Exhibit 4.1
THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, PURSUANT TO A REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION (REGISTRATION NO. 333-44747).
HOWEVER, NEITHER THE OPTIONS NOR SUCH SECURITIES CAN BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) A POST-EFFECTIVE AMENDMENT TO SUCH REGISTRATION STATEMENT, (ii)
A SEPARATE REGISTRATION STATEMENT UNDER SUCH ACT, OR (iii) AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT.
THE TRANSFER OF THIS OPTION IS
RESTRICTED AS DESCRIBED HEREIN.
ROSEDALE DECORATIVE PRODUCTS LTD.
UNDERWRITERS' PURCHASE OPTION
100,000 Shares of Common Stock
and 100,000 Underwriters' Common Stock Purchase Warrants
THIS CERTIFIES that, for receipt in hand of $100.00 and other value
received, J.P. Turner & Company, L.L.C., 3340 Peachtree Road, N.E., Suite
450, Atlanta, Georgia 30326 (hereinafter referred to as the "Holder" or
"Underwriter") is entitled to subscribe for and purchase from ROSEDALE
DECORATIVE PRODUCTS LTD., a corporation organized under the laws of the
Province of Ontario, Canada (the "Company"), upon the terms and conditions
set forth herein, at any time or from time to time after ____________, 1999
and before 5:00 P.M. on ______________, 2003, New York time (the "Exercise
Period"), 100,000 shares of the Company's Common Stock, no par value per
share (the "Shares") at a price of $_____ per share (the "Exercise Price per
Share"), and an Underwriters' Common Stock Purchase Warrant or Warrants
("Underwriters' Warrants") for the purchase of an additional 100,000 shares
of the Company's Common Stock (the "Warrant Shares") at a price of $_______
per Underwriters' Warrant. This Option may not be sold, transferred, assigned
or hypothecated, until _____________, 1999 except that it may be transferred
in whole or in part, to (i) either party who is a "Holder" or one or more
officers or partners of the Holder (or the officers or partners of any such
person); (ii) a successor to the Holder, or the officers or partners of such
successor; (iii) a purchaser of substantially all of the assets of the
Holder; or (iv) by operation of law. The term "Holder" as used herein shall
include any transferee to whom this Option has been transferred in accordance
with the above. As used herein the term "Option" shall mean and include this
Underwriters' Purchase Option and any option or options of like form and
tenor hereafter issued as a consequence of the exercise or transfer of this
Option in whole or part.
Each Underwriters' Warrant shall entitle the holder thereof to purchase
Shares at $_____ per share. Each Underwriters' Warrant shall be in
the form attached hereto as "Exhibit A" and shall be identical in all material
respects to the warrants (the "Public Warrants"), issued pursuant to the Warrant
Agreement, dated ___________, 1998 (the "Warrant Agreement"), between the
Company and Continental Stock Transfer & Trust Company, as Warrant Agent.
The Underwriters' Warrants shall be subject to redemption by the Company
under the same terms and conditions as the Public Warrants pursuant to the
Warrant Agreement.
1. Term of Exercise.
(a) This Option may be exercised during the Exercise Period as
to the whole or any lesser number of Shares and Underwriters' Warrants, by the
surrender of an Underwriters' Option Certificate for this Option (with the
election at the end thereof duly executed) to the Company at its offices at 731
Millway Avenue, Concord, Ontario, Canada L4K 3S8 or 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 (per Share and per Warrant, respectively) multiplied by the
number of Shares and Underwriters' Warrants for which this Option is being
exercised.
(b) For purposes of this Option, the term "Current Market
Price" at any date shall be deemed to be: (i) the average of the daily closing
prices of the Common Stock or the Public Warrants, as the case may be, for the
20 consecutive trading days immediately preceding such date in reported sales
price, or (ii) in case no such reported sale takes place on such date, the last
sales price regular way in either case as reported on the principal national
securities exchange on which the Common Stock or the Public Warrants, as the
case may be, is listed or admitted to trading, or (iii) if the Common Stock or
the Public Warrants, as the case may be, is not listed or admitted to trading on
any national securities exchange, the average of the closing bid and asked
prices regular way for the Common Stock or the Public Warrants, as the case may
be, on the Nasdaq National Market System or Nasdaq SmallCap Market of the Nasdaq
Stock Market, Inc. (together referred to as "Nasdaq") or (iv) if the Common
Stock or the Public Warrants, as the case may be, is not listed or admitted for
trading on any national securities exchange and is not reported on NASDAQ or any
similar organization, the average of the closing bid and asked prices in the
over-the-counter market as furnished by the National Quotation Bureau, Inc. or
if no such quotation is available, the fair market value as determined by the
Board of Directors in good faith.
2. Delivery of Certificates to Registered Holder. Upon each exercise of
this Option, the Holder shall be deemed to be the holder of record of the Shares
and Underwriters' Warrants issuable
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upon such exercise notwithstanding that the transfer books of the Company shall
then be closed or certificates representing such Shares or Underwriters'
Warrants shall not then have been actually delivered to the Holder. As soon as
practicable after each such exercise of this Option, the Company shall issue and
deliver to the Holder a certificate or certificates for the Shares and a
certificate or certificates for the Underwriters' Warrants registered in the
name of the Holder or its designee. If this option should be exercised in part
only, the Company shall, upon surrender of an Underwriters' Option Certificate
for this Option for cancellation, execute and deliver a new Underwriters' Option
Certificate evidencing the right of the Holder to purchase the balance of the
Shares and Underwriters' Warrant (or portions thereof) subject to purchase
hereunder.
3. Option Register. Any Option issued upon the transfer or exercise in
part of this Option shall be numbered and shall be registered in an Option
Register as they are issued. The Company shall be entitled to treat the
registered holder of any Option on the Option 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 Option on the part of any other person, and
shall not be liable for any registration or transfer of Options 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 participation
therein amounts to bad faith. The Options shall be transferable only on the
books of the Company upon delivery of an Underwriters' Option Certificate duly
endorsed by the Holder or by its duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment or authority to
transfer in all cases of transfer by an attorney, executor, administrator,
guardian, or other legal representative, duly authenticated evidence his or its
authority shall be produced. Upon any registration of transfer, the Company
shall deliver an Underwriters' Option Certificate to the Holder thereof, for
another Option, or other options of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of Shares (or
portions thereof) and Underwriters' Warrants upon surrender to the Company or
its duly authorized agent. Notwithstanding the foregoing, the Company shall have
no obligation to cause this Option 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, as amended (the "Act"), and the
rules and regulations thereunder.
4. Reservation of Common Stock. The Company shall at all times reserve
and keep available out of its authorized and unissued Common Stock, solely for
the purpose of providing for the exercise of this Option and the Underwriters'
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 Option and the Underwriters' Warrants when paid
for in accordance with the respective terms thereof, shall be validly issued,
fully paid and nonassessable by the Company.
5. Anti-Dilution; Adjustments to Exercise Price.
(a) Upon the occurrence of any event (an "Event") as a result
of which an adjustment is made to the exercise price (the "Public Exercise
Price") of any of the Public Warrants,
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the number of Shares issuable upon exercise of this Option shall be adjusted to
equal thereafter the number of Shares issuable prior to such Event multiplied by
a fraction, the numerator of which shall be the Public Exercise Price in effect
prior to such Event and the denominator of which shall be the Public Exercise
Price subsequent to such Event.
(b) Upon each adjustment of the number of Shares issuable upon
exercise of this Option pursuant to subparagraph 5(a) above, this Option shall
thereupon evidence the right to purchase such number of Shares at the Exercise
Price per Share obtained by (1) multiplying the Exercise Price per share in
effect immediately prior to the triggering Event by the number of shares then
purchasable upon exercise of this Option and (2) dividing the product so
obtained by the number of Shares purchasable upon exercise of this Warrant
subsequent to the triggering Event.
(c) Notwithstanding any other provision of this Option, any
adjustment of the exercise price, and/or the number of Warrant Shares
purchasable upon the exercise of the Underwriters' Warrants shall be determined
solely by the antidilution and other adjustment provisions contained in the
Warrant Agreement (which provisions are incorporated herein by reference) as if
such Underwriters' Warrants were and had been outstanding on and from
_____________, 1998.
(d) Whenever there shall be an adjustment as provided in this
paragraph 5, the Company shall promptly cause written notice thereof to be sent
by registered mail, postage prepaid, to the Holder, at its principal office,
which notice shall be accompanied by an officer's certificate setting forth the
number and Exercise Price per Share and per Warrant of the Shares and
Underwriters' Warrants issuable upon exercise of this Option and the exercise
price per Warrant Share and the number of Warrant Shares purchasable upon the
exercise of the Underwriters' Warrants after such adjustment and setting forth a
brief statement of the facts requiring such adjustment and the computation
thereof.
(e) All calculations under this paragraph 5 shall be made to
the nearest cent or to the nearest one-thousandth of a Share or Warrant, as the
case may be.
(f) 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 Options. If any fraction of a share would be issuable on the exercise of any
Option (or specified portions thereof), the Company, in its sole discretion,
shall purchase such fraction for an amount in cash equal to the same fraction of
the Current Market Price of such share on the date of exercise of the Option.
6. Reorganization/Reclassification.
(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 of the Company as an
entirety or substantially as an entirety, such successor, leasing or
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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 Option 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 and the Underwriters' Warrants for which this Option
might have been exercised immediately prior to such consolidation, merger, sale,
lease or conveyance, and (ii) make effective provision in order to effect such
agreement. Such agreement shall provide for adjustment which shall be as nearly
equivalent as practicable to the adjustments for which paragraph 5 provides.
(b) In case of any reclassification or change of the shares of
Common Stock issuable upon exercise of this Option (other than a change in par
value or from par value to no 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 par value to no 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 Option 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 and the Underwriters' Warrants for which this
Option 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 for which paragraph 5 provides.
(c) The above provisions of this paragraph 6 shall similarly
apply to successive reclassifications and changes of shares of Common Stock and
to successive consolidations, mergers, sales, leases or conveyances similar to
those described in subparagraphs 6(a) and (b).
7. Notice of Dividends/Distributions. If, in case at any time the
Company shall propose:
(a) to pay any dividend or make any distribution of 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) to issue any rights, warrants or other securities to all
holders of Common Stock or Public Warrants entitling them to purchase any
additional shares of Common Stock or any other rights, warrants or other
securities; or
(c) to effect any reclassification or change or outstanding
shares of Common Stock, or any consolidation, merger, sale, lease or conveyance
of property, described in paragraph 6; or
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(d) to effect any liquidation, dissolution, or winding-up
of the Company; or
(e) to take any other action which would cause an adjustment
to the exercise price of the Public Warrants; then, on each such occasion, 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 Option 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
or Public Warrants, as the case may be, shall be entitled to exchange their
shares or warrants 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 Public
Exercise Price.
8. Payment of Taxes. The issuance of any Shares or Underwriters'
Warrants or other securities upon the exercise of this Option, and the delivery
of certificates or other instruments representing such shares of Common Stock,
Warrants 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 the Company the amount of such tax or shall have established to
the satisfaction of the Company that such tax has been paid or is not due and
payable.
9. Registration Rights. (a) If, at any time after _____________, 1999,
and before _____________, 2003, the Company shall file a registration statement
(other than on Form S-8, or any successor form) with the Securities and Exchange
Commission (the "Commission") while Shares or Underwriters' Warrants are
available for purchase upon exercise of this Option or while any Shares,
Underwriters' Warrants or Warrant Shares (which have not been so registered) are
outstanding, the Company shall give the Holder and all the then registered
holders of such Shares, Underwriters' Warrants or Warrant Shares at least 30
days prior written notice of the filing of such registration statement. If
requested by the Holder or by any such 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 Holder or such holder
and the underwriting discounts and commissions, if any, payable in respect of
the Warrants, Shares, Underwriters' Warrants and Warrant Shares sold by the
Holder or any such holder), use its best efforts to register or qualify the
Shares, Underwriters' Warrants and Warrant Shares (collectively, the
"Underwriters' Securities") of the Holder or any such holders who shall have
made such request concurrently with the registration covering such other
securities, all to the extent requisite to permit the public offering and sale
of the Underwriters' 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
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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 Underwriters' Securities requested to 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, the Underwriters' Securities
shall not be included in such registration statement or such registration
statement shall include only so many of the Underwriters' Securities as will not
have such an effect, provided that if any securities of the Company are included
in such registration statement for the account of any person other than the
Company and the Holder or any such holder, the securities included in such
registration statement for such other person shall have been reduced pro rata to
the reduction of the Underwriters' Securities which were requested to be
included in such registration.
(b) If at any time after ____________, 1999 and before
____________, 2003, the Company shall receive a written request from holders of
Underwriters' Securities who, in the aggregate, own (or upon exercise of the
Option and Underwriters' Warrants, will own) a majority of the total number of
shares of Common Stock issued or issuable upon exercise of the Option and the
Underwriters' Warrants, 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 Underwriters' 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
Holder or such holders and underwriting discounts and commissions, if any,
payable in respect of the Underwriters' Securities sold by the Holder or any
such holder) shall be borne by the Company and one additional such registration
statement for which all such expenses shall be paid by the Holder and such
holders.
(c) In the event of a registration pursuant to the provisions
of this paragraph 9, the Company shall use its best efforts to cause the
Underwriters' 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 be required to (i) qualify to do business in any state by reason of this
paragraph 9(c) in which it is not otherwise required to qualify to do business,
(ii) or register or qualify in any state which will impose material burdens on
the Company or its principals.
(d) The Company shall keep effective any registration or
qualification contemplated by this paragraph 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 Holder or such holders to complete the
offer and sale of the Underwriters' Securities covered thereby. The Company
shall in no event be required to keep any such registration or qualification
effect for a period in excess of nine months from the date on which the Holder
and such holders are first free to sell such
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Underwriters' Securities; provided, however, that if the Company is required to
keep any such registration or qualification in effect with respect to securities
other than the Underwriters' Securities beyond such period, the Company shall
keep such registration or qualification in effect as it relates to the
Underwriters' Securities for so long as such registration or qualification
remains or is required to remain in effect in respect of such other securities.
(e) In the event of a registration pursuant to the provisions
of this paragraph 9, the Company shall furnish to each of the five largest
holders of any Underwriters' Securities included therein such 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 the Holder or such holders
may reasonably request in order to facilitate the disposition of the
Underwriters' Securities included in such registration.
(f) In the event of a registration pursuant to the provisions
this paragraph 9, the Company shall furnish to each holder of any Underwriters'
Securities so registered with an opinion of its counsel (reasonably acceptable
to the Holder) 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 has the Commission or any state
securities authority instituted or threatened to institute any proceedings with
respect to such an order, (ii) the registration statement and each prospectus
forming a part thereof (including each preliminary prospectus), and any
amendment or supplement thereto, materially complies as to form with the Act and
the rules and regulations thereunder (except as to financial statements,
including schedules, and other accounting and financial data, as to which
counsel need express no opinion), and (iii) such counsel has no knowledge or
reason to know of any material misstatement or omission in such registration
statement or any prospectus, as amended or supplemented.
(g) The Company agrees that until all the Underwriters'
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
Underwriters' Securities to sell such securities under Rule 144.
10. Indemnification.
(a) Subject to the conditions set forth below, the Company
agrees to indemnify and hold harmless the Holder, any holder of any of the
Underwriters' Securities, their 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 Securities Exchange Act
of 1934, as amended (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 paragraph 10,
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but not be limited to, reasonable attorneys' fees and any and all expense
whatsoever reasonably incurred, 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 (i) 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, or (B) in any application or other
document or communication (in this paragraph 10 collectively called an
"application") executed by or on behalf of the Company filed in any jurisdiction
in order to register or qualify any of the Underwriters' Securities under the
securities 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
the Holder or any holder of any of the Underwriters' Securities by or on behalf
of such Holder or Holders, or such other holder, exclusively for inclusion in
any such 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 to
indemnify, which shall be in addition to any liability the Company may otherwise
have, including liabilities arising under this Option.
If any action is brought against the Holder or any holder of
any of the Underwriters' Securities 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
it may have other than pursuant to this paragraph 10(a) except to the extent
that it has been harmed in any material respect by such failure) 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 promptly 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 in addition to those available to the Company, if any, in
which events the reasonable fees and expenses of such counsel 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
paragraph 10 (a) to the contrary notwithstanding, the Company shall not be
liable for any settlement of any such claim or action effected without its
written consent.
(b) The Holder and any other holder of Underwriters'
Securities agree to indemnify and hold harmless the Company, each director of
the Company, each officer of the
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Company who shall have signed any registration statement covering Underwriters'
Securities held by the Holder and such other holder and 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, to the same extent as the foregoing indemnity
from the Company to the Holder and such other holder in paragraph 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 or such other holder by or
on behalf of the Holder or such other 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 paragraph 10(b), the Holder and such other 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 paragraph 10(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to paragraph 10(a)
or 10(b) (subject to the limitations thereof) but is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced 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 and any controlling person of the Company), as one
entity, and the Holder and any holder of any of the Underwriters' 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 the Holder or any
such holder 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, by
the Holder or by any holder of Underwriters' Securities included in such
registration, 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
Holder or any such other holder of the Underwriters' Securities for contribution
were determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages and expenses (even if the Holder 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 paragraph 10(c). No person guilty of a fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled
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to contribution from any person who is not guilty of such fraudulent
misrepresentation. For purposes of this paragraph 10(c), each person, if any,
who controls the Holder or any holder of any of the Underwriters' Securities
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
person, shall have the same rights to contribution as such 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 and each officer, director, partner,
employee, agent and counsel of each such person, shall have the same rights to
contribution as such 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, and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the provisions of this
paragraph 10(c). Anything in this paragraph 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
paragraph 10(c) is intended to supersede any right to contribution under the
Act, the Exchange Act or otherwise.
(d) Th provisions of this paragraph 10 shall survive
regardless of the expiration, exercise or surrender of this Option.
11. Legend. The securities issued upon exercise of this Option shall be
subject to a stop transfer order and, when Company's counsel deem appropriate,
the certificate or certificates evidencing any such securities shall bear the
following legend:
"THE SHARES [OR OTHER SECURITIES] REPRESENTED BY THIS
CERTIFICATE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, PURSUANT TO A REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. HOWEVER, SUCH
SHARES [OR OTHER SECURITIES] CANNOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) A POST-EFFECTIVE AMENDMENT TO SUCH
REGISTRATION STATEMENT, (ii) A SEPARATE REGISTRATION STATEMENT
UNDER SUCH ACT, OR (iii) AN EXEMPTION FROM REGISTRATION UNDER
SUCH ACT."
12. Lost Certificates. Upon receipt of evidence satisfactory to the
Company of the loss, theft, destruction or mutilation of any Option (and upon
surrender of any Option if mutilated), and upon reimbursement of the Company's
reasonable incidental expenses, the Company shall execute and deliver to the
Holder thereof a new Option of like date, tenor and denomination.
13. No Rights as Shareholder. No Holder of any Option shall have,
solely on account of such status, any rights of a shareholder of the Company,
either at law or in equity, or to any notice
11
of meetings of stockholders or of any other proceedings of the Company, except
as provided in this Option.
14. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to the registered holder of this Option, to the
address of such holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in
Paragraph l(a) of this Option; or
(c) if to the Holder, to the address set forth on the first
page of this Option.
15. Governing Law. This Option shall be construed in accordance with
the laws of the State of Georgia, without giving effect to conflict of laws.
Dated: , 1998
----------------
ROSEDALE DECORATIVE PRODUCTS LTD.
By:
-----------------------------------
Name:
Title:
[Seal]
- ------------------------------
Secretary
12
THESE SECURITIES MAY NOT BE PUBLICLY OFFERED OR SOLD UNLESS AT THE TIME OF SUCH
OFFER OR SALE, THE PERSON MAKING SUCH OFFER OR SALE DELIVERS A PROSPECTUS
MEETING THE REQUIREMENTS OF SECTION 10 OF THE SECURITIES ACT OF 1933, AS
AMENDED, FORMING A PART OF A REGISTRATION STATEMENT, OR POST-EFFECTIVE AMENDMENT
THERETO, WHICH IS EFFECTIVE UNDER SAID ACT, OR UNLESS IN THE OPINION OF COUNSEL
TO THE CORPORATION, SUCH OFFER AND SALE IS EXEMPT FROM THE APPLICABLE PROVISIONS
OF SECTION 5 OF SAID ACT.
UNDERWRITERS' COMMON STOCK PURCHASE WARRANT
For the Purchase of Shares of Common Stock, no par value,
of
ROSEDALE DECORATIVE PRODUCTS LTD.
Incorporated Under the Laws of the
Province of Ontario, Canada
Void After 5 P.M. New York, New York, time
on ______________, 2003
No. 001 Warrant to Purchase 100,000 Shares
THIS IS TO CERTIFY, that, for value received, J. P. Turner & Company,
L.L.C., a limited liability Georgia corporation (the "Underwriter"), or
registered assigns, is entitled, subject to the terms and conditions hereinafter
set forth, on or after ___________, 1999, and at any time prior to 5:00 P.M.,
New York, New York, time on _____________, 2003, but not thereafter, to purchase
the number of shares set forth above (the "Shares") of common stock, no par
value (the "Common Stock") of ROSEDALE DECORATIVE PRODUCTS, LTD., a corporation
organized under the laws of the Province of Ontario, Canada (the "Corporation"),
from the Corporation upon payment to the Corporation of $______ per share (the
"Purchase Price"), if and to the extent this Warrant is exercised, in whole or
in part, during the period this Warrant remains in force, subject in all cases
to adjustment as provided in Article II hereof, and to receive certificates
representing the Common Stock so purchased, upon presentation and surrender to
the Corporation of this Warrant, with the form of subscription attached hereto
duly executed, and accompanied by payment of the Purchase Price of each share of
Common Stock purchased as provided herein.
ARTICLE I -- TERMS OF THE WARRANT
Section 1.01 Subject to the provisions of Sections 1.05 and 3.01
hereof, this Warrant may be exercised at any time and from time to time after
9:00 A.M., New York, New York, time, on ____________, 1999 (the "Exercise
Commencement Date"), but no later than 5:00 P.M., New York, New York, time on
___________, 2003 (the "Expiration Time"). If __________, 2003 is a day on which
banking institutions are authorized by law to close, then the date on which this
Warrant shall expire shall be the next succeeding day which shall not be such a
day. If this Warrant is not exercised on or before the Expiration Time it shall
become void, and all rights hereunder shall thereupon cease.
13
Section 1.02 (a) The holder of this Warrant (the "Holder") may
exercise this Warrant, in whole or in part, upon surrender of this Warrant
with the form of subscription attached hereto duly executed, to the
Corporation at its corporate office located at 731 Millway Avenue, Concord,
Ontario, Canada L4K3S8, together with the full Purchase Price for each share
of Common Stock to be purchased in lawful money of the United States, or by
check, bank draft or postal or express money order payable in United States
dollars to the order of the Corporation, and upon compliance with and subject
to the conditions set forth herein.
(b) Upon receipt of this Warrant with the form of
subscription duly executed and accompanied by payment of the aggregate Purchase
Price for the Shares for which this Warrant is then being exercised, together
with all taxes applicable upon such exercise, the Corporation shall cause to be
issued certificates for the total number of whole shares of Common Stock for
which this Warrant is being exercised in such denominations as are required for
delivery to the Holder, and the Corporation shall thereupon deliver such
certificates to the Holder or its nominee.
(c) In case the Holder shall exercise this Warrant with
respect to less than all of the shares of Common Stock that may be purchased
under this Warrant, the Corporation shall execute a new Warrant for the balance
of the shares of Common Stock that may be purchased upon exercise of this
Warrant and deliver such new Warrant to the Holder.
(d) The Corporation covenants and agrees that it will pay
when due and payable any and all taxes that may be payable in respect of the
issue of this Warrant, or the issue of any shares of Common Stock, upon the
exercise of this Warrant. The Corporation shall not, however, be required to pay
any tax that may be payable in respect of any transfer involved in the issuance
or delivery of this Warrant or of the shares of Common Stock, in a name other
than that of the Holder at the time of surrender, and until the payment of such
tax the Corporation shall not be required to issue such shares of Common Stock.
Section 1.03 This Warrant may be split-up, combined or exchanged for
another Warrant or Warrants of like tenor to purchase a like aggregate number of
shares. If the Holder desires to split-up, combine, or exchange this Warrant, he
shall make such request in writing delivered to the Corporation at its corporate
office and shall surrender this Warrant and any other Warrants to be so
split-up, combined or exchanged at such office. Upon any such surrender for a
split-up, combination or exchange, the Corporation shall execute and deliver to
the person entitled thereto a Warrant or Warrants, as the case may be, as so
requested. The Corporation shall not be required to effect any split-up,
combination or exchange that will result in the issuance of a Warrant entitling
the Holder to purchase upon exercise a fraction of the shares of Common Stock.
The Corporation may require the holder to pay a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any split-up,
combination or exchange of Warrants.
Section 1.04 Prior to due presentment for registration or transfer of
this Warrant, the Corporation may deem and treat the Holder, as registered on
the books of the Corporation maintained for that purpose, as the absolute owner
of this Warrant (notwithstanding any endorsement or notation of ownership or
other writing hereon) for the purpose of any exercise hereof and for all other
purposes and the Corporation shall not be affected by any notice to the
contrary.
14
Section 1.05 Prior to _________, 1999, this Warrant may not be sold,
hypothecated, exercised, assigned, or transferred, except to any member of the
National Association of Securities Dealers, Inc. participating in the offering
contemplated in Section 3.01 hereof and to individuals who are the bona fide
officers or partners of the Underwriter or such members, or any successor to
their respective businesses or pursuant to the laws of descent and distribution,
and thereafter and until its expiration shall be assignable and transferable in
accordance with and subject to the provisions of the Securities Act of 1933, as
amended (the "Act"), if this Warrant is exercised immediately upon assignment or
transfer. If this Warrant is not exercised immediately upon assignment or
transfer, this Warrant shall lapse.
Section 1.06 Any assignment permitted hereunder shall be made by
surrender of this Warrant to the Corporation at its principal office with the
form of assignment attached hereto duly executed and funds sufficient to pay any
transfer tax. In such event, the Corporation shall, without charge, execute and
deliver a new Warrant in the name of the assignee named in such instrument of
assignment and this Warrant shall promptly be canceled. This Warrant may be
divided or combined with other Warrants that carry the same rights upon
presentation thereof at the corporate office of the Corporation together with a
written notice signed by the Holder, specifying the names and denominations in
which such new Warrants are to be issued.
Section 1.07 Nothing contained in this Warrant shall be construed as
conferring upon the Holder the right to vote or to consent or to receive notice
as a stockholder in respect of any meetings of stockholders for the election of
directors or any other matter, or as having any rights whatsoever as a
stockholder of the Corporation. If, however, at any time prior to the expiration
of this Warrant and prior to its exercise, any of the following shall occur:
(i) the Corporation shall declare any dividend payable in
stock to the holders of its Common Stock or make any other distribution in
property other than cash to the holders of its Common Stock; or
(ii) the Corporation shall offer to the holders of its Common
Stock rights to subscribe for or purchase any shares of any class of stock or
any other purchase any shares of any class of stock or any other rights or
options or securities exchangeable for or convertible into shares of any class
of stock; or
(iii) the Corporation shall effect any reclassification of its
Common Stock (other than a reclassification involving merely the subdivision or
combination of outstanding shares of Common Stock) or any capital
reorganization, or any consolidation or merger (other than a merger in which no
distribution of securities or other property is made to holders of Common
Stock), or any sale, transfer or other disposition of its property, assets and
business substantially as an entirety, or the liquidation, dissolution or
winding up of the Corporation; or
(iv) except as set forth in the Corporation's Final Prospectus
dated ____________, 1998, the Corporation shall issue any shares of Common Stock
in exchange for shares of preferred stock or indebtedness of the Corporation,
other than upon conversion of such shares of preferred stock or indebtedness;
then, in each such case, the Corporation shall cause notice of such proposed
action to be mailed to the Holder. Such notice shall specify (i) the date on
which the books of the Corporation
15
shall close, or a record be taken, for determining holders of Common Stock
entitled to receive such stock dividend or other distribution or such rights or
options, or the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, other disposition, liquidation,
dissolution, winding up or exchange shall take place or commence, as the case
may be, (ii) the date as of which it is expected that holders of record of
Common Stock shall be entitled to receive securities or other property
deliverable upon such action, if any such date has been fixed (on such date in
the event of a voluntary or involuntary liquidation, dissolution or winding up
of the Corporation, the right to exercise this Warrant shall terminate), and
(iii) such facts as shall indicate the effect of such action (to the extent such
effect may be known at the date of such notice) on the Purchase Price and the
kind and amount of the Common Stock and other securities and property
deliverable upon exercise of this Warrant. Such notice shall be mailed in the
case of any action covered by Subsection 1.07(a) and 1.07(b) above, at least ten
(10) days prior to the record date of determining holders of the Common Stock
for purposes of receiving such payment or offer, and in the case of any action
covered by Subsection 1.07(c) or 1.07(d) above, at least ten (10) days prior to
the earlier of the date upon which such action is to take place or any record
date to determine holders of Common Stock entitled to receive such securities or
other property.
Without limiting the obligation of the Corporation to
provide notice to the Holder of actions hereunder, it is agreed that failure of
the Corporation to give notice shall not invalidate such action of the
Corporation.
Section 1.08 If this Warrant is lost, stolen, mutilated or destroyed,
the Corporation shall, on such reasonable terms as to indemnity or otherwise as
it may impose (which shall, in the case of a mutilated Warrant, include the
surrender thereof), issue a new Warrant of like denomination and tenor as, and
in substitution for, this Warrant, which shall thereupon become void. Any such
new Warrant shall constitute an independent contractual obligation of the
Corporation, whether or not the Warrant so lost, stolen, destroyed or mutilated
shall at any time be enforceable by anyone.
Section 1.09 (a) The Corporation covenants and agrees that at all
times it shall reserve and kept available for the exercise of this Warrant
such number of authorized shares of Common Stock as are sufficient to permit
the exercise in full of this Warrant.
(b) Prior to this issuance of any shares of Common Stock
upon exercise of this Warrant, the Corporation shall secure the registration of
such shares and listing of such securities upon any securities exchange
including NASDAQ upon which the shares of the Corporation's Common Stock may at
the time be listed for trading, if any.
(c) The Corporation covenants that all shares of Common
Stock, when issued upon the exercise of this Warrant, will be validly issued,
fully paid, nonassessable and free of preemptive rights.
16
ARTICLE II -- ADJUSTMENT OF PURCHASE PRICE
AND NUMBER OF SHARES OF COMMON STOCK
PURCHASABLE UPON EXERCISE
Section 2.01 Subject to the provisions of this Article II, the
Purchase Price in effect from time to time as it relates to the shares of
Common Stock shall be subject to adjustment as follows:
(a) In the case the Corporation shall (i) declare a
dividend or make a distribution on the outstanding shares of its Common Stock in
shares of its Common Stock, (ii) subdivide the outstanding shares of its Common
Stock into a greater number of shares, (iii) combine the outstanding shares of
its Common Stock into a smaller number of shares, (iv) issue any shares of its
Common Stock shares, except as contemplated by the Final Prospectus dated
__________, 1998, (v) issue any shares of its Common Stock by reclassification
of the Common Stock, then in each case the Purchase Price in effect immediately
after the record date for such dividend or distribution or the effective date of
such subdivision, combination or reclassification shall be adjusted so that it
shall equal the price determined by multiplying the Purchase Price in effect
immediately prior thereto by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding immediately before such dividend,
distribution, subdivision, combination or reclassification, and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such dividend, distribution, subdivision, combination or
reclassification. Any shares of Common Stock of the Corporation issuable in
payment of a dividend shall be deemed to have been issued immediately prior to
the record date for such dividend.
(b) All calculations under this Section 2.01 shall be made
to the nearest whole cent.
Section 2.02 No adjustment in the Purchase Price in accordance with
the provisions of Subsection 2.01(a) hereof need be made if such adjustment
would amount to a change of less than 1% in such Purchase Price; provided
that the amount by which any adjustment is not made by reason of the
provisions of this Section 2.02 shall be carried forward and taken into
account at the time of any subsequent adjustment in the Purchase Price.
Section 2.03 Upon each adjustment of the Purchase Price pursuant to
Subsection 2.01(a) each Warrant shall thereupon evidence the right to purchase
shares of Common Stock comprised of the same number of Warrants and that number
of shares of Common Stock (calculated to the nearest whole share or Warrant, as
the case may be) obtained by multiplying the number of shares of Common Stock
purchasable immediately prior to such adjustment and dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment.
Section 2.04 In case of any capital reorganization, other than in the
cases referred to in Section 2.01 hereof, or the consolidation or merger of the
Corporation with or into another corporation (other than a merger or
consolidation in which the Corporation is the merger or consolidation in which
the Corporation is the continuing corporation and which does not result in any
reclassification of the outstanding shares of Common Stock or the conversion of
the outstanding shares of Common Stock into shares of other stock or other
securities or property), or the sale of the property of the Corporation as an
entirety or substantially as an entirety, or the conversion, however effected,
of the Corporation
17
into another form of entity (collectively such actions being hereinafter
referred to as "Reorganizations"), there shall thereafter be deliverable upon
exercise of any Warrant (as to the shares of Common Stock subject thereto and in
lieu of the number of shares of Common Stock theretofore deliverable) the number
of shares of stock or other securities or property to which a holder of the
number of shares of Common Stock that would otherwise have been deliverable upon
the exercise of such Warrant would have been entitled upon such Reorganization
if such Warrant had been exercised in full immediately prior to such
Reorganization. In case of any Reorganization, appropriate adjustment, as
determined in good faith by the Board of Directors of the Corporation, shall be
made in the application of the provisions herein set forth with respect to the
rights and interests of Warrant holders so that the provisions set forth herein
shall thereafter be applicable, as nearly as possible, in relation to any shares
or other property thereafter deliverable upon exercise of Warrants. The
Corporation shall not effect any such Reorganization, unless upon or prior to
the consummation thereof the successor entity, or if the Corporation shall be
the surviving entity in any such Reorganization and is not the issuer of the
shares of stock or other securities or property to be delivered to holders of
shares of the Common Stock outstanding at the effective time thereof, then such
issuer shall assume by written instrument the obligation to deliver to the
Holder such shares of stock, securities, cash or other property as the Holder
shall be entitled to purchase in accordance with the foregoing provisions. In
the event of a sale or conveyance or other transfer of all or substantially all
of the assets of the Corporation as a part of a plan for liquidation of the
Corporation, all rights to exercise any Warrant shall terminate on the date such
sale or conveyance or other transfer is to be consummated.
Section 2.05 The Corporation may select a firm of independent
certified public accountants acceptable to the Holder hereof, which selection
may be changed from time to time, to verify the computations made in
accordance with this Article II. The certificate, report or other written
statement of any such firm shall be conclusive evidence of the correctness of
any computation made under this Article II.
Section 2.06 Irrespective of any adjustments pursuant to this Article
II, Warrants theretofore or thereafter issued need not be amended or replaced,
but certificates thereafter issued shall bear an appropriate legend or other
notice of any adjustments.
Section 2.07 The Corporation shall not be required upon the
exercise of any Warrant to issue fractional shares of Common Stock that may
result from adjustments in accordance with this Article II to the Purchase
Price or number of shares of Common Stock purchasable under each Warrant. If
more than one Warrant is exercised at one time by the same Holder, the number
of full shares of Common Stock that shall be deliverable shall be computed
based on the number of shares of Common Stock deliverable in exchange for the
aggregate number of Warrants exercised. With respect to any final fraction of
a share called for upon the exercise of any Warrant or Warrants, the
Corporation shall pay a cash adjustment in respect of such final fraction in
an amount equal to the same fraction of the market value of a share of Common
Stock on the business day next preceding the date of such exercise. The
Holder, by his acceptance of the Warrant, shall expressly waive any right to
receive any fractional share of Common Stock upon exercise of the Warrants.
For the purposes of this Section 2.07, the market price per share of Common
Stock or price per Warrant at any date shall mean the last reported sale
price regular way or, in case no such reported sale takes place on such date,
the average of the last reported bid and asked prices regular way, in either
case on the principal national securities exchange on which the Common Stock
are admitted to trading or listed if that is the principal market for the
18
Common Stock or if not listed or admitted to trading on any national securities
exchange or if such national security exchange is not the principal market for
the Common Stock, the closing bid price (or closing sales price, if reported) as
reported by the National Association of Securities Dealers, Inc. Automated
Quotation System or its successor, if any. If the price of the Common Stock is
not so reported, then such market price shall mean the last known price paid per
share, by a purchaser of such stock in an arms' length transaction. All
calculations under this Section 2.07 shall be made to the nearest 1/100th of a
share.
Section 2.08 In no event shall the Purchase Price be adjusted below
the par value per share of the Common Stock.
ARTICLE III -- REGISTRATION UNDER THE SECURITIES ACT OF 1933
Section 3.01 The sale of the shares of Common Stock issuable upon
exercise of this Warrant have been registered under the Act in the Corporation's
Registration Statement on Form SB-2, SEC File No. 333-44747 (the "Registration
Statement").
Upon exercise, in part or in whole, of this Warrant, the
certificates representing the Common Stock shall bear the following legend:
"THE SHARES (OR WARRANTS, AS APPLICABLE) REPRESENTED BY THIS
CERTIFICATE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, SOLELY FOR SALE TO THE HOLDER OF A WARRANT TO PURCHASE, WHICH
HOLDER MAY BE DEEMED TO BE AN UNDERWRITER OF SUCH SHARES WITHIN THE
PROVISIONS AND FOR PURPOSES ONLY OF THE SECURITIES ACT OF 1933, AS
AMENDED. THE ISSUER OF THESE SHARES WILL AGREE TO A TRANSFER HEREOF
ONLY IF (1) AN AMENDED OR SUPPLEMENTED PROSPECTUS SETTING FORTH THE
TERMS OF THE OFFER HAS BEEN FILED AS PART OF A POST-EFFECTIVE AMENDMENT
TO THE REGISTRATION STATEMENT UNDER WHICH THESE SHARES ARE REGISTERED
OR AS PART OF A NEW REGISTRATION STATEMENT, IF THEN REQUIRED, AND SUCH
POST-EFFECTIVE AMENDMENT OR NEW REGISTRATION STATEMENT HAS BECOME
EFFECTIVE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (2) COUNSEL
TO THE ISSUER IS SATISFIED THAT NO SUCH POST-EFFECTIVE AMENDMENT OR NEW
REGISTRATION STATEMENT IS REQUIRED."
The Corporation agrees that it shall be satisfied that no
post-effective amendment or new registration statement is required for the
public sale of the shares of Common Stock if it shall be presented with a letter
from the Staff of the Securities and Exchange Commission (the "Commission")
stating in effect that, based upon stated facts that the Corporation shall have
no reason to believe are not true in any material respect, the Staff of the
Commission will not recommend any action to the Commission if such shares are
offered and sold without delivery of a prospectus, and that, therefore, no
post-effective amendment to the Registration Statement under which the sale of
such shares is registered or new registration statement is required to be filed.
19
Section 3.02 The Corporation understands and agrees that if at any
time during the period referred to above it should file a registration
statement or offering statement pursuant to the Act for a public offering of
securities, the Corporation, at its own expense, will offer to the Holder the
opportunity to register or qualify the offering and sale of the shares of
Common Stock. Registration Rights set forth in Section 9 of the Underwriters'
Purchase Option Agreement are incorporated by reference and made a part
hereof. This paragraph is not applicable to a registration statement filed
with the Commission on Form S-4 or S-8, or any successor Forms.
Section 3.03 In connection with any registration under Section 3.02
hereof, the Corporation covenants and agrees as follows:
(a) The Corporation shall use its best efforts to have any
post-effective amendment or new registration statement declared effective at the
earliest possible time, and shall furnish such number of prospectuses as shall
reasonably be requested by the Holder selling Shares.
(b) The Corporation shall pay all costs, fees, and
expenses in connection with all post-effective amendments or new registration
statements under Section 3.02 hereof including, without limitation, the
Corporation's legal and accounting fees, printing expenses, blue sky fees and
expenses, except that the Corporation shall not pay any of the following costs,
fees or expenses: (i) underwriting discounts and commissions allocable to the
shares of Common Stock, (ii) state transfer taxes, (iii) brokerage commissions
and (iv) fees and expenses of counsel and accountants for the Holder of the
Warrant and/or Shares.
(c) The Corporation will take all necessary action to
qualify or register the Securities included in a post-effective amendment or new
registration statement for offering and sale under the securities or blue sky
laws of such states as are requested by the holders of such Securities, provided
that the Corporation shall not be obligated to execute or file any general
consent to service of process or to qualify as a foreign corporation to do
business under the law of any such jurisdiction.
(d) The Holder shall be entitled to pay the Purchase Price
for the Securities purchasable upon the exercise of this Warrant out of the
proceeds of any sale of the Securities purchasable upon their exercise, provided
such exercise and sale occur simultaneously.
Section 3.04 (a) The Corporation shall indemnify and hold harmless
each person registering the sale of Securities pursuant to this Article III
(the "Seller") and each underwriter, within the meaning of the Act, who may
purchase from or sell for any Seller any of the Securities from and against
any and all losses, claims, damages and liabilities caused by any untrue
statement or alleged untrue statement of a material fact contained in any
post-effective amendment or new registration statement or any supplemented
prospectus under the Act included therein required to be filed or furnished
by reason of Section 3.02, or caused by any omission or alleged omission to
state therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are caused by
any such untrue statement or alleged untrue statement or omission or alleged
omission based upon information furnished or required to be furnished in
writing to the Corporation by such Seller or underwriter expressly for use
therein, which indemnification shall include each person, if any, who
controls any such Seller or underwriter within the meaning of the Act;
provided, however, that the indemnity agreement by the Corporation set forth
in this Section 3.04 with respect to any prospectus
20
that shall be subsequently amended or supplemented prior to the written
confirmation of the sale of any securities shall not inure to the benefit of any
Seller or underwriter from whom the person asserting such securities that are
the subject thereof (or to the benefit of any person controlling such Seller or
underwriter), if such Seller or underwriter failed to send or give a copy of the
prospectus as amended or supplemented to such person at or prior to written
confirmation of the sale of such securities to such person and if such amended
or supplemented prospectus did not contain any untrue statement or alleged
untrue statement or omission or alleged omission giving rise to such cause,
claim, damage or liability.
(b) Each Seller that avails itself of the procedures under
Article III shall indemnify, and secure the agreement of any underwriter which
the Seller employs to indemnify, the Corporation, its directors, each officer
signing the related post-effective amendment or registration statement and each
person, if any, who controls the Corporation within the meaning of the Act from
and against any and all losses, claims, damages and liabilities caused by any
untrue statement or alleged untrue statement of a material fact contained in any
post-effective amendment or registration statement or any prospectus required to
be filed or furnished by reason of Section 3.02, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, insofar as such
losses, claims, damages or liabilities are caused by any untrue statement or
alleged untrue statement or omission or alleged omission based upon information
furnished in writing to the Corporation by any such Seller or underwriter
expressly for use therein.
Section 3.05 The agreements in this Article III shall continue in
effect regardless of the exercise and surrender of this Warrant.
ARTICLE IV -- OTHER MATTERS
Section 4.01 The Corporation will from time to time promptly pay,
subject to the provisions of paragraph (4) of Section 1.02 hereof, all taxes and
charges that may be imposed upon the Corporation in respect of the issuance or
delivery of this Warrant or the shares of Common Stock purchasable upon the
exercise of this Warrant.
Section 4.02 All the covenants and provisions of this Warrant by
or for the benefit of the Corporation shall bind and inure to the benefit of it
successors and assigns hereunder.
Section 4.03 Notices or demands pursuant to this Warrant to be
given or made by the Holder to or on the Corporation shall be sufficiently
given or made if sent by certified or registered mail, return receipt
requested, postage prepaid, and addressed, until another address is
designated in writing by the Corporation, as follows:
Rosedale Decorative Products, Ltd.
731 Millway Avenue
Concord, Ontario
Canada L4K 3S8
21
Notices to the Holder provided for in this Warrant shall be deemed given or made
by the Corporation if sent by certified or registered mail, return receipt
requested, postage prepaid, and addressed to the Holder at his last known
address as it shall appear on the books of the Corporation.
Section 4.04 The validity, interpretation and performance of this
Warrant shall be governed by the substantive laws of the State of Georgia.
Section 4.05 Nothing in this Warrant expressed and nothing that may be
implied from any of the provisions hereof is intended, or shall be construed, to
confer upon, or give to, any person or corporation other than the Corporation
and the Holder any right, remedy or claim under promise or agreement hereof, and
all covenants, conditions, stipulations, promises and agreements contained in
this Warrant shall be for the sole and exclusive benefit of the Corporation and
its successors and of the Holder, its successors and, if permitted, its
assignees.
Section 4.06 The headings herein are for convenience only and are not
part of this Warrant and shall not affect the interpretation thereof.
IN WITNESS WHEREOF, this, Warrant has been duly executed by the
Corporation under its corporate seal as of the ___ day of __________, 1998.
ROSEDALE DECORATIVE PRODUCTS, LTD.
By: /s/ Sidney Ackerman
-------------------------------
Name: Sidney Ackerman
Title: President
Attest:
- ----------------------------------
, Secretary
- -----------------------
22
ROSEDALE DECORATIVE PRODUCTS, LTD.
Subscription Form
(To be executed by the registered holder to exercise the right to purchase
Common Stock evidenced by the foregoing Warrant)
Rosedale Decorative Products, Ltd.
731 Millway Avenue
Concord, Ontario
Canada L4K 3S8
The undersigned hereby irrevocably subscribes for the purchase of _____
shares of your Common Stock pursuant to and in accordance with the terms and
conditions of this Warrant No. ___, and herewith makes payment, covering the
purchase of such Shares. Certificates for the shares of Common Stock should be
delivered to the undersigned at the address stated below. If such number of
shares of Common Stock shall not be all of the Shares purchasable hereunder,
please deliver a new Warrant of like tenor for the balance of the remaining
Shares purchasable hereunder to the undersigned at the address stated below.
The undersigned agrees that: (1) the undersigned will not offer, sell,
transfer or otherwise dispose of any such shares of Common Stock being purchased
hereunder unless either (a) a registration statement, or post-effective
amendment thereto, covering the sale of such shares of Common Stock has been
filed with the Securities and Exchange Commission pursuant to the Securities Act
of 1933, as amended (the "Act"), and such sale, transfer or other disposition is
accompanied by a prospectus meeting the requirements of Section 10 of the Act
forming a part of such registration statement, or post-effective amendment
thereto, which is in effect under the Act covering the sale of the shares of
Common Stock to be sold, transferred or otherwise disposed of, or (b) counsel
acceptable to Rosedale Decorative Products Ltd. and satisfactory to the
undersigned has rendered an opinion acceptable to the Company in writing and
addressed to the Company that such proposed offer, sale, transfer or other
disposition of the shares of Common Stock is exempt from the provisions of
Section 5 of the Act in view of the circumstances of such proposed offer, sale,
transfer or other disposition; (2) the Company may notify the transfer agent for
its Common Stock that the certificates for the Common Stock acquired by the
undersigned pursuant hereto are not to be transferred unless the transfer agent
receives advance from the Company that one or both of the conditions referred to
in (1)(a) and (1)(b) above have been satisfied; and (3) the Company may affix
the legend set forth in Section 3.01 of this Warrant to the certificates for
shares of Common Stock hereby subscribed for and purchasable upon exercise of
the Warrants, if such legend is applicable.
Dated: Signed:
--------------------------- ----------------------
Signature guaranteed: Address:
----------------------
----------------------
----------------------
ROSEDALE DECORATIVE PRODUCTS LTD.
Assignment Form
(To be executed by the registered holder to effect assignment of the foregoing
warrant)
FOR VALUE RECEIVED _________________________________ hereby sells, assigns and
transfers unto _________________________________ the right to purchase _____
shares of Common Stock, no par value per share on the terms and conditions set
forth therein, and does hereby irrevocably constitute and appoint
______________________________________ and/or its transfer agent Attorney, to
transfer on the books of the Corporation Warrants representing such rights, with
full power of substitution.
Dated:
---------------------------
Signed:
----------------------------
Signature guaranteed:
- ---------------------------------
THE UNDERWRITERS' PURCHASE OPTION REPRESENTED BY THIS CERTIFICATE AND THE OTHER
SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR
RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE UNDERWRITERS' OPTIONS REPRESENTED BY
THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE UNDERWRITERS'
PURCHASE OPTION AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK TIME, _____________, 2003
No. U.0.1 Underwriter's Options
Underwriter's Purchase Option Certificate
This Underwriter's Purchase Option Certificate certifies that J. P.
Turner & Company, LLC, or registered assigns (the "Holder" or "Holders"), is the
registered holder of options (the "Underwriter's Options") under an
Underwriters' Purchase Option Agreement (the "Underwriters' Purchase Option
Agreement") dated as of _____________, 1998 between Rosedale Decorative Products
Ltd. (the "Company") and the Holder to purchase initially, at any time from
____________, 1999 until 5:00 p.m. New York time on _____________, 2003
("Expiration Date"), up to 100,000 shares at a price of $______ (the "Exercise
Price Per Share") and 100,000 Underwriters' Warrants at a price of $_______ per
Warrant (the "Exercise Price Per Warrant") upon surrender of this Underwriter's
Option Certificate and payment of the aggregate amount of the Exercise Price Per
Share and Warrant (collectively, the "Exercise Price") at an office or agency of
the Company, but subject to the conditions set forth herein and in the
Underwriters' Purchase Option Agreement. Payment of the Exercise Price shall be
made by certified or official bank check in New York Clearing House funds
payable to the order of the Company.
No Underwriter's Option may be exercised after 5:00 p.m., New York
time, on the Expiration Date, at which time all Underwriter's Options evidenced
hereby, unless exercised prior thereto, shall thereafter be void.
The Underwriter's Options evidenced by this Underwriter's Purchase
Option Certificate are part of a duly authorized issue of warrants pursuant to
the Underwriter's Purchase Option Agreement, which Underwriter's Purchase Option
Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
Holder of the Underwriter's Options.
The Underwriter's Purchase Option Agreement provides that upon the
occurrence of certain events the Exercise Price per share and number of shares
issuable upon execution thereupon may, subject to certain conditions, be
adjusted. In such event, the Company will, at the request of the Holder, issue a
new Underwriter's Purchase Option Certificate evidencing the adjustment in the
exercise price and the number and/or type of securities issuable upon the
exercise of the Underwriter's Options; provided, however, that the failure of
the Company to issue such new Underwriter's Option Certificates shall not in any
way change, alter or otherwise impair, the rights of the holder as set forth in
the Underwriters Purchase Option Agreement.
Upon due presentment for registration of transfer of this Underwriter's
Purchase Option Certificate at an office or agency of the Company, a new
Underwriter's Purchase Option Certificate or Underwriter's Purchase Option
Certificates of like tenor and evidencing in the aggregate a like number of
Underwriter's Options shall be issued to the transferees in exchange for this
Underwriter's Purchase Option Certificate, subject to the limitations provided
herein and in the Underwriter's Purchase Option Agreement, without any charge
except for any tax or other governmental charge imposed in connection with such
transfer.
Upon the exercise of less than all of the Underwriter's Options
evidenced by this Certificate, the Company shall forthwith issue to the holder
hereof a new Underwriter's Purchase Option Certificate representing such
numbered unexercised Underwriter's Options.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Underwriter's Purchase Option Certificate
(notwithstanding any notation of ownership or other writing hereon made by
anyone), for the purpose of any exercise hereof, and of any distribution to the
holder(s) hereof, and for all other purposes, and the Company shall not be
affected by any notice to the contrary.
All defined terms used in this Underwriter's Purchase Option
Certificate shall have the meanings assigned to them herein or if not
differently defined herein, in the Underwriter's Purchase Option Agreement.
IN WITNESS WHEREOF, the Company has caused this Underwriter's Purchase
Option Certificate to be duly executed under its corporate seal.
Dated as of _________________, 1998
ROSEDALE DECORATIVE PRODUCTS LTD.
[SEAL] By:
Attest: ------------------------------------
Name:
-------------------------------
Title:
-------------------------------
- ------------------------------
Secretary
2
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Underwriter's Purchase Option Certificate, to purchase
_________ Shares and Underwriters' Warrants and herewith tenders in payment for
such securities a certified or official bank check payable in New York Clearing
House Funds to the order of Rosedale Decorative Products Ltd. in the amount of
$___________, all in accordance with the terms hereof. The undersigned requests
that a certificate for such securities be registered in the name of
______________________ whose address is________________________________________
and that such Certificate be delivered to _____________________________________
whose address is _____________________________________________________________.
Dated:__________________
-----------------------------------------
Signature
(Signature must conform in
all respects to name of
holder as specified on the
face of the Underwriter's
Purchase Option
Certificate.)
-----------------------------------------
Insert Social Security or
Other Identifying Number of Holder)
3