Exhibit 1.2
REPRESENTATIVE'S WARRANT AGREEMENT
REPRESENTATIVE'S WARRANT AGREEMENT (the "REPRESENTATIVE'S WARRANT
AGREEMENT" or "AGREEMENT"), dated as of ___________, 2003, between NATURAL GOLF
CORPORATION (the "COMPANY") and GILFORD SECURITIES INCORPORATED, the
Representative of the several underwriters (the "REPRESENTATIVE").
WITNESSETH:
WHEREAS, the Representative has agreed, pursuant to the underwriting
agreement (the "UNDERWRITING AGREEMENT") dated ___________________, 2003 between
the Company, the Representative, as the Representative of the several
underwriters named in the Underwriting Agreement (the "UNDERWRITERS") and
certain Selling Shareholders (the "SELLING SHAREHOLDERS"), to act as the
Representative of the several underwriters named therein in connection with the
Company's proposed public offering of up to 2,500,000 shares of the Company's
common stock, no par value (the "COMMON STOCK") at $5.00 per share (the "PUBLIC
OFFERING"); and
WHEREAS, the Company proposes to issue to the Representative and/or member
firms of the National Association of Securities Dealers, Inc. ("NASD")
participating in the Public Offering and the BONA FIDE officers and partners
thereof as permitted by Rule 2710(c)(7)(A) and (B) (the "RULE") of the NASD
Conduct Rules (each, a "HOLDER," and collectively, the "HOLDERS"), warrants
("COMMON STOCK REPRESENTATIVE WARRANTS") to purchase up to 250,000 shares of
Common Stock (the "SHARES"). The "COMMON STOCK REPRESENTATIVE WARRANTS" are also
referred to as the "WARRANTS." The "SHARES" are also referred to as the "WARRANT
SECURITIES;" and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued on the Closing Date (as such term is defined in the Underwriting
Agreement) by the Company to the Holders in consideration for, and as part of
the compensation in connection with, the Representative acting as Representative
of the several underwriters pursuant to the Underwriting Agreement.
NOW, THEREFORE, in consideration of the premises, the payment to the
Company of $.0001 per Warrant, the agreements set forth herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. GRANT AND PERIOD. The above recitals are true and correct. The Public
Offering has been registered under a Registration Statement on Form SB-2 (File
No. 333-107802 and declared effective by the Securities and Exchange Commission
(the "SEC" or "COMMISSION") on ____________, 2003 (the "EFFECTIVE DATE"). This
Agreement, relating to the purchase of the Warrants, is entered into pursuant to
the Underwriting Agreement between the Company and the Representative in
connection with the Public Offering.
Pursuant to the Warrants, the Holders are hereby granted the right to
purchase from the Company, at any time during the period commencing after the
Closing Date of the Offering and expiring five (5) years after the Closing Date
(the "EXPIRATION TIME"), up to 250,000 Shares at an initial exercise price
(subject to adjustment as provided in SECTION 7 hereof) of $8.25 per share (165%
of the per share price of the Common Stock in the Public Offering) (the
"EXERCISE PRICE" or "PURCHASE PRICE"), subject to the terms and conditions of
this Agreement.
Except as specifically otherwise provided herein, the Shares constituting
the Warrant Securities shall bear the same terms and conditions as such
securities described under the caption "DESCRIPTION OF SECURITIES" in the
Registration Statement, and as designated in the Company's Articles of
Incorporation and any amendments thereto, and the Holders shall have
registration rights under the Securities Act of 1933, as amended (the "ACT"),
for the Warrants and the Shares, as more fully described in SECTION 7 of this
Representative's Warrant Agreement.
2. WARRANT CERTIFICATES. The warrant certificates (the "WARRANT
CERTIFICATE") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in the form of Warrant Certificate, attached hereto and
made a part hereof, with such appropriate insertions, omissions, substitutions,
and other variations as required or permitted by this Agreement.
3. EXERCISE OF WARRANT.
3.1 FULL EXERCISE.
(a) The Holder may effect a cash exercise of the Common Stock
Representative Warrants by surrendering to the Company the Warrant Certificate,
together with a Subscription in the form of EXHIBIT A attached thereto, duly
executed by such Holder, at any time prior to the Expiration Time, at the
Company's principal office, accompanied by payment in cash or by certified or
official bank check payable to the order of the Company in the amount of the
aggregate purchase price (the "AGGREGATE PRICE"), subject to any adjustments
provided for in this Agreement. The aggregate price hereunder for each Holder
shall be equal to the Exercise Price multiplied by the number of Shares that are
the subject of each Holder's Warrant (as adjusted as hereinafter provided).
(b) The Holder hereof may effect a cashless exercise of the
Common Stock Representative Warrants by delivering the Warrant Certificate to
the Company together with a Subscription in the form of EXHIBIT B attached
thereto, duly executed by such Holder, in which case no payment of cash will be
required. Upon such cashless exercise, the number of Shares to be purchased by
each Holder hereof shall be determined by dividing: (i) the number obtained by
multiplying the number of Shares that are the subject of each Holder's Warrant
Certificate by the amount, if any, by which the then Market Value (as
hereinafter defined) exceeds the Purchase Price; by (ii) the then per share
Market Value. In no event shall the Company be obligated to issue any fractional
securities and, at the time it causes a certificate or certificates to be
issued, it shall pay the Holder in lieu of any fractional securities or shares
to which such Holder would otherwise be entitled, by the Company check, in an
amount equal to such fraction multiplied by the Market Value. The "MARKET VALUE"
shall be determined on a per
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Share basis as of the close of the business day preceding the date of exercise,
which determination shall be made as follows: (a) if the Common Stock is listed
for trading on a national or regional stock exchange or is included on the
NASDAQ National Market or SmallCap Market, the average closing sale price quoted
on such exchange or the NASDAQ National Market or SmallCap Market which is
published in THE WALL STREET JOURNAL for the ten (10) trading days immediately
preceding the date of exercise, or if no trade of the Common Stock shall have
been reported during such period, the last sale price so quoted for the next day
prior thereto on which a trade in the Common Stock was so reported; or (b) if
the Common Stock is not so listed, admitted to trading or included, the average
of the closing highest reported bid and lowest reported ask price as quoted on
the National Association of Securities Dealer's OTC Bulletin Board or in the
"PINK SHEETS" published by the National Daily Quotation Bureau for the first day
immediately preceding the date of exercise on which the Common Stock is traded.
3.2 PARTIAL EXERCISE. The Warrants may also be exercised from time to
time in part by surrendering the Warrant Certificate in the manner specified in
SECTION 3.1 hereof, except that with respect to a cash exercise, the Purchase
Price payable shall be equal to the number of securities being purchased
hereunder multiplied by the per security Purchase Price, subject to any
adjustments provided for in this Agreement. Upon any such partial exercise, the
Company, at its expense, will forthwith issue to the Holder hereof a new Warrant
Certificate or Warrants of like tenor calling in the aggregate for the number of
securities (as constituted as of the date hereof) for which the Warrant
Certificate shall not have been exercised, issued in the name of the Holder
hereof or as such Holder (upon payment by such Holder of any applicable transfer
taxes) may direct.
4. ISSUANCE OF CERTIFICATES. Upon the exercise of the Warrants, the
issuance of certificates for shares of Common Stock shall be made forthwith
(and, in any event within three (3) business days thereafter) without charge to
the Holder thereof including, without limitation, any tax which may be payable
in respect of the issuance thereof, and such certificates shall (subject to the
provisions of SECTION 5 and SECTION 6 hereof) be issued in the name of, or in
such names as may be directed by, the Holder thereof; provided, however, that
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificates
in a name other than that of the Holder and the Company shall not be required to
issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
The Warrant Certificates and the certificates representing the shares of
Common Stock shall be executed on behalf of the Company by the manual or
facsimile signature of the then present Chairman or Vice Chairman of the Board
of Directors or President or Vice President of the Company, attested to by the
manual or facsimile signature of the then present Secretary or Assistant
Secretary of the Company. Warrant Certificates shall be dated the date of
execution by the Company upon initial issuance, division, exchange, substitution
or transfer.
5. RESTRICTION ON TRANSFER OF WARRANTS. The Holder of a Warrant
Certificate, by acceptance thereof, covenants and agrees that the Warrants may
not be sold, transferred, assigned, hypothecated or otherwise disposed of, in
whole or in part, for a period of one (1) year
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from the Effective Date of the Public Offering, except (a) to a NASD member firm
that participated in the Public Offering and the BONA FIDE officers or partners
thereof; (b) by operation of law or (c) by reason of reorganization of the
Company.
6. REGISTRATION RIGHTS.
6.1 REGISTRATION UNDER THE SECURITIES ACT OF 1933. The Warrants and
the Warrant Securities (collectively the "REGISTRABLE SECURITIES") have been
registered under the Securities Act of 1933, as amended (the "ACT"). Upon
exercise, in part or in whole, of the Warrants, certificates representing the
Shares shall bear the following legend in the event there is no current
registration statement effective with the Commission at such time as to such
securities:
The securities represented by this certificate may not be offered or sold
except pursuant to (i) an effective registration statement under the
Securities Act of 1933, as amended, (ii) to the extent applicable, Rule 144
under the Securities Act (or any similar rule under the Securities Act
relating to the disposition of securities), or (iii) an opinion of counsel,
if such opinion shall be reasonably satisfactory to counsel to the issuer,
that an exemption from registration under the Securities Act and applicable
state securities laws is available.
6.2 PIGGYBACK REGISTRATION. If, at any time commencing on the first
anniversary of the Closing Date and expiring seven (7) years after the Closing
Date, the Company prepares and files a post-effective amendment to the
Registration Statement, or a new Registration Statement under the Act, or files
a Notification on Form 1-A or otherwise registers securities under the Act, or
files a similar disclosure document with the Commission (each such filing, a
"REGISTRATION DOCUMENT") as to any of its securities under the Act (other than
under a Registration Statement pursuant to Form S-8 or Form S-4), it will give
written notice by registered mail, at least twenty (20) days prior to the filing
of such Registration Document to the Representative and to all other Holders of
the Registrable Securities of its intention to do so. The Company shall include
all Registrable Securities in such Registration Documents with respect to which
the Company has received written requests for inclusion therein within fifteen
(15) days of actual receipt of the Company's notice.
No Holder of Registrable Securities may participate in any registration
hereunder which is underwritten unless such holder completes and executes all
documents as are reasonable and customary in such offerings.
The Company shall have the right at any time after it shall have given
written notice pursuant to this SECTION 6.2 (irrespective of whether a written
request for inclusion of any Registration Securities shall have been made) to
elect not to file any such Registration Document, or to withdraw the same after
the filing but prior to the effective date thereof.
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6.3 DEMAND REGISTRATION.
(a) At any time commencing one (1) year after the Closing Date
until the Expiration Time, Holders of Registrable Securities representing more
than fifty (50%) percent of such securities at that time outstanding (a
"MAJORITY OF HOLDERS") shall have the right (which right is in addition to the
registration rights under SECTION 6.2 hereof), exercisable by written notice to
the Company, to have the Company prepare and file with the Commission, on one
(1) occasion, a registration statement and/or such other documents, including a
prospectus, and/or any other appropriate disclosure document as may be
reasonably necessary in the opinion of both counsel for the Company and counsel
for the Majority of Holders, in order to comply with the provisions of the Act,
so as to permit a public offering and sale of their respective Registrable
Securities for nine (9) consecutive months (or such longer period of time as
permitted by the Act) by such Majority of Holders and any other Holders of any
of the Registrable Securities who notify the Company within twenty (20) days
after receipt of notice by registered or certified mail from the Company of such
request. A Demand Registration shall not be counted as a Demand Registration
hereunder until such Demand Registration has been declared effective by the SEC
and maintained continuously effective for a period of at least nine (9) months
or such shorter period when all Registrable Securities included therein have
been sold in accordance with such Demand Registration.
(b) The Company covenants and agrees to give written notice by
registered or certified mail of any registration request under this SECTION 6.3
by the Majority of Holders to all other registered Holders of any of the
Registrable Securities within ten (10) days from the date of the receipt of any
such registration request.
(c) Any written request by the Holders made pursuant to this
SECTION 6.3 shall:
(i) specify the number of Registrable Securities which the
Holders intend to offer and sell and the minimum price at which the Holders
intend to offer and sell such securities;
(ii) state the intention of the Holders to offer such
securities for sale;
(iii) describe the intended method of distribution of such
securities; and
(iv) contain an undertaking on the part of the Holders to
provide all such information and materials concerning the Holders and take
all such action as may be reasonably required to permit the Company to
comply with all applicable requirements of the Commission and to obtain
acceleration of the effective date of the registration statement.
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6.4 COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. In
connection with the filing of any Registration Document by the Company, the
Company covenants and agrees as follows:
(a) The Company shall use its best efforts to file a
registration statement within forty-five (45) days of receipt of any demand
pursuant to SECTION 6.3, and shall use its best efforts to have any such
registration statement declared effective at the earliest practicable time. The
Company will promptly notify each Holder of such Registrable Securities and
confirm such advice in writing, (i) when such registration statement becomes
effective, (ii) when any post-effective amendment to such registration statement
becomes effective and (iii) of any request by the SEC for any amendment or
supplement to such registration statement or any prospectus relating thereto or
for additional information.
The Company shall furnish to each Holder of such Registrable Securities
such number of copies of such registration statement and of each such amendment
and supplement thereto (in each case including each preliminary prospectus and
summary prospectus) in conformity with the requirements of the Act, and such
other documents as the Holders may reasonably request in order to facilitate the
disposition of the Registrable Securities by such Holders.
(b) The Company shall pay all costs (excluding transfer taxes,
if any, and the Holders' pro-rata portions of the selling discount or
commissions), fees and expenses in connection with all registration statements
filed pursuant to SECTION 6.2 and SECTION 6.3(a) hereof including, without
limitation, the Company's legal and accounting fees, printing expenses, blue sky
fees and expenses and the fees and expenses of one (1) legal counsel to the
Holders, so chosen by the Holders. The Holder(s) will pay all costs, fees and
expenses in connection with any registration statement filed pursuant to SECTION
6.3(c). If the Company shall fail to comply with the provisions of SECTION
6.3(a), the Company shall, in addition to any other equitable or other relief
available to the Holder(s), be liable for any or all special and consequential
damages sustained by the Holder(s) requesting registration of their Registrable
Securities.
(c) The Company shall prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be reasonably necessary to keep such
registration statement effective for at least nine (9) months (or such longer
period as permitted by the Act), and to comply with the provisions of the Act
with respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the Holder or Holders of Registrable Securities set forth in such
registration statement. If at any time the SEC should institute or threaten to
institute any proceedings for the purpose of issuing a stop order suspending the
effectiveness of any such registration statement, the Company will promptly
notify each Holder of Registrable Securities and will use all reasonable efforts
to prevent the issuance of any such stop order or to obtain the withdrawal
thereof as soon as possible. The Company will use its good faith reasonable
efforts and take all reasonably necessary action which may be required in
qualifying or registering the Registrable Securities included in a registration
statement for offering and sale under the securities or blue sky laws of such
states as reasonably are required by the Holder(s), provided that the Company
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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 laws of
any such jurisdiction. The Company shall use its good faith reasonable efforts
to cause such Registrable Securities covered by such registration statement to
be registered with or approved by such other governmental agencies or
authorities of the United States or any State thereof as may be reasonably
necessary to enable the Holder(s) thereof to consummate the disposition of such
Registrable Securities.
(d) The Company shall indemnify the Holder(s) of the Registrable
Securities to be sold pursuant to any registration statement and each person, if
any, who controls such Holders within the meaning of SECTION 15 of the Act or
SECTION 20(a) of the Securities Exchange Act of 1934, as amended ("EXCHANGE
ACT"), against all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may become subject under the Act, the
Exchange Act or otherwise, arising from such registration statement but only to
the same extent and with the same effect as the provisions pursuant to which the
Company has agreed to indemnify the Underwriters as contained in the
Underwriting Agreement.
(e) If requested by the Company prior to the filing of any
registration statement covering the Registrable Securities, each of the
Holder(s) of the Registrable Securities to be sold pursuant to a registration
statement, and their successors and assigns, shall severally, and not jointly,
indemnify the Company, its officers and directors 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, against all loss, claim, damage or expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the Exchange Act or otherwise, arising from written
information furnished by such Holder, or their successors or assigns, for
specific inclusion in such registration statement to the same extent and with
the same effect as the provisions contained in the Underwriting Agreement
pursuant to which the Underwriters have agreed to indemnify the Company, except
that the maximum amount which may be recovered from each Holder pursuant to this
paragraph or otherwise shall be limited to the amount of net proceeds received
by the Holder from the sale of the Registrable Securities.
(f) Nothing contained in this Agreement shall be construed as
requiring the Holder(s) to exercise their Warrants prior to the filing of any
registration statement or the effectiveness thereof.
(g) The Company shall not permit the inclusion of any securities
other than the Registrable Securities to be included in any registration
statement filed pursuant to SECTION 6.3 hereof without the prior written consent
of the Majority of Holders which consent will not be unreasonably withheld or
delayed.
(h) The Company shall furnish to each Holder participating in an
offering and to the managing underwriter, if any, a signed counterpart,
addressed to such Holder or underwriter, of (i) an opinion of counsel to the
Company, dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, an opinion dated the date
of the closing under the underwriting agreement), and (ii) a "COLD
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COMFORT" letter dated the effective date of such registration statement (and, if
such registration includes an underwritten public offering, a letter dated the
date of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such registration statement, in each case covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities.
(i) The Company shall deliver promptly to each Holder
participating in an offering and to the managing underwriter, if any, copies of
all correspondence between the Commission and the Company, its counsel or
auditors and all non-privileged memoranda relating to discussions with the
Commission or its staff with respect to the registration statement and permit
each Holder and underwriter to do such investigation, upon reasonable advance
notice, with respect to information contained in or omitted from the
registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the NASD. Such investigation shall
include access to books, records and properties and opportunities to discuss the
business of the Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as any such Holder
shall reasonably request.
(j) With respect to a registration statement filed pursuant
to SECTION 6.3, the Company, if requested, shall enter into an underwriting
agreement with the managing underwriter, reasonably satisfactory to the Company,
selected for such underwriting by a Majority of Holders requested to be included
in such underwriting. Such agreement shall be satisfactory in form and substance
to the Company, each Holder and such managing underwriters, and shall contain
such representations, warranties and covenants by the Company and such other
terms as are customarily contained in agreements of that type used by the
managing underwriter. The Holders, if required by the underwriter to be parties
to any underwriting agreement relating to an underwritten sale of their
Registrable Securities, may, at their option, require that any or all the
representations, warranties and covenants of the Company to or for the benefit
of such underwriters shall also be made to and for the benefit of such Holders.
Such Holders shall not be required to make any representations or warranties to
or agreements with the Company or the underwriters except as they may relate to
such Holders and their intended methods of distribution.
(k) Notwithstanding the provisions of SECTION 6.2 or
SECTION 6.3 of this Agreement, the Company shall not be required to effect or
cause the registration of Registrable Securities pursuant to SECTION 6.2 or
SECTION 6.3 hereof if, within thirty (30) days after its receipt of a request to
register such Registrable Securities (i) counsel for the Company delivers an
opinion to the Holders and to the Company's transfer agent requesting
registration of such Registrable Securities, in form and substance satisfactory
to counsel to such Holder(s), to the effect that the entire number of
Registrable Securities proposed to be sold by such Holder(s) may otherwise be
sold, in the manner proposed by such Holder(s), without registration under the
Securities Act, or (ii) the SEC shall have issued a no-action position, in form
and
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substance satisfactory to counsel for the Holder(s) requesting registration of
such Registrable Securities, to the effect that the entire number of Registrable
Securities proposed to be sold by such Holder(s) may be sold by it, in the
manner proposed by such Holder(s), without registration under the Securities
Act; PROVIDED, HOWEVER, if the Company's transfer agent does not permit the sale
of the Registrable Securities upon request or for any other reason such sale is
delayed, the Company shall thereafter immediately register the Registrable
Securities for sale under the Act.
(l) After completion of the Public Offering, the Company
shall not, directly or indirectly, enter into any merger, business combination
or consolidation in which (a) the Company shall not be the surviving corporation
and (b) the shareholders of the Company are to receive, in whole or in part,
capital stock or other securities of the surviving corporation, unless the
surviving corporation shall, prior to such merger, business combination or
consolidation, agree in writing to assume the obligations of the Company under
this Agreement, and for that purpose references hereunder to "REGISTRABLE
SECURITIES" shall be deemed to include the securities which the Holders would be
entitled to receive in exchange for Registrable Securities under any such
merger, business combination or consolidation, provided that to the extent such
securities to be received are convertible into shares of Common Stock of the
issuer thereof, then any such shares of Common Stock as are issued or issuable
upon conversion of said convertible securities shall also be included within the
definition of "REGISTRABLE SECURITIES."
7. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES.
7.1 ADJUSTMENT FOR DIVIDENDS, SUBDIVISIONS, COMBINATIONS OR
RECLASSIFICATIONS. In case the Company shall (a) pay a dividend or make a
distribution in shares of its capital stock (whether shares of Common Stock or
of capital stock of any other class), (b) subdivide its outstanding shares of
Common Stock into a greater number of shares, (c) combine its outstanding shares
of Common Stock into a smaller number of shares, or (d) issue by
reclassification of its shares of Common Stock any shares of capital stock of
the Company; then, and in each such case, the per share Exercise Price and the
number of Warrant Securities in effect immediately prior to such action shall be
adjusted so that the Holder of this Warrant thereafter upon the exercise hereof
shall be entitled to receive the number and kind of shares of the Company which
such Holder would have owned immediately following such action had this Warrant
been exercised immediately prior thereto. An adjustment made pursuant to this
SECTION 7.1 shall become effective immediately after the record date in the case
of a dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
If, as a result of an adjustment made pursuant to this section, the Holder of
this Warrant shall become entitled to receive shares of two or more classes of
capital stock of the Company, the Board of Directors of the Company (whose
determination shall be conclusive) shall determine the allocation of the
adjusted Exercise Price between or among shares of such class of capital stock.
Immediately upon any adjustment of the Exercise Price pursuant to this
section, the Company shall send written notice thereof to the Holder of Warrant
Certificates (by first class mail, postage prepaid), which notice shall state
the Exercise Price resulting from such adjustment, and any increase or decrease
in the number of Warrant Securities to be acquired
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upon exercise of the Warrants, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.
7.2 ADJUSTMENT FOR REORGANIZATION, MERGER OR CONSOLIDATION. In case
of any reorganization of the Company or consolidation of the Company with, or
merger of the Company with, or merger of the Company into, another corporation
(other than a consolidation or merger which does not result in any
reclassification or change of the outstanding Common Stock), the corporation
formed by such consolidation or merger shall execute and deliver to the Holder a
supplemental Warrant Agreement providing that the Holder of each Warrant then
outstanding or to be outstanding shall have the right thereafter (until the
expiration of such Warrant) to receive, upon exercise of such warrant, the kind
and amount of shares of stock and other securities and property receivable upon
such consolidation or merger, by a holder of the number of shares of Common
Stock of the Company for which such warrant might have been exercised
immediately prior to such reorganization, consolidation, merger, conveyance,
sale or transfer. Such supplemental Warrant Agreement shall provide for
adjustments which shall be identical to the adjustments provided in this SECTION
7 and such registration rights and other rights as provided in this Agreement.
The Company shall not effect any such consolidation, merger, or similar
transaction as contemplated by this paragraph, unless prior to or simultaneously
with the consummation thereof, the successor corporation (if other than the
Company) resulting from such consolidation or merger or the corporation
purchasing, receiving, or leasing such assets or other appropriate corporation
or entity shall assume, by written instrument executed and delivered to the
Holders, the obligation to deliver to the Holders, such shares of stock,
securities, or assets as, in accordance with the foregoing provisions, such
holders may be entitled to purchase, and to perform the other obligations of the
Company under this Agreement. The above provision of this SECTION 7.2 shall
similarly apply to successive consolidations or successively whenever any event
listed above shall occur.
7.3 DIVIDENDS AND OTHER DISTRIBUTIONS. In the event that the Company
shall at any time prior to the exercise of all of the Warrants distribute to its
shareholders any assets, property, rights, evidences of indebtedness, securities
(other than a distribution made as a cash dividend payable out of earnings or
out of any earned surplus legally available for dividends under the laws of the
jurisdictions of incorporation of the Company), whether issued by the Company or
by another, the Holders of the unexercised Warrants shall thereafter be
entitled, in addition to the shares of Common Stock or other securities and
property receivable upon the exercise thereof, to receive, upon the exercise of
such Warrants, the same property, assets, rights, evidences of indebtedness,
securities or any other thing of value that they would have been entitled to
receive at the time of such distribution as if the Warrants had been exercised
immediately prior to such distribution. At the time of any such distribution,
the Company shall make appropriate reserves to ensure the timely performance of
the provisions of this subsection or an adjustment to the Exercise Price, which
shall be effective as of the day following the record date for such
distribution.
7.4 ADJUSTMENT IN NUMBER OF SECURITIES. Upon each adjustment of the
Exercise Price pursuant to the provisions of this SECTION 7, the number of
securities issuable upon the exercise of each Warrant shall be adjusted to the
nearest full amount by multiplying a number equal to the Exercise Price in
effect immediately prior to such adjustment by the number
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of securities issuable upon exercise of the Warrants immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise Price.
7.5 NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No adjustment
of the Exercise Price shall be made if the amount of said adjustment shall be
less than $.01 per Share; PROVIDED, HOWEVER, that in such case any adjustment
that would otherwise be required then to be made shall be carried forward and
shall be made at the time of and together with the next subsequent adjustment
which, together with any adjustment so carried forward, shall amount to at least
$.01 per Share.
7.6 ACCOUNTANT'S CERTIFICATE OF ADJUSTMENT. In each case of an
adjustment or readjustment of the Exercise Price or the number of any securities
issuable upon exercise of the Warrants, the Company, at its expense, shall cause
independent certified public accountants of recognized standing selected by the
Company (who may be the independent certified public accountants then auditing
the books of the Company) to compute such adjustment or readjustment in
accordance herewith and prepare a certificate showing such adjustment or
readjustment, and shall mail such certificate, by first class mail, postage
prepaid, to any Holder of the Warrants at the Holders' address as shown on the
Company's books. The certificate shall set forth such adjustment or
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based including, but not limited to, a statement of (i) the
Exercise Price at the time in effect, and (ii) the number of additional or fewer
securities and the type and amount, if any, of other property which at the time
would be receivable upon exercise of the Warrants.
8. EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES. Each Warrant
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of securities in such denominations as shall
be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
9. ELIMINATION OF FRACTIONAL INTEREST. The Company shall not be required
to issue certificates representing fractions of shares of Common Stock upon the
exercise of the Warrants, nor shall it be required to issue script or pay cash
in lieu of fractional interests, it being the intent of the parties that all
fractional interests may be eliminated, at the Company's option, by rounding any
fraction up to the nearest whole number of shares of Common Stock or other
securities, properties or rights, or in lieu thereof paying cash equal to such
fractional interest multiplied by the Market Value of a share of Common Stock.
- 11 -
10. RESERVATION, VALIDITY AND LISTING. The Company covenants and agrees
that during the exercise period, the Company shall at all times reserve and keep
available out of its authorized shares of Common Stock, solely for the purpose
of issuance upon the exercise of the Warrants, such number of shares of Common
Stock or other securities, properties or rights as shall be issuable upon the
exercise under this Warrant Certificate. The Company covenants and agrees that,
upon exercise of the Warrants, and payment of the Exercise Price therefor, all
shares of Common Stock and other securities issuable upon such exercise shall be
duly authorized, validly issued, fully paid, non-assessable and not subject to
the preemptive rights of any shareholder. As long as the Warrants shall be
outstanding, the Company shall use its best efforts to cause all shares of
Common Stock issuable upon the exercise of the Warrants to be listed and quoted
(subject to official notice of issuance) on all securities exchanges and systems
on which the Common Stock are then listed and/or quoted, including Nasdaq and
the American Stock Exchange.
11. NOTICES TO WARRANT HOLDERS. Nothing contained in this Agreement shall
be construed as conferring upon the Holders of the Warrants the right to vote or
to consent or to receive notice as a shareholder in respect of any meetings of
shareholders for the election of directors or any other matter, or as having any
rights whatsoever as a shareholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the following
events shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) the Company shall offer to all the holders of its Common Stock
any additional shares of capital stock of the Company or securities convertible
into or exchangeable for shares of capital stock of the Company, or any option,
right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall be
proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date of the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notices shall
specify such record date or the date of closing the transfer books, as the case
may be. Failure to give such notice or any defect therein shall not affect the
validity of any action taken in connection with the declaration or payment of
any such dividend, or the issuance of any convertible or exchangeable
securities, or subscription rights, options or warrants, or any proposed
dissolution, liquidation, winding up or sale.
- 12 -
12. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly given when
sent by (i) facsimile; and (ii) delivered personally or by overnight courier or
mailed by registered or certified mail, return receipt requested:
(a) If to the registered Holder of any of the Registrable Securities,
to the address of such Holder as shown on the books of the Company.
With a copy to:
Xxxxxxxx X. Xxxxxxx, Esq.
Gusrae, Xxxxxx & Bruno, PLLC
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
(b) If to the Company, to the address set forth below or to such
other address as the Company may designate by notice to the Holders.
Xxxxxx X. Xxxxx
President and Chief Executive Officer
Natural Golf Corporation
0000 Xxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxx, Esq.
Xxxxxxx X. Xxxxx, Esq.
Xxxxxx Xxxxxx Zavis Rosennan
000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
Fax: (000) 000-0000
13. ENTIRE AGREEMENT: MODIFICATION. This Agreement (and the Underwriting
Agreement to the extent applicable) contain the entire understanding between the
parties hereto with respect to the subject matter hereof, and the terms and
provisions of this Agreement may not be modified, waived or amended except in a
writing executed by the Company and a Majority of Holders. Notice of any
modification, waiver or amendment shall be promptly provided to any Holder not
consenting to such modification, waiver or amendment.
14. SUCCESSORS. All the covenants and provisions of this Agreement shall
be binding upon and inure to the benefit of the Company, the Holders and their
respective successors and assigns hereunder.
- 13 -
15. TERMINATION. This Agreement shall terminate at the earlier of (i) the
public sale of all of the Registrable Securities, or (ii) at the close of
business on _______________, 200_. Notwithstanding the foregoing, the
indemnification provisions of SECTION 6 shall survive such termination.
16. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York without regard to the conflicts of laws principles thereof. The parties
hereto hereby irrevocably agree that any suit or proceeding arising directly
and/or indirectly pursuant to or under this Agreement, shall be brought solely
in a federal or state court located in the City, County and State of New York.
By its execution hereof, the parties hereby covenant and irrevocably submit to
the IN PERSONAM jurisdiction of the federal and state courts located in the
City, County and State of New York and agree that any process in any such action
may be served upon any of them personally, or by certified mail or registered
mail upon them or their agent, return receipt requested, with the same full
force and effect as if personally served upon them in New York City. The parties
hereto waive any claim that any such jurisdiction is not a convenient forum for
any such suit or proceeding and any defense or lack of IN PERSONAM jurisdiction
with respect thereto. In the event of any such action or proceeding, the party
prevailing therein shall be entitled to payment from the other party hereto of
its reasonable counsel fees and disbursements in an amount judicially
determined.
17. SEVERABILITY. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
18. CAPTIONS. The caption headings of the sections of this Agreement are
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
19. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Underwriters and any other registered Holder(s) of the Warrant Certificates or
Registrable Securities any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit of the
Company and the Underwriters and any other Holder(s) of the Warrant Certificates
or Registrable Securities.
20. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
- 14 -
IN WITNESS HEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first above written.
NATURAL GOLF CORPORATION
By:
-----------------------------------------
Xxxxxx X. Xxxxx
President and Chief Executive Officer
ATTEST:
-----------------------------------
Xxxxxxxx X. Xxxxxxxxx, Secretary
GILFORD SECURITIES INCORPORATED
By:
-----------------------------------------
Name:
Title:
- 15 -
NATURAL GOLF CORPORATION
WARRANT CERTIFICATE
THE WARRANTS 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, AS AMENDED,
(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, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE
ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M. EASTERN TIME ON ___________, 200__
NO. W-__________ __________ Common Stock
Representative Warrants
This Warrant Certificate certifies that, or registered assigns, is the
registered holder of Common Stock Representative Warrants of Natural Golf
Corporation (the "COMPANY"). Each Common Stock Representative Warrant permits
the Holder hereof to purchase initially, at any time from __________, 2004
("PURCHASE DATE") until 5:30 p.m. Eastern Time on __________, 2009 ("EXPIRATION
TIME"), one (1) share of the Company's Common Stock at the initial exercise
price, subject to adjustment in certain events (the "EXERCISE PRICE"), of $8.25
per share (165% of the public offering price).
Any exercise of Common Stock Representative Warrants shall be effected by
surrender of this Warrant Certificate and payment of the Exercise Price at an
office or agency of the Company, but subject to the conditions set forth herein
and in the Representative's Warrant Agreement dated as of ____________, 2003,
between the Company and Gilford Securities Incorporated, as the same may be
amended or modified from time to time (the "REPRESENTATIVE'S WARRANT
AGREEMENT"). Payment of the Exercise Price shall be made by certified check or
official bank check in New York Clearing House funds payable to the order of the
Company in the event there is no cashless exercise pursuant to SECTION 3.1(b) of
the Representative's Warrant Agreement. The Common Stock Representative Warrants
are also referred to as "WARRANTS."
No Warrant may be exercised after the Expiration Time, at which time all
Warrants evidenced hereby, unless exercised prior thereto, hereby shall
thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Representative's Warrant
Agreement, which Representative's Warrant 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 or rights, obligations, duties and
immunities thereunder of the Company and the holders (the words "HOLDERS" or
"HOLDER" meaning the registered holders or registered holder) of the Warrants.
The Representative's Warrant Agreement provides that upon the occurrence of
certain events, the Exercise Price and the type and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter, or otherwise impair, the rights
of the holder as set forth in the Representative's Warrant Agreement.
Upon due presentment for registration or transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the
Representative's Warrant 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 Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant 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 terms used in this Warrant Certificate which are defined in the
Representative's Warrant Agreement shall have the meanings assigned to them in
the Representative's Warrant Agreement.
- 2 -
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed.
Dated as of ___________, 2003
NATURAL GOLF CORPORATION
By:
-----------------------------------------
Xxxxxx X. Xxxxx
President and Chief Executive Officer
ATTEST:
----------------------------------
Xxxxxxxx X. Xxxxxxxxx, Secretary
- 3 -
EXHIBIT "A"
FORM OF SUBSCRIPTION (CASH EXERCISE)
(To be signed only upon exercise of Warrant)
TO: Natural Golf Corporation
0000 Xxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxxxxx, Xxxxxxxx 00000
The undersigned, the Holder of Warrant Certificate number __________ (the
"WARRANT"), representing _____________ Common Stock Representative Warrants of
Natural Golf Corporation (the "COMPANY"), which Warrant Certificate is being
delivered herewith, hereby irrevocably elects to exercise the purchase right
provided by the Warrant Certificate for, and to purchase thereunder, ___________
Shares of the Company, and herewith makes payment of $___________ therefore, and
requests that the certificates for such securities be issued in the name of, and
delivered to, ______________________________________, whose address is
______________________________________________________________, all in
accordance with the Representative's Warrant Agreement and the Warrant
Certificate.
Dated:
----------------------
------------------------------------------
(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrant Certificate)
------------------------------------------
------------------------------------------
------------------------------------------
Address
------------------------------------------
Social Security Number or
Tax Identification Number
EXHIBIT "B"
FORM OF SUBSCRIPTION (CASHLESS EXERCISE)
TO: Natural Golf Corporation
0000 Xxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxxxxx, Xxxxxxxx 00000
The undersigned, the Holder of Warrant Certificate number ___________ (the
"WARRANT"), representing _________ Common Stock Representative Warrants of
Natural Golf Corporation (the "COMPANY"), which Warrant is being delivered
herewith, hereby irrevocably elects the cashless exercise of the purchase right
provided by the Representative's Warrant Agreement and the Warrant Certificate
for, and to purchase thereunder, Shares of the Company in accordance with the
formula provided at SECTION 3.1(b) of the Representative's Warrant Agreement.
The undersigned requests that the certificates for such Shares be issued in the
name of, and delivered to, ____________________, whose address is
______________________________________________________________, all in
accordance with the Warrant Certificate.
Dated:
-------------------
------------------------------------------
(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrant Certificate)
------------------------------------------
------------------------------------------
------------------------------------------
Address
------------------------------------------
Social Security Number or
Tax Identification Number
FORM OF ASSIGNMENT
(To be exercised by the registered holder if such
Holder desires to transfer the Warrant Certificate)
FOR VALUE RECEIVED ________________________________________________ hereby
sells, assigns and transfers unto:
------------------------------------
Print Name of Transferee
------------------------------------
Address
------------------------------------
City State Zip Code
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _____________________________
Attorney, to transfer the within Warrant Certificate on the books of the
within-named Company, with full power of substitution.
Dated: Signature:
----------------------------
------------------------------------------
(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrant Certificate)
------------------------------------------
------------------------------------------
Social Security Number or Other
Identifying Number of Assignee
