THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED ("THE ACT"), OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED
OR OTHERWISE DISPOSED OF UNLESS THIS WARRANT SHALL HAVE BEEN
REGISTERED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS OR THE PERSON REQUESTING THE TRANSFER OF THIS WARRANT
SHALL FURNISH, WITH RESPECT TO SUCH TRANSFER, AN OPINION OF
COUNSEL, SATISFACTORY TO AMERICAN CONSOLIDATED LABORATORIES,
INC., TO THE EFFECT THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
DISPOSITION WILL NOT INVOLVE ANY VIOLATION OF THE
REGISTRATION PROVISIONS OF THE ACT OR OF ANY APPLICABLE
STATE SECURITIES LAW.
AMERICAN CONSOLIDATED LABORATORIES, INC.
(a Florida corporation)
Warrant for the purchase of securities of American
Consolidated Laboratories, Inc.
VOID AFTER 5:00 P.M., EASTERN TIME, ON JUNE 25, 2001
FOR VALUE RECEIVED, American Consolidated Laboratories,
Inc., a Florida corporation (the "Company"), hereby grants
to Fidelity Funding of California, Inc., or its assigns (the
"Holder"), the right, subject to the provisions of this
Warrant, to purchase from the Company at any time during the
period commencing on the date hereof and expiring at 5:00
p.m., Eastern Time, on June 25, 2001 (the "Expiration
Date"), 150,000 fully paid and nonassessable shares of the
Company's authorized but unissued Common Stock (as
hereinafter defined) at a price (the "Exercise Price") of
$.50 per share (such Exercise Price and the number of shares
of Common Stock purchasable hereunder being subject to
adjustment as provided herein).
The term "Common Stock" means the common stock of the
Company, together with any other equity securities that may
be issued by the Company in respect thereof or in
substitution therefor. The shares of Common Stock
deliverable or delivered upon such exercise, as adjusted
from time to time, are hereinafter referred to as "Warrant
Stock."
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant certificate and (in the case of
loss, theft or destruction) of reasonably satisfactory
indemnification and upon surrender and cancellation of this
Warrant certificate, if mutilated, the Company shall execute
and deliver a new Warrant of like tenor and date.
1. Exercise of Warrant. This Warrant may be
exercised, subject to the requirements set forth below, in
whole or in part at any time or from time to time prior to
5:00 p.m., Eastern Time, on the Expiration Date, or, if such
a day is a day on which banking institutions in New York,
New York are authorized by law to close, then on the next
succeeding day that shall not be such a day, by presentation
and surrender of this Warrant certificate to the Company at
its principal office, or at the office of its stock transfer
agent, if any, with the Warrant Exercise Form
attached hereto duly executed and accompanied by payment (either in
cash or by certified or official bank check, payable to the
order of the Company, or by surrender of Warrant Stock) of
the Exercise Price. Upon receipt by the Company of this
Warrant certificate, together with the Exercise Price, at
its office, or by the stock transfer agent, if any, of the
Company, at its offices, in proper form for exercise as
described above, the Holder shall be deemed to be the holder
of record for the shares of Common Stock issuable upon such
exercise, even if the stock transfer books of the Company
shall then be closed or certificates representing such
shares of Common Stock shall not have been delivered to the
Holder. The Holder shall pay any and all documentary stamp
or similar issue or transfer taxes payable in respect of the
issue or delivery of shares of Common Stock on exercise of
this Warrant. The Company shall promptly thereafter issue
certificate(s) evidencing the Common Stock so purchased.
2. Reservation of Shares. The Company shall at all
times reserve for issuance and delivery upon exercise of
this Warrant all shares of Common Stock or other shares of
capital stock of the Company (and other securities) from time
to time receivable upon exercise of this Warrant. All such
shares (and other securities) shall be duly authorized and,
when issued upon exercise, shall be validly issued, fully
paid and nonassessable.
3. No Fractional Shares Issued. No fractional shares
or scrip representing fractional shares shall be issued upon
the exercise of this Warrant, but the Company shall pay the
Holder an amount equal to the Fair Value (as hereinafter
defined), on the business day prior to the exercise of this
Warrant, of such fractional share of Common Stock in lieu of
each fraction of a share otherwise called for upon exercise
of this Warrant.
4. Transfer.
(a) Securities Law. Neither this Warrant nor the
Warrant Stock issuable upon the exercise hereof has been
registered under the Securities Act of 1933, as amended (the
"Act"), or under any state securities laws and, unless so
registered, may not be transferred, sold, pledged,
hypothecated or otherwise disposed of unless an exemption
for such registration is available. In the event Holder
desires to transfer this Warrant or any of the Warrant Stock
issued upon the exercise hereof, the Holder must give the
Company prior written notice of such proposed transfer
including the name and address of the proposed transferee.
Such transfer may be made only either (i) upon registration
of the Warrants or Warrant Stock pursuant to the Act and
applicable state securities laws, (ii) upon publication by
the Securities and Exchange Commission (the "Commission")
of a ruling, interpretation, opinion or "no action letter"
based upon facts presented to the Commission, or (iii) upon
receipt by the Company of an opinion of counsel, reasonably
satisfactory to the Company, in the case of either (ii) or
(iii), to the effect that the proposed transfer will not
involve any violation of the registration provisions of the
Act or of any applicable state securities laws.
(b) Transfer. Except as restricted hereby, this
Warrant and the Warrant Stock may be transferred by the
Holder in whole at any time. Upon surrender of this Warrant
certificate to the Company with the Assignment Form annexed
hereto duly executed and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and
deliver a new Warrant certificate in the name of the
assignee named in such instrument of assignment, and this
Warrant
2
certificate shall promptly be cancelled. Any
assignment, transfer, pledge, hypothecation or other
disposition of this Warrant attempted contrary to the
provisions of this Warrant, or any levy of execution,
attachment or other process attempted upon this Warrant,
shall be null and void and without effect.
(c) Rule 144A. The Company will take, or will
cause to be taken, such action as the Holder may reasonably
request from time to time to facilitate any sale or
disposition by the Holder of this Warrant or any Warrant
Stock without registration under the Act and/or any
applicable state securities laws within the limitations of
the exemptions of any rule or regulation thereunder,
including, without limitation, Rule 144A under the Act.
5. Rights of Holder. The Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder in the
Company, either at law or in equity, and the rights of the
Holder are limited to those expressed in this Warrant.
6. Anti-Dilution Provisions.
6.1. Adjustment of Number of Shares Purchasable.
Upon any adjustment of the Exercise Price as provided in
Section 6.2, the Holder hereof shall thereafter be entitled
to purchase, at the Exercise Price resulting from such
adjustment, the number of shares of Common Stock (calculated
to the nearest 1/100th of a share) obtained by multiplying
the Exercise Price in effect immediately prior to such
adjustment by the number of shares of Common Stock
purchasable hereunder immediately prior to such adjustment
and dividing the product thereof by the Exercise Price
resulting from such adjustment; provided, however, that the
maximum number of shares of Common Stock purchasable
hereunder after all adjustments shall be 225,000.
6.2. Adjustment of Exercise Price. In addition to
any adjustment required under the provisions of Section 6.5
below, and except as otherwise provided in Section 6.2(n)
below, the Exercise Price shall be subject to adjustment
from time to time as set forth in this Section 6.2.
(a) Stock Dividends, Subdivisions and
Combinations. If and whenever the Company subsequent to the
date hereof:
(i) declares a dividend upon, or makes any
distribution in respect of, any of its capital
stock, payable in shares of Common Stock,
Convertible Securities (as hereinafter defined) or
Stock Purchase rights (as hereinafter defined), or
(ii) subdivides its outstanding shares of
Common Stock into a larger number of shares of
Common Stock, or
(iii) combines its outstanding shares of
Common Stock into a smaller number of shares
of Common Stock,
then the Exercise Price shall be adjusted to that price
determined by multiplying the Exercise Price in effect
immediately prior to such event by a fraction (A) the
numerator of which shall be the
3
total number of outstanding shares of Common Stock immediately
prior to such event, and (B) the denominator of which shall
be the total number of outstanding shares of Common Stock
immediately after such event, treating as outstanding all
shares of Common Stock issuable upon conversions or exchanges
of such Convertible Securities and exercises of such Stock
Purchase Rights.
(b) Issuance of Additional Shares of Common
tock. If and whenever the Company subsequent to the date
hereof shall issue or sell any shares of Common Stock
(except as otherwise provided in the last paragraph of this
Section 6.2(b)), for a consideration per share less than the
greater of (x) the Fair Value (as hereinafter defined) per
share and (y) the Exercise Price then in effect (determined,
in each case, as of the date specified in the next
succeeding paragraph), the Exercise Price upon each such
issuance or sale shall be adjusted as of the date specified
in the next succeeding paragraph to the lower of the prices
calculated pursuant to the following clauses (i) and (ii) of
this Section 6.2(b) and shall be determined by:
(i) multiplying the Exercise Price in effect
as of the date specified in the next succeeding
paragraph by a fraction the numerator of which is
(A) the sum of (1) the number of shares of Common
Stock outstanding immediately prior to such issue
or sale multiplied by the Fair Value per share of
Common Stock immediately prior to such issue or
sale plus (2) the aggregate consideration, if any,
received by the Company upon such issue or sale,
divided by (B) the total number of shares of
Common Stock outstanding immediately after such
issue or sale, and the denominator of which is the
Fair Value per share of Common Stock immediately
prior to such issue or sale; and
(ii) multiplying the Exercise Price in effect
as of the date specified in the next succeeding
paragraph by a fraction the numerator of which is
(A) the sum of (1) the number of shares of Common
Stock outstanding immediately prior to such issue
or sale multiplied by the Exercise Price per share
of Common Stock immediately prior to such issue or
sale plus (2) the aggregate consideration, if any,
received by the Company upon such issue or sale,
divided by (B) the total number of shares of
Common Stock outstanding immediately after such
issue or sale, and the denominator of which is the
Exercise Price per share of Common Stock
immediately prior to such issue or sale.
For purposes of this Section 6.2(b), (i) the date
as of which the Exercise Price shall be adjusted and the
date as of which the Fair Value shall be determined shall be
the earlier of (A) the date on which the Company shall enter
into a firm contract for the issuance of such shares of
Common Stock and (B) immediately prior to the date of actual
issuance of such shares of Common Stock and (ii) the date as of
which the Exercise Price then in effect shall be determined shall
be the date of, and immediately prior to, such other sale or
issuance of any such shares of Common Stock.
No adjustment of the Exercise Price shall be made
under this Section 6.2(b) upon the issuance of any shares of
Common Stock which are (i) distributed to holders of Common
Stock pursuant to a stock dividend or subdivision for which
an adjustment shall previously have
4
been made under Section 6.2(a) or (ii) issued pursuant to the
exercise of any Stock Purchase Rights or pursuant to the
conversion or exchange of any Convertible Securities to
the extent that an adjustment shall previously have been made
upon the issuance of such Stock Purchase Rights or Convertible
Securities pursuant to Sections 6.2(a), (c) or (d).
(c) Issuance of Stock Purchase Rights. If and
whenever the Company subsequent to the date hereof shall
issue or sell any Stock Purchase Rights (except as otherwise
provided in the last paragraph of this Section 6.2(c) and the
consideration per share for which shares of Common Stock may
at any time thereafter be issuable upon exercise thereof
(or, in the case of Stock Purchase Rights exercisable for
the purchase of Convertible Securities, upon the subsequent
conversion or exchange of such Convertible Securities) shall
be less than the greater of (x) the Fair Value per share and
(y) the Exercise Price then in effect (determined, in each
case, as of the date specified in the next succeeding
paragraph), the Exercise Price upon each such issuance or
sale shall be adjusted as provided in Section 6.2(b) as of
the date specified in the next succeeding paragraph on the
basis that the maximum number of shares of Common Stock ever
issuable upon exercise of such Stock Purchase Rights (or
upon conversion or exchange of such Convertible Securities
following such exercise) shall be deemed to have been issued
as of the date of the determination of the Fair Value
specified in the next succeeding paragraph.
For the purposes of this Section 6.2(c), (i) the
date as of which the Exercise Price shall be adjusted and the
date as of which the Fair Value shall be determined shall be
the earlier of (A) the date on which the Company shall enter
into a firm contract for the issuance of such Stock Purchase Rights
and (B) immediately prior to the date of actual issuance of such
Stock Purchase Rights and (ii) the date as of which the Exercise
Price then in effect shall be determined shall be the date of, and
immediately prior to, such other sale or issuance of any such Stock
Purchase Rights.
No adjustment of the Exercise Price shall be made
under this Section 6.2(c) upon the issuance of any Stock
Purchase Rights to the extent that an adjustment shall
previously have been made upon the issuance of such Stock
Purchase Rights pursuant to Section 6.2(a).
(d) Issuance of Convertible Securities. If and
whenever the Company subsequent to the date hereof shall
issue or sell any Convertible Securities (except as
otherwise provided in the last paragraph of this Section
6.2(d)) and the consideration per share for which shares of
Common Stock may at any time thereafter be issuable pursuant
to the terms of such Convertible Securities shall be less
than the greater of (x) the Fair Value per share and (y) the
Exercise Price then in effect (determined, in each case, as
of the date specified in the next succeeding paragraph), the
Exercise Price upon each such issuance or sale shall be
adjusted as provided in Section 6.2(b) as of the date
specified in the next succeeding paragraph on the basis that
the maximum number of shares of Common Stock ever necessary
to effect the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued as of the
date of the determination of the Fair Value specified in the
next succeeding paragraph.
For the purposes of this Section 6.2(d), (i) the
date as of which the Exercise Price shall be adjusted and
the date as of which the Fair Value shall be determined
shall be the earlier of (A) the date on which the Company
shall enter into a firm contract for the issuance of such
5
Convertible Securities and (B) immediately prior to the date
of actual issuance of such Convertible Securities and (ii)
the date as of which the Exercise Price then in effect shall
be determined shall be the date of, and immediately prior
to, such other sale or issuance of any such Convertible
Securities.
No adjustment of the Exercise Price shall be made
under this Section 6.2(d) upon the issuance of any
convertible Securities which are (I) distributed to holder
of Common Stock pursuant to a stock dividend to the extent
that an adjustment shall previously have been made pursuant
to Section 6.2(a) or (ii) issued pursuant to the exercise of
any Stock Purchase Rights to the extent that an adjustment
shall previously have been made upon the issuance of such
Stock Purchase Rights pursuant to section 6.2(a) or (c).
(e) Minimum Adjustment. If any adjustment of the
Exercise Price pursuant to this Section 6.2 shall result in
an adjustment of less that $.0001, no such adjustment shall
be made, but any such lesser adjustment shall be carried
forward and shall be made at the time and together with the
next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to $.0001;
provided that upon any adjustment of the Exercise Price
resulting from (i) the declaration of a dividend upon, or
the making of any distribution in respect of, any stock of
the Company payable is Common Stock, Stock Purchase Rights
or Convertible Securities or (ii) the reclassification by
subdivision, combination or otherwise, of the Common Stock
into a greater or smaller number of shares, the foregoing
figure of $.0001 per share (or such figure as last adjusted)
shall be proportionately adjusted, and provided, further,
that upon the exercise of this Warrant, the Company shall
make all necessary adjustments (to the nearest $.0001 of a
cent) not theretofore made to the Exercise Price up to and
including the date upon which this Warrant is exercised.
(f) Readjustment of Exercise Price. Upon each
change in (i) the consideration, if any, payable for any
Stock Purchase Rights or Convertible Securities referred to
in Section 6.2(a), (c) or (d), (ii) the consideration, if
any, payable upon exercise of such Stock Purchase Rights or
upon the conversion or exchange of such Convertible
Securities or (iii) the number of shares of Common Stock
issuable upon the exercise of such Stock Purchase Rights or
the rate at which such Convertible Securities are
convertible into or exchangeable for share of Common Stock,
the Exercise Price in effect at the time of such event shall
forthwith the readjusted to the Exercise Price which would
have been in effect at such had such Stock Purchase Rights
or Convertible Securities provided for such changed
consideration, number of shares of Common Stock so issuable
or conversion rate, as the case may be, at the time
initially granted, issued or sold. On the expiration of any
Stock Purchase Rights not exercised, the Exercise Price then
in effect shall forthwith be increased to the Exercise Price
which would have been in effect at the time of such
expiration had such Stock Purchase Rights or Convertible
Securities never been issued. In the event an adjustment is
made to the Exercise Price pursuant to Section 6.2(b),
(c) or (d) upon the entering into by the Company of a firm
contract for the issuance of shares of Common Stock Purchase
Rights or convertible Securities, but the terms of such firm
contract change subsequent to the date on which such firm
contract was entered into (including any reduction in the
number of shares, Stock Purchase Rights or Convertible
Securities issuable thereunder or the consideration payable
therefor under such firm contract), the Exercise Price in
effect on the date
6
of such change to such firm contract shall forthwith be adjusted
to the Exercise Price which would have been in effect at the
time of such change had such firm contract been entered into
originally on such changed terms. No readjustment of the Exercise
Price pursuant to this Section 6.2(f) shall (i) increase the
Exercise Price in respect of the issue, sale or grant (or
deemed issue, sale or grant) of the applicable shares of
Common Stock, Stock Purchase Rights or convertible
Securities or (ii) require any adjustment to the amount paid
or number of shares of Warrant Stock received upon any
exercise of this Warrant prior to the date upon which such
readjustment to the Exercise Price shall occur.
(g) Reorganization; Reclassification or
Recapitalization of the Company. If and whenever subsequent
to the date hereof the Company shall effect (i) any
reorganization or reclassification or recapitalization of
the capital stock of the Company (other than in the cases
referred to in section 6.2(a), (ii) any consolidation or
merger of the Company with or into another person or entity,
(iii) the sale, transfer or other disposition of the
property, assets or business of the Company as an entirety
or substantially as an entirety or (iv) any other
transaction (or any other event shall occur) as a result of
which holder of Common Stock become entitled to receive any
shares of stock or other securities and/or property
(including, without limitation, cash) with respect to or in
exchange for the Common Stock, there shall thereafter be
deliverable upon the exercise of this Warrant or any portion
thereof ) in lieu of or in addition to the shares of Warrant
Stock theretofore deliverable, as appropriate) the highest
number of shares of stock or other securities and/or the
greatest amount of property (including, without limitation,
cash) to which the holder of the number of shares of Warrant
Stock which would otherwise have been deliverable upon the
exercise of this Warrant or any portion thereof at the time
would have been entitle upon such reorganization or
reclassification or recapitalization of capital stock,
consolidation, merger, sale, transfer, disposition or any
other transaction or upon the occurrence of such other event
and at the same aggregate Exercise Price.
Prior to and as a condition of the consummation of any
transaction or event described in the preceding sentence,
the Company shall make equitable, written adjustments in the
application of the provisions herein set forth satisfactory
tot he Holder of this Warrant so that the provisions set
forth herein shall thereafter be applicable, as nearly as
possible, in relation to any shares of stock or other
securities or other property thereafter deliverable upon
exercise of this Warrant. Any such adjustment shall be made
by and set forth in a supplemental agreement of the Company
and/or the successor entity, as applicable, for the benefit
of and in form and substance acceptable to the Holder of
this Warrant, which agreement shall bind the Company and/or
the successor entity, as applicable, and the Holder hereof
and shall be accompanied by a favorable opinion of the
regular outside counsel to the Company or the successor
entity, as applicable (or such other firm as is reasonable
acceptable to the Holder hereof), as to the enforceability
of such agreement and as to such other matters as the Holder
hereof may reasonable request.
(h) Other Dilutive Events. If any other transaction or
event (other than those explicitly referred to in this Section
6.2), including, without limitation, any issuance, repurchase,
redemption, or other distribution in respect of any shares of
stock or securities of the Company or of any other person or
entity, including any person or entity referred to in Section
6.2(g), shall occur as to which the other provisions of this
Section 6 are not strictly applicable but the failure to
7
make any adjustment to the Exercise Price or to any of the other
terms of this Warrant would not fairly protect the purchase
rights and other rights represented by this Warrant in
accordance with the essential intent and principles hereof,
then, and as a condition to the consummation of any such
transaction or event, and in each such case, the Company
shall appoint a firm of independent public accountants of
recognized national standing (which may be the regular auditors
of the Company), which shall give its opinion as to the
adjustment, if any, on a basis consistent with the essential
intent and principles established in this Section 6, necessary
to preserve, without dilution, the rights represented by this
Warrant. The certificate of any such firm of accountants shall be
conclusive evidence of the correctness of any computation made
under this Section 6. The Company shall pay the fees and
expenses of such firm of accountants in connection with any
such opinion. Upon receipt of such opinion, the Company
will promptly deliver a copy thereof to the hold of this
Warrant and shall make the adjustments described therein.
(i) Determination of Consideration. For purposes of this
Section 6, the consideration received or receivable by the Company
for the issuance, sale and grant of shares of Common Stock, Stock
Purchase Rights or Convertible Securities, irrespective of the
accounting treatment of such consideration, shall be valued and
determined as follows.
(i) Cash Payment. In the case of cash, the
gross amount paid by the purchasers without deduction of
any accrued interest or dividends, any reasonable expenses
paid or incurred and any reasonable underwriting commissions
or concessions paid or allowed by the Company in connection
with such issue or sale.
(ii) Non-Cash Payment. In the case of consideration other
than cask, the fair Value thereof (in any case as of the date
immediately preceding the issuance, sale or grant in question).
(iii) Certain Allocations. If shares of Common Stock,
Stock Purchase Rights and/or Convertible Securities are
issued or sold together with other securities or other
assets of the Company for a consideration which covers more
than one of the foregoing categories of securities and
assets, the consideration received or receivable
(computed as provided in clauses (I) and (ii) of this
Section 6.2(I)) shall be allocable to such shares of Common
Stock, Stock Purchase Rights and or Convertible Securities
as reasonably determined in good faith by the board of
directors of the Company (provided such allocation is set
forth in a written resolution and a certified copy thereof
is furnished to the holder of this Warrant promptly (but in
any event within 10 days) following its adoption.
(iv) Dividends in Securities. If the Company shall declare a
dividend or make any other distribution upon any stock of the
Company payable in share of Common Stock, Convertible Securities
or Stock Purchase Rights, such shares of Common Stock,
Convertible Securities or Stock Purchase Rights, as the case
may be, issuable in payment of such dividend or distribution
shall be deemed to have been issued or sold without
consideration.
8
(v) Stock Purchase Rights and Convertible Securities.
The consideration for which each share of Common Stock shall
be deemed to be issued upon the issuance or sale of any Stock
Purchase Rights or Convertible Securities shall be determined
by dividing (A) the total consideration, if any, received by
the Company as consideration for the Stock Purchase Rights
or the Convertible Securities, as the case may be, plus
the minimum aggregate amount of additional consideration, if
any, ever payable to the Company upon the exercise of such
Stock Purchase Rights and/or upon the conversion or exchange
of such Convertible Securities, as the case may be, but
without deduction of any accrued interest or dividends, any
reasonable expenses paid or incurred and any reasonable
underwriting commissions or concessions paid or allowed by the
Company in connection with such issue or sale; by (B) the
maximum number of shares of Common Stock ever issuable upon
the exercise of such Stock Purchase Rights or upon the
conversion or exchange of such Convertible Securities.
(vi) Merger, Consolidation or Sale of Assets. If any
shares of Common Stock, Convertible Securities or Stock
Purchase Rights are issued in connection with any merger or
consolidation of which the Company is the surviving
corporation, the amount of consideration therefor shall be
deemed to be the Fair Value of such portion of the assets
and business of the non-surviving corporation as shall be
attributable to such Common Stock, Convertible Securities
or Stock Purchase Rights, as the case may be. In the
event of (A) any merger or consolidation of which the
Company is not the surviving corporation or (B) the sale,
transfer or other disposition of the property, assets or
business of the Company as an entirety or substantially as
an entirety for stock or other securities or any other
person or entity, the Company shall be deemed to have issued
the number of shares of Common Stock for stock or securities
of the surviving corporation or such other person or entity,
the Company shall be deemed to have issued the number
of shares of Common Stock for stock or securities of the
surviving corporation or such other person or entity computed on
the basis of the actual exchange ration on which the transaction
was predicated and for a consideration equal to the fair
Value on the date of such transaction of such stock or
securities of the surviving corporation or such other
person or entity, and if any such calculation results in
adjustment of the Exercise Price, the determination of the
number of shares of Warrant Stock issuable upon exercise
of this Warrant immediately prior to such merger, consolidation
or sale, for the purposes of Section 6.2(g), shall be
made after giving effect to such adjustment of the Exercise Price.
(j) Record Date. If the Company shall take a
record of the holders of the Common Stock for the purpose of
entitling them (i) to receive a dividend or other
distribution payable in Common Stock, Convertible Securities
or Stock Purchase Rights or (ii) to subscribe for or
purchase Common Stock, Convertible Securities or Stock
Purchase Rights, then all references in this Section 6 to
the date of the issue or sale of the shares of Common Stock
deemed to have been issued or sold upon the declaration of
such dividend or the making of such other distribution or
the date of the granting of such right of subscription or
purchase, as the case may be, shall be deemed to be
references to such record date.
9
(k) Shares Outstanding. The number of shares of
Common Stock deemed to be outstanding at any given time
shall not include shares of Common Stock held by the Company
or any subsidiary of the Company.
(l) Maximum Exercise Price. At no time shall the
Exercise Price exceed $0.50 per share except as a result of
an adjustment thereto pursuant to Section 6.2(a)(iii) or
6.2(g).
(m) Application. All subdivisions of this
Section 6.2 are intended to operate independently of one
another. If a transaction or any event occurs that requires
the application of more than one subdivision, all applicable
subdivisions shall be given independent effect so as to
fairly protect the purchase rights and other rights
represented by this Warrant in accordance with the essential
intent and principles hereof.
(n) No Adjustments under Certain Circumstances.
Anything herein to the contrary notwithstanding, no
adjustment to the Exercise Price shall be made in the
case of any issuance of shares of Common Stock upon the
exercise in whole or part of any Warrant.
6.3 Rights Offering. If the Company shall effect an
offering of securities pro rata among its stockholders,
the Holder hereof shall be entitled, at its option, to
elect to participate in each and every such offering as
if this Warrant had been exercised and such Holder were,
at the time of any such rights offering, then a Holder of
that number of shares of Warrant Stock to which such
Holder is then entitled on the exercise hereof.
6.4 Certificates and Notices.
(a) Adjustments to Exercise Price. As promptly
as practicable (but in any event not later than five days)
after the occurrence of any event requiring any adjustment
under this Section 6 to the Exercise Price (or to the number
or kind of securities or other property deliverable upon the
exercise of this Warrant), the Company shall, at its
expense, deliver to the Holder of this Warrant either (i) an
officer's certificate or (ii) a certificate signed by a firm
of independent public accountants of recognized national
standing (which may be the regular auditors of the Company),
setting forth in reasonable detain the vents requiring the
adjustment and the method by which such adjustment was
calculated and specifying the adjusted Exercise Price and
the number of shares of Common Stock purchasable upon
exercise of this Warrant after giving effect to such
adjustment.
(b) Extraordinary Corporate Events. If and
whenever the Company subsequent to the date hereof shall
propose to (i) pay any dividend to the holders of shares of
Common Stock or to make any other distribution to the
holders of shares of Common Stock (including, without
limitation, any cash dividend), (ii) offer to the holders of
shares of Common Stock rights to subscribe for or purchase
any additional shares of any class of stock or any other
rights or options or (iii) effect any reclassification of
the Common Stock (other than a reclassification involving
merely the subdivision or combination of the Common Stock
(other than a reclassification involving merely the
subdivision or combination of outstanding shares of Common
Stock), (iv) engage in any reorganization or
recapitalization or any consolidation or merger (other than
a merger in which no distribution of securities or other
property is to be made to holder of shares of Common Stock),
(v) consummate any sale, transfer or other disposition of
its property,
10
assets and business as an entirety or substantially as
an entirety, (vi) effect any other transaction which might
require an adjustment to the Exercise Price (or to the
number or kind of securities or other property deliverable
upon the exercise of this Warrant), including, without
limitation, any transaction of the kind described in Section
6.2(g) or (vii) commence or effect the liquidation,
dissolution or winding up of the Company, then, in each such
case, the Company shall deliver to the holder of this Warrant
an officer's certificate giving notice of such proposed action,
specifying (A) the date on which the stock transfer books of
the Company shall close, or a record shall be taken, for
determining the holders of Common Stock entitled to receive such
dividend or other distribution or such rights or options, or the
date on which such reclassification, reorganization,
recapitalization, consolidation, merger, sale, transfer,
other disposition, transaction, liquidation, dissolution or
winding up shall take place or commence, as the case may be,
and (B) the date as of which it is expected that holders of
Common Stock of record shall be entitled to receive
securities or other property deliverable upon such action,
if any such date is to be fixed. Such officer's certificate
shall be delivered in the case of any action covered by
clause (i) or (ii) above, at least 20 days prior to the
record date for determining holders of Common Stock for
purposes of receiving such payment or offer, and, in any
other case, at least 20 days prior to the date upon which
such action takes place and 20 days prior to any record date
to determine holders of Common Stock entitled to receive
such securities or other property.
(c) Effect of Failure. Failure to give any
certificate of notice, or any defect in any certificate or
notice required under this Section 6.4 shall not affect the
legality or validity of the adjustment of the Exercise Price
or the number of shares of Warrant Stock purchasable upon
exercise of this Warrant.
6.5 Definitions. The following terms, when used
herein, shall have the following meanings:
"Convertible Securities" shall mean evidences of
indebtedness, shares (including, without limitation,
preferred stock) or stock or other securities which are
convertible into or exchangeable or exercisable for, with or
without payment of addition consideration, shares of Common
Stock, either immediately or upon the arrival of a specified
date or the happening of a specified event.
"Current Market Price" of any security as of any
date herein specified shall mean the average of the daily
closing prices for the 30 consecutive trading days
commencing 45 trading days before the day in question (or in
the event that a security has been traded for less than 45
days, each of the trading days on which such security has
been traded). The closing price for each day shall be (a)
if such security is listed or admitted for trading on any
national securities exchange, the last sale price of such
security, regular way, or the average of the closing bid and
asked prices thereof if no such sale occurred, in each case
as officially reported on the principal securities exchange
on which such security is listed, or (b) if not reported as
described in clause (a), the average of the closing bid and
asked prices of such security as shown by the National
Association of Securities Dealers, Inc. Automated Quotation
System, or any similar system of automated dissemination of
quotations of securities prices then in common use (an
"Automated Quotation System"), is so quoted, as reported
by any member firm of the New York Stock Exchange selected
by the Holder, or (c) if not quoted as described in clause
(b), the average of the
11
closing bid and asked prices for such security as reported by
the National Quotation Bureau Incorporated or any similar
successor organization, as reported by any member firm of the
New York Stock Exchange selected by the Holder, provided,
however, if shares of the Common Stock of the Company shall
not be quotes as described in clause (b) above, the "Current
Market Price" of a share of Common Stock shall be deemed to
be an amount equal to the Exercise Price then in effect.
If such security is quoted on a national securities or central
market system in lieu of a market or quotation system described
above, the closing price shall be determined in the manner
set forth in clause (a) of the preceding sentence if bid and
asked prices are reported but actual transactions are not.
In connection with any security being offered to the public
in an initial public offering of the issue, the per share
offering price to the public.
"Fair Value" shall mean the fair value of the
appropriate security, property, assets or business as
determined by (a) in the case of any security, application
of the definition of Current Market Price, or (b) is clause
(a) of this definition is not applicable, a bona fide arm's-
length transaction between the Company or a subsidiary
thereof and an unaffiliated third party, which transaction
involves securities, properties, assets or businesses the
cost or value of which constitutes not less than 5% of all
of the securities, properties, assets or businesses, as the
case may be, of the Company and its subsidiaries taken as a
whole, or (c) if neither clause (a) nor clause (b) of this
definition is applicable, the Board of Directors of the
Company in good faith (a "Board Determination"), provided,
however, that if the Holder hereof shall object to such
valuation under this clause (c), they shall within 10 days
of such unsatisfactory valuation designate an independent
appraiser or investment bank of recognized national standing
reasonably satisfactory to the Company to make an appraisal
in accordance with generally accepted financial practice (an
"Appraisal"). Any such determination reference in the
proviso to clause (c) of the immediately preceding sentence
shall be set forth in writing, and the Company shall,
immediately following such determination, deliver a copy
thereof to the Holder hereof. The determination so made
(except for a Board determination to which the Holder hereof
objects within 10 days) shall be conclusive and binding on
the Company and on such Holder. The Company shall pay all
of the expenses incurred in connection with any such
determination, except for any Appraisal, the cost of which
shall be borne by the Holder.
"Stock Purchase Rights" shall mean any warrants,
options or other rights subscribe for, purchase or otherwise
acquire any shares of Common Stock or any Convertible
Securities, either immediately or upon the arrival of a
specified date or the happening of a specified event.
7. Various Covenants of the Company
7.1 No Impairment or Amendment. The Company
shall not by any action including, without limitation,
amending its charter, any reorganization, recapitalization,
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, but will at all times in good
faith assist in the carrying out of all such terms and in
the taking of all such actions as may be necessary or
appropriate to protect the rights of the holder hereof
against impairment. Without limiting the generality of the
foregoing, the Company (a) will not permit the par value of
any shares of Warrant Stock issuable upon exercise of this
Warrant to be greater than
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the amount payable therefor upon such exercise, (b) will
take all such action as may be necessary or appropriate in
order that the Company may validly issue fully paid and
nonassessable shares of Warrant Stock, (c) will obtain and
maintain all such authorizations, exemptions or consents from
any public regulatory body having jurisdiction as may be
necessary to enable the Company to perform its obligations
under this Warrant, and (d) will not issue any capital stock
or enter into any agreement the terms of which would have the
effect, directly or indirectly, of preventing the Company from
honoring its obligations hereunder.
So long as any Warrants or shares of Warrant
Stock are outstanding, the Company will acknowledge in
writing, in form satisfactory to any holder of any such
security, the continued validity of the Company obligations
hereunder.
7.2 Listings on Security Exchanges, etc. At all
times following the exercise of this Warrant, the Company
will use commercially reasonable efforts to maintain the
listing of all shares of Warrant Stock on each security
exchange or market or trading system on which the Common
Stock is then or at any time thereafter listed or traded.
8. Legend and Stop Transfer Orders. Unless the
shares of Warrant Stock have been register under the Act,
upon exercise of any of this Warrant and the issuance of any
of the shares of Warrant Stock, all certificates
representing shares of Warrant Stock shall bear on the face
thereof substantially the following legend, insofar as is
consistent with applicable law:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1993, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE,
ASSIGNED, TRANSFERRED, OR OTHERWISE DISPOSED OF
UNLESS REGISTERED PURSUANT TO THE PROVISIONS OF
THAT ACT AND APPLICABLE STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY,
IS OBTAINED STATING THAT SUCH DISPOSITION WILL NOT
INVOLVE ANY VIOLATION OF THE REGISTRATION
PROVISIONS OF THE OR OF ANY APPLICABLE STATE
SECURITIES LAW."
9. Registration.
(a) Piggyback Registrations. Notwithstanding the
provision s set forth above, the Company shall notify the
Holder in writing at least thirty (30) days prior to filing
any registration statement under the Act for purposes of a
public offering of securities of the Company (including, but
not limited to, registration statements relating to
secondary offerings of securities of the Company, but
excluding registration statements relating to employee
benefit plans) and will afford each such Holder an
opportunity to include in such registration statement the
Warrant Stock. If the registration statement is for an
underwritten offering, the Company shall so advise the
Holder and the right of Holder to be included in a
registration shall be subject to reduction in the discretion
of the underwriter (provided that any reduction by such
underwriter shall be effected pro rata with respect to all
persons or entities entitled to piggy-back registration of
their securities in such offering) and conditioned upon such
Holder's participation in such
13
underwriting and the inclusion of such Xxxxxx's Warrant Stock
and Holders execution of the underwriting agreement.
(b) Payment of Expenses. All expenses incurred
in connection with registration (excluding underwriters'
discounts and commissions), including, without limitation,
all registration, blue sky and qualification fees, printers'
and accounting fees, and fees and disbursements of counsel
for the Company shall be borne by the Company.
(c) Obligations of the Company. Whenever
required to effect the registration of the Warrant Stock,
the Company shall, as expeditiously as reasonably possible:
(i) Prepare and file a registration statement
with respect thereto and use its best
efforts to cause such registration
statement to become effective, and keep
such registration statement effective for
up to one hundred fifty (150) days.
(ii) Prepare and file such amendments and
supplements to such registration statement
and the prospectus used in connection with
such registration statement as may be
necessary to comply with the provisions of
the Act.
(iii) Furnish to the Holder such number of
copies of a prospectus, including a
preliminary prospectus, in conformity with
the requirements of the Act, and such
other documents as may be reasonable
requested.
(iv) Use its best efforts to register and
qualify the securities covered by such
registration statement under such other
securities or Blue Sky laws of such
jurisdictions as shall be reasonable
requested by the Holder, provided that the
Company shall not be required in
connection therewith or as a condition
thereto to qualify to do business or to
file a general consent to service or
process in any such states or
jurisdictions.
(v) In the event of any underwritten public
offering, enter into and perform its
obligations under an underwriting
agreement, in usual and customary form,
with the managing underwriter(s) of such
offering. the Holder participating in
such underwriting shall also enter into
and perform its obligations under such an
agreement.
(vi) Notify the Holder at any time when a
prospectus relating thereto is required to
be delivered under the Act of the
happening of any event as a result of
which the prospectus included in such
registration statement or any document
incorporated therein by reference, as then
in effect, includes and untrue statement
of a material fact or omits to state a
material fact required to be stated
therein or necessary to
14
make the statements therein not misleading in
light of the circumstances then existing.
(vii) Afford to the Holder all rights
(including the right to conduct "due
diligence" with respect to the Company)
customarily afforded to selling
stockholders in an underwritten public
offering.
(d) Indemnification. The Company will indemnify
and hold harmless the Holder, the partners,
officers and directors of the Holder, any
underwriter (as defined in the Act) for such
Holder and each person, if any, who controls
such Holder or underwriter with the meaning of
the Act of the Securities Exchange Act of 1934,
as amended (the "1934 Act"), against any
losses, claims, damages, or liabilities (joint
and several) to which they may become subject
under the Act, the 1934 Act, as amended (the
"1934 Act"), against any losses, claims,
damages, or liabilities (joint and several) to
which they may become subject under the Act,
the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof)
arise out of or are based upon any of the
following statements, omissions or violations
(collectively a "violation"): (i) any untrue
statement or alleged untrue statement of a
material fact contained in such registration
statement, including any Preliminary Prospectus
or final prospectus contained therein or any
amendments or supplements thereto, or any
documents incorporated therein by reference,
(ii) the omission or alleged omission to state
therein a material fact contained in such
registration statement, including any
Preliminary Prospectus contained therein or any
amendments or supplements thereto, or any
documents incorporated therein by reference,
(ii) the omission or alleged omission to state
therein a material fact required to be stated
therein, or necessary to make the statements
therein not misleading, or (iii) any violation
or alleged violation by the Company of the Act,
the 1934 Act any state securities law or rule
or regulation promulgated under the Act, the
1934 Act or any state securities law in
connection with the offering covered by such
registration statement: and the Company, at its
option, shall either assume the defense thereof
or will reimburse the Holder, partner, officer,
or director, underwriter or controlling person
for any legal or other expenses reasonably
incurred by them, as incurred, in connection
with investigating or defending any such loss
claim, damage, liability or action; provided,
however, that the indemnity agreement contained
in this subsection shall not apply to amounts
paid in settlement of any such loss, claim,
damage, liability or action if the Holder fails
to promptly notify the Company of such claim or
such settlement is effected without the consent
of the Company (which consent shall not be
15
unreasonably withheld), nor shall the Company
be liable in any such case for any such loss,
claim, damage, liability or action to the
extent that it arises out of or is based upon a
violation which occurs in reliance upon and in
conformity with written information furnished
expressly for use in connection with such
registration by such Xxxxxx, partner, officer,
director, underwriter or controlling person of
such Holder. The obligations of the Company
under this paragraph shall survive the
completion of any offering of Warrant Stock.
(e) Survival. The Company's obligations under
this Section 9 shall survive until the third
anniversary of the date hereof.
10. Representation and Warranties. The Company
represents and warrants to the Holder that:
(a) The authorized capital stock of the Company
consists of 20,000,000 shares of Common Stock, of which
4,136,927 shares of Common Stock were issued and
outstanding on the date hereof. Except for this Warrant
and except as described in writing by the
Company to the Holder on or prior to the date hereof,
(i) there are no outstanding rights, options, warrants or
agreements for the purchase from, or sale or issuance by, the
Company or any of the Company's subsidiaries of any capital
stock or equity interests or securities convertible into or
exercisable or exchangeable for such stock or equity interest;
(ii) there are no agreements on the part of the Company or any of
the Company's subsidiaries to issue, sell or distribute any
securities or equity interests or any assets of the Company
or any of the Company's subsidiaries; (iii) none of the
Company or any of the Company's subsidiaries has any
obligation (contingent or otherwise) to purchase, redeem
or otherwise acquire any of its securities or equity
interests or any interest therein or to pay any
dividend or make any distribution in respect thereof, and
(iv) no person or entity is entitled to (A) any preemptive
or similar right with respect to the issuance of any
securities or equity interests of the Company or any of the
Company's subsidiaries, or (B) any rights with respect to the
registration of any securities or equity interests of the
Company or any of the Company's subsidiaries under the Act.
(b) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the state
of its incorporation, with all requisite power
and authority to execute, deliver and perform its
obligations under this Warrant and to conduct its
business as presently conducted. The Company is duly
qualified and authorized to do business as a foreign
corporation and is in good standing in which such qualification
and good standing are necessary or desirable for the conduct
by the Company of its business or the performance by the
Company of its obligations hereunder. The execution, delivery and
performance by the Company of this Warrant do not and will not
constitute (a) a violation of any applicable law or the
Company's articles or certificate of incorporation or
bylaws or (b) a material breach of any other document, agreement or
instrument to which the Company is a party or by
which the Company is bound. This Warrant has been duly authorized,
executed and delivered by the Company, and is
the legal, valid and binding obligation of the
Company enforceable against the Company in
accordance with its terms. No consent of, approval
by, registration or filling with or authorization
from any governmental authority or agency
is required in connection with the
execution, delivery or performance by the
Company of this Warrant.
16
11. Put Rights. The Company hereby irrevocably grants
to Holder the right and option (to "Put") to sell to the
Company this Warrant, on and after July 1, 1997
and prior to the Expiration Date, at a purchase price
(the "Purchase Price") of $75,000. The Purchase Price shall
be due and payable in twelve installments of $6,250
with the first such installment due and payable on the
ninetieth day after the Company's receipt of written notice
from Holder of its exercise of the Put and
subsequent installments shall be due and payable every
three months thereafter until such Purchase Price is paid
in full. Upon payment in full of such Purchase Price, Xxxxxx
shall surrender the Warrant to the Company for cancellation. If
the Company fails to pay any installment of the Purchase Price
when due or becomes the subject of any bankruptcy or
insolvency proceeding or receivership, Holder shall be entitled
to demand immediate payment of (and the Company shall be required
to immediately pay) the remainder of the Purchase Price.
12. Prohibitions on Certain Transactions. The Company
shall not, on or after the date hereof, (A) issue or sell an Common
Stock to Xxxxxx-Xxxxxxxxx Capital Focus, L.P. ("TD") or
any affiliate, officer or director of TD or the Company
(collectively, the "Prohibited Persons") for a consideration
per share less than the greater of (x) the Fair Value
per share and (y) the Exercise Price then in effect;
(B) issue or sell any Stock Purchase Rights to a Prohibited
Person where the consideration per share for which shares of
Common Stock issuable upon the exercise thereof is less than
the greater of (x) the Fair Value per share and (y) the Exercise
Price then if effect; or (c) issue or sell any Convertible
Securities to any Prohibited Person where the consideration
per share for which Common Stock issuable pursuant to the terms
thereof is less than the greater of (x) the Fair Value per share
and (y) the Exercise Price then if effect; provided however, that
the foregoing prohibition shall not apply to the issuance of
any Common Stock to a Prohibited Person pursuant to Stock
Purchase Rights or Convertible Securities issued by the Company
prior to the date hereof.
13. Notice. All notices hereunder shall be in writing
and shall be deemed given (a) when delivered personally,
(b) the next business day when sent by nationally recognized
overnight courier service procuring a return receipt, or
(c) within three business days after mailing when by
certified or registered mail, return receipt requested,
to the Company at American Consolidated Laboratories, Inc.,
0000 X. Xxxxxx Xxxxx, Xxxxxxx, Xxxxx Xxxxxxxx 00000, or
to the Holder at its address on the Company's records or at such
other address of which the Company or Xxxxxx has been
advised by notice hereunder.
14. Applicable Law. This Warrant is issued under and shall
for all purposes be governed by and construed in accordance with the
laws of the State of Florida.
15. Miscellaneous. This Warrant represents the entire
agreement of the Company with respect to the subject matter hereof
and may be changed only by a written agreement executed by the Company
and the Holder.
17
IN WITNESS WHEREOF, the Company has caused this
Warrant to be signed on its behalf, in its
corporate name, by its duly authorized officer,
all as of June 25, 1996.
AMERICAN CONSOLIDATED
LABORATORIES, INC.
By: /s/ Xxxxxx X. Arena
Name: Xxxxxx X. Xxxxx
Title: Chief Executive Officer
18
ASSIGNMENT FORM
For value received, the undersigned
hereby sells, assigns and transfers all of the rights of the
undersigned under the within Warrant, with respect to the number
of shares of the capital stock covered thereby set forth
below, unto:
Name and address of Assignee Number of Shares
Date:
Name of Holder:
By:
19
WARRANT EXERCISE FORM
1. The undersigned Warrant Holder of the attached
original, executed Warrant hereby elects to exercise its
purchase right under such Warrant with respect to the Warrant
Stock, as defined in the Warrant of American Consolidated
Laboratories, Inc. (the "Company").
2. The undersigned Warrant Holder elects to pay the
aggregate exercise price for such Warrant Stock in the following
manner:
(a) by lawful money of the United States or the
enclosed certified check or postal or express
money order payable in United States dollars to
the order of the Company in the amount of $ ;
or
(b) by wire transfer of United States funds to the
account of the Company in the amount of $ ,
which transfer has been made before or
simultaneously with the delivery of this Warrant
Exercise Form pursuant to the instructions of the
Company.
(c) by surrendering Xxxxxx's rights to that number of
shares of Warrant Stock having a Fair Value (as
defined in the Warrant) equal to the exercise price
of the Warrant Stock being purchased. Accordingly,
upon exercise of this Warrant, Xxxxxx would receive
the number of shares of Warrant Stock to which it
would otherwise be entitled upon such exercise,
less the surrendered shares.
3. Please issue a stock certificate or certificates
representing the appropriate number of shares of Warrant Stock
in the name of the undersigned or in such names as is specified
below:
Name:
Address:
Tax Identification No.
HOLDER:
By:
Date:
Note: The signature of the Warrant Holder must conform in all
respects to the name of the Warrant Holder as specified on the
face of the Warrant, or Assignment, without alteration,
enlargement or any change whatsoever.
20
