EXHIBIT 10(af)
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL (WHICH MAY BE IN-HOUSE COUNSEL) REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933. IN ADDITION, THESE SECURITIES ARE
SUBJECT TO THE RESTRICTIONS ON TRANSFER SET FORTH IN SECTION 10 OF THIS
WARRANT AGREEMENT.
WARRANT AGREEMENT
To Purchase Shares of the capital stock of
UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
dated as of ______________, 2002
WHEREAS, Universal Automotive Industries, Inc., a Delaware corporation
(the "Company") has entered into that certain Placement Agent Agreement, dated
as of January __, 0000 (xxx "Xxxxxxxxx Xxxxxxxxx") xxxx XXX-X0 Xxxxxxx (XXX)
Ltd., vFinance Investments, Inc.("vFinance") and SBI E2-Capital (HK) Limited
(SBI (HK) and together with vFinance the "Warrantholder"); and
WHEREAS, the Company desires to grant to the Warrantholder, in
connection with such Placement Agreement, the right to purchase shares of the
Company's common stock, $.01 par value (the "Warrants") upon the terms of, and
subject to the conditions to, this Agreement;
NOW, THEREFORE, in connection with the purchase of the Company's common
stock, $.01 par value ("Common Stock") by the Warrantholder and in consideration
of mutual covenants and agreements contained herein, the Company and the
Warrantholder certify and agree as follows:
1. GRANT OF THE RIGHT TO PURCHASE STOCK. (a) The Company hereby grants
to the Warrantholder the right, and the Warrantholder is entitled, upon the
terms and subject to the conditions hereinafter set forth, to subscribe for and
purchase, from the Company, ___________ shares of the Company's fully paid and
non-assessable shares of Common Stock. The Exercise Price for the shares of
Common Stock issuable upon the exercise of this Warrant (the "Shares") shall be
$______ per share, subject to adjustment pursuant to Section 8 of this
Agreement.
2. EXERCISE OF WARRANT. (a) Notice of Exercise. The purchase rights set
forth in this Warrant Agreement are exercisable by the Warrantholder, in whole
or in part, at any time during the period and prior to the expiration of the
term set forth in Section 3 of this Agreement by tendering to the Company at its
principal office a notice of exercise in the form attached hereto as Exhibit I
(the "Notice of Exercise"), duly completed and executed. Upon receipt of the
Notice of Exercise and the payment of the Exercise Price in accordance with the
terms of Section 2(b) or (c) of this Agreement, the Company shall issue to the
Warrantholder a certificate for the number of Shares purchased and shall execute
the Notice of Exercise indicating that no Shares remain subject to future
purchases.
(a) Payment of Exercise Price. Payment of the Exercise Price
shall be made (i) in cash or official bank check payable to the order of the
Company or by wire transfer; or (ii) in the manner provided in Section 2(b) of
this Agreement.
(b) Net Issuance Rights. Warrantholder may exercise its right
to receive Common Stock on a net basis, such that, without the exchange of any
funds and upon surrender of the Warrant, the
Warrantholder receives shares of Common Stock equal to the value (as determined
below) of this Warrant by surrender of the Warrant at the principal office of
the of the Company together with notice of such election in which event the
Company shall issue to the Warrantholder a number of shares of Common Stock
computed using the following formula:
X = Y(A-B)
------
A
X = the number of shares of Common Stock to be issued to the
Warrantholder.
Where:
Y = the number of shares of Common Stock subject to this
Warrant.
A = the fair market value of each share of the Company's
Common Stock
(i) if the Company's Common Stock is actively
traded over-the-counter, the fair market
value shall be deemed to be the product of
(x) the average of the closing prices of the
Company's Common Stock's sales on all
securities exchanges on which such security
may at the time be listed, or, if there has
been no sales on any such exchange on any
day, the average of the highest bid and
lowest asked prices on all such exchanges at
the end of such day, or, if on any day such
security is not so listed, the average of
the representative bid and asked prices
quoted on the Nasdaq Stock Market as of 4:00
P.M., New York time, or, if on any day such
security is not quoted by the Nasdaq Stock
Market, the average of the highest bid and
lowest asked prices on such day in the
domestic over-the-counter market as reported
by NASDAQ Small Cap Market, or any similar
successor organization, in each such case
averaged over a period of 21 days, ending
one day before the day the Company receives
the notice of election with regard to the
net issuance and (y) the number of shares of
Common Stock for which the Warrant is
exercisable at the time of such election; or
(ii) if at any time the Common Stock is not
listed on any securities exchange or quoted
over-the-counter or is not actively traded,
the fair market value of Preferred Stock
shall be the product of (x) the highest
price per share which the Company could
obtain from a willing buyer (not a current
employee or director) for shares of the
Company's Common Stock sold by the Company,
from authorized but unissued shares, as
determined in good faith by the Company's
Board of Directors and (y) the number of
shares of Common Stock for which the warrant
is exercisable at the time of such exercise;
or
(iii) notwithstanding the provisions (i) and (ii)
above, if the Company shall become subject
to a Merger, the fair market value of Common
Stock shall be deemed to be the value
received by the holders of the Company's
Common Stock pursuant to such Merger.
B = Exercise Price.
3. TERM OF THE WARRANT AGREEMENT. Except as otherwise provided for
herein, the term of this Warrant Agreement and the right to purchase Shares as
granted herein shall commence on ____________, 2002 [first anniversary of the
Initial Closing as defined in the Placement Agreement] and shall be exercisable
until _____________, 2006.
4. RESERVATION OF SHARES. The Company will at all times have authorized
and reserved a sufficient number of shares of Common Stock to provide for the
exercise of the rights to purchase Common Stock as provided herein. During the
term of this Warrant Agreement, the Company shall at all times have authorized
and reserved a sufficient number of shares of Common Stock to provide for the
exercise of the rights to purchase such shares of Common Stock as provided
herein.
5. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of the
Warrantholder's rights to purchase Shares, but in lieu of such fractional shares
the Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.
6. NO RIGHTS AS SHAREHOLDERS. This Warrant Agreement does not entitle
the Warrantholder to any voting rights or other rights as a shareholder of the
Company prior to the exercise of the Warrantholder's rights to purchase Shares
as provided for herein. No provision of this Warrant Agreement, in the absence
of affirmative action by the Warrantholder to purchase Shares, and no
enumeration in this Warrant Agreement of the rights or privileges of the
Warrantholder, will give rise to any liability of such Warrantholder for the
Exercise Price of the Shares acquirable by exercise hereof or as a stockholder
of the Company.
7. WARRANTHOLDER REGISTRY. The Company shall maintain a registry
showing the name and address of the registered holder of this Warrant Agreement.
8. ADJUSTMENT RIGHTS. The purchase price per share and the number of
Shares purchasable hereunder are subject to adjustment from time to time, as
follows:
(a) Merger and Sale of Assets. If at any time there shall be a
capital reorganization of the shares of the Company's Stock (other than a
combination, reclassification, exchange or subdivision of shares otherwise
provided for herein) or a merger or consolidation of the Company with or into
another corporation or the sale of all or substantially all of the Company's
properties and assets to any other person (other than such a transaction
constituting a Change of Control), effected in such a way that holders of Common
Stock shall be entitled to receive stock, securities, cash or other assets or
consideration in exchange for Common Stock, then, as a part of such transaction,
lawful provision shall be made so that the Warrantholder shall thereafter be
entitled to receive upon exercise of this Warrant and in full satisfaction of
its rights hereunder, the number of shares or other securities of the successor
corporation resulting from such transaction (which corporation may, but need not
be the Company), or the amount of cash or other consideration, as may be issued
or payable with respect to or in exchange for a number of outstanding shares of
Common Stock equal to the number of shares of such stock immediately theretofore
purchasable and receivable upon exercise of the rights represented hereby had
such transaction not taken place. If appropriate (as determined in good faith by
the Company's Board of Directors), adjustment shall be made by the Company's
Board of Directors in the application of the provisions of this Warrant
Agreement with respect to the rights and interest of the Warrantholder after the
reorganization or Change of Control to the end that the provisions of this
Warrant Agreement (including adjustments of the Exercise Price and number of
Shares purchasable pursuant to the terms and conditions of this Warrant
Agreement) shall be applicable after that event, as near as reasonably may be,
in relation to any shares deliverable after that event upon the exercise of the
Warrantholder's rights to purchase Shares pursuant to this Warrant Agreement.
(b) Reclassification of Shares. If the Company at any time
shall, by combination, reclassification, exchange or subdivision of securities
or otherwise, change any of the securities as to which purchase rights under
this Warrant Agreement exist into the same or a different number of securities
of any other class or classes, this Warrant Agreement shall thereafter represent
the right to acquire such number and kind of securities as would have been
issuable as the result of such change with respect to the securities which were
subject to the purchase rights under this Warrant Agreement immediately prior to
such combination, reclassification, exchange, subdivision or other change.
(c) Subdivision or Combination of Shares. If the Company at
any time shall combine or subdivide its Shares of Common Stock, the Exercise
Price shall be proportionately decreased in the case of a subdivision, or
proportionately increased in the case of a combination.
(d) Stock Dividends. If the Company at any time shall pay a
dividend payable in, or make any other distribution (except any distribution
specifically provided for in the foregoing subsections (a) or (b)) of the
Company's Common Stock, including, without limitation, any shares of Common
Stock of the same series as the Shares subject to this Warrant Agreement, then
the Exercise Price shall be adjusted, from and after the date of determination
of stockholders entitled to receive such dividend or distribution, to that price
determined by multiplying the Exercise Price in effect immediately prior to such
date of determination by a fraction (i) the numerator of which shall be the
total number of all shares of the Company's Common Stock outstanding immediately
prior to such dividend or distribution, and (ii) the denominator of which shall
be the total number of all shares of the Company's Common Stock outstanding
immediately after such dividend or distribution.
(e) Issuance of Shares at Other Than Exercise Price. If the
Company should issue shares of its Common Stock, including, without limitation,
any shares of Common Stock of the same series as the Shares subject to this
warrant, at a price per share less than the Exercise Price in effect immediately
prior to such issuance, then the Exercise Price shall be adjusted by dividing
(i) the sum of (A) the total number of shares of the Company's Common Stock
outstanding immediately prior to such issuance multiplied by the then effective
Exercise Price and (B) the value of the consideration received by the Company
upon such issuance of such shares, by (ii) the total number of shares of the
Company's Common Stock outstanding immediately after such issuance. For the
purposes of this Section 8(e), the issuance of securities convertible into or
exercisable for the Company's Common Stock shall be deemed the issuance of the
number of shares of the Company's Common Stock into which such securities are
convertible or for which such securities are exercisable, and the consideration
received for such securities shall be deemed to include the minimum aggregate
amount payable upon conversion or exercise of such securities. In the event the
right to convert or exercise such securities expires unexercised, the Exercise
Price of shares issuable upon the exercise hereof shall be readjusted
accordingly. The sale or other disposition of any shares of Common Stock held in
the treasury of the Company, or of any securities resulting from any
reclassification of such shares or other securities which were effected while
they were held in the treasury of the Company, shall be deemed an issuance
thereof.
(f) Notice of Adjustments. In the event that: (i) the Company
shall declare any dividend or distribution upon its stock, whether in cash,
property, stock or other securities; (ii) the Company shall offer for
subscription pro rata to the holders of any class of its capital stock any
additional shares of stock of any class or other rights; (iii) there shall be
any capital reorganization, reclassification, consolidation, merger or sale of
all or substantially all of the Company's assets; or (iv) there shall be any
voluntary or involuntary dissolution, liquidation or winding up of the Company;
then, in connection with each such event, the Company shall send to the
Warrantholder:
(i) At least 20 days' prior written notice of the date on
which the books of the
Company shall close or a record shall be taken for such dividend,
distribution, subscription rights (specifying the date on which the
holders of Shares shall be entitled thereto) or for determining rights
to vote in respect of such capital reorganization, reclassification,
consolidation, merger or sale of all or substantially all of the
Company's assets, dissolution, liquidation or winding up (other than
such a transaction constituting a Change of Control), and at least 45
days' prior written notice of the date on which the books of the
Company shall close or a record shall be taken for determining the
right to vote in respect of a Change of Control; and
(ii) In the case of any such capital reorganization,
reclassification, consolidation, merger or sale of all or substantially
all of the Company's assets, dissolution, liquidation or winding up
(other than such a transaction constituting a Change of Control), at
least 20 days' prior written notice of the date when the same shall
take place (and specifying the date on which the holders of Shares
shall be entitled to exchange their Shares for securities or other
property deliverable upon such capital reorganization,
reclassification, consolidation, merger or sale of all or substantially
all of the Company's assets, dissolution, liquidation or winding up),
and, in the case of any Change of Control, at least 45 days' prior
written notice of the date when the Change of Control shall take place.
Each such written notice shall set forth, in reasonable
detail, (i) the event requiring the adjustment, (ii) the amount of the
adjustment, (iii) the method by which such adjustment was calculated, (iv) the
Exercise Price, and (v) the number of shares subject to purchase hereunder after
giving effect to such adjustment, and shall be given by first class mail,
postage prepaid, addressed to the Warrantholder, at the address as shown on the
books of the Company.
(g) No Overissue. The Company will not take any action which
will result in any adjustment of the number of Shares issuable upon exercise of
this Warrant Agreement if the total number of Shares issuable after such action
upon exercise of the Warrant Agreement then outstanding, together with the total
number of Shares then outstanding, would exceed the total number of Shares then
authorized and not reserved for any purpose other than the purpose of issue upon
exercise of the Warrant Agreement.
9. REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER. This Warrant
Agreement has been entered into by the Company in reliance upon the following
representations and covenants of the Warrantholder, which by its execution
hereof the Warrantholder hereby confirms:
(a) Investment Purpose. The right to acquire Shares issuable
upon exercise of the Warrantholder's rights contained herein will be acquired
without a view to the sale or distribution of any part thereof, or engaging in
any public distribution of the same except pursuant to a registration or
exemption therefrom under applicable federal and state securities laws.
(b) Private Issue. The Warrantholder understands that (i) the
Shares issuable upon exercise of the Warrantholder's rights contained herein are
not registered under the Securities Act of 1933 (the "1933 Act") or qualified
under applicable state securities laws on the ground that the issuance
contemplated by this Warrant Agreement will be exempt from the registration and
qualifications requirements thereof, and (ii) the Company's reliance on such
exemption is predicated on the representations set forth in this Section 9.
(c) Disposition of the Warrantholder's Rights. In no event
will the Warrantholder make a disposition of any of its rights to acquire Shares
issuable upon exercise of such rights unless and until (i) it shall have
notified the Company of the proposed disposition, and (ii) if requested by the
Company, it shall have furnished the Company with an opinion of counsel (which
counsel may either be
inside or outside counsel to the Warrantholder) reasonably satisfactory to the
Company and its counsel to the effect that (A) appropriate action necessary for
compliance with the 1933 Act has been taken, or (B) an exemption from the
registration requirements of the 1933 Act is available. Notwithstanding the
foregoing, the restrictions imposed upon the transferability of any of its
rights to acquire Shares issuable on the exercise of such rights do not apply to
transfers from the beneficial owner of any of the aforementioned securities to
its nominee or from such nominee to its beneficial owner or transfer to an
affiliate of Warrantholder including Warrantholder's parent or a majority owned
subsidiary of Warrantholder's parent or Warrantholder who takes subject to the
restrictions herein set forth, and shall terminate as to any particular Shares
when (1) such security shall have been effectively registered under the 1933 Act
and sold by the holder thereof in accordance with such registration or (2) such
security shall have been sold without registration in compliance with Rule 144
under the 1933 Act, or (3) a letter shall have been issued to the Warrantholder
at its request by the staff of the Securities and Exchange Commission or a
ruling shall have been issued to the Warrantholder at its request by such
Commission stating that no action shall be recommended by such staff or taken by
such Commission, as the case may be, if such security is transferred without
registration under the 1933 Act in accordance with the conditions set forth in
such letter or ruling and such letter or ruling specifies that no subsequent
restrictions on transfer are required. Whenever the restrictions imposed
hereunder shall terminate, as hereinabove provided, the Warrantholder or holder
of Shares then outstanding as to which such restrictions have terminated shall
be entitled to receive from the Company, without expense to such holder, one or
more new certificates for the Warrant or for such Shares not bearing any
restrictive legend.
10. TRANSFERS.
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY
BE IN-HOUSE COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES
ACT OF 1933. IN ADDITION, THESE SECURITIES ARE SUBJECT TO THE
RESTRICTIONS ON TRANSFER SET FORTH IN THIS SECTION 10.
(a) Subject to the restrictions, terms and conditions
contained in Section 9 of this Agreement and this Section 10, this Warrant
Agreement and all rights hereunder are transferable in whole or in part by the
Warrantholder and any successor transferee; provided, however, that in no event
shall the number of transfers of the rights and interests in all of the Warrant
Agreement exceed 3 transfers, excluding transfers to Warrantholder's parent or a
majority owned subsidiary of Warrantholder's parent or Warrantholder who takes
subject to the restrictions contained herein. The transfer shall be recorded on
the books of the Company upon receipt by the Company of a notice of transfer in
the form attached hereto as Exhibit II (the "Transfer Notice"), at its principal
offices and the payment to the Company of all transfer taxes and other
governmental charges imposed on such transfer.
(b) Legends. The Warrantholder agrees that the Company may
place or cause to be placed on this Warrant Agreement and the certificates
representing the Shares, any appropriate legend or legends containing
restrictions on transfer necessary under the 1933 Act and any other applicable
state corporations or securities statutes and regulations, including, but not
limited to, the legend appearing at the beginning of this Agreement.
11. REGISTRATION RIGHTS. The Warrantholder shall have the right to
register the
Shares issuable upon exercise of this Warrant (in the event the Warrant is
exercised to purchase Common Stock), as set forth in Exhibit III hereto which
provisions are incorporated herein and made a part hereof.
12. MISCELLANEOUS.
(a) Effective Date. The provisions of this Warrant Agreement
shall be construed and shall be given effect in all respects as if it had been
executed and delivered by the Company on the date hereof. This Warrant Agreement
shall be binding upon any successors or assigns of the Warrantholder and the
Company.
(b) Attorneys' Fees. In any litigation, arbitration or court
proceeding between the Company and the Warrantholder relating hereto, the
prevailing party shall be entitled to reasonable attorneys' fees and expenses
and all costs of proceedings incurred in enforcing this Warrant Agreement.
(c) Governing Law. This Warrant Agreement shall be governed by
and construed for all purposes under and in accordance with the laws of the
State of California.
(d) Counterparts. This Warrant Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(e) Titles and Subtitles. The titles of the Sections and
subsections of this Warrant Agreement are for convenience and are not to be
considered in construing this Agreement.
(f) Notices. Any notice required or permitted hereunder shall
be given in writing and shall be deemed effectively given upon personal delivery
or upon the expiration of 5 business days from deposit in the United States
mail, by registered or certified mail, or upon facsimile transmission during
normal business hours addressed
(i) to the Warrantholder at
and
(ii) to the Company at
Universal Automotive Industries, Inc.
00000 Xxxxx Xxxxxxx
Xxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxx
with a copy to
Xxxxxxxx X. Xxxxxxxxx, Esq.
Xxxxxxx & Xxxxxxxxx, Ltd.
000 X. Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
or at such other address as any such party may subsequently designate by written
notice to the other party.
(g) Specific Performance. The Company recognizes and agrees
that the Warrantholder will not have an adequate remedy if the Company fails to
comply with this Agreement and that damages will not be readily ascertainable,
and the Company expressly agrees that, in the event of such failure, it shall
not oppose an application by the Warrantholder or any other person entitled to
the benefit of this Agreement requiring specific performance of any or all
provisions hereof or enjoining the Company from continuing to commit any such
breach of this Agreement.
(h) Survival. The representations, warranties, covenants and
conditions of the respective parties contained herein or made pursuant to this
Warrant Agreement shall survive the execution and delivery of this Warrant
Agreement.
(i) Severability. In the event any one or more of the
provisions of this Warrant Agreement shall for any reason be held invalid,
illegal or unenforceable, the remaining provisions of this Warrant Agreement
shall be unimpaired, and the invalid, illegal or unenforceable provision shall
be Financing:
IN WITNESS WHEREOF, the parties hereto have caused the Warrant
Agreement to be executed by its officers thereunto duly authorized.
Dated: ________, 2002
Company:
UNIVERSAL AUTOMOTIVE
INDUSTRIES, INC.
By:
Title:
Warrantholder:
By:
Its:
Exhibit I
NOTICE OF EXERCISE
To:
(1) The undersigned Warrantholder hereby elects to purchase _____ shares of
Common Stock of Universal Automotive Industries, Inc. (the "Shares"),
pursuant to the terms of the Warrant Agreement' dated the [ ] day of
_______, 2002 (the "Warrant Agreement") between Universal Automotive
Industries, Inc. and the Warrantholder.
(2) In exercising its rights to purchase the Shares, the undersigned hereby
confirms and acknowledges the representations and warranties made in
Section 9 of the Warrant Agreement.
(3) Please issue a certificate or certificates representing said Shares in
the name of the undersigned or in such other name as is specified
below.
(Name)
(Address)
(Address)
(Taxpayer Identification Number)
Warrantholder:
By:
Title:
Date:
ACKNOWLEDGMENT OF EXERCISE
The undersigned , hereby acknowledges receipt of the "Notice of
Exercise" from _________________________, to purchase ____________ shares of the
Common Stock of _______________________, pursuant to the terms of the Warrant
Agreement, and further acknowledges that no shares remain subject to purchase
under the terms of the Warrant Agreement.
Company: Universal Automotive Industries, Inc.
By:
Title:
Date:
Exhibit II
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. IT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR
AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933. IN
ADDITION, THE WARRANT IS SUBJECT TO THE RESTRICTIONS ON TRANSFER SET
FORTH IN SECTION 10 OF THE WARRANT AGREEMENT.
TRANSFER NOTICE
(To transfer or assign the foregoing Warrant Agreement execute this
form and supply required information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the foregoing Warrant Agreement and all rights
evidenced thereby are hereby transferred and assigned to
(Please Print)
whose address is
Dated
Warrantholder's Signature
Warrantholder's Address
Signature Guaranteed:
NOTE: The signature to this Transfer Notice must correspond with the
name as it appears on the face of the Warrant Agreement,
without alteration or enlargement or any change whatever.
Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of
authority to assign the foregoing Warrant Agreement.
