as so adjusted, (ii) the
number of shares of Common Stock purchasable upon exercise of each Warrant,
after such adjustment, and (iii) a brief statement of the facts accounting for
such adjustment. The Company will promptly file such certificate with the
Warrant Agent and cause a brief summary thereof to be sent by ordinary first
class mail to each Registered Holder at his last address as it shall appear on
the registry books of the Warrant Agent. No failure to mail such notice nor any
defect therein or in the mailing thereof shall affect the validity thereof
except as to the holder to whom the Company failed to mail such notice, or
except as to the holder whose notice was defective. The affidavit of an officer
of the Warrant Agent or the Secretary or an Assistant Secretary of the Company
that such notice has been mailed shall, in the absence of fraud, be prima facie
evidence of the facts stated therein.
(f) No adjustment of the Purchase Price shall be made
as a result of or in connection with (A) the issuance or sale of shares of
Common Stock pursuant to options, warrants, stock purchase agreements and
convertible or exchangeable securities outstanding or in effect on the date
hereof, (B) the issuance or sale of shares of Common Stock upon the exercise of
any "incentive stock options" (as such term is defined in the Internal Revenue
Code of 1986, as amended), whether or not such options were outstanding on the
date hereof, or (C) the issuance or sale of shares of Common Stock if the amount
of said adjustment shall be less than ten cents ($.10); PROVIDED, HOWEVER, that
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 of and together with the
next subsequent adjustment that shall amount, together with any adjustment so
carried forward, to at least ten cents ($.10). In addition, Registered Holders
shall not be entitled to cash dividends paid by the-Company prior to the
exercise of any Warrant or Warrants held by them.
7. REDEMPTION OF THE WARRANTS.
(a) Commencing six months from the effective date of the
Merger, the Company may, on 30 days' prior written notice redeem all the
Warrants at ten cents ($.10) per Warrant, provided, however, that before any
such call for redemption of Warrants can take place, (i) the Securities are
registered under the Securities Act and applicable "Blue Sky" laws, (ii) a
current prospectus is then available for the resale of the Securities and (iii)
the
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closing bid price of the Common Stock as reported by Nasdaq, the OTC Bulletin
Board, or such other market on which the Common Stock is then traded, exceeds
$5.00 per share for the 20 consecutive trading days ending on the fifth trading
day prior to the date of the notice of redemption contemplated by (b) and (c)
below is given (subject to adjustment in the event of any stock splits or other
similar events as provided herein).
(b) In case the Company shall exercise its right to redeem all
of the Warrants, it shall give or cause to be given notice to the Registered
Holders of the Warrants, by mailing to such Registered Holders a notice of
redemption, first class, postage prepaid, at their last address as shall appear
on the records of the Company. Any notice mailed in the manner provided herein
shall be conclusively presumed to have been duly given whether or not the
Registered Holder receives such notice. Not less than five business days prior
to the mailing to the Registered Holders of the Warrants of the notice of
redemption, the Company shall deliver or cause to be delivered to Capital Growth
International, LLC a similar notice telephonically and confirmed in writing
together with a list of the Registered Holders (including their respective
addresses and number of Warrants beneficially owned) to whom such notice of
redemption has been or will be given.
(c) The notice of redemption shall specify (i) the redemption
price, (ii) the date fixed for redemption, which shall in no event be less than
thirty (30) days after the date of mailing of such notice, (iii) the place where
the Warrant Certificate shall be delivered and the redemption price shall be
paid, and (iv) that the right to exercise the Warrant shall terminate at 5:00
p.m. (New York time) on the business day immediately preceding the date fixed
for redemption. The date fixed for the redemption of the Warrants shall be the
Redemption Date. No failure to mail such notice nor any defect therein or in the
mailing thereof shall affect the validity of the proceedings for such redemption
except as to a holder (a) to whom notice was not mailed or (b) whose notice was
defective. An affidavit of the Secretary or Assistant Secretary of the Company
that notice of redemption has been mailed shall, in the absence of fraud, be
prima facie evidence of the facts stated therein.
(d) Any right to exercise a Warrant shall terminate at 5:00
p.m. (New York time) on the business day immediately preceding the Redemption
Date. The redemption price payable to the Registered Holders shall be mailed to
such persons at their addresses of record.
8. MERGER OR CONSOLIDATION.
In case of any consolidation of the Company with, or merger of the
Company with, or merger of the Company into, another corporation (other than a
consolidation or merger which does not
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result in any reclassification or change of the outstanding common stock of the
Company), the corporation formed by such consolidation or merger shall execute
and deliver to the Holder a supplemental warrant agreement providing that the
Holder shall have the right thereafter (until the expiration of such Warrant) to
receive, upon exercise of his Warrant, the kind and amount of shares of stock
and other securities and property receivable upon such consolidation or merger
by a holder of the number of shares of common stock of the Company for which his
Warrant might have been exercised immediately prior to such consolidation,
merger, sale or transfer. Such supplemental warrant agreement shall provide for
adjustments which shall be identical to the adjustments provided in SECTION 6.
The above provisions of this SECTION 8 shall apply to successive consolidations
or mergers.
9. EXCHANGE AND REPLACEMENT OF WARRANT.
This Warrant is exchangeable without expense, upon the surrender hereof
by the registered Holder at the principal executive office of the Company for a
new Warrant of like tenor and date representing in the aggregate the right to
purchase the same number of Shares as are purchasable hereunder in such
denominations as shall be designated by the Holder hereof at the tune of such
surrender.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and, in case of loss, theft or destruction, of indemnity or security
reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will make and deliver a new Warrant of
like tenor, in lieu of this Warrant.
10. ELIMINATION OF FRACTIONAL INTERESTS.
The Company shall not be required to issue certificates representing
fractions of Shares on the exercise of this Warrant, nor shall it be required to
issue scrip or pay cash in lieu of fractional interests, it being the intent of
the parties that all fractional interests shall be eliminated.
11. RESERVATION OF SECURITIES.
The Company shall at all times reserve and keep available out of its
authorized common stock, solely for the purpose of issuance upon the exercise of
this Warrant, such number of Shares as shall be issuable upon the exercise
hereof. The Company covenants and agrees that, upon exercise of this Warrant and
payment of the Purchase Price therefor, all Shares issuable upon such exercise
shall be duly and validly issued, fully paid and nonassessable.
12. NOTICES TO WARRANT HOLDERS.
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Nothing contained in this Warrant shall be construed as conferring upon
the Holder hereof the right to vote or to consent or to receive notice as a
stockholder in respect of any meetings of stockholders for the election of
directors or any other matter, or as having any rights whatsoever as a
stockholder of the Company.
13. NOTICES.
All notices, requests, consents and other communications required or
permitted hereunder shall be in writing and shall be delivered personally,
telegraphed or sent by certified, registered, or express mail, postage prepaid,
and shall be deemed given when so delivered personally, telegraphed or, if
mailed, five days after the date of deposit in the United States mails, as
follows:
(a) If to the Company, to:
First American Railways, Inc.
1360 South Ocean Boulevard
Pompano Beach, Florida 33062
Attn: Eugene K. Garfield, President
(b) If to the Holder, to the address of such Holder as
shown on the books of the Company.
14. SUCCESSORS.
All the covenants, agreements, representations and warranties contained
in this Warrant shall bind the parties hereto and their respective heirs,
executors, administrators, distributees, successors and assigns.
15. HEADINGS.
The headings in this Warrant are inserted for purposes of convenience
only and shall have no substantive effect.
16. LAW GOVERNING.
This Warrant shall be construed and enforced in accordance with, and
governed by, the laws of the State of New York, without giving effect to
conflicts of law, rules or principles.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its corporate name by, and such signature to be attested to by, a duly
authorized officer and has caused its corporate seal to be affixed hereto on the
date first above written.
FIRST AMERICAN RAILWAYS, INC.
By: /s/ ALLEN C. HARPER
------------------------------
Allen C. Harper
Chairman of the Board of Directors
Attest:
/s/ MARY ACEITUNO
- --------------------------------
Mary Aceituno, Secretary
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SUBSCRIPTION FORM
(To be Executed by the Registered Holder
in order to Exercise the Warrant)
The undersigned hereby irrevocably elects to exercise the
right to purchase Shares represented by this Warrant in accordance to the
conditions hereof and herewith makes payment of the Purchase Price of such
Shares in full.
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Signature
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Address
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Social Security Number or
Taxpayer's Identification
Number
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