WARRANT AGREEMENT
-------------------------
KINGSGATE ACQUISITIONS, INC.
AND
OLDE MONMOUTH STOCK TRANSFER CO., INC.
WARRANT AGENT
----------------- , 1999
WARRANT AGREEMENT
THIS AGREEMENT dated as of ----------------, 1999, between Kingsgate
Acquisitions, Inc., a Delaware corporation (the "Company"), and Olde Monmouth
Stock Transfer Co., Inc. , a transfer agency located in Atlantic Highlands, New
Jersey (the "Warrant Agent") (collectively, the "Parties" and individually a
"Party").
WHEREAS: The Company is conducting a public offering (the "Public
Offering") of 1,000,000 units (the "Units") each Unit consisting of one share of
Common Stock, $.001 par value per share ("Common Stock") and five redeemable
common stock purchase warrants ("Warrants"); and
WHEREAS, the Company desires to provide for the issuance, registration,
transfer, exchange and exercise of certificates (the "Warrant Certificates")
representing the Warrants and for the exercise of the Warrants;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth and for the purpose of defining the terms and provisions
of the Warrant Certificates and the Warrants, and the respective rights and
obligations thereunder of the Company, the registered holders of the Warrant
Certificates and the Warrant Agent, the Parties agree as follows:
1. Definitions.
As used herein:
(a) "Common Stock" shall mean Common Stock of the Company, whether now or
hereafter authorized, holders of which have the right to participate
in the distribution of earnings and assets of the Company without
limit as to amount or percentage.
(b) "Corporate Office" shall mean the place of business of the Warrant
Agent (or its successor) which office is presently located at 77
Memorial Parkway, Suite 101, Atlantic Highlands, New Jersey 07716.
(c) "Effective Date" shall mean ------------------ , 1999, the date on
which the Company's Registration Statement is declared effective by
the Securities and Exchange Commission.
(d) "Exercise Date" shall mean the date of surrender for exercise of any
Warrant Certificate, provided the exercise form on the back of the
Warrant Certificate or a form substantially similar thereto has been
completed in full by the Registered Owner or a duly appointed attorney
and the Warrant Certificate is accompanied by payment in full of the
Exercise Price.
(e) "Exercise Period" shall mean the period commencing on the Effective
Date and extending to and through the Expiration Date.
(f) "Exercise Price" shall mean $1.00; provided, however, that in the
event the Company reduces the Exercise Price, the Exercise Price shall
be as established by the Company.
(g) "Expiration Date" shall mean 5:00 P.M. Eastern Time on the last day of
the two year period commencing on the Effective Date, subject to the
terms provided in Section 5 herein for redemption; provided however,
if such date shall be a holiday or a day on which banks are authorized
to close, then Expiration Date shall mean 5:00 p.m., Eastern Time on
the next following day which in the State of New Jersey is not a
holiday or a day on which banks are authorized to close. If the
Company redeems the Warrants as provided in Section 5 of this
Agreement, the Expiration Date shall be the date fixed for redemption.
(h) "Warrants" shall mean 5,000,000 Warrants to purchase 5,000,000 shares
of Common Stock, all of which will be sold in the Public Offering as
part of the Units.
(i) "Registered Owner" shall mean the person in whose name any Warrant
Certificate shall be registered on the books maintained by the Warrant
Agent pursuant to Section 7 of this Agreement.
(j) "Registration Statement" shall mean the Company's Registration
Statement on Form SB-2 (S.E.C. File No. 333- ), as amended.
(k) "Warrant Agent" shall mean Olde Monmouth Stock Transfer Co., Inc. or
any successor, as the transfer agent and registrar of the Warrants.
(l) "Warrant Shares" shall mean and include up to 5,000,000 authorized and
unissued shares of Common Stock reserved for issuance on exercise of
the Warrants, and unless otherwise noted, and any additional shares of
Common Stock or other property which may hereafter be issuable or
deliverable on exercise of the Warrants pursuant to Section 9 of this
Agreement.
2. Warrants and Issuance of Warrant Certificates.
Each Warrant shall initially entitle the Registered Owner of a Warrant
Certificate representing Warrants to purchase one share of Common Stock on the
exercise of each Warrant, subject to modification and adjustment as hereinafter
provided in Section 9. Warrant Certificates representing 5,000,000 Warrants and
evidencing the right to purchase an aggregate of 5,000,000 shares of Common
Stock of the Company shall be executed by the proper officers of the Company and
delivered to the Warrant Agent for countersignature. Warrant Certificates to be
delivered to the Warrant Agent shall be in direct relation to the Units sold in
the Company's Public Offering and shall be attached to certificates representing
an equal number of shares of Common Stock. The Warrant Certificates representing
the Warrants will be issued and delivered on written order of the Company signed
by the proper officers of the Company. The Warrant Agent shall deliver Warrant
Certificates in required whole number denominations to the persons entitled
thereto in connection with any transfer or exchange permitted under this
Agreement.
Except as provided in Section 8 hereof, certificates representing the
Warrant Shares shall be issued only on or after the Exercise Date on exercise of
the Warrants or on transfer or exchange of the Warrant Shares.
3. Form and Execution of Warrant Certificates.
The Warrant Certificates shall be substantially in the form attached as
Exhibit "A" and may have such letters, numbers or other marks of identification
and such legends, summaries or endorsements printed, lithographed or engraved
thereon as the Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement. The Warrant Certificates shall be dated as of the
date of issuance, whether on initial issuance, transfer, exchange or in lieu of
mutilated, lost, stolen or destroyed Warrant Certificates.
Each Warrant Certificate shall be initially issued only when attached to a
certificate representing that number of Shares of Common Stock which is
one-fifth the number of Warrants represented by the Warrant Certificate and
shall be separately transferable from the certificate representing the Shares of
Common Stock immediately upon issuance.
The Warrant Certificates shall be executed on behalf of the Company by its
duly authorized officers, by manual signatures or by facsimile signatures
printed thereon, and shall have imprinted thereon a facsimile of the Company's
seal. The Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. In the
event any officer of the Company who executed the Warrant Certificates shall
cease to be an officer of the Company before the date of issuance of the Warrant
Certificates or before countersignature and delivery by the Warrant Agent, such
Warrant Certificates may be countersigned, issued and delivered by the Warrant
Agent with the same force and effect as though the person who signed such
Warrant Certificates had not ceased to be an officer of the Company.
4. Exercise.
The exercise of Warrants in accordance with this Agreement shall only be
permitted during the Exercise Period.
Warrants shall be deemed to have been exercised immediately prior to the
close of business on the Exercise Date. The exercise form shall be executed by
the Registered Owner thereof or the Registered Owner's attorney duly authorized
in writing and shall be delivered together with payment to the Warrant Agent, in
cash or by official bank or certified check, of an amount in lawful money of the
United States of America. Such payment shall be in an amount equal to the
Exercise Price as hereinabove defined.
The person entitled to receive the number of Warrant Shares deliverable on
such exercise shall be treated for all purposes as the Registered Owner of such
Warrant Shares as of the close of business on the Exercise Date. The Company
shall not be obligated to issue any fractional share interests in Warrant
Shares. If Warrants represented by more than one Warrant Certificate shall be
exercised at one time by the same Registered Owner, the number of full Warrant
Shares which shall be issuable on exercise thereof shall be computed on the
basis of the aggregate number of full Warrant Shares issuable on such exercise.
As soon as practicable on or after the Exercise Date and in any event
within 30 days after such date, the Warrant Agent shall cause to be issued and
delivered to the person or persons entitled to receive the same, a certificate
or certificates for the number of Warrant Shares deliverable on such exercise.
No adjustment shall be made in respect of cash dividends on Warrant Shares
deliverable on exercise of any Warrant. The Warrant Agent shall promptly notify
the Company in writing of any exercise and of the number of Warrant Shares
caused to be delivered and shall cause payment of an amount in cash equal to the
Exercise Price to be made promptly to the order of the Company. The Parties
contemplate such payments will be made by the Warrant Agent to the Company on a
weekly basis and will consist of collected funds only. The Warrant Agent shall
hold any proceeds collected and not yet paid to the Company in a
Federally-insured escrow account at a commercial bank selected by agreement of
the Company and the Warrant Agent, at all times relevant hereto. Following a
determination by the Warrant Agent that collected funds have been received, the
Warrant Agent shall cause the Transfer Agent to issue share certificates
representing the number of Warrant Shares purchased by the Registered Owner.
Expenses incurred by the Warrant Agent, including administrative costs, and
the standard fees imposed by the Warrant Agent for the Warrant Agent's services,
shall be paid by the Company and shall be deducted from the Escrow Account prior
to distribution of funds to the Company.
A detailed accounting statement setting forth the number of Warrants
exercised, the number of Warrant Shares issued, the net amount of exercised
funds and all expenses incurred by the Warrant Agent shall be transmitted to the
Company on payment of each exercise amount. Such accounting statement shall
serve as an interim accounting for the Company during the Exercise Period. The
Warrant Agent shall render to the Company, at the completion of the Exercise
Period, a complete accounting setting forth the number of Warrants exercised,
the identity of persons exercising such Warrants, the number of Warrant Shares
issued, the amounts distributed to the Company, and all expenses incurred by the
Warrant Agent.
The Company may be required to deliver a prospectus that satisfies the
requirements of Section 10 of the Securities Act of 1933, as amended (the "1933
Act") with delivery of the Warrant Shares and must have a registration statement
(or a post-effective amendment to an existing registration statement) effective
under the 1933 Act in order for the Company to comply with any such prospectus
delivery requirements. The Company will advise the Warrant Agent of the status
of any such registration statement under the 1933 Act and of the effectiveness
of the Company's registration statement or lapse of effectiveness.
No issuance of Warrant Shares shall be made unless there is an effective
registration statement under the 1933 Act, and registration or qualification of
the Warrant Shares, or an exemption therefrom, has been obtained from state or
other regulatory authorities in the jurisdiction in which such Warrant Shares
are sold. The Company will provide to the Warrant Agent written confirmation of
all such registration or qualification, or an exemption therefrom, when
requested by the Warrant Agent.
5. Redemption.
Commencing the Effective Date, the Company may, at its option, redeem the
Warrants in whole, but not in part, for a redemption price of $.001 per Warrant,
on not less than 30 days' notice to the Registered Owners. The right to redeem
the Warrants may be exercised by the Company during the Exercise Period only in
the event (i) the closing bid price for Company's shares of Common Stock has
equaled or exceeded $1.25 (125% of the Warrant Exercise Price) for 20
consecutive trading days, (ii) any notice of the call for redemption is given
not more than ten (10) business days after the conclusion of the 20 consecutive
trading days referred to in the foregoing (i), (iii) the Company has a
registration statement (or a post-effective amendment to an existing
registration statement) pertaining to the Warrant Shares effective with the
Securities and Exchange Commission, which registration statement would enable a
Registered Owner to exercise the Warrants, and (iv) the expiration of the 30 day
notice period is within the Exercise Period. In the event the Company exercises
its right to redeem the Warrants, the Expiration Date will be deemed to be, and
the Warrants will be exercisable until the close of business on, the date fixed
for redemption in such notice. If any Warrant called for redemption is not
exercised by such time, it will cease to be exercisable and the Registered Owner
thereof will be entitled only to the redemption price
6. Reservation of Shares and Payment of Taxes.
The Company covenants that it will at all times reserve and have available
from its authorized shares of Common Stock such number of Shares as shall then
be issuable on exercise of all outstanding Warrants. The Company covenants that
all Warrant Shares issuable shall be duly and validly issued, fully paid and
non-assessable, and free from all taxes, liens and charges with respect to the
issue thereof.
The Registered Owner shall pay all documentary, stamp or similar taxes and
other government charges that may be imposed with respect to the issuance of the
Warrants, or the issuance, transfer or delivery of any Warrant Shares on
exercise of the Warrants. In the event the Warrant Shares are to be delivered in
a name other than the name of the Registered Owner of the Warrant Certificates,
no such delivery shall be made unless the person requesting the same has paid to
the Warrant Agent or Transfer Agent the amount of any such taxes or charges
incident thereto.
The Company will supply the Warrant Agent with blank Warrant Certificates,
so as to maintain an inventory satisfactory to the Warrant Agent. The Warrant
Agent will also serve as Transfer Agent for the Shares.
7. Registration of Transfer.
The Warrant Certificates may be transferred in whole or in part and may be
separately transferred from the Share Certificate to which such Warrant
Certificate is attached upon initial issuance, if any, at any time during the
Exercise Period. Warrant Certificates to be exchanged shall be surrendered to
the Warrant Agent at its corporate office. The Company shall execute and the
Warrant Agent shall countersign, issue and deliver in exchange therefor, the
Warrant Certificate or Certificates which the holder making the transfer shall
be entitled to receive.
The Warrant Agent shall keep transfer books at its corporate office on
which Warrant Certificates and the transfer thereof shall be registered. On due
presentment for registration of transfer of any Warrant Certificate at such
office, the Company shall execute and the Warrant Agent shall issue and deliver
to the transferee or transferees a new Warrant Certificate or Certificates
representing an equal aggregate number of Warrants.
All Warrant Certificates presented for registration of transfer or exercise
shall be duly endorsed or be accompanied by a written instrument or instruments
of transfer in form satisfactory to the Company and the Warrant Agent.
Prior to due presentment for registration of transfer thereof, the Company
and the Warrant Agent may treat the Registered Owner of any Warrant Certificate
as the absolute owner thereof (notwithstanding any notations of ownership or
writing thereon made by anyone other than the Company or the Warrant Agent) and
the Parties shall not be affected by any notice to the contrary.
8. Loss or Mutilation.
On receipt by the Company and the Warrant Agent of evidence satisfactory as
to the ownership of and the loss, theft, destruction or mutilation of any
Warrant Certificate, the Company shall execute and the Warrant Agent shall
countersign and deliver in lieu thereof, a new Warrant Certificate representing
an equal aggregate number of Warrants. In the case of loss, theft or destruction
of any Warrant Certificate, the Registered Owner requesting issuance of a new
Warrant Certificate shall be required to secure an indemnity bond from an
approved surety bonding company in favor of the Company and Warrant Agent in an
amount satisfactory to each of them. In the event a Warrant Certificate is
mutilated, such Certificate shall be surrendered and cancelled by the Warrant
Agent prior to delivery of a new Warrant Certificate. Applicants for a
substitute Warrant Certificate shall also comply with such other regulations and
pay such other reasonable charges as the Company may prescribe.
9. Adjustment of Exercise Price and Shares.
(a) If at any time prior to the expiration of the Warrants by their terms
or by exercise, the Company increases or decreases the number of its
issued and outstanding shares of Common Stock, or changes in any way
the rights and privileges of such shares of Common Stock, by means of
(i) the payment of a share dividend or the making of any other
distribution on such shares of Common Stock payable in its shares of
Common Stock, (ii) a split or subdivision of shares of Common Stock,
or (iii) a consolidation or combination of shares of Common Stock,
then the Exercise Price in effect at the time of such action and the
number of Warrants required to purchase each Warrant Share at that
time shall be proportionately adjusted so that the numbers, rights and
privileges relating to the Warrant Shares then purchasable upon the
exercise of the Warrants shall be increased, decreased or changed in
like manner, for the same aggregate purchase price set forth in the
Warrants, as if the Warrant Shares purchasable upon the exercise of
the Warrants immediately prior to the event had been issued,
outstanding, fully paid and non-assessable at the time of that event.
Any dividend paid or distributed on the shares of Common Stock in
shares of any other class of shares of the Company or securities
convertible into shares of Common Stock shall be treated as a dividend
paid in shares of Common Stock to the extent shares of Common Stock
are issuable on the payment or conversion thereof.
(b) In the event, prior to the expiration of the Warrants by exercise or
by their terms, the Company shall be recapitalized by reclassifying
its outstanding shares of Common Stock into shares with a different
par value, or by changing its outstanding shares of Common Stock to
shares without par value or in the event of any other material change
in the capital structure of the Company or of any successor
corporation by reason of any reclassification, recapitalization or
conveyance, prompt, proportionate, equitable, lawful and adequate
provision shall be made whereby any Registered Owner of the Warrants
shall thereafter have the right to purchase, on the basis and the
terms and conditions specified in this Agreement, in lieu of the
Warrant Shares theretofore purchasable on the exercise of any Warrant,
such securities or assets as may be issued or payable with respect to
or in exchange for the number of Warrant Shares theretofore
purchasable on exercise of the Warrants had such reclassification,
recapitalization or conveyance not taken place; and in any such event,
the rights of any Registered Owner of a Warrant to any adjustment in
the number of Warrant Shares purchasable on exercise of such Warrant,
as set forth above, shall continue and be preserved in respect of any
stock, securities or assets which the Registered Owner becomes
entitled to purchase.
(c) In the event the Company, at any time while the Warrants shall remain
unexpired and unexercised, shall sell all or substantially all of its
property, or dissolves, liquidates or winds up its affairs, prompt,
proportionate, equitable, lawful and adequate provision shall be made
as part of the terms of such sale, dissolution, liquidation or winding
up such that the Registered Owner of a Warrant may thereafter receive,
on exercise thereof, in lieu of each Warrant Share which the
Registered Owner would have been entitled to receive, the same kind
and amount of any stock, securities or assets as may be issuable,
distributable or payable on any such sale, dissolution, liquidation or
winding up with respect to each share of Common Stock of the Company;
provided, however, that in the event of any such sale, dissolution,
liquidation or winding up, the right to exercise the Warrants shall
terminate on a date fixed by the Company, such date to be not earlier
than 5:00 P.M., Eastern Time, on the 30th day next succeeding the date
on which notice of such termination of the right to exercise the
Warrants has been given by mail to the Registered Owners thereof at
such addresses as may appear on the books of the Company.
(d) In the event prior to the expiration of the Warrants by exercise or by
their terms, the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to purchase its shares
of Common Stock at a price per share more than 10% below the
then-current market price per share (as defined below) at the date of
taking such record, then, (i) the number of Warrant Shares purchasable
pursuant to the Warrants shall be redetermined as follows: the number
of Warrant Shares purchasable pursuant to a Warrant immediately prior
to such adjustment (taking into account fractional interests to the
nearest 1,000th of a share) shall be multiplied by a fraction, the
numerator of which shall be the number of shares of Common Stock of
the Company outstanding (excluding shares of Common Stock then owned
by the Company) immediately prior to the taking of such record, plus
the number of additional shares offered for purchase, and the
denominator of which shall be the number of shares of Common Stock of
the Company outstanding (excluding shares of Common Stock owned by the
Company) immediately prior to the taking of such record, plus the
number of shares which the aggregate offering price of the total
number of additional shares so offered would purchase at such current
market price; and (ii) the Exercise Price per Warrant Share
purchasable pursuant to a Warrant shall be redetermined as follows:
the Exercise Price in effect immediately prior to the taking of such
record shall be multiplied by a fraction, the numerator of which is
the number of Warrant Shares purchasable immediately prior to the
taking of such record, and the denominator of which is the number of
Warrant Shares purchasable immediately after the taking of such record
as determined pursuant to clause (i) above; provided, however, (i)
that any adjustment in the number of shares issuable as set forth
above shall be effective only to the extent sufficient shares of
Common Stock have bee registered through a registration statement
effective under the 1933 Act, and (ii) that any adjustment in the
Exercise Price does not cause the Company to receive proceeds in
excess of the amount authorized by any such registration statement.
For the purpose hereof, the current market price per share at any date
shall be determined as follows:
(i) The current market price shall be the average of the closing
prices of the Common Stock as reported by the exchange or system
on which the Company's Common Stock trades for 10 consecutive
business days commencing 30 business days prior to the record
date;
(ii) If the Common Stock is not so listed or admitted to unlisted
trading privileges or so quoted, the current market price shall
be the average of the last reported highest bid and the lowest
asked prices quoted on the National Association of Securities
Dealers, Inc. Automated Quotations System or, if not so quoted,
then by the National Quotation Bureau, Inc. for 10 consecutive
business days commencing 30 business days prior to the record
date; or
(iii)If the Common Stock is not so listed or admitted to unlisted
trading privileges or so quoted, and bid and asked prices are not
reported, the current market price shall be determined in such
reasonable manner as may be prescribed by the Board of Directors.
(e) On exercise of the Warrants by the Registered Owners, the Company
shall not be required to deliver fractions of Warrant Shares;
provided, however, that the Company shall make prompt, proportionate,
equitable, lawful and adequate provisions in respect of any such
fraction of one Warrant Share either on the basis of adjustment in the
then applicable Exercise Price or a purchase of the fractional
interest at the price of the Company's shares of Common Stock or such
other reasonable basis as the Company may determine.
(f) In the event, prior to expiration of the Warrants by exercise or by
their terms, the Company shall determine to take a record of the
holders of its shares of Common Stock for the purpose of determining
stockholders entitled to receive any stock dividend, distribution or
other right which will cause any change or adjustment in the number,
amount, price or nature of the shares of Common Stock or other stock,
securities or assets deliverable on exercise of the Warrants pursuant
to the foregoing provisions, the Company shall give to the Registered
Owners of the Warrants at the addresses as may appear on the books of
the Company at least 30 days' prior written notice to the effect that
it intends to take such a record. Such notice shall specify the date
as of which such record is to be taken; the purpose for which such
record is to be taken; and the number, amount, price and nature of the
shares of Common Stock or other stock, securities or assets which will
be deliverable o exercise of the Warrants after the action for which
such record will be taken has been completed. Without limiting the
obligation of the Company to provide notice to the Registered Owners
of the Warrants of any corporate action hereunder, the failure of the
Company to give notice shall not invalidate such corporate action of
the Company.
(g) The Warrants shall not entitle the Registered Owner thereof to any of
the rights of stockholders or to any dividend declared on the shares
of Common Stock unless the Warrant is exercised and the Warrant Shares
purchased prior to the record date fixed by the Board of Directors of
the Company for the determination of holders of shares of Common Stock
entitled to such dividend or other right.
(h) Any reduction in the applicable Exercise Price shall be effective upon
written notice to the Warrant Agent, which notice shall be given
pursuant to a duly and validly authorized resolution of the Board of
Directors of the Company. Any such reduction in the Exercise Price
shall not entitle the Registered Owners to issuance of any additional
Common Shares pursuant to the adjustment provisions set forth
elsewhere herein, regardless of whether the reduction in the Exercise
Price was effected either prior to or following exercise of Warrants
by the Registered Owners thereof. A nonexercising Registered Owner
shall have no remedy or rights to receive any additional Warrant
Shares as a result of any reduction in any applicable Exercise Price
pursuant to this subsection.
10. Duties, Compensation and Termination of Warrant Agent.
The Warrant Agent shall act hereunder as agent and in a ministerial
capacity for the Company, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not, by issuing and delivering
Warrant Certificates or by any other act hereunder, be deemed to make any
representations as to the validity, value or authorization of the Warrant
Certificate or the Warrants represented thereby or of the Warrant Shares or
other property delivered on exercise of any Warrant. The Warrant Agent shall not
be under any duty or responsibility to any holder of the Warrant Certificates to
make or cause to be made any adjustment of the Exercise Price or to determine
whether any fact exists which may require any such adjustment.
The Warrant Agent shall not (i) be liable for any recital or statement of
fact contained herein or for any action taken or omitted by it in reliance on
any Warrant Certificate or other document or instrument believed by it in good
faith to be genuine and to have been signed or presented by the proper Party or
Parties, (ii) be responsible for any failure on the part of the Company to
comply with any of its covenants and obligations contained in this Agreement or
in the Warrant Certificates, or (iii) be liable for any act or omission in
connection with this Agreement except for its own negligence or willful
misconduct.
The Warrant Agent may at any time consult with counsel satisfactory to it
(who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken or omitted by it in good faith in accordance
with the opinion or advice of such counsel.
Any notice, statement, instruction, request, direction, order or demand of
the Company shall be sufficiently evidenced by an instrument signed by an
officer of the Company. The Warrant Agent shall not be liable for any action
taken or omitted by it in accordance with such notice, statement, instruction,
request, direction, order or demand.
The Company agrees to pay the Warrant Agent reasonable compensation for its
services hereunder and to reimburse the Warrant Agent for its reasonable
expenses. The Company further agrees to indemnify the Warrant Agent against any
and all losses, expenses and liabilities, including judgments, costs and counsel
fees, for any action taken or omitted by the Warrant Agent in the execution of
its duties and powers hereunder, excepting losses, expenses and liabilities
arising as a result of the Warrant Agent's negligence or willful misconduct.
The Warrant Agent may resign its duties or the Company may terminate the
Warrant Agent and the Warrant Agent shall be discharged from all further duties
and liabilities hereunder (except liabilities arising as a result of the Warrant
Agent's own negligence or willful misconduct) on 30 days' prior written notice
to the other Party. Upon notice by the Company to the Warrant Agent, the Warrant
Agent shall cause a copy of such notice of resignation to be mailed to the
Registered Owner of each Warrant Certificate. The expenses the Warrant Agent
incurs in mailing such notice shall be paid by the Company. On such resignation
or termination, the Company shall appoint a new Warrant Agent. If the Company
shall fail to make such appointment within a period of 30 days after it has been
notified in writing of the resignation by the Warrant Agent, then the Registered
Owner of any Warrant Certificate may apply to any court of competent
jurisdiction for the appointment of a new Warrant Agent. Any new Warrant Agent
shall have its principal office in the United States.
After acceptance in writing of an appointment of a new warrant agent is
received by the Company, such new warrant agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
herein as the Warrant Agent, without any further assurance, conveyance, act or
deed; provided, however, if it shall be necessary or expedient to execute and
deliver any further assurance, conveyance, act or deed, the same shall be done
at the expense of the Company and shall be legally and validly executed. The
Company shall file a notice of appointment of a new warrant agent with the
resigning Warrant Agent and shall forthwith cause a copy of such notice to be
mailed to the Registered Owner of each Warrant Certificate.
Any corporation into which the Warrant Agent or any new Warrant Agent may
be converted or merged, or any corporation resulting from any consolidation to
which the Warrant Agent or any new Warrant Agent shall be a party, or any
corporation succeeding to the corporate trust business of the Warrant Agent
shall be a successor Warrant Agent under this Agreement, provided that such
corporation is eligible for appointment as a successor to the Warrant Agent. Any
such successor Warrant Agent shall promptly cause notice of its succession as
Warrant Agent to be mailed to the Company and to the Registered Owner of each
Warrant Certificate. No further action shall be required for establishment and
authorization of such successor Warrant Agent.
The Warrant Agent, its officers or directors and it subsidiaries or
affiliates may buy, hold or sell Warrants or other securities of the Company and
otherwise deal with the Company in the same manner and to the same extent and
with like effect as though it were not the Warrant Agent. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the Company.
11. Modification of Agreement.
The Warrant Agent and the Company may by supplemental agreement make any
changes or corrections in this Agreement they shall deem appropriate to cure any
ambiguity or to correct any defective or inconsistent provision or mistake or
error herein contained. Additionally, the Parties may make any changes or
corrections deemed necessary which shall not adversely affect the interests of
the Registered Owners of Warrant Certificates; provided, however, this Agreement
shall not otherwise be modified, supplemented or altered in any respect except
with the consent in writing of the Registered Owners of Warrant Certificates
representing not less than a majority of the Warrants outstanding. Additionally,
no change in the number or nature of the Warrant Shares purchasable on exercise
of a Warrant or the Exercise Price therefor shall be made without the consent in
writing of the Registered Owner of the Warrant Certificate representing such
Warrant, other than such changes as are specifically prescribed by this
Agreement.
12. Notices.
All notices, demands, elections, opinions or requests (however
characterized or described) required or authorized hereunder shall be deemed
given sufficiently in writing and sent by registered or certified mail, return
receipt requested and postage prepaid, or by tested telex, telegram or cable to:
in the case of the Company:
Kingsgate Acquisitions, Inc.
950 11th Street
West Vancouver, British Columbia V7T 2M3
Canada
and in the case of the Warrant Agent:
Olde Monmouth Stock Transfer Co., Inc.
77 Memorial Parkway (Suite 101)
Atlantic Highlands New Jersey 07716
and, if requested by the Company to the Registered Owner of a Warrant
Certificate, at the address of such Registered Owner as set forth on the books
maintained by the Warrant Agent.
13. Persons Benefiting.
This Agreement shall be binding upon and inure to the benefit of the
Company, the Warrant Agent and their respective successors and assigns, and the
Registered Owners and beneficial owners from time to time of the Warrant
Certificates. Nothing in this Agreement is intended or shall be construed to
confer on any other person any right, remedy or claim or to impose on any other
person any duty, liability or obligation.
14. Further Instruments.
The Parties shall execute and deliver any and all such other instruments
and shall take any and all such other actions as may be reasonable or necessary
to carry out the intention of this Agreement.
15. Severability.
If any provision of this Agreement shall be held, declared or pronounced
void, voidable, invalid, unenforceable or inoperative for any reason by any
court of competent jurisdiction, government authority or otherwise, such
holding, declaration or pronouncement shall not affect adversely any other
provision of this Agreement, which shall otherwise remain in full force and
effect and be enforced in accordance with its terms, and the effect of such
holding, declaration or pronouncement shall be limited to the territory or
jurisdiction in which made.
16. Waiver.
All the rights and remedies of either Party under this Agreement are
cumulative and not exclusive of any other rights and remedies as provided by
law. No delay or failure on the part of either Party in the exercise of any
right or remedy arising from a breach of this Agreement shall operate as a
waiver of any subsequent right or remedy arising from a subsequent breach of
this Agreement. The consent of any Party where required hereunder to any act or
occurrence shall not be deemed to be a consent to any other action or
occurrence.
17. General Provisions.
This Agreement shall be construed and enforced in accordance with, and
governed by, the local laws of the State of New Jersey. Except as otherwise
expressly stated herein, time is of the essence in performing hereunder. This
Agreement embodies the entire agreement and understanding between the Parties
and supersedes all prior agreements and understandings relating to the subject
matter hereof, and this Agreement may not be modified or amended or any term or
provision hereof waived or discharged except in writing signed by the Party
against whom such amendment, modification, waiver or discharge is sought to be
enforced. The headings of this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning thereof. This Agreement may
be executed in any number of counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed as of the date first above mentioned.
THE COMPANY:
KINGSGATE ACQUISITIONS, INC.
(CORPORATE SEAL)
By:
-----------------------------------
Barney Magnusson, President
ATTEST:
/s/
- -----------------------------------
Leslie McGuffin, Secretary
THE WARRANT AGENT:
OLDE MONMOUTH STOCK TRANSFER CO., INC.
By: /s/
------------------------------------
Title:
ATTEST:
/s/
- -------------------------------------
, Secretary