EXHIBIT 4.1
WARRANT AGREEMENT
AGREEMENT, dated as of this ____ day of August 2001, by and among
OMNICOMM SYSTEMS, INC., a Delaware corporation (the "Company") and COMMONWEALTH
ASSOCIATES, L.P., a New York limited partnership ("Commonwealth").
W I T N E S S E T H
WHEREAS, in connection with a private placement (the "Private
Placement") of up to a maximum of 200,000 shares of Series B Convertible
Preferred Stock (the "Preferred Shares"), the Company will issue warrants (the
"Warrants") to purchase up to an aggregate of 8,000,000 shares of Common Stock;
WHEREAS, in connection with the Private Placement the Company may issue
to the placement agent an option (the "Placement Agent Option") to purchase up
to an additional 30,000 Preferred Shares and Warrants to purchase up to an
additional 1,200,000 shares of Common Stock.
NOW THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Warrants and the certificates representing the Warrants and
the respective rights and obligations thereunder of the Company, the holders of
certificates representing the Warrants and the parties hereto agree as follows:
SECTION 1. DEFINITIONS. As used herein, the following terms shall have
the following meanings, unless the context shall otherwise require:
(a) "Common Stock" shall mean common stock of the Company of
any class, whether now or hereafter authorized, which has the right to
participate in the distributions of earnings and assets of the Company
without limit as to amount or percentage, which at the date hereof
consists of 20,000,000 authorized shares of Common Stock, par value
$.001 per share (to be increased to 60,000,000 shares upon the
Amendment Date (as defined below)).
(b) "Corporate Office" shall mean the office of the Company in
its capacity as warrant agent (or its successor) at which at any
particular time its principal business shall be administered, which
office is currently located at 0000 Xxxx Xxxxxx, Xxxxx 000, Xxxxx,
Xxxxxxx 00000.
(c) "Exercise Date" shall mean, as to any Warrant, the date on
which the Company shall have received both (a) the Warrant Certificate
representing such Warrant, with the exercise form thereon duly executed
by the Registered Holder thereof or his attorney duly authorized in
writing, and (b) either payment in cash, or by official bank or
certified check or by check drawn on an account of Commonwealth or such
other investment banks and brokerage houses as the Company shall
approve, in each case made payable to the Company, of an amount in
lawful money of the United States of America equal to the Exercise
Price or a Notice of Exchange.
(d) "Exercise Price" shall mean the purchase price to be paid
upon exercise of each Warrant in accordance with the terms hereof,
which price shall initially be $0.25 per share and which price shall be
subject to adjustment from time to time pursuant to the provisions of
Section 8 hereof and subject to the Company's right to reduce the
applicable Exercise Price upon notice to all warrantholders.
(e) "Initial Warrant Exercise Date" shall mean the earlier of
(i) January 31, 2002, and (ii) the close of business on the date
("Amendment Date") that the Company files with the Secretary of State
of the State of Delaware an amendment to the Company's Certificate of
Incorporation increasing the authorized number of shares of Common
Stock to at least 60 million shares.
-1-
(f) "Registered Holder" shall mean the person in whose name
any certificate representing Warrants shall be registered on the books
maintained by the Company pursuant to Section 6.
(g) "Transfer Agent" shall mean Jersey Transfer & Trust
Company as the Company's transfer agent, or its authorized successor,
as such.
(h) "Warrant Expiration Date" shall mean 5:00 P.M. (New York
time) on the earlier of _______ __, 2006 or the Call Date (as defined
in Section 9); provided that if such date shall in the State of New
York be a holiday or a day on which banks are authorized to close, then
5:00 P.M. (New York time) on the next following day which in the State
of New York is not a holiday or a day on which banks are authorized to
close. Upon notice to all warrantholders the Company shall have the
right to extend the Warrant Expiration Date.
(i) "Warrant Shares" shall mean the shares of Common Stock
deliverable upon exercise of the Warrants, as adjusted from time to
time pursuant to the provisions hereof.
SECTION 2. WARRANTS AND ISSUANCE OF WARRANT CERTIFICATES.
(a) A Warrant shall initially entitle the Registered Holder of
the Warrant Certificate representing such Warrant to purchase one share
of Common Stock upon the exercise thereof, in accordance with the terms
hereof, subject to modification and adjustment as provided in Section
8.
(b) From time to time, up to the Warrant Expiration Date, the
Transfer Agent shall execute and deliver stock certificates in required
whole number denominations representing up to an aggregate of 9,200,000
shares of Common Stock, subject to adjustment as described herein, upon
the exercise of Warrants in accordance with this Agreement.
(c) From time to time, up to the Warrant Expiration Date, the
Company shall execute and deliver Warrant Certificates in required
whole number denominations to the persons entitled thereto in
connection with any transfer or exchange permitted under this
Agreement; provided that no Warrant Certificates shall be issued except
(i) those initially issued hereunder, those issued hereunder on any
subsequent closing of the Private Placement and those issued upon
exercise of any Placement Agent Option; (ii) those issued on or after
the Initial Warrant Exercise Date, upon the exercise of fewer than all
Warrants represented by any Warrant Certificate, to evidence any
unexercised Warrants held by the exercising Registered Holder; (iii)
those issued upon any transfer or exchange pursuant to Section 6; (iv)
those issued in replacement of lost, stolen, destroyed or mutilated
Warrant Certificates pursuant to Section 7; and (v) those issued at the
option of the Company, in such form as may be approved by its Board of
Directors, to reflect (a) any adjustment or change in the Exercise
Price or the number of shares of Common Stock purchasable upon exercise
of the Warrants made pursuant to Section 8 hereof, and (b) other
modifications approved in accordance with Section 15 hereof.
SECTION 3. FORM AND EXECUTION OF WARRANT CERTIFICATES.
(a) The Warrant Certificates for the Warrants, shall be
substantially in the form annexed hereto as Exhibit A (the provisions
of which are hereby incorporated herein) and may have such letters,
numbers or other marks of identification or designation and such
legends, summaries or endorsements printed, lithographed, engraved or
typed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be
required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange
on which the Warrants may be listed, or to conform to usage. The
Warrant Certificates shall be dated the date of issuance thereof
(whether upon initial issuance, transfer, exchange or in lieu of
mutilated, lost, stolen, or destroyed Warrant Certificates) and issued
in registered form. The Warrants shall be numbered serially with the
letters PW.
(b) Warrant Certificates shall be executed on behalf of the
Company by its Chairman of the Board, Chief Executive Officer,
President or any Vice President and by its Chief Financial Officer,
Secretary or an Assistant Secretary and shall have imprinted thereon a
facsimile of the Company's seal. In case any officer of the Company who
shall have signed any of the Warrant Certificates shall cease to be
such officer of the Company before the date of issuance of the Warrant
-2-
Certificates and delivery thereof, such Warrant Certificates may
nevertheless be issued and delivered with the same force and effect as
though the person who signed such Warrant Certificates had not ceased
to be such officer of the Company. After execution by the Company,
Warrant Certificates shall be delivered by the Company to the
Registered Holder.
SECTION 4. EXERCISE.
(a) Each Warrant may be exercised by the Registered Holder
thereof at any time on or after the Initial Warrant Exercise Date, but
not after the Warrant Expiration Date, upon the terms and subject to
the conditions set forth herein and in the applicable Warrant
Certificate. A Warrant shall be deemed to have been exercised
immediately prior to the close of business on the Exercise Date and the
person entitled to receive the securities deliverable upon such
exercise shall be treated for all purposes as the holder upon exercise
thereof as of the close of business on the Exercise Date. As soon as
practicable on or after the Exercise Date the Company shall cause to be
issued and delivered by the Transfer Agent, to the person or persons
entitled to receive the same, a certificate or certificates for the
securities deliverable upon such exercise, (plus a certificate for any
remaining unexercised Warrants of the Registered Holder).
(b) The Board of Directors has approved and determined to
submit to stockholders a certificate of amendment to the Company's
Certificate of Incorporation to increase the number of shares of
authorized Common Stock to 60,000,000 shares (the "Proposed Charter
Amendment"). It is understood that if the Proposed Charter Amendment is
not filed with the Secretary of State of Delaware by the Initial
Warrant Exercise Date, after reserving the number of shares of Common
Stock issuable upon conversion of the Series B Preferred Stock sold in
the Private Placement, including the Series B Preferred Stock
underlying the Placement Agent Option, the Company may not have a
sufficient number of shares of Common Stock authorized and available
for issuance upon exercise of this Warrant. Therefore, prior to the
filing of the Proposed Charter Amendment, a holder of this Warrant
shall be allowed to exercise this Warrant for only that number of
shares of Common Stock equal to the product of the number of
authorized, unissued and unreserved shares of Common Stock on the date
of exercise multiplied by a fraction, the numerator of which is the
total number of Warrant Shares issuable upon exercise of the Warrant
held by such holder and the denominator of which is the total number of
Warrant Shares issuable upon exercise of the Warrants sold in the
Private Placement, including the Placement Agent Option.
(c) The Registered Holder may, at its option, at any time on
or after the Initial Warrant Exercise Date, exchange Warrants on a
cashless basis, in whole or in part (a "Warrant Exchange"), for the
number of Warrant Shares determined in accordance with this Section
(4)(c), by surrendering the Warrant Certificate at the principal office
of the Company, accompanied by a notice stating such Registered
Holder's intent to effect such exchange, the number of Warrants to be
exchanged and the date on which the Registered Holder requests that
such Warrant Exchange occur (the "Notice of Exchange"). The Warrant
Exchange shall take place on the date specified in the Notice of
Exchange or, if later, the date the Notice of Exchange is received by
the Company (the "Exchange Date"). Certificates for the shares issuable
upon such Warrant Exchange and, if applicable, a new Warrant
Certificate of like tenor evidencing the balance of the Warrants
remaining subject to the surrendered Warrant Certificate, shall be
issued as of the Exchange Date and delivered to the Registered Holder
within seven (7) days following the Exchange Date. In connection with
any Warrant Exchange, a Warrant Certificate shall represent the right
to subscribe for and acquire the number of Warrant Shares (rounded to
the next highest integer) equal to (i) the number of Warrants specified
by the Registered Holder in its Notice of Exchange (the "Total Number")
less (ii) the number of Warrant Shares equal to the quotient obtained
by dividing (A) the product of the Total Number and the existing
Exercise Price by (B) the current market price of a share of Common
Stock. Current market price shall have the meaning set forth Section 11
hereof, except that for purposes hereof, the date of exercise, as used
in such Section 11 hereof, shall mean the Exchange Date.
SECTION 5. RESERVATION OF SHARES; BLUE SKY APPROVALS; PAYMENT OF TAXES.
(a) Subject to Section 4(b) above, the Company covenants that
it will at all times following the Initial Warrant Exercise Date
reserve and keep available out of its authorized Common Stock, solely
for the purpose of issue upon exercise of Warrants, such number of
-3-
shares of Common Stock as shall then be issuable upon the exercise of
all outstanding Warrants. The Company covenants that all shares of
Common Stock which shall be issuable upon exercise of the Warrants and
payment of the Exercise Price shall, at the time of delivery, be duly
and validly issued, fully paid, nonassessable and free from all taxes,
liens and charges with respect to the issue thereof (other than those
which the Company shall promptly pay or discharge).
(b) The Company will use reasonable efforts to obtain
appropriate approvals or registrations under state "blue sky"
securities laws with respect to the exercise of the Warrants; provided,
however, that the Company shall not be obligated to file any general
consent to service of process or qualify as a foreign corporation in
any jurisdiction. With respect to any such securities laws, however,
Warrants may not be exercised by, or shares of Common Stock issued to,
any Registered Holder in any state in which such exercise would be
unlawful.
(c) The Company shall pay all documentary, stamp or similar
taxes and other governmental charges that may be imposed with respect
to the issuance of Warrants, or the issuance, or delivery of any shares
upon exercise of the Warrants; provided, however, that if the shares of
Common Stock are to be delivered in a name other than the name of the
Registered Holder of the Warrant Certificate representing any Warrant
being exercised, then no such delivery shall be made unless the person
requesting the same has paid to the Company the amount of transfer
taxes or charges incident thereto, if any.
SECTION 6. EXCHANGE AND REGISTRATION OF TRANSFER. Subject to the
restrictions on transfer contained in the Warrant Certificates and the
Subscription Agreement(s) between the Company and each of the investors in the
Private Placement:
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants or may
be transferred in whole or in part. Warrant Certificates to be
exchanged shall be surrendered to the Company at its Corporate Office,
and upon satisfaction of the terms and provisions hereof, the Company
shall execute, issue and deliver in exchange therefor the Warrant
Certificate or Certificates which the Registered Holder making the
exchange shall be entitled to receive.
(b) The Company shall keep at its office books in which,
subject to such reasonable regulations as it may prescribe, it shall
register Warrant Certificates and the transfer thereof in accordance
with its regular practice. Upon due presentment for registration of
transfer of any Warrant Certificate at its office, the Company shall
execute, issue and deliver to the transferee or transferees a new
Warrant Certificate or Certificates representing an equal aggregate
number of Warrants of the same tranche. The Company shall also make
available to Commonwealth for inspection by its agents or employees,
from time to time as Commonwealth may request, such original books of
accounts and record (including original Warrant Certificates
surrendered to the Company upon exercise of Warrants) as may be
maintained by the Company in connection with the issuance and exercise
of Warrants hereunder, such inspections to occur at the Company's
Corporate Office during normal business hours.
(c) With respect to all Warrant Certificates presented for
registration of transfer, or for exchange or exercise, the subscription
form on the reverse thereof shall be duly endorsed, or be accompanied
by a written instrument or instruments of transfer and subscription, in
form satisfactory to the Company, duly executed by the Registered
Holder or his attorney-in-fact duly authorized in writing.
(d) The Company may require payment by such holder of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith.
(e) All Warrant Certificates surrendered for exercise or for
exchange shall be promptly canceled by the Company and thereafter
retained by the Company until termination of this Agreement, or, with
the prior written consent of Commonwealth, disposed of or destroyed.
(f) Prior to due presentment for registration of transfer
thereof, the Company may deem and treat the Registered Holder of any
Warrant Certificate as the absolute, true and lawful owner thereof and
of each Warrant represented thereby (notwithstanding any notations of
ownership or writing thereon made by anyone other than a duly
authorized officer of the Company) for all purposes and the Company
shall not be affected by any notice to the contrary, except as
otherwise expressly provided in Section 7 hereof.
-4-
SECTION 7. LOSS OR MUTILATION. Upon receipt by the Company of evidence
satisfactory to it of the ownership of and loss, theft, destruction or
mutilation of any Warrant Certificate and (in case of loss, theft or
destruction) of indemnity satisfactory to them, and (in the case of mutilation)
upon surrender and cancellation thereof, and in the absence of notice to the
Company that the Warrant Certificate has been acquired by a bonafide purchaser,
the Company shall execute and deliver to the Registered Holder in lieu thereof a
new Warrant Certificate of like tenor representing an equal aggregate number of
Warrants. Applicants for a substitute Warrant Certificate shall comply with such
other reasonable regulations and pay such other reasonable charges as the
Company may prescribe.
SECTION 8. ANTI-DILUTION PROVISIONS. The Exercise Price in effect at
any time and the number and kind of securities purchasable upon the exercise of
the Warrants shall be subject to adjustment from time to time upon the happening
of certain events as follows:
(a) In case the Company shall hereafter (i) declare a dividend
or make a distribution on its outstanding shares of Common Stock in
shares of Common Stock, (ii) subdivide or reclassify its outstanding
shares of Common Stock into a greater number of shares, or (iii)
combine or reclassify its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect at the time of
the record date for such dividend or distribution or of the effective
date of such subdivision, combination or reclassification shall be
adjusted so that it shall equal the price determined by multiplying the
Exercise Price by a fraction, the denominator of which shall be the
number of shares of Common Stock outstanding after giving effect to
such action, and the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to such action. Such
adjustment shall be made successively whenever any event listed above
shall occur.
(b) In case the Company shall fix a record date for the
issuance of rights or warrants to all holders of its Common Stock
entitling them to subscribe for or purchase shares of Common Stock (or
securities convertible into Common Stock) at a price (the "Subscription
Price") (or having a conversion price per share) less than the current
market price (as defined below) on such record date, the Exercise Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Exercise Price in effect immediately prior to the date
of such issuance by a fraction, the numerator of which shall be the sum
of the number of shares of Common Stock outstanding on the record date
mentioned below and the number of additional shares of Common Stock
which the aggregate offering price of the total number of shares of
Common Stock so offered (or the aggregate conversion price of the
convertible securities so offered) would purchase at such current
market price per share of the Common Stock, and the denominator of
which shall be the sum of the number of shares of Common Stock
outstanding on such record date and the number of additional shares of
Common Stock offered for subscription or purchase (or into which the
convertible securities so offered are convertible). Such adjustment
shall be made successively whenever such rights or warrants are issued
and shall become effective immediately after the record date for the
determination of shareholders entitled to receive such rights or
warrants.
(c) In case the Company shall hereafter distribute to the
holders of its Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions and dividends or
distributions referred to in Subsection (a) above) or subscription
rights or warrants (excluding those referred to in Subsection (b)
above), then in each such case the Exercise Price in effect thereafter
shall be determined by multiplying the Exercise Price in effect
immediately prior thereto by a fraction, the numerator of which shall
be the total number of shares of Common Stock outstanding multiplied by
the current market price per share of Common Stock (as defined below),
less the fair market value (as determined by the Company's Board of
Directors) of said assets or evidences of indebtedness so distributed
or of such rights or warrants, and the denominator of which shall be
the total number of shares of Common Stock outstanding multiplied by
such current market price per share of Common Stock. Such adjustment
shall be made successively whenever such a record date is fixed. Such
adjustment shall be made whenever any such distribution is made and
shall become effective immediately after the record date for the
determination of shareholders entitled to receive such distribution.
(d) In case the Company shall hereafter issue shares of its
Common Stock (excluding shares issued (i) in any of the transactions
described in Subsection (a) above, (ii) upon exercise of options
granted to the Company's officers, directors, employees and consultants
under a plan or plans adopted by the Company's Board of Directors or a
committee thereof and approved by its shareholders, if such shares
would otherwise be included in this Subsection (d), (but only to the
-5-
extent that the aggregate number of shares excluded by this Subsection
(d)(ii) does not exceed 15% of the Company's Common Stock outstanding,
on a fully diluted basis, at the time of any issuance), (iii) upon
exercise of options, warrants, convertible securities and convertible
debentures outstanding as of the final closing of the Private
Placement, (iv) to shareholders of any corporation which merges into
the Company in proportion to their stock holdings of such corporation
immediately prior to such merger, upon such merger, (v) in a private
placement where the Offering Price (as defined below) is at least 75%
of the current market price, (vi) in a bona fide public offering
pursuant to a firm commitment underwriting, or (vii) in connection with
an acquisition of a business or technology which has been approved by a
majority of the Company's outside directors but only if no adjustment
is required pursuant to any other specific subsection of this Section 8
(without regard to Subsection (i) below) with respect to the
transaction giving rise to such rights) for a consideration per share
(the "Offering Price") less than the current market price on the date
of such issuance, the Exercise Price shall be adjusted immediately
thereafter so that it shall equal the price determined by multiplying
the Exercise Price in effect immediately prior thereto by a fraction,
the numerator of which shall be the sum of the number of shares of
Common Stock outstanding immediately prior to the issuance of such
additional shares and the number of shares of Common Stock which the
aggregate consideration received for the issuance of such additional
shares would purchase at such current market price per share of Common
Stock, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately after the issuance of such
additional shares. Such adjustment shall be made successively whenever
such an issuance is made.
(e) In case the Company shall hereafter issue any securities
convertible into or exchangeable for its Common Stock (excluding
securities issued in transactions described in Subsections (b) and (c)
above or in the exclusions set forth in (d)(i) through (vii) above) for
a consideration per share of Common Stock (the "Exchange Price")
initially deliverable upon conversion or exchange of such securities
(determined as provided in Subsection (g) below) less than the current
market price on the date of such issuance, the Exercise Price shall be
adjusted immediately thereafter so that it shall equal the price
determined by multiplying the Exercise Price in effect immediately
prior thereto by a fraction, the numerator of which shall be the sum of
the number of shares of Common Stock outstanding immediately prior to
the issuance of such securities and the number of shares of Common
Stock which the aggregate consideration received for such securities
would purchase at such current market price per share of Common Stock,
and the denominator of which shall be the sum of the number of shares
of Common Stock outstanding immediately prior to such issuance and the
maximum number of shares of Common Stock of the Company deliverable
upon conversion of or in exchange for such securities at the initial
conversion or exchange price or rate. Such adjustment shall be made
successively whenever such an issuance is made.
(f) Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Subsections (a), (b), (c), (d) and (e)
above or pursuant to subsection (j) below, the number of Warrant Shares
purchasable upon exercise of each Warrant shall simultaneously be
adjusted by multiplying the number of Warrant Shares initially issuable
upon exercise of such Warrant by the Exercise Price in effect on the
date hereof and dividing the product so obtained by the Exercise Price,
as adjusted.
(g) For purposes of any computation respecting consideration
received pursuant to Subsections (d) and (e) above and (j) below, the
following shall apply:
(A) in the case of the issuance of shares of Common
Stock for cash, the consideration shall be the amount of such
cash, provided that in no case shall any deduction be made for
any commissions, discounts or other expenses incurred by the
Company for any underwriting of the issue or otherwise in
connection therewith;
(B) in the case of the issuance of shares of Common
Stock for a consideration in whole or in part other than cash,
the consideration other than cash shall be deemed to be the
fair market value thereof as determined in good faith by the
Board of Directors of the Company (irrespective of the
accounting treatment thereof), whose determination shall be
conclusive; and
(C) in the case of the issuance of securities
convertible into or exchangeable for shares of Common Stock,
-6-
the aggregate consideration received therefor shall be deemed
to be the consideration received by the Company for the
issuance of such securities plus the additional minimum
consideration, if any, to be received by the Company upon the
conversion or exchange thereof (the consideration in each case
to be determined in the same manner as provided in clauses (A)
and (B) of this Subsection (g)). Upon the expiration or
termination of any such securities convertible into or
exchangeable for shares of Common Stock, the Exercise Price
shall be automatically readjusted to the Exercise Price that
would have been obtained had such convertible or exchangeable
securities not been issued.
(h) For the purpose of any computation under Subsection (b),
(c), (d) and (e) above, the current market price per share of Common
Stock at any date shall be determined in the manner set forth in
Section 11 hereof.
(i) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at
least five cents ($0.05) in such price; provided, however, that any
adjustments which by reason of this Subsection (i) are not required to
be made shall be carried forward and taken into account in any
subsequent adjustment required to be made hereunder. All calculations
under this Section 8 shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be. Anything in this
Section 8 to the contrary notwithstanding, the Company shall be
entitled, but shall not be required, to make such changes in the
Exercise Price, in addition to those required by this Section 8, as it
shall determine, in its sole discretion, to be advisable in order that
any dividend or distribution in shares of Common Stock, or any
subdivision, reclassification or combination of Common Stock, hereafter
made by the Company shall not result in any Federal income tax
liability to the holders of Common Stock or securities convertible into
Common Stock (including Warrants).
(j) Notwithstanding the other provisions of this Section 8,
(A) in the event that the Company shall at
any time issue securities in transactions of the type
described in Subsections (b), (d) and (e) of this Section 8
(other than securities issued in transactions described in
Subsection (d)(i) through (vii) above) having an Offering
Price, Subscription Price or Exchange Price less than the
Exercise Price, then the Exercise Price shall be immediately
reset to equal such lower Offering Price, Subscription Price
or Exchange Price and
(B) no adjustment under Subsections (b), (d)
or (e) shall be required for issuances below the current
market price if (i) the Offering Price, Subscription Price or
Exchange Price, as applicable, is at least 300% of the
Exercise Price then in effect and (ii) a registration
statement covering the Warrant Shares is in effect and remains
in effect for the 90 days after such issuance or Rule 144(k)
under the Securities Act of 1933, as amended (the "Act") is
available for resale of all of the Warrant Shares.
(k) Whenever the Exercise Price is adjusted, as herein
provided, the Company shall promptly cause a notice setting forth the
adjusted Exercise Price and adjusted number of Warrant Shares issuable
upon exercise of each Warrant, and, if requested, information
describing the transactions giving rise to such adjustments, to be
mailed to the holders at their last addresses appearing in the registry
books maintained by the Company pursuant to Section 6(b), and shall
cause a certified copy thereof to be mailed to its transfer agent, if
any. The Company may retain a firm of independent certified public
accountants selected by the Board of Directors (who may be the regular
accountants employed by the Company) to make any computation required
by this Section 8, and a certificate signed by such firm shall be
conclusive evidence of the correctness of such adjustment absent
manifest error.
(l) In the event that at any time, as a result of an
adjustment made pursuant to this Section 8, a holder of Warrants
thereafter shall become entitled to receive any securities, other than
Common Stock, thereafter the number of such other securities so
receivable upon exercise of a Warrant shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock
contained in Subsections (a) to (j), inclusive above.
-7-
(m) In case of any reorganization, reclassification or change
of the Common Stock (including any such reorganization,
reclassification or change in connection with a consolidation or merger
in which the Company is the continuing entity), or any consolidation of
the Company with, or merger of the Company with or into, any other
entity (other than a consolidation or merger in which the Company is
the continuing entity), or of any sale of the properties and assets of
the Company as, or substantially as, an entirety to any other person or
entity, each Warrant then outstanding shall thereafter be convertible
into the kind and amount of stock or other securities or property
receivable upon each such reorganization, reclassification, change,
consolidation, merger or sale by a holder of the number of shares of
Common Stock for which such Warrant would have been exercisable prior
to such transaction assuming such Warrant had been exercisable. The
provisions of this Paragraph (m) shall similarly apply to successive
reorganizations, reclassifications, changes, consolidations, mergers or
sales immediately prior to such reorganization, reclassification,
change, consolidation, merger or sale.
(n) Irrespective of any adjustments in the Exercise Price or
the number or kind of shares purchasable upon exercise of this Warrant,
Warrants theretofore or thereafter issued may continue to express the
same price and number and kind of shares as are stated in the similar
Warrants initially issuable pursuant to this Agreement.
SECTION 9. WARRANT CALL.
(a) If at any time the current market value of a share of
Common Stock (determined in accordance with Section 11 hereof) equals
or exceeds three times the Exercise Price then in effect for a period
of 20 consecutive trading days then, at any time during the five
trading day period following the last day of such 20 day period the
Company may, at its option, accelerate the expiration of the Warrants
to a date not less than 30 days from the date written notice thereof
(the "Call Notice") is sent to the Registered Holders of the Warrants
provided (i) a registration statement covering the Warrant Shares filed
under the Act has been declared effective and remains effective on the
date fixed for expiration of the Warrants (the "Call Date"), (ii) the
Warrants and Warrant Shares are not subject to a lock-up agreement and
(iii) on each day during such 20 consecutive day trading period the
Common Stock was traded on a national securities exchange, included for
quotation on the Nasdaq SmallCap Market or National Market System or
reported by the NASD Over the Counter Bulletin Board.
(b) If the conditions set forth in Section 9(a) are met, and
the Company desires to exercise its right to accelerate the exercise
date of the Warrants, it shall mail a Call Notice to each of the
Registered Holders of the Warrants, first class, postage prepaid, at
their last address as shall appear on the records maintained pursuant
to Section 6(b). Any notice mailed in the manner provided herein shall
be conclusively presumed to have been duly given whether or not the
Registered Holder receives such notice.
(c) The Call Notice shall specify (i) the Call Date, which
shall be no later than the 60th day following the last day of the 20
consecutive day trading period referred to in Section 9(a), and (ii)
that the right to exercise the Warrant shall terminate at 5:00 P.M.
(New York time) on the Call Date. No failure to mail such notice nor
any defect therein or in the mailing thereof shall affect the validity
of the proceedings for such acceleration of the Expiration Date except
as to a Registered Holder (a) to whom notice was not mailed or (b)
whose notice was defective. An affidavit of the Secretary or an
Assistant Secretary of the Company that the Call Notice has been mailed
shall, in the absence of fraud, be prima facie evidence of the facts
stated therein.
(d) Any right to exercise a Warrant shall terminate at 5:00
P.M. (New York time) on the Call Date. After 5:00 p.m. (New York time)
on the Call Date, Registered Holders of the Warrants shall have no
further rights and such Warrants shall expire and become void and all
rights hereunder and under the Warrant Certificates shall cease.
SECTION 10. REGISTRATION UNDER THE SECURITIES ACT OF 1933. The Company
agrees to register the Warrant Shares for resale under the Securities Act of
-8-
1933, as amended (the "Act") on the terms and subject to the conditions set
forth in Annex A to the Subscription Agreement(s) between the Company and each
of the investors in the Private Placement.
SECTION 11. FRACTIONAL WARRANTS AND FRACTIONAL SHARES. If the number of
shares of Common Stock purchasable upon the exercise of each Warrant is adjusted
pursuant to Section 8 hereof, the Company shall nevertheless not be required to
issue fractions of shares, upon exercise of the Warrants or otherwise, or to
distribute certificates that evidence fractional shares. With respect to any
fraction of a share called for upon any exercise of any Warrant, the Company
shall pay to the holder thereof an amount in cash equal to such fraction
multiplied by the current market price of a share of Common Stock, determined as
follows:
(a) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such exchange or
listed for trading on the Nasdaq National Market System ("NMS"), the
current market price shall be the higher of (x) the average of the last
reported sale prices of the Common Stock on such exchange for the 20
trading days prior to the date of exercise of this Warrant and (y) the
last reported sales price on the trading day immediately preceding such
date; provided that if no such sale is made on a day within such period
or no closing sale price is quoted, that day's price shall be the
average of the closing bid and asked prices for such day on such
exchange or system; or
(b) If the Common Stock is not so listed or admitted to
unlisted trading privileges, but is traded on the Nasdaq SmallCap
Market, the current market price shall be the higher of (x) the average
of the closing bid and asked prices for the 20 trading days prior to
the date of exercise of this Warrant on such market and (y) the last
reported bid price on the trading day immediately preceding such date
on such market and if the Common Stock is not so traded, the current
market price shall be the higher of (i) the mean of the last reported
bid and asked prices reported by the NASD Over the Counter Bulletin
Board for the 20 trading days prior to the date of the exercise of this
Warrant and (ii) the last reported bid price on the trading day
immediately preceding such date as reported by the NASD Over the
Counter Bulletin Board; or
(c) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so
reported, the current market price shall be an amount determined in a
reasonable manner by the Board of Directors of the Company.
SECTION 12. WARRANT HOLDERS NOT DEEMED STOCKHOLDERS. No holder of
Warrants shall, as such, be entitled to vote or to receive dividends or be
deemed the holder of Common Stock that may at any time be issuable upon exercise
of such Warrants for any purpose whatsoever, nor shall anything contained herein
be construed to confer upon the holder of Warrants, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issue or reclassification of stock, change of par value or
change of stock to no par value, consolidation, merger or conveyance or
otherwise), or to receive notice of meetings, or to receive dividends or
subscription rights, until such Holder shall have exercised such Warrants and
been issued shares of Common Stock in accordance with the provisions hereof.
SECTION 13. RIGHTS OF ACTION. All rights of action with respect to this
Agreement are vested in the respective Registered Holders of the Warrants, and
any Registered Holder of a Warrant, without consent of the Company or of the
holder of any other Warrant, may, on his own behalf and for his own benefit,
enforce against the Company his right to exercise his Warrants for the purchase
of shares of Common Stock in the manner provided in the Warrant Certificate and
this Agreement.
SECTION 14. CANCELLATION OF WARRANT CERTIFICATES. If the Company shall
purchase or acquire any Warrant or Warrants, the Warrant Certificate or Warrant
Certificates evidencing the same shall thereupon be canceled by it and retired.
SECTION 15. MODIFICATION OF AGREEMENT. The parties hereto may by
supplemental agreement make any changes or corrections in this Agreement (i)
that it shall deem appropriate to cure any ambiguity or to correct any defective
or inconsistent provision or manifest mistake or error herein contained; (ii) to
reflect an increase in the number of Warrants which are to be governed by this
Agreement resulting from an increase in the size of the Private Placement or the
-9-
number of Warrants issued in connection with the Private Placement; (iii) to
provide for a warrant agent for the Warrants; or (iv) that it may deem necessary
or desirable and which shall not adversely affect the interests of the holders
of Warrant Certificates. Except as set forth above, this Agreement shall not be
modified, supplemented or altered in any respect except with the consent in
writing of the Company and the holders of not less than 50% of the outstanding
Warrants.
SECTION 16. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
made when delivered or mailed first class registered or certified mail, postage
prepaid as follows: if to the Registered Holder of a Warrant Certificate, at the
address of such holder as shown on the registry books maintained by the Company
in its capacity as warrant agent; if to the Company, OmniComm Systems, Inc.,
0000 Xxxx Xxxxxx, Xxxxx 000, Xxxxx, Xxxxxxx 00000, Att: Chief Financial Officer;
and if to Commonwealth, at Commonwealth Associates, 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Att: Xxxx Xxxxxxxx.
SECTION 17. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
reference to principles of conflict of laws.
SECTION 18. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the Company and Commonwealth (and their respective
successors and assigns) and the holders from time to time of Warrant
Certificates. Nothing in this Agreement is intended or shall be construed to
confer upon any other person any right, remedy or claim, in equity or at law, or
to impose upon any other person any duty, liability or obligation.
SECTION 19. TERMINATION. This Agreement shall terminate on the earlier
to occur of (i) the close of business on the Expiration Date of all the
Warrants; or (ii) the date upon which all Warrants have been exercised or
called.
SECTION 20. COUNTERPARTS. This Agreement may be executed in several
counterparts, which taken together shall constitute a single document.
-10-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
OMNICOMM SYSTEMS, INC.
By:
--------------------------------------
Name:
Title:
COMMONWEALTH ASSOCIATES, L.P.
By: Commonwealth Associates Management
Company, Inc., its general partner
By:
--------------------------------------
Name:
Title:
-11-
THIS WARRANT AND ANY SHARES OF COMMON STOCK ISSUABLE UPON ITS EXERCISE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT') OR APPLICABLE STATE
SECURITIES LAWS AND MAY NOT BE TRANSFERRED UNTIL (1) A REGISTRATION STATEMENT
UNDER THE ACT AND/OR APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH RESPECT THERETO, OR (2) RECEIPT BY THE ISSUER OF AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT REGISTRATION
UNDER THE ACT IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER NOR IS
SUCH TRANSFER IN VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS.
No. PW ________ Warrants
VOID AFTER__________ __, 2006
WARRANT CERTIFICATE FOR PURCHASE
OF COMMON STOCK
OMNICOMM SYSTEMS, INC.
This certifies that FOR VALUE RECEIVED ___________________ or
registered assigns (the "Registered Holder") is the owner of the number of
Warrants ("Warrants") specified above. Each Warrant initially entitles the
Registered Holder to purchase, subject to the terms and conditions set forth in
this Certificate and the Warrant Agreement (as hereinafter defined), one fully
paid and nonassessable share of common stock, par value $.001 per share ("Common
Stock") of OmniComm Systems, Inc., a Delaware corporation (the "Company") at any
time commencing on the Initial Warrant Exercise Date (as defined in the Warrant
Agreement) and prior to the Expiration Date (as hereinafter defined), upon the
presentation and surrender of this Warrant Certificate with the Subscription
Form on the reverse hereof duly executed, at the corporate office of the
Company, as warrant agent, or its successor (the "Warrant Agent"), accompanied
by payment of an amount equal to $.25 for each Warrant (the "Exercise Price") in
lawful money of the United States of America in cash or by official bank or
certified check or by check drawn on an account of Commonwealth or such other
investment banks and brokerage houses as the Company shall approve, in each case
made payable to OmniComm Systems, Inc. or a Notice of Exchange (as defined in
the Warrant Agreement). The Company may, at its election, reduce the Exercise
Price.
This Warrant Certificate and each Warrant represented hereby
are issued pursuant to and are subject in all respects to the terms and
conditions set forth in the Warrant Agreement (the "Warrant Agreement"), dated
August __2001 by and among the Company and Commonwealth Associates, L.P.
In the event of certain contingencies provided for in the
Warrant Agreement, the Exercise Price or the number of shares of Common Stock
subject to purchase upon the exercise of each Warrant represented hereby are
subject to modification or adjustment.
The Warrants may be called by the Company under certain
circumstances described in the Warrant Agreement.
Each Warrant represented hereby is exercisable at the option
of the Registered Holder, but no fractional shares of Common Stock will be
issued. In the case of the exercise of less than all the Warrants represented
hereby, the Company shall cancel this Warrant Certificate upon the surrender
hereof and shall execute and deliver a new Warrant Certificate or Warrant
Certificates of like tenor for the balance of such Warrants.
The term "Expiration Date" shall mean 5:00 P.M. (New York
time) on ___ _, 2006 or unless the Warrants are called by the Company prior to
such date. If such date shall in the State of New York be a holiday or a day on
which the banks are authorized to close, then the Expiration Date shall mean
5:00 P.M. (New York time) the next following day which in the State of New York
is not a holiday or a day on which banks are authorized to close. The Company
may, at its election, extend the Expiration Date.
This Warrant Certificate is exchangeable, upon the surrender
hereof by the Registered Holder at the corporate office of the Company, for a
new Warrant Certificate or Warrant Certificates of like tenor representing an
equal aggregate number of Warrants, each of such new Warrant Certificates to
represent such number of Warrants as shall be designated by such Registered
Holder at the time of such surrender. Upon due presentment with any tax or other
governmental charge imposed in connection therewith, for registration of
transfer of this Warrant Certificate at such office, a new Warrant Certificate
or Warrant Certificates representing an equal aggregate number of Warrants will
be issued to the transferee in exchange therefor, subject to the limitations
provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the
Registered Holder shall not be entitled to any of the rights of a stockholder of
the Company, including, without limitation, the right to vote or to receive
dividends or other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided in the Warrant
Agreement.
Prior to due presentment for registration of transfer hereof,
the Company may deem and treat the Registered Holder as the absolute owner
hereof and of each Warrant represented hereby (notwithstanding any notations of
ownership or writing hereon made by anyone other than a duly authorized officer
of the Company) for all purposes and the Company shall not be affected by any
notice to the contrary.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
-2-
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed, manually or in facsimile, by two of its
officers thereunto duly authorized and a facsimile of its corporate seal to be
imprinted hereon.
OMNICOMM SYSTEMS, INC.
Dated: _______ __, 2001
By:
------------------------------
Name:
Title:
[seal]
By:
------------------------------
Name:
Title:
-3-
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to
exercise Warrants represented by this Warrant Certificate, and to purchase the
securities issuable upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
------------------------------------
------------------------------------
------------------------------------
------------------------------------
[please print or type name and address]
and be delivered to
------------------------------------
------------------------------------
------------------------------------
------------------------------------
[please print or type name and address]
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
Dated:
----------------------
X
----------------------
Address:
------------------------------ ------------------------------
Taxpayer Identification Number
------------------------------
------------------------------
Signature Guaranteed
ASSIGNMENT
To Be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, __________________ hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
------------------------------------
------------------------------------
------------------------------------
------------------------------------
[please print or type name and address]
____________________________ of the Warrants represented by this Warrant
Certificate, and hereby irrevocably constitutes and appoints
__________________________________ _______________________________ Attorney to
transfer this Warrant Certificate on the books of the Company, with full power
of substitution in the premises.
Dated:
----------------------
X
----------------------
Signature Guaranteed
-------------------------------
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.
