Exhibit 4.6
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY
INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH
COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED IN THE MANNER
CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OF THIS WARRANT IS
RESTRICTED AS DESCRIBED HEREIN.
CELERITY SYSTEMS, INC.
Warrant for the Purchase of ______ Shares of Common Stock,
par value $.001 per share
No. ____ ______ Shares
THIS CERTIFIES that, for value received, ___________, with an
address at __________________________ (including any transferee,
the "Holder"), is entitled to subscribe for and purchase from Celerity
Systems, Inc. a Tennessee corporation (the "Company"), upon the terms and
conditions set forth herein, at any time or from time to time before 5:00
P.M. New York time on the earlier of (i) the fifth anniversary of the date of
this Warrant or (ii) the third anniversary of the closing of the initial
public offering of the Company's securities registered under the Act (the
"Exercise Period"), ______ shares of the Company's Common Stock, par value
$.001 per share ("Common Stock"), at an exercise price of $4.50 per share
(the "Exercise Price"). This Warrant is one of the warrants issued pursuant
to an offering (the "Offering") by the Company of units (the "Units"), each
Unit consisting of (i) 17,777 shares of Common Stock, (ii) one promissory
note with a face value of $50,000 (collectively, the "Notes"), and (iii) a
warrant to purchase 6,562 shares of Common Stock at the Exercise Price
collectively, the "Warrants". As used herein, the term "this Warrant" shall
mean and include this Warrant and any
Warrant or Warrants hereafter issued as a consequence of the exercise or
transfer of this Warrant in whole or in part.
The number of shares of Common Stock issuable upon exercise of this
Warrant (the "Warrant Shares") and the Exercise Price may be adjusted from
time to time as hereinafter set forth.
1. (a) This Warrant may be exercised during the Exercise Period, as
to the whole or any lesser number of whole Warrant Shares, by the surrender of
this Warrant (with the election form at the end hereof duly executed) to the
Company at its office at 9051 Executive Park Drive, Suite 400, Knoxville,
Tennessee, 37923, or at such other place as is designated in writing by the
Company, together with a certified or bank cashier's check payable to the order
of the Company in an amount equal to the Exercise Price multiplied by the number
of Warrant Shares for which this Warrant is being exercised.
(b) Notwithstanding anything to the contrary contained in
Section 1(a), the Holder may elect to exercise this Warrant in whole or in
part by receiving, upon surrender of this Warrant (with the election form at
the end hereof duly executed) to the Company at the address set forth above,
a number of Warrant Shares determined and computed using the following
formula:
X = Y[A-B]
A
X = the number of Warrant Shares to be issued to the Holder;
Y = the number of Warrant Shares to be exercised under this
Warrant;
A = the Current Fair Market Value per share of the Company's
Common Stock calculated as of the last trading day
immediately preceding exercise of this Warrant;
B = $4.50
As used herein, the "Current Fair Market Value" of the Common Stock as of a
specified date shall mean with respect to each share of Common Stock, (i) the
average of the closing prices of the Common Stock sold on all securities
exchanges on which the Common Stock may at the time be listed, or (ii) if there
have been no sales on any such exchange on such day, the average of the highest
bid and lowest asked prices on all such exchanges at the end of such day, or
(iii) if on such day the Common Stock is not so listed, the average of the
representative bid and asked prices quoted in the NASDAQ System as of 4:00 p.m.,
New York time, or (iv) if on such day the Common Stock is not quoted in the
NASDAQ System, the average of the highest bid and lowest asked prices on such
day in the domestic over-the-counter market as reported by the
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National Quotation Bureau, Incorporated or any similar successor organization,
in each such case averaged over a period of 21 days consisting of the day as of
which the Current Fair Market Value is being determined and the 20 consecutive
business days prior to such day. If on the date for which Current Fair Market
is to be determined the Common Stock is not listed on any securities exchange or
quoted in the NASDAQ System or the over-the-counter market, then Current Fair
Market Value of the Common Stock shall be the highest price per share which the
Company could then obtain from a willing buyer (not a current employee or
director) for Common Stock sold by the Company from authorized but unissued
shares, as determined in good faith by the Board of Directors of the Company,
unless prior to such date the Company has become subject to a merger,
consolidation, reorganization, acquisition or other similar transaction pursuant
to which the Company is not the surviving entity, in which case the Current Fair
Market Value of the Common Stock shall be deemed to be the per share value
received or to be received in such transaction by the holders of Common Stock.
2. Upon each exercise of the Holder's rights to purchase Warrant
Shares, the Holder shall be deemed to be the holder of record of the Warrant
Shares issuable upon such exercise, notwithstanding that the transfer books of
the Company shall then be closed or certificates representing such Warrant
Shares shall not then have been actually delivered to the Holder. As soon as
practicable after each such exercise of this Warrant, the Company shall issue
and deliver to the Holder a certificate or certificates for the Warrant Shares
issuable upon such exercise, registered in the name of the Holder or its
designee. If this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and deliver a new
Warrant evidencing the right of the Holder to purchase the balance of the
Warrant Shares (or portions thereof) subject to purchase hereunder.
3. (a) Any Warrants issued upon the transfer or exercise in part of
this Warrant shall be numbered and shall be registered in a Warrant Register as
they are issued. The Company shall be entitled to treat the registered holder
of any Warrant on the Warrant Register as the owner in fact thereof for all
purposes and shall not be bound to recognize any equitable or other claim to or
interest in such Warrant on the part of any other person, and shall not be
liable for any registration or transfer of Warrants which are registered or to
be registered in the name of a fiduciary or the nominee of a fiduciary unless
made with the actual knowledge that a fiduciary or nominee is committing a
breach of trust in requesting such registration or transfer, or with the
knowledge of such facts that its participation therein amounts to bad faith.
This Warrant shall be transferable only on the books of the Company upon
delivery thereof duly endorsed by the Holder or by his duly authorized attorney
or representative, or accompanied by proper evidence of succession, assignment,
or authority to transfer. In all cases of transfer by an attorney, executor,
administrator, guardian, or other legal representative, duly authenticated
evidence of his or its authority shall be produced. Upon any registration of
transfer, the Company shall deliver a new Warrant or Warrants to the person
entitled thereto. This Warrant may be exchanged, at the option of the Holder
thereof, for another Warrant, or other Warrants of different denominations, of
like tenor and representing in the aggregate the right to purchase a like number
of Warrant Shares (or portions thereof), upon surrender to the Company or its
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duly authorized agent. Notwithstanding the foregoing, the Company shall have no
obligation to cause Warrants to be transferred on its books to any person if, in
the opinion of counsel to the Company, such transfer does not comply with the
provisions of the Securities Act of 1933 (the "Act"), and the rules and
regulations thereunder.
(b) The Holder acknowledges that he has been advised by the
Company that neither this Warrant nor the Warrant Shares have been registered
under the Act, that this Warrant is being or has been issued and the Warrant
Shares may be issued on the basis of the statutory exemption provided by
Section 4(2) of the Act or Regulation D promulgated thereunder, or both,
relating to transactions by an issuer not involving any public offering, and
that the Company's reliance thereon is based in part upon the representations
made by the original Holder in the original Holder's Subscription Agreement
executed and delivered in accordance with the terms of the Offering (the
"Subscription Agreement"). The Holder acknowledges that he has been informed
by the Company of, or is otherwise familiar with, the nature of the
limitations imposed by the Act and the rules and regulations thereunder on
the transfer of securities. In particular, the Holder agrees that no sale,
assignment or transfer of this Warrant or the Warrant Shares issuable upon
exercise hereof shall be valid or effective, and the Company shall not be
required to give any effect to any such sale, assignment or transfer, unless
(i) the sale, assignment or transfer of this Warrant or such Warrant Shares
is registered under the Act, it being understood that neither this Warrant
nor such Warrant Shares are currently registered for sale and that the
Company has no obligation or intention to so register this Warrant or such
Warrant Shares except as specifically provided herein, or (ii) this Warrant
or such Warrant Shares are sold, assigned or transferred in accordance with
all the requirements and limitations of Rule 144 under the Act, it being
understood that Rule 144 is not available at the time of the original
issuance of this Warrant for the sale of this Warrant or such Warrant Shares
and that there can be no assurance that Rule 144 sales will be available at
any subsequent time, or (iii) such sale, assignment, or transfer is otherwise
exempt from registration under the Act.
4. The Company shall at all times reserve and keep available out its
authorized and unissued Common Stock, solely for the purpose of providing for
the exercise of the rights to purchase all Warrant Shares granted pursuant to
the Warrants, such number of shares of Common Stock as shall, from time to time,
be sufficient therefor. The Company covenants that all shares of Common Stock
issuable upon exercise of this Warrant, upon receipt by the Company of the full
Exercise Price therefor, shall be validly issued, fully paid, nonassessable, and
free of preemptive rights.
5. (a) In case the Company shall at any time after the date the
Warrants were first issued (i) declare a dividend on the outstanding Common
Stock payable in shares of its capital stock, (ii) subdivide the outstanding
Common Stock, (iii) combine the outstanding Common Stock into a smaller number
of shares, or (iv) issue any shares of its capital stock by reclassification of
the Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing corporation),
then, in each case, the Exercise Price, and the number of Warrant Shares
issuable upon exercise of this Warrant, in effect at the time of the record date
for such dividend or of the effective date of such subdivision, combination, or
reclassification, shall be proportionately adjusted so that the Holder
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after such time shall be entitled to receive the aggregate number and kind of
shares which, if such Warrant had been exercised immediately prior to such time,
he would have owned upon such exercise and been entitled to receive by virtue of
such dividend, subdivision, combination, or reclassification. Such adjustment
shall be made successively whenever any event listed above shall occur.
(b) In case the Company shall issue or fix a record date for the
issuance to all holders of Common Stock of rights, options, or warrants to
subscribe for or purchase Common Stock (or securities convertible into or
exchangeable for Common Stock) at a price per share (or having a conversion or
exchange price per share, if a security convertible into or exchangeable for
Common Stock) less than the Current Market Price per share of Common Stock (as
defined in Section 5(f) hereof) on such record date, then, in each case, the
Exercise Price shall be adjusted by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Common Stock outstanding on such record date
plus the number of shares of Common Stock which the aggregate offering price of
the total number of shares of Common Stock so to be offered (or the aggregate
initial conversion or exchange price of the convertible or exchangeable
securities so to be offered) would purchase at such Current Market Price and the
denominator of which shall be the number of shares of Common Stock outstanding
on such record date plus the number of additional shares of Common Stock to be
offered for subscription or purchase (or into which the convertible or
exchangeable securities so to be offered are initially convertible or
exchangeable). Such adjustment shall become effective at the close of business
on such record date; provided, however, that, to the extent the shares of Common
Stock (or securities convertible into or exchangeable for shares of Common
Stock) are not delivered, the Exercise Price shall be readjusted after the
expiration of such rights, options, or warrants (but only with respect to
Warrants exercised after such expiration), to the Exercise Price which would
then be in effect had the adjustments made upon the issuance of such rights,
options, or warrants been made upon the basis of delivery of only the number of
shares of Common Stock (or securities convertible into or exchangeable for
shares of Common Stock) actually issued. In case any subscription price may be
paid in a consideration part or all of which shall be in a form other than cash,
the value of such consideration shall be as determined in good faith by the
board of directors of the Company, whose determination shall be conclusive
absent manifest error. Shares of Common Stock owned by or held for the account
of the Company or any majority-owned subsidiary shall not be deemed outstanding
for the purpose of any such computation.
(c) In case the Company shall at any time after the date of this
Warrant make a distribution (through a dividend or otherwise) to its
stockholders (a "Spin-Off") of capital stock of any entity other than the
Company ("Spin-Off Stock"), then (i) the Holder of this Warrant, to the extent
this Warrant is unexercised at the time of such distribution, shall receive a
warrant (a "Spin-Off Warrant") to purchase a number of shares of Spin-Off Stock
equal to the number of shares of Spin-Off Stock such Holder would have been
entitled to receive if such Holder had exercised this Warrant as of the record
date for such dividend or distribution and (ii) the Exercise Price shall be
adjusted as provided in the next sentence. The Spin-Off Warrant
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shall be substantially identical to this Warrant except it shall not expire
until the earlier of (i) the fifth anniversary of the date of the Warrant, or
(ii) the third anniversary of the initial public offering registered under the
Act of the issuer of the Spin-Off Stock, and the exercise price of such Spin-Off
Warrant shall be determined by multiplying the Exercise Price of this Warrant
immediately prior to the Spin-Off by a fraction, the numerator of which shall be
the aggregate Value (as determined below) of the Spin-Off Stock distributed in
the Spin-Off to all stockholders and the denominator of which shall be the
aggregate Value of the Company immediately prior to the Spin-Off. After the
exercise price of the Spin-Off Warrant has been determined, the Exercise Price
of this Warrant shall be reduced so that such Exercise Price as so reduced, when
added to the exercise price of the Spin-Off Warrant, shall equal the Exercise
Price of this Warrant immediately prior to the Spin-Off.
The Value of the Company immediately prior to the Spin-Off shall
be determined in good faith by the Board of Directors of the Company in reliance
upon a fairness opinion issued by an investment banking firm mutually acceptable
to the Company and to Hampshire Securities Corporation. The Value of the
Spin-Off Stock shall be determined in good faith by the Board of Directors of
the Company and of the issuer of the Spin-Off Stock after consideration of all
relevant factors, including any public trading market for the Spin-Off Stock,
the balance sheet and operations of the issuer of the Spin-Off Stock as compared
to that of the Company prior to the Spin-Off and such other factors as such
Boards determine are relevant. It shall be a condition to any Spin-Off that the
issuer at the Spin-Off Stock agree in writing to issue the Spin-Off Warrants to
the Holders and to effectuate this Agreement. In addition, the aggregate
price of the Warrants and the Spin-Off Warrants will not exceed $4.50.
(d) In case the Company shall distribute to all holders of
Common Stock (including any such distribution made to the stockholders of the
Company in connection with a consolidation or merger in which the Company is
the continuing corporation) evidences of its indebtedness, cash (other than
any cash dividend which, together with any cash dividends paid within the 12
months prior to the record date for such distribution, does not exceed 5% of
the Current Market Price at the record date for such distribution) or assets
(other than distributions and dividends payable in shares of Common Stock or
Spin-Off Stock as the case may be), or rights, options, or warrants to
subscribe for or purchase Common Stock, or securities convertible into or
exchangeable for shares of Common Stock (excluding those with respect to the
issuance of which an adjustment of the Exercise Price is provided pursuant to
Section 5(b) hereof), then, in each case, the Exercise Price shall be
adjusted by multiplying the Exercise Price in effect immediately prior to the
record date for the determination of stockholders entitled to receive such
distribution by a fraction, the numerator of which shall be the Current
Market Price per share of Common Stock on such record date, less the fair
market value (as determined in good faith by the board of directors of the
Company, whose determination shall be conclusive absent manifest error) of
the portion of the evidences of indebtedness or assets so to be distributed,
or of such rights, options, or warrants or convertible or exchangeable
securities, or the amount of such cash, applicable to one share, and the
denominator of which shall be such Current Market Price per share of Common
Stock. Such adjustment shall become effective at the close of business on
such record date.
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(e) In case the Company shall issue shares of Common Stock or
rights, options, or warrants to subscribe for or purchase Common Stock, or
securities convertible into or exchangeable for Common Stock (excluding
shares, rights, options, warrants, or convertible or exchangeable securities
issued or issuable (i) in any of the transactions with respect to which an
adjustment of the Exercise Price is provided pursuant to Sections 5(a), 5(b),
5(c) or 5(d) above, (ii) upon any issuance of securities pursuant to the
Offering, or (iii) upon exercise of the Warrants) at a price per share
(determined, in the case of such rights, options, warrants, or convertible or
exchangeable securities, by dividing (x) the total amount received or
receivable by the Company in consideration of the sale and issuance of such
rights, options, warrants, or convertible or exchangeable securities, plus
the minimum aggregate consideration payable to the Company upon exercise,
conversion, or exchange thereof, by (y) the maximum number of shares covered
by such rights, options, warrants, or convertible or exchangeable securities)
lower than the Current Market Price per share of Common Stock in effect
immediately prior to such issuance, then the Exercise Price shall be reduced
on the date of such issuance to a price (calculated to the nearest cent)
determined by multiplying the Exercise Price in effect immediately prior to
such issuance by a fraction, (1) the numerator of which shall be an amount
equal to the sum of (A) the number of shares of Common Stock outstanding
immediately prior to such issuance plus (B) the quotient obtained by dividing
the consideration received by the Company upon such issuance by such Current
Market Price, and (2) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such issuance. For the
purposes of such adjustments, the maximum number of shares which the holders
of any such rights, options, warrants, or convertible or exchangeable
securities shall be entitled to initially subscribe for or purchase or
convert or exchange such securities into shall be deemed to be issued and
outstanding as of the date of such issuance, and the consideration received
by the Company therefor shall be deemed to be the consideration received by
the Company for such rights, options, warrants, or convertible or
exchangeable securities, plus the minimum aggregate consideration or premiums
stated in such rights, options, warrants, or convertible or exchangeable
securities to be paid for the shares covered thereby. No further adjustment
of the Exercise Price shall be made as a result of the actual issuance of
shares of Common Stock on exercise of such rights, options, or warrants or on
conversion or exchange of such convertible or exchangeable securities. On
the expiration or the termination of such rights, options, or warrants, or
the termination of such right to convert or exchange, the Exercise Price
shall be readjusted (but only with respect to Warrants exercised after such
expiration or termination) to such Exercise Price as would have obtained had
the adjustments made upon the issuance of such rights, options, warrants, or
convertible or exchangeable securities been made upon the basis of the
delivery of only the number of shares of Common Stock actually delivered upon
the exercise of such rights, options, or warrants or upon the conversion or
exchange of any such securities; and on any change of the number of shares of
Common stock deliverable upon the exercise of any such rights, options, or
warrants or conversion or exchange of such convertible or exchangeable
securities or any change in the consideration to be received by the Company
upon such exercise, conversion, or exchange, including, without limitation, a
change resulting from the antidilution provisions thereof, the Exercise
Price, as then in effect, shall forthwith be readjusted (but only with
respect to Warrants
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exercised after such change) to such Exercise Price as would have been obtained
had an adjustment been made upon the issuance of such rights, options, or
warrants not exercised prior to such change, or securities not converted or
exchanged prior to such change, on the basis of such change. In case the
Company shall issue shares of Common Stock or any such rights, options,
warrants, or convertible or exchangeable securities for a consideration
consisting, in whole or in part, of property other than cash or its equivalent,
then the "price per share" and the "consideration received by the Company" for
purposes of the first sentence of this Section 5(e) shall be as determined in
good faith by the board of directors of the Company, whose determination shall
be conclusive absent manifest error. Shares of Common Stock owned by or held
for the account of the Company or any majority-owned subsidiary shall not be
deemed outstanding for the purpose of any such computation.
(f) For the purpose of any computation under this Section 5, the
Current Market Price per share of Common Stock on any date shall be deemed to be
the average of the daily closing prices for the 30 consecutive trading days
immediately preceding the date in question. The closing price for each day
shall be the last reported sales price regular way or, in case no such reported
sale takes place on such day, the closing bid price regular way, in either case
on the principal national securities exchange (including, for purposes hereof,
the Nasdaq National Market) on which the Common Stock is listed or admitted to
trading or, if the Common Stock is not listed or admitted to trading on any
national securities exchange, the highest reported bid price for the Common
Stock as furnished by the National Association of Securities Dealers, Inc.
through Nasdaq or a similar organization if Nasdaq is no longer reporting such
information. If on any such date the Common Stock is not listed or admitted to
trading on any national securities exchange and is not quoted by Nasdaq or any
similar organization, the fair value of a share of Common Stock on such date, as
determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest error, shall be used;
provided, that the fair value of a share of Common Stock shall not be less than
the Exercise Price in effect on such date.
(g) No adjustment in the Exercise Price shall be required if
such adjustment is less than $.05; provided, however, that any adjustments which
by reason of this Section 5 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations under
this Section 5 shall be made to the nearest cent or to the nearest
one-thousandth of a share, as the case may be.
(h) In any case in which this Section 5 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer, until the occurrence of such
event, issuing to the Holder, if the Holder exercised this Warrant after such
record date, the shares of Common Stock, if any, issuable upon such exercise
over and above the shares of Common Stock, if any, issuable upon such exercise
on the basis of the Exercise Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to the Holder a due bill or other
appropriate instrument
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evidencing the Holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
(i) Upon each adjustment of the Exercise Price as a result of
the calculations made in Sections 5(b), 5(d), or 5(e) hereof, this Warrant shall
thereafter evidence the right to purchase, at the adjusted Exercise Price, that
number of shares (calculated to the nearest thousandth) obtained by dividing (A)
the product obtained by multiplying the number of shares purchasable upon
exercise of this Warrant prior to adjustment of the number of shares by the
Exercise Price in effect prior to adjustment of the Exercise Price by (B) the
Exercise Price in effect after such adjustment of the Exercise Price.
(j) Whenever there shall be an adjustment as provided in this
Section 5, the Company shall promptly cause written notice thereof to be sent by
registered mail, postage prepaid, to the Holder, at its address as it shall
appear in the Warrant Register, which notice shall be accompanied by an
officer's certificate setting forth the number of Warrant Shares purchasable
upon the exercise of this Warrant and the Exercise Price after such adjustment
and setting forth a brief statement of the facts requiring such adjustment and
the computation thereof, which officer's certificate shall be conclusive
evidence of the correctness of any such adjustment absent manifest error.
(k) The Company shall not be required to issue fractions of
shares of Common Stock or other capital stock of the Company upon the exercise
of this Warrant. If any fraction of a share would be issuable on the exercise
of this Warrant (or specified portions thereof), the Company shall purchase such
fraction for an amount in cash equal to the same fraction of the Current Market
Price of such share of Common Stock on the date of exercise of this Warrant.
6. (a) In case of any consolidation with or merger of the Company
with or into another corporation (other than a merger or consolidation in which
the Company is the surviving or continuing corporation), or in case of any sale,
lease, or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety, such
successor, leasing, or purchasing corporation, as the case may be, shall (i)
execute with the Holder an agreement providing that the Holder shall have the
right thereafter to receive upon exercise of this Warrant solely the kind and
amount of shares of stock and other securities, property, cash, or any
combination thereof receivable upon such consolidation, merger, sale, lease, or
conveyance by a holder of the number of shares of Common Stock for which this
Warrant might have been exercised immediately prior to such consolidation,
merger, sale, lease, or conveyance, and (ii) make effective provision in its
certificate of incorporation or otherwise, if necessary, to effect such
agreement. Such agreement shall provide for adjustments which shall be as
nearly equivalent as practicable to the adjustments in Section 5.
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(b) In case of any reclassification or change of the shares of
Common Stock issuable upon exercise of this Warrant (other than a change in par
value or from no par value to a specified par value, or as a result of a
subdivision or combination, but including any change in the shares into two or
more classes or series of shares), or in case of any consolidation or merger of
another corporation into the Company in which the Company is the continuing
corporation and in which there is a reclassification or change (including a
change to the right to receive cash or other property) of the shares of Common
Stock (other than a change in par value, or from no par value to a specified par
value, or as a result of a subdivision or combination, but including any change
in the shares into two or more classes or series of shares), the Holder shall
have the right thereafter to receive upon exercise of this Warrant solely the
kind and amount of shares of stock and other securities, property, cash, or any
combination thereof receivable upon such reclassification, change,
consolidation, or merger by a holder of the number of shares of Common Stock for
which this Warrant might have been exercised immediately prior to such
reclassification, change, consolidation, or merger. Thereafter, appropriate
provision shall be made for adjustments which shall be as nearly equivalent as
practicable to the adjustments in Section 5.
(c) The above provisions of this Section 6 shall similarly apply
to successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales, leases, or conveyances.
7. In case at any time the Company shall propose to:
(a) pay any dividend or make any distribution on shares of
Common Stock in shares of Common Stock or make any other distribution (other
than regularly scheduled cash dividends which are not in a greater amount per
share than the most recent such cash dividend) to all holders of Common Stock;
or
(b) issue any rights, warrants, or other securities to all
holders of Common Stock entitling them to purchase any additional shares of
Common Stock or any other rights, warrants, or other securities; or
(c) effect any reclassification or change of outstanding shares
of Common Stock, or any consolidation, merger, sale, lease, or conveyance of
property, described in Section 6; or
(d) effect any liquidation, dissolution, or winding-up of the
Company; or
(e) take any other action which would cause an adjustment to the
Exercise Price;
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then, and in any one or more of such cases, the Company shall give written
notice thereof, by registered mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the Warrant Register, mailed at least 15
days prior to (i) the date as of which the holders of record of shares of Common
Stock to be entitled to receive any such dividend, distribution, rights,
warrants, or other securities are to be determined, (ii) the date on which any
such reclassification, change of outstanding shares of Common Stock,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up is expected to become effective, and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange their shares for securities or other property, if any,
deliverable upon such reclassification, change of outstanding shares,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up, or (iii) the date of such action which would require
an adjustment to the Exercise Price.
8. The issuance of any shares or other securities upon the exercise
of this Warrant, and the delivery of certificates or other instruments
representing such shares or other securities, shall be made without charge to
the Holder for any tax or other charge in respect of such issuance. The Company
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of any certificate in a name
other than that of the Holder and the Company shall not be required to issue or
deliver any such certificate unless and until the person or persons requesting
the issue 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.
9. (a) If, at any time commencing 12 months after the consummation
of the initial public offering of the capital stock of the Company (or such
shorter period as may be determined by the managing or lead underwriter of such
initial public offering, in its sole discretion) and continuing for a period of
24 months, the Company shall file a registration statement (other than on Form
S-4, Form S-8, or any successor form) with the Securities and Exchange
Commission (the "Commission") while any Registrable Securities (as hereinafter
defined) are outstanding, the Company shall give all the then holders of any
Registrable Securities (the "Eligible Holders") at least 30 days prior written
notice of the filing of such registration statement. If requested by any
Eligible Holder in writing within 20 days after receipt of any such notice, the
Company shall, at the Company's sole expense (other than the fees and
disbursements of counsel for the Eligible Holders and the underwriting
discounts, if any, payable in respect of the Registrable Securities sold by any
Eligible Holder), register or qualify all or, at each Eligible Holder's option,
any portion of the Registrable Securities of any Eligible Holders who shall have
made such request, concurrently with the registration of such other securities,
all to the extent requisite to permit the public offering and sale of the
Registrable Securities through the facilities of all appropriate securities
exchanges and the over-the-counter market, and will use its best efforts through
its officers, directors, auditors, and counsel to cause such registration
statement to become effective as promptly as practicable. Notwithstanding the
foregoing, if the managing underwriter of any such offering shall advise the
Company in writing that, in its opinion, the distribution of all or a portion of
the Registrable Securities requested to
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be included in the registration concurrently with the securities being
registered by the Company would materially adversely affect the distribution
of such securities by the Company for its own account, then any Eligible
Holder who shall have requested registration of his or its Registrable
Securities, and all or a portion of whose Registrable Securities are not
included in such registration statement, shall delay the offering and the
sale of such Registrable Securities (or the portions thereof so designated by
such managing underwriter) for such period, not to exceed 180 days (the
"Delay Period"), as the managing underwriter shall request, provided that no
such delay shall be required as to any Registrable Securities if any
securities of the Company are included in such registration statement for the
account of any person other than the Company and any Eligible Holder unless
the securities included in such registration statement and eligible for sale
during the Delay Period for such other person shall have been reduced pro
rata to the reduction of the Registrable Securities which were requested to
be included and eligible for sale during the Delay Period in such
registration. As used herein, "Registrable Securities" shall mean the
Warrant Shares, if any, underlying the Warrants issued in connection with the
Offering (but excluding the shares underlying the warrant issued to the
Placement Agent in connection with the Offering), which have not been
previously sold pursuant to a registration statement or Rule 144 promulgated
under the Act.
(b) If, at any time commencing 12 months after the
consummation of the initial public offering of the capital stock of the
Company (or such shorter period as may be determined in the sole discretion
of the managing or lead underwriter of such initial public offering) and
continuing for a period of 24 months, the Company shall receive a written
request, from Eligible Holders who in the aggregate own (or who upon exercise
of all Warrants then outstanding would own) a majority of the total number of
shares of Common Stock then included (or upon such exercise would be
included) in the Registrable Securities ("Majority Holders") (provided, that
the Registrable Securities must include Warrant Shares or Warrants
exercisable for Warrant Shares which in the aggregate represent at least 10%
of the aggregate number of Warrant Shares underlying all Warrants initially
issued pursuant to the Offering), to register the sale of all or part of such
Registrable Securities, the Company shall, as promptly as practicable,
prepare and file with the Commission a registration statement sufficient to
permit the public offering and sale of the Registrable Securities through the
facilities of all appropriate securities exchanges and the over-the-counter
market, and will use its best efforts through its officers, directors,
auditors, and counsel to cause such registration statement to become
effective as promptly as practicable; provided, however, that the Company
shall only be obligated to file one such registration statement for which all
expenses incurred in connection with such registration (other than the fees
and disbursements of counsel for the Eligible Holders and underwriting
discounts, if any, payable in respect of the Registrable Securities sold by
the Eligible Holders) shall be borne by the Company and one additional such
registration statement for which all such expenses shall be paid by the
Eligible Holders. The Company shall not be obligated to effect any
registration of its securities pursuant to this Section 9(b) within six
months after the effective date of a previous registration statement prepared
and filed in accordance with Sections 9(a) (in which Registrable Securities
could have been included) or 9(b). Within ten business days after receiving
any request contemplated by this Section 9(b), the Company shall give written
notice to all the other Eligible Holders, advising each of them that the
Company is proceeding with such registration and offering to include therein
all or any portion of any such other Eligible Holder's Registrable
Securities,
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provided that the Company receives a written request to do so from such Eligible
Holder within 30 days after receipt by him or it of the Company's notice.
(c) In the event of a registration pursuant to the provisions of
this Section 9, the Company shall use its best efforts to cause the Registrable
Securities so registered to be registered or qualified for sale under the
securities or blue sky laws of such jurisdictions as the Holder or such holders
may reasonably request; provided, however, that the Company shall not by reason
of this Section 9(c) be required to qualify to do business in any state in which
it is not otherwise required to qualify to do business or to file a general
consent to service process.
(d) The Company shall keep effective any registration or
qualification contemplated by this Section 9 and shall from time to time amend
or supplement each applicable registration statement, preliminary prospectus,
final prospectus, application, document, and communication for such period of
time as shall be required to permit the Eligible Holders to complete the offer
and sale of the Registrable Securities covered thereby.
(e) In the event of a registration pursuant to the provisions of
this Section 9, the Company shall furnish to each Eligible Holder such number of
copies of the registration statement and of each amendment and supplement
thereto (in each case, including all exhibits), such reasonable number of copies
of each prospectus contained in such registration statement and each supplement
or amendment thereto (including each preliminary prospectus), all of which shall
conform to the requirements of the Act and the rules and regulations thereunder,
and such other documents, as any Eligible Holder may reasonably request to
facilitate the disposition of the Registrable Securities included in such
registration.
(f) In the event of a registration pursuant to the provisions
this Section 9, the Company shall furnish each Eligible Holder of any
Registrable Securities so registered with an opinion of its counsel (reasonably
acceptable to the Eligible Holders) to the effect that (i) the registration
statement has become effective under the Act and no order suspending the
effectiveness of the registration statement, preventing or suspending the use of
the registration statement, any preliminary prospectus, any final prospectus, or
any amendment or supplement thereto has been issued, nor to the best knowledge
of such counsel has the Commission or any securities or blue sky authority of
any jurisdiction instituted or threatened to institute any proceedings with
respect to such an order, (ii) each document, if any, incorporated by reference
in the registration statement and the prospectus included therein (except for
financial statements and related schedules, as to which such counsel need
express no opinion) complied as to form when filed with the Commission in all
material respects with the Securities Exchange Act of 1934 (the "Exchange Act"),
and the rules and regulations of the Commission thereunder, (iii) the
registration statement and the prospectus included therein and any supplements
or amendments thereto (except for financial statements and related schedules, as
to which such counsel need express no opinion) comply as to form in all material
respects with the Act and the rules and regulations of the Commission
thereunder, and (iv) such counsel believes that (except
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for financial statements and related schedules, as to which such counsel need
express no belief) such registration statement and the prospectus included
therein at the time such registration statement became effective did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading and the
prospectus, as amended or supplemented, if applicable, does not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Such opinion shall also state the
jurisdictions in which the Registrable Securities have been registered or
qualified for sale pursuant to the provisions of section 9(c). The Company
shall also furnish to each Eligible Holder a cold comfort letter from the
independent certified public accountants of the Company in customary form and
substance.
(g) In the event of a registration pursuant to the provision of
this Section 9, the Company shall enter into a cross-indemnity agreement and a
contribution agreement, each in customary form, with each underwriter, if any,
and, if requested, enter into an underwriting agreement containing conventional
representations, warranties, allocation of expenses, and customary closing
conditions, including, without limitation, opinions of counsel and accountants'
cold comfort letters, with any underwriter who acquires any Registrable
Securities.
(h) The Company agrees that, after the completion of such public
offering and until all the Registrable Securities have been sold under a
registration statement or pursuant to Rule 144 under the Act, it shall keep
current in filing all reports, statements and other materials required to be
filed with the Commission to permit holders of the Registrable Securities to
sell such securities under Rule 144.
10. (a) Subject to the conditions set forth below, the Company agrees
to indemnify and hold harmless each Eligible Holder, its officers, directors,
partners, employees, agents, and counsel, and each person, if any, who controls
any such person within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act, from and against any and all loss, liability, charge, claim,
damage, and expense whatsoever (which shall include, for all purposes of this
Section 10, without limitation, attorneys' fees and any and all expense
whatsoever incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), as and when incurred,
arising out of, based upon, or in connection with any untrue statement or
alleged untrue statement of a material fact contained (A) in any registration
statement, preliminary prospectus, or final prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto, relating to
the sale of any of the Registrable Securities, or (B) in any application or
other document or communication (in this Section 10 collectively called an
"application") executed by or on behalf of the Company or based upon written
information furnished by or on behalf of the Company filed in any jurisdiction
in order to register or qualify any of the Registrable Securities under the
securities
-14-
or blue sky laws thereof or filed with the Commission or any securities
exchange; or any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in reliance upon and
in conformity with written information furnished to the Company with respect
to such Eligible Holder by or on behalf of such person expressly for
inclusion in any registration statement, preliminary prospectus, or final
prospectus, or any amendment or supplement thereto, or in any application, as
the case may be, or (ii) any breach of any representation, warranty,
covenant, or agreement of the Company contained in any of the Notes. The
foregoing agreement to indemnify shall be in addition to any liability the
Company may otherwise have, including liabilities arising under any of the
Warrants.
If any action is brought against any Eligible Holder or any of its
officers, directors, partners, employees, agents, or counsel, or any controlling
persons of such person (an "indemnified party") in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
indemnified party or parties shall promptly notify the Company in writing of the
institution of such action (but the failure so to notify shall not relieve the
Company from any liability under this Section 10(a) unless the Company shall
have been materially prejudiced by such failure or relieve the Company from any
liability other than pursuant to this Section 10(a)) and the Company shall
promptly assume the defense of such action, including the employment of counsel
(reasonably satisfactory to such indemnified party or parties) and payment of
expenses. Such indemnified party or parties 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 such indemnified party or parties 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 reasonably satisfactory to such indemnified party or parties to
have charge of the defense of such action or such indemnified party or parties
shall have reasonably concluded that there may be one or more legal defenses
available to it or them or to other indemnified parties which are different from
or additional to those available to the Company, in any of which events such
fees and expenses shall be borne by the Company and the Company shall not have
the right to direct the defense of such action on behalf of the indemnified
party or parties. Anything in this Section 10 to the contrary notwithstanding,
the Company shall not be liable for any settlement of any such claim or action
effected without its written consent, which shall not be unreasonably withheld.
The Company agrees promptly to notify the Eligible Holders of the commencement
of any litigation or proceedings against the Company or any of its officers or
directors in connection with the sale of any Registrable Securities or any
preliminary prospectus, prospectus, registration statement, or amendment or
supplement thereto, or any application relating to any sale of any Registrable
Securities.
(b) The Holder agrees to indemnify and hold harmless the
Company, each director of the Company, each officer of the Company who shall
have signed any registration statement covering Registrable Securities held by
the Holder, each other person, if any, who controls the Company within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, and its
or their respective counsel, to the same extent as the foregoing
-15-
indemnity from the Company to the Eligible Holders in Section 10(a), but only
with respect to statements or omissions, if any, made in any registration
statement, preliminary prospectus, or final prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto, or in any
application, in reliance upon and in conformity with written information
furnished to the Company with respect to the Holder by or on behalf of the
Holder expressly for inclusion in any such registration statement, preliminary
prospectus, or final prospectus, or any amendment or supplement thereto, or in
any application, as the case may be. If any action shall be brought against the
Company or any other person so indemnified based on any such registration
statement, preliminary prospectus, or final prospectus, or any amendment or
supplement thereto, or in any application, and in respect of which indemnity may
be sought against the Holder pursuant to this Section 10(b), the Holder shall
have the rights and duties given to the Company, and the Company and each other
person so indemnified shall have the rights and duties given to the indemnified
parties, by the provisions of Section 10(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 10(a) or
10(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Warrant expressly provides for
indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Act, the Exchange Act or otherwise, then the
Company (including for this purpose any contribution made by or on behalf of any
director of the Company, any officer of the Company who signed any such
registration statement, any controlling person of the Company, and its or their
respective counsel), as one entity, and the Eligible Holders of the Registrable
Securities included in such registration in the aggregate (including for this
purpose any contribution by or on behalf of an indemnified party), as a second
entity, shall contribute to the losses, liabilities, claims, damages, and
expenses whatsoever to which any of them may be subject, on the basis of
relevant equitable considerations such as the relative fault of the Company and
such Eligible Holders in connection with the facts which resulted in such
losses, liabilities, claims, damages, and expenses. The relative fault, in the
case of an untrue statement, alleged untrue statement, omission, or alleged
omission, shall be determined by, among other things, whether such statement,
alleged statement, omission, or alleged omission relates to information supplied
by the Company or by such Eligible Holders, and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement, alleged statement, omission, or alleged omission. The Company and
the Holder agree that it would be unjust and inequitable if the respective
obligations of the Company and the Eligible Holders for contribution were
determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages, and expenses (even if the Eligible Holders and the
other indemnified parties were treated as one entity for such purpose) or by any
other method of allocation that does not reflect the equitable considerations
referred to in this Section 10(c). In no case shall any Eligible Holder be
responsible for a portion of the contribution obligation imposed on all Eligible
Holders in excess of its pro rata share based on the number of shares of Common
Stock owned (or which would be owned upon exercise of all Registrable
Securities) by it and included in such registration as compared to the number of
shares of Common Stock
-16-
owned (or which would be owned upon exercise of all Registrable Securities) by
all Eligible Holders and included in such registration. No person guilty of a
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent representation. For purposes of this Section 10(c), each person, if
any, who controls any Eligible Holder within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act and each officer, director, partner,
employee, agent, and counsel of each such Eligible Holder or control person
shall have the same rights to contribution as each Eligible Holder or control
person and each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, each officer of the
Company who shall have signed any such registration statement, each director of
the Company, and its or their respective counsel shall have the same rights to
contribution as the Company, subject in each case to the provisions of this
Section 10(c). Anything in this Section 10(c) to the contrary notwithstanding,
no party shall be liable for contribution with respect to the settlement of any
claim or action effected without its written consent. This Section 10(c) is
intended to supersede any right to contribution under the Act, the Exchange Act
or otherwise.
11. Unless registered pursuant to the provisions of Section 9 hereof,
the Warrant Shares issued upon exercise of this Warrant shall be subject to a
stop transfer order and the certificate or certificates evidencing such Warrant
Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), OR ANY STATE
SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN
MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED
UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH
SECURITIES, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO
THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED,
ASSIGNED OR TRANSFERRED IN THE MANNER CONTEMPLATED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE
SECURITIES LAWS."
12. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction, or mutilation of any Warrant (and upon surrender of any
Warrant if mutilated), the Company shall execute and deliver to the Holder
thereof a new Warrant of like date, tenor, and denomination.
13. The Holder of any Warrant shall not have solely on account of
such status, any rights of a stockholder of the Company, either at law or in
equity, or to any notice of
-17-
meetings of stockholders or of any other proceedings of the Company, except as
provided in this Warrant.
14. As a condition precedent to registering the shares underlying
the Warrants, a Holder shall be required to execute a lock-up agreement the
terms of which shall require the Holder to refrain from offering for sale,
selling, soliciting an offer to buy, contracting to sell, distributing,
granting any option for the sale of or otherwise transferring or disposing
of directly or indirectly, any shares of Common Stock underlying the Warrant
for a period of 12 months from the date of the Company's initial public
offering.
14a. This Warrant has been negotiated and consummated in the State of
New York and shall be construed in accordance with the laws of the State of New
York applicable to contracts made and performed within such State, without
regard to principles governing conflicts of law.
-18-
15. The Company irrevocably consents to the jurisdiction of the
courts of the State of New York and of any federal court located in such
State in connection with any action or proceeding arising out of or relating
to this Warrant, any document or instrument delivered pursuant to, in
connection with or simultaneously with this Warrant, or a breach of this
Warrant or any such document or instrument. In any such action or proceeding,
the Company waives personal service of any summons, complaint or other
process and agrees that service thereof may be made in accordance with
Section E(3) of the Subscription Agreement. Within 30 days after such
service, or such other time as may be mutually agreed upon in writing by the
attorneys for the parties to such action or proceeding, the Company shall
appear to answer such summons, complaint or other process. Should the
Company so served fail to appear or answer within such 30-day period or such
extended period, as the case may be, the Company shall be deemed in default
and judgment may be entered against the Company for the amount as demanded in
any summons, complaint or other process so served.
Dated: , 1996
CELERITY SYSTEMS, INC.
By:
-------------------------------
Name:
Title:
[Seal]
- ------------------------------
Secretary
-19-
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
attached Warrant.)
FOR VALUE RECEIVED, _____________________ hereby sells, assigns, and
transfers unto _________________ a Warrant to purchase __________ shares of
Common Stock, par value $.001 per share, of Celerity Systems, Inc. (the
"Company"), together with all right, title, and interest therein, and does
hereby irrevocably constitute and appoint ______________________________
attorney to transfer such Warrant on the books of the Company, with full power
of substitution.
Dated: _________________
Signature________________________
NOTICE
The signature on the foregoing Assignment must correspond to the name
as written upon the face of this Warrant in every particular, without alteration
or enlargement or any change whatsoever.
-20-
To: CELERITY SYSTEMS, INC.
ELECTION TO EXERCISE
The undersigned hereby exercises his or its rights to purchase _______
Warrant Shares covered by the within Warrant and tenders payment herewith in the
amount of $________ in accordance with the terms thereof, and requests that
certificates for such securities be issued in the name of, and delivered to:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by the within Warrant be registered in the name of, and delivered
to, the undersigned at the address stated below.
Dated:_________________ Name_______________________
(Print)
Address:___________________________________________________________________
___________________________
(Signature)
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