No. BT007W Warrants to purchase
*70,000* shares
Dated: November 13, 1997 (subject to adjustment)
of common stock
$.001 par value of
Krantor Corporation
VOID AFTER
KRANTOR CORPORATION
Transferable
Warrant for Common Stock of Krantor Corporation
Krantor Corporation (hereinafter referred to as the "Company"), a
Delaware corporation, hereby certifies that, for value received, Baytree
Associates, Inc., 40 Wall Street, New York, New York 10005, or assigns (the
"Holder"), is entitled to purchase from the Company, at any time or from time to
time, subsequent to 9:00 A.M. New York local time on November 13, 1997, and
before 3:00 P.M. New York local time five years thereafter (hereinafter the
"Term") on November 12, 2002, an aggregate of *70,000* fully paid and
non-assessable shares of the common stock (the "Common Stock"), par value $.001
per share, of the Company on the payment therefor of $1.10 (which may be
adjusted pursuant to Section 9 below) for each share of the common stock
subscribed for and purchased (the "Exercise Price"), upon the surrender of this
Warrant duly signed by the registered Holder hereof or assigns at the time of
subscription, accompanied by payment of the total subscription price in cash or
by certified check, by wire transfer or bank draft payable to the order of the
Company, upon the terms and subject to the conditions hereinafter set forth.
1. NOTICE OF EXERCISE. Notice of intention to exercise any of the
purchase rights evidenced by this Warrant must be given by written notice
addressed to the Company at its principal office at 120 East Industry Court,
Deer Park, New York 11729 unless and until change of address may be given to the
warrantholder in writing or by written notice addressed to its duly designated
and acting Warrant Agent, if any, at least ten (10) days prior to any intended
exercise. Such notice shall specify the date on which purchase rights are to be
exercised and the number of shares of the common stock to be purchased on that
date.
2. EXERCISE OF WARRANT. On or before the date of exercise specified in
such notice, the Holder shall surrender this Warrant (in negotiable form, if not
surrendered by the Holder named above), to the principal office of the Company,
or to that of its duly designated and acting Warrant Agent, if any, with the
notice of exercise in the form as attached as a schedule to this Warrant duly
signed, together with the purchase price of the common stock represented by
certified or official bank check on New York Clearing House funds payable to the
order of the Company.
3. DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon as practicable
after the exercise of this Warrant, payment of the purchase price, and in any
event no later than ten (10) days thereafter, the Company or its duly designated
and acting Warrant Agent, if any, will cause to be issued in the name of,
transferred
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to, or otherwise delivered to the Holder hereof, or such Holder's nominee or
nominees, a certificate or certificates for the number of full shares of the
common stock of the Company to which such Holder shall be entitled upon such
exercise. In case, between the date of such exercise and the date on which such
certificate or certificates are issued, transferred or otherwise delivered, the
record Holder of such shares shall become entitled to any dividend or other
right, the Company will forthwith pay or cause to be paid in cash to the Holder
hereof, the amount of such dividend, or transfer to the Holder hereof such
right, as the case may be. No fraction of a share or scrip certificate for such
a fraction shall be issued upon the exercise of this Warrant; in lieu thereof,
the Company will pay or cause to be paid to such Holder, cash equal to a like
fraction at the then prevailing market price for such share as determined by the
Company.
4. PARTIAL EXERCISE OF A WARRANT. In case this Warrant shall be
exercised for less than the full number of shares to which the Holder is
entitled, the Company, at its expense, will issue or will cause to be issued and
delivered to the Holder hereof, a new warrant or warrants of like tenor issued
in said Holder's name, calling for the number of shares for which the
surrendered warrant shall have been exercised.
5. EXCHANGE OF WARRANTS. Upon the surrender by any Holder of any
warrant or warrants at th-e principal office of the Company or at that of its
duly designated and acting Warrant Agent (in negotiable form if not surrendered
by the Holder named on the face thereof), the Company or its duly designated
Warrant Agent will issue and deliver to, or on the order of such Holder, at the
Company's expense, a new warrant or warrants in the name of such Holder or as
such Holder (upon the payment by such Holder of any applicable transfer tax) may
direct, in such authorized denomination or denominations as such Holder may
request, evidencing the rights to purchase an aggregate amount of stock or
securities equal to the aggregate amount of stock or securities which the
warrant or warrants so surrendered evidenced the right to purchase.
6. LOST, STOLEN, DESTROYED OR MUTILATED WARRANTS. Upon receipt by the
Company or its duly designated and acting Warrant Agent, if any, of evidence
satisfactory (in the exercise of reasonable discretion) to each of them of the
ownership of and the loss, theft or destruction or mutilation of any warrant and
(in the case of loss, theft or destruction), of indemnity satisfactory (in the
exercise of reasonable discretion) to each of them, and (in the case of
mutilation) upon the surrender and cancellation thereof, the Company or its duly
designated and acting Warrant Agent will issue and deliver, in lieu thereof, a
new warrant of like tenor.
7. NEGOTIABILITY. This Warrant is transferable at the office of the
Company or the Warrant Agent, if any, (or of its successors as Warrant Agent) by
the registered Holder hereof or by attorney duly authorized in writing, but only
in the manner and subject to the limitations provided in this Agreement, and
upon surrender of this Warrant and the payment of any transfer taxes. Upon any
such transfer, a new warrant, or new warrants of different denominations, of
like tenor and representing in the aggregate the right to purchase a like number
of shares of Common Stock (or as much thereof as remains issuable on exercise of
the Warrant) will be issued to the transferee in exchange for this Warrant.
This Warrant when surrendered, by the registered Holder hereof in
person or by attorney duly authorized in writing, may be exchanged in the manner
and subject to the limitations provided in this Agreement, for another warrant,
or other warrants of different denominations, of like tenor and representing in
the aggregate the right to purchase a like number of shares of Common Stock.
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8. ANTI-DILUTION. In case the Company shall at any time subdivide the
outstanding shares of common stock, or shall issue a stock dividend on its
outstanding common stock, the Exercise Price in effect immediately prior to such
subdivision or the issuance of such dividend shall be proportionately decreased,
and in case the Company shall at any time combine the outstanding shares of
common stock, the Exercise Price in effect immediately prior to such combination
shall be proportionately increased, effective at the close of business on the
date of such subdivision, dividend or combination, as the case may be. The
Company also reserves the right through its Board of Directors to reduce the
Exercise Price of the Warrant at any time during its term.
When the number of shares of Common Stock or the Exercise Price is
adjusted as herein provided, the Company shall cause to be promptly mailed to
the Holder by first class mail, postage prepaid, notice of such adjustment or
adjustments and a certificate of a firm of independent public accountants
selected by the Board of Directors of the Company (who may be the regular
accountants employed by the Company) setting forth the number of shares of
Common Stock and the Exercise Price after such adjustment, a brief statement of
the facts requiring such adjustment and the computation by which such adjustment
was made.
The term "Common Stock" shall mean (A) the class of stock designated as
the Common Stock of the Company at the date of this Warrant or (B) any other
class of stock resulting from successive changes or reclassification of such
Common Stock 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 this Section, the Holder shall become
entitled to receive any securities upon exercise other than shares of Common
Stock of the Company, thereafter the number of such other securities and the
Exercise Price of such securities 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 this Section.
THERE SHALL BE NO OTHER ANTI-DILUTION PROVISIONS APPLICABLE TO THE WARRANT
Fractional shares need not be issued upon exercise, but in lieu
thereof, the Company may pay cash equal to the market value of such fractional
share.
Except as stated above, the Exercise Price will not be adjusted. To the
extent that sufficient stock has not been previously issued and is available for
delivery to the Holder to satisfy exercise of this Warrant, the Company shall
attempt to reserve and keep available out of its authorized but unissued Common
Stock, for the purpose of effecting exercise of the Warrant, the full number of
Common Stock necessary for delivery upon the exercise. However to the extent,
based on changing market prices for the Company's securities, sufficient
authorized but unissued stock is not available the Company shall promptly seek
to have its certificate of incorporation amended to increase its authorized
common stock to a level which shall accommodate exercise of all outstanding
Warrants or otherwise take corporate action which the Company deems necessary to
accommodate and satisfy exercise rights.
NO ADJUSTMENT FOR DIVIDENDS. Except as provided in this Section 9, no
adjustment in respect to any dividends paid shall be made during the term of the
Warrant or upon the exercise of the Warrant.
PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION CONSOLIDATION,
ETC. In the case of any consolidation of the Company with or merger of the
Company into another corporation or in the case of any sale or conveyance to
another corporation of all or substantially all of the property, assets or
business of
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the Company, the Company or such successor or purchasing corporation, as the
case may be, shall provide that the Holder shall have the right thereafter upon
payment of the Exercise Price in effect immediately prior to such action to
purchase upon exercise of the Warrant the kind and amount of shares and other
securities and property which the Holder would have owned or have been entitled
to receive after the happening of such consolidation, merger, sale or conveyance
had the Warrant been exercised immediately prior to such action, such agreement
shall provide for adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 8. The provisions of
this Section 9 shall similarly apply to successive consolidations, mergers,
sales or conveyances.
PAR VALUE OF COMMON STOCK. Before taking any action which would cause
an adjustment reducing the Exercise Price below the then par value of the shares
of Common Stock issuable upon exercise of the Warrant, the Company will take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock at such adjusted Exercise Price.
STATEMENT ON WARRANT CERTIFICATES. Irrespective of any adjustments in
the Exercise Price or the number of securities convertible, this Warrant
certificate or any certificates hereafter issued may continue to express the
same price and number of securities as are stated in this Warrant certificate.
However, the Company may at any time in its sole discretion (which shall be
conclusive) make any change in the form of the Warrant certificate that it may
deem appropriate and that does not affect the substance thereof; and any Warrant
certificate thereafter issued, whether upon registration or transfer of, or in
exchange or substitution for, an outstanding Warrant certificate, may be in the
form so changed.
10. REGISTRATION RIGHTS/ ESTABLISHMENT OF ESCROW FOR SHARES PENDING
REGISTRATION. The Company agrees to seek registration with the Securities and
Exchange Commission of sufficient common stock as will include the underlying
common stock into which this Warrant is exercisable. Such registration attempt
shall be accomplished by the filing, within 15 days of the final closing on the
Private Placement in which the Unit in which this Investor Warrant was a part
was subscribed for and paid for, with the Securities and Exchange Commission of
a registration statement covering such securities, on form available to the
Company sufficient in form to accomplish such registration, and the Company
shall use its best efforts to have such registration declared effective within a
reasonable time period after filing. The Company has undertaken to keep said
registration current and effective during the period any of the Warrants remain
outstanding and not exercised into common stock of the Company. If the said
registration statement is not filed within said 15 day period the Company shall
be subject to penalties as set forth in the Debenture also made part of the Unit
of which this Investor Warrant was a part.
(a) The Company shall establish an Escrow Account (the "Escrow
Account") which shall be administered by an Escrow Agent (the "Escrow Agent")
appointed by the Company with the consent of the Placement Agent, which consent
shall not be unreasonably withheld, into which Escrow Account the Company shall
deliver shares, as will have previous thereto been issued to the Holders of the
Debentures, Investor Warrants and Placement Agent Warrants, in the amount of
1,000,000 shares (which will likely be in excess of the amount of such stock
into which the Securities shall be convertible/exercisable). Although the
Company shall register all of such stock, that which is not necessary to
transfer to the Holders for exercise/conversion of all of the Securities may be
redeemed by the
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Company for the stock's par value. The Escrow Account shall be administered by
the Escrow Agent in accord with that certain Escrow Agreement (the "Escrow
Agreement") as executed by the Company and the Placement Agent, a copy of which
is acknowledged by the undersigned Holder to have been reviewed and accepted by
him.
The Company shall have the right, on written notice to the Holders, to
redeem any and all of the stock placed into the Escrow Account (the "Escrow
Stock") which remains in the Escrow Account after withdrawal of a total number
of shares of the Escrow Stock into which the Debentures have been converted,
Investor Warrants exercised, and the Placement Agent Warrants exercised, as of
the date of the termination of rights to convert and/or exercise all such
Securities. The redemption price shall be the par value of such stock. The
Escrow Stock may be issued with a legend thereon referring to the redemption
rights of the Company as provided herein. However, when transferred from the
Escrow Account to the Holder, all legends shall be removed, provided that the
stock has been registered as provided herein.
Until released from the Escrow Account or redeemed by the Company, the
Escrow Stock shall be treated on and reflected in the books of the Company as
issued and outstanding and owned of record by the Holders of the Securities in
proportion to the amount of such Securities held by such Holders, subject to the
voting rights of the Escrow Agent and redemption rights of the Company as
provided herein and in the Escrow Agreement. Subject to such rights of
redemption by the Company and with such voting rights of the Escrow Agent, the
Escrow Stock shall be freely transferrable by the record holder thereof,
provided that the transferee is made aware of and agrees to the continued status
of such stock as is set forth herein, and provided, however that prior to any
such transfer the stock shall be registered or an exemption from registration
available to allow the transfer.
(b) Expenses of Registration. All expenses incurred in connection with
any registration, qualification or compliance in furtherance of registration
rights provided in this Agreement, including without limitation, all
registration, filing, and qualification fees, printing expenses, fees and
disbursements of counsel for the Company, and expenses of any special audits
incidental to or required by such registration, shall be borne by the Company;
provided however:
(i) The Company shall not be required to pay for expenses of any
registration the request for which has been subsequently withdrawn by the
holders of rights to such registration (the "Holders"), in which case, such
expenses shall be borne by the Holders requesting such withdrawal;
(ii) The Company shall not be required to pay fees of legal counsel of
Holder, or underwriters' fees, discounts, or commissions relating to
securities registered for the Holders (hereinafter "Registrable
Securities").
(C) REGISTRATION PROCEDURES. In the case of each registration,
qualification, or compliance effected by the Company as provided herein, the
Company will keep each Holder participating therein advised in writing as to the
initiation of each registration, qualification and compliance and as to the
completion thereof. At its expense the Company will:
(i) The Company shall take such action that is reasonably necessary to cause
the registration to become effective and will maintain such effectiveness
for a period of three years from the final closing on such Private Placement
or for so long as any shares of Common Stock including shares underlying the
Debentures, Investor Warrants, and/or Placement Agent Warrants continue to
be
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owned beneficially by any of the investors in the Private Placement or the
Placement Agent or until such shares of Common Stock may be sold pursuant to
Rule 144 under the Securities Exchange Act of 1934, as amended, whichever
time period is shorter; and
(ii) Furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request.
(D) INDEMNIFICATION. (i) The Company will indemnify each Holder of
Registrable Securities, each of the Holder's officers and directors, and each
person controlling such Holder, with respect to such registration,
qualification, or compliance effected pursuant to this paragraph, and each
underwriter, if any, and each person who controls any underwriter of the
Registrable Securities held by or issuable to such Holder, against all claims,
losses, damages, and liabilities (or actions in respect thereto) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any prospectus, offering circular or other document (including
any related registration statement, notification or the like) incident to any
such registration, qualification, or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or any violation by
the Company of any rule or regulation promulgated under the Securities Act
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification, or compliance,
and will reimburse each such Holder, each of the Holder's officers and
directors, and each person controlling such Holder, each such underwriter and
each person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating or defining any
such claim, loss, damage, liability or action, provided that the Company will
not be liable in any such case to the extent that any such claim, loss, damage
or liability arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by or any other action of such
Holder or underwriter in connection with or adversely affecting the
registration.
(ii) Each Holder will, if Registrable Securities held by or issuable to such
Holder are included in the securities as to which such registration,
qualification, or compliance is being effected, indemnify the Company, each
of its directors and officers who sign such registration statement, each
underwriter or placement agent, if any, of the Company's securities covered
by such a registration statement, each person who controls the Company
within the meaning of the Securities Act, and each other such Holder, each
of such Holder's officers and directors and each person controlling such
Holder, against all claims, losses, damages, and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular, or other document, or any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse the Company, such Holders, such directors, officers, persons,
underwriters and/or placement agents for any legal or any other expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability, or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular, or other document in reliance upon and in
conformity with information furnished to the Company by such Holder in
writing specifically for use therein.
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(iii) Each party entitled to indemnification under this paragraph (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the Indemnifying Party) promptly after such indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall
not be unreasonably withheld), and the Indemnified Party may participate in
such defense at such party's expense, and provided further that the failure
of any Indemnified Party to give notice as provided herein shall not relieve
the Indemnifying Party of its obligations under this paragraph. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgement or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim
or litigation.
(E) INFORMATION BY HOLDER
The Holder or Holders of Registrable Securities included in any
registration shall furnish to the Company such written information regarding
such Holder or Holders and the distribution proposed by such Holder or Holders
as the Company may reasonably request in writing and as shall be required in
connection with any registration, qualification, or compliance referred to in
this paragraph.
(F) TRANSFER OF REGISTRATION RIGHTS
The Rights to cause the Company to register your securities granted to
you by the Company under this Agreement may be assigned by you to a transferee
or assignee of any of your Registrable Securities, provided, that the Company is
given written notice by you at the time of or within a reasonable time after
said transfer, stating the name and address and social security number (if
applicable) of said transferee or assignee and identifying the securities with
respect to which such registration rights are being assigned.
(G) SURVIVAL
The provisions of this Section 10 shall survive the conversion of the
Debentures and/or exercise of the Warrants, where applicable.
The Company has undertaken to keep said registration current and
effective during the period any of the Warrants remain outstanding and not
exercised into common stock of the Company.
11. SUBSCRIPTION AGREEMENT. The Holder has executed a Subscription
Agreement (the "Subscription Agreement") contemporaneous herewith, terms and
conditions, covenants and representations therein also being applicable as to
this Agreement, unless provisions appear herein to the contrary. Definitions of
certain terms in that Subscription Agreement equally apply to use of those terms
herein unless provisions to the contrary appear herein.
12. MISCELLANEOUS. This Warrant shall not be valid for any purpose
unless signed by an authorized officer of the Company and countersigned by the
duly designated and acting agent, if any. This Warrant does not confer upon the
Holder any right to vote or to consent or to receive notice as a stockholder of
the Company.
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13. HEADINGS. The headings in this Warrant are for purposes of
reference only, and shall not limit or otherwise affect the meaning hereof.
14. LAW GOVERNING. This Warrant shall be construed and enforced in
accordance with and governed by the laws of the State of New York.
15. FURTHER ASSURANCES. The parties agree to execute such further
documents and to take such further actions as may be necessary and/or reasonably
requested to implement the transactions provided for in this Agreement and
confirm the existence of this Agreement and information provided herein,
provided however that no such further documents or actions shall alter the
material terms of this Agreement, and no publication or public disclosure of the
existence or terms of this Agreement shall be made unless with the prior
approval of all parties hereto, unless and until applicable government
regulation shall require such.
16. COUNTERPARTS. This Agreement may be executed in counterpart
signature pages which together shall evidence proper and effective execution of
this Agreement by all parties.
17.CAPITALIZED TERMS. Capitalized terms as used herein where not
otherwise defined are as defined in the Subscription Agreement, Investor
Warrants, Placement Agent Warrants and/or Escrow Agreement.
KRANTOR CORPORATION
By /s/
-------------------------------
ATTEST:
- -------------------------------------
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ASSIGNMENT
(To be executed by the registered Holder to
effect a transfer of the within Warrant)
FOR VALUE RECEIVED, I, ______________________________________________
hereby sell, assign and transfer onto _____________________________________ this
Warrant and the rights represented by the Warrant to purchase common stock in
accordance with the rights and conditions hereof, and do hereby irrevocably
constitute and appoint _______________________________________, my attorney, to
transfer the said Warrant on the books of the Company, with full power of
substitution.
DATED:___________________, ____ SIGNED_________________________________
WITNESS:
- -------------------------------
Notice: The signature to this Assignment must correspond with the name
as written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatever.
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ELECTION TO PURCHASE
(To be executed by the Holder desiring to exercise
the right to purchase common stock evidenced by the
within Warrant)
KRANTOR CORPORATION
The undersigned irrevocably elects to exercise the right to purchase
hereunder shares of the common stock of the Company of the par value of $.001
per share, in accordance with the terms and conditions of this Warrant, the
amount of which shares being purchased and the amount of the exercise
price/purchase price therefor being tendered herewith being as stated below, and
requests that a certificate for such shares be issued in the name of the
undersigned and be delivered to the undersigned at the address stated below, and
if said number of shares shall not be all of the shares purchasable hereunder,
that a new warrant of like tenor for the balance of the remaining shares
purchasable hereunder be delivered to the undersigned at the address stated
below.
Amount of Shares being Purchased
on Exercise of this Warrant ---------------------------------
Amount of Purchase Price/Exercise
Price being tendered herewith
DATED:___________________, ____ SIGNED-----------------------------------
Address:---------------------------------
---------------------------------
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