EXHIBIT 4.1
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.
AROTECH CORPORATION
WARRANT
Warrant No.:
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Number of Shares:
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Date of Issuance: July 14, 2004 ("ISSUANCE DATE")
Arotech Corporation, a Delaware corporation (the "COMPANY"), hereby certifies
that, for value received, the receipt and sufficiency of which are hereby
acknowledged, _______________________________________, the registered holder
hereof or its permitted assigns (the "HOLDER"), is entitled, subject to the
terms set forth below, to purchase from the Company, at the Exercise Price (as
defined below) then in effect, at any time or times on or after the date hereof,
but not after 11:59 p.m., New York Time, on the Expiration Date (as defined
below), __________________________________________________________ (_________)
fully paid nonassessable shares of Common Stock (as defined below) (the "WARRANT
SHARES"). Except as otherwise defined herein, capitalized terms in this warrant
(including all Warrants issued in exchange, transfer or replacement hereof, the
"WARRANTS") shall have the meanings set forth in Section 15.
The Company agrees that the Warrant Shares shall be treated as "Registrable
Securities" in accordance with, and shall be governed by, identical terms to the
Registration Rights Agreement, dated as of January 7, 2004, which provisions and
terms should be applicable hereto mutates mutandis (as such agreement may be
amended from time to time, the "REGISTRATION RIGHTS AGREEMENT"), by and among
the Company and the buyers named therein, as if the Company and the Holder had
executed such Registration Rights Agreement, and as if the Holder were party
thereto, as of the Issuance Date; provided, however, that:
"EFFECTIVENESS DATE" shall mean with respect to the
Registration Statement required to be filed thereunder
relating to the Warrant Shares, the earlier of (1) (i) in the
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event that the Registration Statement is not subject to a full
review by the SEC, 90 days after the Issuance Date or (ii) in
the event that the Registration Statement is subject to a full
review by the SEC, 90 days after the Issuance Date, and (2)
the fifth Business Day following the date on which the Company
is notified by the SEC that such Registration Statement will
not be reviewed or is no longer subject to further review and
comments.
"FILING DATE" shall mean with respect to the Registration
Statement required to be filed thereunder relating to the
Warrant Shares, the 30th day following the Issuance Date.
For purposes of clarity, the issuance of this Warrant is unrelated to the
transaction pursuant to which the Registration Rights Agreement was entered
into.
1. EXERCISE OF WARRANT.
(a) Mechanics of Exercise. Subject to the terms and conditions
hereof (including, without limitation, the limitations set forth in Section
1(g)), this Warrant may be exercised by the Holder on any day from and after the
date hereof, in whole or in part, by (i) delivery of a written notice, in the
form attached hereto as Exhibit A (the "EXERCISE NOTICE"), of such Holder's
election to exercise this Warrant, and (ii) (A) payment to the Company of an
amount equal to the applicable Exercise Price multiplied by the number of
Warrant Shares as to which this Warrant is being exercised (the "AGGREGATE
EXERCISE PRICE") in cash or wire transfer of immediately available funds or (B)
by notifying the Company that this Warrant is being exercised pursuant to a
Cashless Exercise (as defined in Section 1(d)). The date the Exercise Notice and
the Aggregate Exercise Price (or notice of a Cashless Exercise) are delivered to
the Company (as determined in accordance with the notice provisions hereof) is
an "EXERCISE DATE." The Holder shall not be required to deliver the original
Warrant in order to effect an exercise hereunder. Execution and delivery of the
Exercise Notice with respect to less than all of the Warrant Shares shall have
the same effect as cancellation of the original Warrant and issuance of a new
Warrant evidencing the right to purchase the remaining number of Warrant Shares.
On or before the first Business Day following the Exercise Date, the Company
shall transmit by facsimile an acknowledgment of confirmation of receipt of the
Exercise Notice and the Aggregate Exercise Price to the Holder and the Company's
transfer agent (the "TRANSFER AGENT"). On or before the third Business Day
following the Exercise Date, the Company shall direct the Transfer Agent to
credit through The Depository Trust Company ("DTC") Fast Automated Securities
Transfer Program such aggregate number of shares of Common Stock to which the
Holder is entitled pursuant to such exercise to the Holder's or its designee's
balance account with DTC through its Deposit Withdrawal Agent Commission system.
On the Exercise Date, the Holder shall be deemed for all corporate purposes to
have become the holder of record of the Warrant Shares with respect to which
this Warrant has been exercised, irrespective of the date of delivery of the
certificates evidencing such Warrant Shares. Upon surrender of this Warrant to
the Company following one or more partial exercises, the Company shall as soon
as practicable and in no event later than three Business Days after receipt of
the Warrant and at its own expense, issue a new Warrant (in accordance with
Section 7(d)) representing the right to purchase the number of Warrant Shares
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purchasable immediately prior to such exercise under this Warrant, less the
number of Warrant Shares with respect to which this Warrant is exercised. No
fractional shares of Common Stock are to be issued upon the exercise of this
Warrant, but rather the number of shares of Common Stock to be issued shall be
rounded up to the nearest whole number. The Company shall pay any and all taxes
which may be payable with respect to the issuance and delivery of Warrant Shares
upon exercise of this Warrant. In the event that the Company is unable to
electronically deliver the Warrant Shares because of applicable securities laws,
then the Company shall issue and deliver to the address as specified in the
Exercise Notice a certificate, registered in the name of the Holder or its
designee, for the number of shares of Common Stock to which the holder of this
Warrant is entitled pursuant to such exercise.
(b) Exercise Price. For purposes of this Warrant, "EXERCISE
PRICE" means the arithmetic average of the Weighted Average Price of the Common
Stock over the period of July 15, 2004, July 16, 2004, and July 19, 2004,
subject to adjustment as provided herein.
(c) Company's Failure to Timely Deliver Shares. Subject to
Section 1(g), if the Company shall fail for any reason or for no reason within
three Business Days of the Exercise Date to credit the Holder's balance account
with DTC for such number of shares of Common Stock to which the Holder is
entitled upon the Holder's exercise of this Warrant, and if after such third
Business Day the Holder purchases (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of the
Warrant Shares that the Holder anticipated receiving from the Company (a
"BUY-IN"), then the Company shall, within three Business Days after the Holder's
request and in the Holder's discretion, either (i) pay cash to the Holder in an
amount equal to the Holder's total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased (the "BUY-IN
PRICE"), at which point the Company's obligation to issue such Common Stock
shall terminate, or (ii) promptly honor its obligation to credit to the Holder
such Common Stock and pay cash to the Holder in an amount equal to the excess
(if any) of the Buy-In Price over the product of (A) such number of shares of
Common Stock, times (B) the Closing Sale Price on the date of the event giving
rise to the Company's obligation to deliver such certificate. Subject to Section
1(g), if the Company shall fail for any reason or for no reason within three
Business Days of the Exercise Date to credit the Holder's balance account with
DTC for such number of shares of Common Stock to which the Holder is entitled
upon the Holder's exercise of this Warrant, then the Holder will have the right
to rescind such exercise.
(d) Cashless Exercise. Notwithstanding anything contained
herein to the contrary, if at any time during the period commencing ten (10)
Business Days prior to the Holder's delivery of an Exercise Notice and ending on
the day of delivery of the Exercise Notice, the Registration Statement (as
defined in the Registration Rights Agreement) covering the Warrant Shares that
are the subject of the Exercise Notice (the "UNAVAILABLE WARRANT SHARES") is not
available for the issuance of such Unavailable Warrant Shares, the Holder may,
in its sole discretion, exercise this Warrant in whole or in part and, in lieu
of making the cash payment otherwise contemplated to be made to the Company upon
such exercise in payment of the Aggregate Exercise Price, elect instead to
receive upon such exercise the "Net Number" of shares of Common Stock determined
according to the following formula (a "CASHLESS EXERCISE"):
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Net Number = (A x B) - (A x C)
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B
For purposes of the foregoing formula:
A = the total number of shares with respect to which this
Warrant is then being exercised.
B = the Closing Sale Price of the Common Stock on the date
immediately preceding the date of the Exercise Notice.
C = the Exercise Price then in effect for the applicable
Warrant Shares at the time of such exercise.
(e) Absolute and Unconditional Obligation. The Company's
obligations to issue and deliver Warrant Shares in accordance with the terms
hereof are absolute and unconditional, irrespective of any action or inaction by
the Holder to enforce the same, the recovery of any judgment against any Person
or any action to enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the Holder or any
other Person of any obligation to the Company or any violation or alleged
violation of law by the Holder or any other Person. Nothing herein shall limit
the Holder's right to pursue any other remedies available to it hereunder, at
law or in equity, including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company's failure to
timely deliver certificates representing Warrant Shares upon exercise of the
Warrant as required pursuant to the terms hereof.
(f) Disputes. In the case of a dispute as to the determination
of the Exercise Price or the arithmetic calculation of the Warrant Shares, the
Company shall promptly issue to the Holder the number of Warrant Shares that are
not disputed and resolve such dispute in accordance with Section 12.
(g) Limitations on Exercises. The Company shall not effect the
exercise of this Warrant, and no Person who is a holder of this Warrant shall
have the right to exercise this Warrant, to the extent that after giving effect
to such exercise, such Person (together with such Person's affiliates) would
beneficially own in excess of 4.99% of the shares of the Common Stock
outstanding immediately after giving effect to such exercise. For purposes of
the foregoing sentence, the aggregate number of shares of Common Stock
beneficially owned by such Person and its affiliates shall include the number of
shares of Common Stock issuable upon exercise of this Warrant with respect to
which the determination of such sentence is being made, but shall exclude shares
of Common Stock which would be issuable upon (i) exercise of the remaining,
unexercised portion of this Warrant beneficially owned by such Person and its
affiliates and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company beneficially owned by such Person
and its affiliates (including, without limitation, any convertible notes,
convertible debentures, convertible preferred stock or warrants) subject to a
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limitation on conversion or exercise analogous to the limitation contained
herein. Except as set forth in the preceding sentence, for purposes of this
paragraph, beneficial ownership shall be calculated in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this
Warrant, in determining the number of outstanding shares of Common Stock a
Holder may rely on the number of outstanding shares of Common Stock as reflected
in (1) the Company's most recent Form 10-Q, Form 10-K or other public filing
with the Securities and Exchange Commission, as the case may be, (2) a more
recent public announcement by the Company or (3) any other notice by the Company
or its Transfer Agent setting forth the number of shares of Common Stock
outstanding. For any reason at any time, upon the written or oral request of the
Holder, the Company shall within two Business Days confirm orally and in writing
to the Holder the number of shares of Common Stock then outstanding. In any
case, the number of outstanding shares of Common Stock shall be determined after
giving effect to the conversion or exercise of securities of the Company by the
Holder and its affiliates since the date as of which such number of outstanding
shares of Common Stock was reported.
The Company shall not be obligated to issue any shares of Common Stock upon
exercise of this Warrant if the issuance of such shares of Common Stock would
exceed that number of shares of Common Stock which the Company may issue upon
exercise of this Warrant without breaching the Company's obligations under the
rules or regulations of the Principal Market (the "EXCHANGE CAP"), except that
such limitation shall not apply in the event that the Company obtains, only if
required, the approval of its stockholders as required by the applicable rules
of the Principal Market for issuances of shares of Common Stock in excess of
such amount. Until such approval is obtained, the Holder shall not be issued,
upon exercise of any Warrants, shares of Common Stock in an amount greater than
the product of the Exchange Cap multiplied by a fraction, the numerator of which
is the total number of shares of Common Stock underlying the Warrants issued to
the Holder on the Issuance Date and the denominator of which is the aggregate
number of shares of Common Stock underlying all the substantially identical
warrants (the "EXCHANGE WARRANTS") issued by the Company on the Issuance Date
(with respect to the Holder, the "EXCHANGE CAP ALLOCATION"). In the event that
the Holder shall sell or otherwise transfer any of such Holder's Warrants, the
transferee shall be allocated a pro rata portion of the Holder's Exchange Cap
Allocation, and the restrictions of the prior sentence shall apply to such
transferee with respect to the portion of the Exchange Cap Allocation allocated
to such transferee. In the event that any holder of applicable warrants shall
exercise all of such holder's applicable warrants into a number of shares of
Common Stock which, in the aggregate, is less than such holder's Exchange Cap
Allocation, then the difference between such holder's Exchange Cap Allocation
and the number of shares of Common Stock actually issued to such holder shall be
allocated to the respective Exchange Cap Allocations of the remaining holders of
applicable warrants on a pro rata basis in proportion to the shares of Common
Stock underlying the warrants then held by each such holder. In the event that
the Company is prohibited from issuing any Warrant Shares for which an Exercise
Notice has been received as a result of the operation of this paragraph, the
Company shall pay cash in exchange for cancellation of such Warrant Shares, at a
price per Warrant Share equal to the difference between the Closing Sale Price
and the Exercise Price as of the date of the attempted exercise.
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2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES UPON
SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at any time after the
date of issuance of this Warrant subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision will be proportionately reduced and the
number of Warrant Shares will be proportionately increased. If the Company at
any time after the date of issuance of this Warrant combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination will be proportionately increased and the
number of Warrant Shares will be proportionately decreased. Any adjustment under
this Section 2 shall become effective at the close of business on the date the
subdivision or combination becomes effective.
3. RIGHTS UPON DISTRIBUTION OF ASSETS. If the Company shall declare or
make any dividend or other distribution of its assets (or rights to acquire its
assets) to holders of Common Stock, by way of return of capital or otherwise
(including, without limitation, any distribution of cash, stock or other
securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement or other similar transaction) (a
"DISTRIBUTION"), at any time after the issuance of this Warrant, then, in each
such case:
(a) any Exercise Price in effect immediately prior to the
close of business on the record date fixed for the determination of holders of
Common Stock entitled to receive the Distribution shall be reduced, effective as
of the close of business on such record date, to a price determined by
multiplying such Exercise Price by a fraction of which (i) the numerator shall
be the Closing Bid Price of the Common Stock on the trading day immediately
preceding such record date minus the value of the Distribution (as determined in
good faith by the Company's Board of Directors) applicable to one share of
Common Stock, and (ii) the denominator shall be the Closing Bid Price of the
Common Stock on the trading day immediately preceding such record date; and
(b) the number of Warrant Shares shall be increased to a
number of shares equal to the number of shares of Common Stock obtainable
immediately prior to the close of business on the record date fixed for the
determination of holders of Common Stock entitled to receive the Distribution
multiplied by the reciprocal of the fraction set forth in the immediately
preceding paragraph (a); provided that in the event that the Distribution is of
common stock ("OTHER COMMON STOCK") of a company whose common stock is traded on
a national securities exchange or a national automated quotation system, then
the Holder may elect to receive a warrant to purchase Other Common Stock in lieu
of an increase in the number of Warrant Shares, the terms of which shall be
identical to those of this Warrant, except that such warrant shall be
exercisable into the number of shares of Other Common Stock that would have been
payable to the Holder pursuant to the Distribution had the Holder exercised this
Warrant immediately prior to such record date and with an aggregate exercise
price equal to the product of the amount by which the exercise price of this
Warrant was decreased with respect to the Distribution pursuant to the terms of
the immediately preceding paragraph (a) and the number of Warrant Shares
calculated in accordance with the first part of this paragraph (b).
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4. PURCHASE RIGHTS; ORGANIC CHANGE.
(a) Purchase Rights. In addition to any adjustments pursuant
to Section 2 above, if at any time the Company grants, issues or sells any
Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the "PURCHASE RIGHTS"), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which such Holder could have acquired if such Holder had held
the number of shares of Common Stock acquirable upon complete exercise of this
Warrant (without regard to any limitations on the exercise of this Warrant)
immediately before the date on which a record is taken for the grant, issuance
or sale of such Purchase Rights, or, if no such record is taken, the date as of
which the record holders of Common Stock are to be determined for the grant,
issue or sale of such Purchase Rights.
(b) Organic Change. Any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets to another Person or other transaction, in each case which is
effected in such a way that holders of Common Stock are entitled to receive
securities or assets with respect to or in exchange for Common Stock is referred
to herein as an "ORGANIC CHANGE." Prior to the consummation of any (i) sale of
all or substantially all of the Company's assets to an acquiring Person or (ii)
other Organic Change following which the Company is not a surviving entity (for
purposes hereof a "surviving entity" means that this Warrant will continue to be
exercisable for the publicly traded shares of a publicly traded entity), the
Company will secure from the Person purchasing such assets or the Person issuing
the securities or providing the assets in such Organic Change (in each case, the
"ACQUIRING ENTITY") a written agreement (in form and substance reasonably
satisfactory to the holders of warrants representing at least a majority of the
shares of Common Stock obtainable upon exercise of the Exchange Warrants then
outstanding) to deliver to the Holder in exchange for this Warrant, a security
of the Acquiring Entity evidenced by a written instrument substantially similar
in form and substance to this Warrant and reasonably satisfactory to the Holder
(including, an adjusted exercise price equal to the value for the Common Stock
reflected by the terms of such consolidation, merger or sale, and exercisable
for a corresponding number of shares of Common Stock acquirable and receivable
upon exercise of this Warrant (without regard to any limitations on the exercise
of this Warrant), if the value so reflected is less than the Exercise Price in
effect immediately prior to such consolidation, merger or sale). In the event
that an Acquiring Entity is directly or indirectly controlled by a company or
entity whose common stock or similar equity interest is listed, designated or
quoted on a securities exchange or trading market, the Holder may elect to treat
such Person as the Acquiring Entity for purposes of this Section 4(b). Prior to
the consummation of any other Organic Change, the Company shall make appropriate
provision (in form and substance reasonably satisfactory to the holders of
Exchange Warrants representing at least a majority of the shares of Common Stock
obtainable upon exercise of the Exchange Warrants then outstanding) to insure
that the Holder thereafter will have the right to acquire and receive in lieu of
or in addition to (as the case may be) the shares of Common Stock immediately
theretofore acquirable and receivable upon the exercise of this Warrant (without
regard to any limitations on the exercise of this Warrant), such shares of
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stock, securities or assets that would have been issued or payable in such
Organic Change with respect to or in exchange for the number of shares of Common
Stock which would have been acquirable and receivable upon the exercise of this
Warrant as of the date of such Organic Change (without regard to any limitations
on the exercise of this Warrant).
5. NONCIRCUMVENTION. The Company hereby covenants and agrees that the
Company will not, by amendment of its Certificate of Incorporation or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, and
will at all times in good faith carry out all the provisions of this Warrant and
take all action as may be required to protect the rights of the Holder. Without
limiting the generality of the foregoing, the Company (i) will not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, (ii) will take all such actions
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant, and (iii) will, so long as any of the Warrants are
outstanding, take all action necessary to reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
exercise of the Warrants, 100% of the number of shares of Common Stock as shall
from time to time be necessary to effect the exercise of the Warrants then
outstanding (without regard to any limitations on exercise).
6. HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically
provided herein, no Holder, solely in such Person's capacity as a holder of this
Warrant, shall be entitled to vote or receive dividends or be deemed the holder
of shares of the Company for any purpose, nor shall anything contained in this
Warrant be construed to confer upon the Holder, solely in such Person's capacity
as a Holder, any of the rights of a shareholder of the Company or any right to
vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise), receive notice of meetings, receive dividends
or subscription rights, or otherwise, prior to the issuance to the Holder of the
Warrant Shares which such Person is then entitled to receive upon the due
exercise of this Warrant. In addition, nothing contained in this Warrant shall
be construed as imposing any liabilities on such Holder to purchase any
securities (upon exercise of this Warrant or otherwise) or as a stockholder of
the Company, whether such liabilities are asserted by the Company or by
creditors of the Company. Notwithstanding this Section 6, the Company will
provide the Holder with copies of the same notices and other information given
to the stockholders of the Company generally, contemporaneously with the giving
thereof to the stockholders.
7. REISSUANCE OF WARRANTS.
(a) Transfer of Warrant. If this Warrant is to be transferred,
the Holder shall surrender this Warrant to the Company, whereupon the Company
will forthwith issue and deliver upon the order of the Holder a new Warrant (in
accordance with Section 7(d)), registered as the Holder may request,
representing the right to purchase the number of Warrant Shares being
9
transferred by the Holder and, if less then the total number of Warrant Shares
then underlying this Warrant is being transferred, a new Warrant (in accordance
with Section 7(d)) to the Holder of this Warrant representing the right to
purchase the number of Warrant Shares not being transferred.
(b) Lost, Stolen or Mutilated Warrant. Upon receipt by the
Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant, and, in the case of loss, theft or
destruction, of any indemnification undertaking by the Holder to the Company in
customary form and, in the case of mutilation, upon surrender and cancellation
of this Warrant, the Company shall execute and deliver to the Holder a new
Warrant (in accordance with Section 7(d)) representing the right to purchase the
Warrant Shares then underlying this Warrant.
(c) Warrant Exchangeable for Multiple Warrants. This Warrant
is exchangeable, upon the surrender hereof by the Holder at the principal office
of the Company, for a new Warrant or Warrants (in accordance with Section 7(d))
representing in the aggregate the right to purchase the number of Warrant Shares
then underlying this Warrant, and each such new Warrant will represent the right
to purchase such portion of such Warrant Shares as is designated by the Holder
at the time of such surrender; provided, however, that no Warrants for
fractional shares of Common Stock shall be given.
(d) Issuance of New Warrants. Whenever the Company is required
to issue a new Warrant pursuant to the terms of this Warrant, such new Warrant
(i) shall be of like tenor with this Warrant, (ii) shall represent, as indicated
on the face of such new Warrant, the right to purchase the Warrant Shares then
underlying this Warrant (or in the case of a new Warrant being issued pursuant
to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder
which, when added to the number of shares of Common Stock underlying the other
new Warrants issued in connection with such issuance, does not exceed the number
of Warrant Shares then underlying this Warrant), (iii) shall have an issuance
date, as indicated on the face of such new Warrant which is the same as the
Issuance Date, and (iv) shall have the same rights and conditions as this
Warrant.
8. NOTICES. Any notices, consents, waivers or other
communications required or permitted
to be given under the terms of this Warrant must be in writing and will be
deemed to have been delivered: (i) upon receipt, when delivered personally; (ii)
upon receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit with an overnight courier service, in
each case properly addressed to the party to receive the same. The addresses and
facsimile numbers for such communications shall be:
If to the Company:
Arotech Corporation
250 West 57th Street
Suite 310
New York, New York 10107
Facsimile No.: (212) 258-3281
Telephone No.: (212) 258-3222
Attn.: Chief Executive Officer
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With a copy to:
Electric Fuel (E.F.L.) Ltd.
One HaSolela Street, POB 641
Western Industrial Park
Beit Shemesh 99000, Israel
Facsimile No.: 011-972-2-990-6688
Telephone No.: 011-972-2-990-6623
Attn.: General Counsel
If to the Holder, to its address and facsimile number set forth on the Schedule
of Buyers to the Securities Purchase Agreement, dated as of January 7, 2004,
among the Company and the investors referred to therein (the "JANUARY SPA"), or
in the event that the Holder was not party to the January SPA, then as set forth
on Exhibit B hereto, with copies to such Holder's representatives as set forth
on such Schedule of Buyers,
With a copy to:
Schulte Roth & Zabel LLP
919 Third Avenue
New York, New York 10022
Facsimile No.: (212) 593-5955
Telephone No.: (212) 756-2000
Attn.: Eleazer Klein, Esq.
or to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (i), (ii) or (iii) above, respectively.
The Company shall provide the Holder with prompt written notice of all actions
taken pursuant to this Warrant, including in reasonable detail a description of
such action and the reason therefore. Without limiting the generality of the
foregoing, the Company will give written notice to the Holder (i) immediately
upon any adjustment of the Exercise Price, setting forth in reasonable detail,
and certifying, the calculation of such adjustment and (ii) promptly after the
date on which the Company establishes a record date (A) with respect to any
dividend or distribution upon the Common Stock, (B) with respect to any grants,
issues or sales of any Options, Convertible Securities or rights to purchase
stock, warrants, securities or other property to holders of Common Stock or (C)
for determining rights to vote with respect to any Organic Change, dissolution
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or liquidation, provided in each case that such information shall be made known
to the public prior to or in conjunction with such notice being provided to the
Holder.
9. AMENDMENT AND WAIVER. Except as otherwise provided herein, the
provisions of this Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the holders of
Exchange Warrants representing at least a majority of the shares of Common Stock
obtainable upon exercise of the Exchange Warrants then outstanding; provided
that no such action may increase the exercise price of any Exchange Warrants or
decrease the number of shares or class of stock obtainable upon exercise of any
Exchange Warrants without the written consent of the Holder. No such amendment
shall be effective to the extent that it applies to less than all of the holders
of the Exchange Warrants then outstanding.
10. GOVERNING LAW. This Warrant shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Warrant shall be governed by, the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York.
11. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly
drafted by the Company and the Holder and shall not be construed against any
person as the drafter hereof. The headings of this Warrant are for convenience
of reference and shall not form part of, or affect the interpretation of, this
Warrant.
12. DISPUTE RESOLUTION. In the case of a dispute as to the
determination of the Exercise Price or the arithmetic calculation of the Warrant
Shares, the Company shall submit the disputed determinations or arithmetic
calculations via facsimile within two Business Days of receipt of the Exercise
Notice giving rise to such dispute, as the case may be, to the Holder. If the
Holder and the Company are unable to agree upon such determination or
calculation of the Exercise Price or the Warrant Shares within three Business
Days of such disputed determination or arithmetic calculation being submitted to
the Holder, then the Company shall, within two Business Days submit via
facsimile (a) the disputed determination of the Exercise Price to an
independent, reputable investment bank selected by the Company and approved by
the Holder or (b) the disputed arithmetic calculation of the Warrant Shares to
the Company's independent, outside accountant. The Company shall cause at its
expense the investment bank or the accountant, as the case may be, to perform
the determinations or calculations and notify the Company and the Holder of the
results no later than ten Business Days from the time it receives the disputed
determinations or calculations. Such investment bank's or accountant's
determination or calculation, as the case may be, shall be binding upon all
parties absent demonstrable error.
13. REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The
remedies provided in this Warrant shall be cumulative and in addition to all
other remedies available under this Warrant and the Registration Rights
Agreement, at law or in equity (including a decree of specific performance
and/or other injunctive relief), and nothing herein shall limit the right of the
12
Holder to pursue actual damages for any failure by the Company to comply with
the terms of this Warrant. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the Holder
shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.
14. TRANSFER. This Warrant may be offered for sale, sold, transferred
or assigned without the consent of the Company.
15. CERTAIN DEFINITIONS. For purposes of this Warrant, the following
terms shall have the following meanings:
"BLOOMBERG" means Bloomberg Financial Markets.
"BUSINESS DAY" means any day other than Saturday, Sunday or other day
on which commercial banks in The City of New York are authorized or required by
law to remain closed.
"CLOSING BID PRICE" and "CLOSING SALE PRICE" means, for any security as
of any date, the last closing bid price and last closing trade price,
respectively, for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing bid price or the closing trade price,
as the case may be, then the last bid price or last trade price, respectively,
of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg,
or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last closing bid price or last trade price,
respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if
the foregoing do not apply, the last closing bid price or last trade price,
respectively, of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price or last trade price, respectively, is reported for such security by
Bloomberg, the average of the bid prices, or the ask prices, respectively, of
any market makers for such security as reported in the "pink sheets" by Pink
Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Closing Bid
Price or the Closing Sale Price cannot be calculated for a security on a
particular date on any of the foregoing bases, the Closing Bid Price or the
Closing Sale Price, as the case may be, of such security on such date shall be
the fair market value as mutually determined by the Company and the Holder. If
the Company and the Holder are unable to agree upon the fair market value of
such security, then such dispute shall be resolved pursuant to Section 12. All
such determinations to be appropriately adjusted for any stock dividend, stock
split, stock combination or other similar transaction during the applicable
calculation period.
"COMMON STOCK" means (i) the Company's common stock, par value $.01 per
share, and (ii) any capital stock into which such Common Stock shall have been
changed or any capital stock resulting from a reclassification of such Common
Stock.
13
"CONVERTIBLE SECURITIES" means any stock or securities (other than
Options) directly or indirectly convertible into or exercisable or exchangeable
for Common Stock.
"EXPIRATION DATE" means July 14, 2009.
"OPTIONS" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.
"PERSON" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity and a government or any department or agency
thereof.
"PRINCIPAL MARKET" means the Nasdaq National Market.
"WEIGHTED AVERAGE PRICE" means, for any security as of any date, the
dollar volume-weighted average price for such security on the Principal Market
during the period beginning at 9:30:01 a.m., New York Time (or such other time
as the Principal Market publicly announces is the official open of trading), and
ending at 4:00:00 p.m., New York Time (or such other time as the Principal
Market publicly announces is the official close of trading) as reported by
Bloomberg through its "Volume at Price" functions, or, if the foregoing does not
apply, the dollar volume-weighted average price of such security in the
over-the-counter market on the electronic bulletin board for such security
during the period beginning at 9:30:01 a.m., New York Time (or such other time
as such market publicly announces is the official open of trading), and ending
at 4:00:00 p.m., New York Time (or such other time as such market publicly
announces is the official close of trading) as reported by Bloomberg, or, if no
dollar volume-weighted average price is reported for such security by Bloomberg
for such hours, the average of the highest closing bid price and the lowest
closing ask price of any of the market makers for such security as reported in
the "pink sheets" by Pink Sheets LLC (formerly the National Quotation Bureau,
Inc.). If the Weighted Average Price cannot be calculated for a security on a
particular date on any of the foregoing bases, the Weighted Average Price of
such security on such date shall be the fair market value as mutually determined
by the Company and the Holder. If the Company and the Holder are unable to agree
upon the fair market value of such security, then such dispute shall be resolved
pursuant to Section 12. All such determinations to be appropriately adjusted for
any stock dividend, stock split, stock combination or other similar transaction
during the applicable calculation period.
16. January SPA Provisions. The Company and the Holder hereby make to
each other the representations and warranties as to the Warrants and the Warrant
Shares as set forth in the January SPA as if such representations and warranties
were set forth herein, mutates mutandis. The Company hereby agrees to issue
transfer agent instructions substantially identical to, and subject to the same
terms and conditions, as the Transfer Agent Instructions referenced in the
January SPA and that the Warrants and Warrant Shares shall be governed by the
provisions of Section 4(b) of the January SPA as if such provisions were set
forth in full herein.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its authorized officer as of the date first indicated above.
AROTECH CORPORATION
By:
-------------------------------
Name: Robert S. Ehrlich
Title: Chief Executive Officer
15
EXHIBIT A
EXERCISE NOTICE
TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
WARRANT
AROTECH CORPORATION
To: Arotech Corporation
The undersigned is the Holder of Warrant No. _____ (the "WARRANT")
issued by Arotech Corporation, a Delaware corporation (the "COMPANY").
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Warrant.
1. The Warrant is currently exercisable to purchase a total of
___________ Warrant Shares.
2. The undersigned holder hereby exercises its right to purchase
___________ Warrant Shares pursuant to the Warrant.
3. The Holder intends that payment of the Exercise Price shall be made
as:
____________ a "Cash Exercise" with respect to _________________
Warrant Shares; and/or
____________ a "Cashless Exercise" with respect to _______________
Warrant Shares.
4. Pursuant to this exercise, the Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the Warrant.
5. Following this exercise, the Warrant shall be exercisable to
purchase a total of ________________ Warrant Shares.
Please issue the Warrant Shares in the following name and to the
following address:
Issue to: _____________________________________________________________
_____________________________________________________________
Account Number: _______________________________________________________
DTC Participant Number: _______________________________________________
Date: _______________ __, ______
- ---------------------------------------
Name of Registered Holder
By:
-----------------------------------
Name:
Title:
ACKNOWLEDGMENT
The Company hereby acknowledges this Exercise Notice and hereby directs
American Stock Transfer & Trust Co. to issue the above indicated number of
shares of Common Stock in accordance with the Transfer Agent Instructions dated
July 14, 2004, from the Company and acknowledged and agreed to by American Stock
Transfer & Trust Co.
AROTECH CORPORATION
By:
----------------------------------
Name:
Title:
FORM OF ASSIGNMENT
[To be completed and signed only upon transfer of Warrant]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________ the right represented by the within Warrant to
purchase ____________ shares of Common Stock of Arotech Corporation to which the
within Warrant relates and appoints ________________ attorney to transfer said
right on the books of Arotech Corporation with full power of substitution in the
premises.
Dated: ,
-------------- -----
----------------------------------------
(Signature must conform in all respects
to name of Holder as specified on the
face of the Warrant)
----------------------------------------
Address of Transferee
----------------------------------------
----------------------------------------
In the presence of:
- ------------------------------
EXHIBIT B
Address for Notices