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MEDICAL TECHNOLOGY SYSTEMS, INC.
AND
NATIONAL SECURITIES CORPORATION
FINANCIAL ADVISOR'S
WARRANT AGREEMENT
DATED AS OF MARCH 1, 2001
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FINANCIAL ADVISOR'S WARRANT AGREEMENT dated as of March 1, 2001,
("Engagement Date") between MEDICAL TECHNOLOGY SYSTEMS, INC., a Delaware
corporation (the "Company"), and NATIONAL SECURITIES CORPORATION, a Washington
corporation and its assignees or designees (hereinafter referred to variously as
a "Holder" or "Financial Advisor").
W I T N E S S E T H:
WHEREAS, the Financial Advisor has agreed pursuant to the engagement
agreement dated as of March 1, 2001 (the "Engagement Agreement"), between the
Financial Advisor and the Company, to act as financial advisor to the Company.
WHEREAS, pursuant to the Engagement Agreement, the Company agreed to issue
warrants to the Financial Advisor to purchase up to an aggregate of 25,000
shares of Common Stock (the "Financial Advisor's Warrants"); and
WHEREAS, the Financial Advisor's Warrants to be issued pursuant to this
Agreement will be issued to the Financial Advisor in consideration for, and as
part of the compensation in connection with, the Financial Advisor's services
pursuant to the Engagement Agreement.
NOW, THEREFORE, in consideration of the premises, the agreements herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. GRANT. The Financial Advisor is hereby granted the right to purchase, at
any time from the Engagement Date until 5:00 p.m., New York time, on March 1,
2006 (5 years from the Engagement Agreement), at which time the Financial
Advisor's Warrants expire, an aggregate of 25,000 shares of Common Stock,
subject to adjustment as provided in Section 11 hereof (the "Financial Advisor's
Securities"). Each Financial Advisor's Warrant shall entitle the holder thereof
to purchase one (1) share of common stock, no par value per share, of the
Company (the "Common Stock"), at an initial exercise price of $1.50 (as defined
in Section 9.3(e)) (the "Common Stock Exercise Price").
2. FINANCIAL ADVISOR'S WARRANT CERTIFICATES. The Financial Advisor's
warrant certificates (the "Warrant Certificates") delivered and to be delivered
pursuant to this Agreement shall be in the form set forth in Exhibit A, attached
hereto and made a part hereof, with such appropriate insertions, omissions,
substitutions, and other variations as required or permitted by this Agreement.
3. REGISTRATION OF WARRANT. The Financial Advisor's Warrants shall be
numbered and shall be registered on the books of the Company when issued.
4. EXERCISE OF FINANCIAL ADVISOR'S WARRANT.
4.1 METHOD OF EXERCISE. The Financial Advisor's Warrants initially are
exercisable at the Common Stock Exercise Price (subject to adjustment as
provided in Section 11 hereof) per Financial Advisor's Warrant set forth in
Section 8 hereof payable by certified or official bank check in New York
Clearing House funds. Upon surrender of a Financial Advisor's Warrant
Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Common Stock Exercise Price for shares of
Common Stock purchased at the Company's principal offices presently located
at 00000 Xxxxxxxxxx Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxx, the registered holder
of a Financial Advisor's Warrant Certificate ("Holder" or "Holders") shall
be entitled to receive a certificate or certificates for the shares of
Common Stock so purchased. The purchase rights represented by each
Financial Advisor's Warrant Certificate are exercisable at the option of
the Holder thereof, in whole or in part (but not as to fractional shares
underlying the Financial Advisor's Warrants). In the case of the purchase
of less than all of the shares purchasable under any Financial Advisor's
Warrant Certificate, the Company shall cancel said Financial Advisor's
Warrant Certificate upon the surrender thereof and shall execute and
deliver a new Financial Advisor's Warrant Certificate of like tenor for the
balance of the shares purchasable thereunder.
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4.2 RIGHT TO CONVERT WARRANT. In addition to the right to exercise the
Financial Advisor's Warrant for cash pursuant to Section 4.1, Financial
Advisor shall have the right to convert the Financial Advisor's Warrant (in
whole but not in part) by the surrender of the Financial Advisor's Warrant
(with the annexed Form of Election to Convert) at the office of the Company
at any time during the term of the Financial Advisor's Warrant, into shares
of Common Stock as provided for in this Section 4.2. Upon exercise of this
conversion right, Financial Advisor shall be entitled to receive that
number of shares of Common Stock of the Company equal to the quotient
obtained by dividing [(A - B)(X)] by (A), where:
(A) = the Market Price (as defined in Section 9.3(e)) of one share of
Common Stock on the date of conversion of the Financial Advisor's Warrant.
(B) = the Common Stock Exercise Price for one share of Common Stock
under the Financial Advisor's Warrant.
(X) = the number of Shares issuable upon exercise of the Financial
Advisor's Warrant.
If the above calculation results in a negative number, then no shares
of Common Stock shall be issued or issuable upon conversion of the
Financial Advisor's Warrant.
Upon conversion of the Financial Advisor's Warrant, the Financial
Advisor shall be entitled to receive a certificate for the number of shares
of Common Stock determined under this Section 4.2.
5. ISSUANCE OF CERTIFICATES. Upon the exercise of the Financial Advisor's
Warrant, the issuance of certificates for securities, properties or rights
underlying such Financial Advisor's Warrant shall be made forthwith (and in any
event within five (5) business days thereafter) without charge to the Holder
thereof including, without limitation, any tax which may be payable in respect
of the issuance thereof, and such certificates shall (subject to the provisions
of Sections 7 and 9 hereof) be issued in the name of, or in such names as may be
directed by, the Holder thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificates in a name other
than that of the Holder and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
The Financial Advisor's Warrant Certificates and the certificates
representing the securities, property or rights issued upon exercise of the
Financial Advisor's Warrant shall be executed on behalf of the Company by the
manual or facsimile signature of the then present President or any Vice
President of the Company under its corporate seal reproduced thereon, attested
to by the manual or facsimile signature of the then present Secretary or any
Assistant Secretary of the Company. Financial Advisor's Warrant Certificates
shall be dated the date of execution by the Company upon initial issuance,
division, exchange, substitution or transfer.
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6. TRANSFER OF FINANCIAL ADVISOR'S WARRANT. The Financial Advisor's Warrant
shall be transferable only on the books of the Company maintained at its
principal office, where its principal office may then be located, upon delivery
thereof duly endorsed by the Holder or by its duly authorized attorney or
Financial Advisor accompanied by proper evidence of succession, assignment or
authority to transfer. Upon any registration of transfer, the Company shall
execute and deliver the new Financial Advisor's Warrant to the person entitled
thereto.
7. RESTRICTION ON TRANSFER OF FINANCIAL ADVISOR'S WARRANT. The Holder of a
Financial Advisor's Warrant Certificate, by its acceptance thereof, covenants
and agrees that the Financial Advisor's Warrant is being acquired as an
investment and not with a view to the distribution thereof, and that the
Financial Advisor's Warrant may not be sold, transferred, assigned, hypothecated
or otherwise disposed of, in whole or in part, for the term of the Financial
Advisor's Warrant, except to officers or affiliates of the Financial Advisor or
by operation of law.
8. EXERCISE PRICE AND NUMBER OF SECURITIES. Except as otherwise provided in
Section 11 hereof, each Financial Advisor's Warrant is exercisable to purchase
one share of Common Stock at an initial exercise price equal to the Common Stock
Exercise Price. The Common Stock Exercise Price, and the number of shares for
which the Financial Advisor's Warrant may be exercised shall be the price and
the number of shares which shall result from time to time from any and all
adjustments in accordance with the provisions of Section 11 hereof.
9. REGISTRATION RIGHTS.
9.1 REGISTRATION UNDER THE SECURITIES ACT OF 1933. Each Financial
Advisor's Warrant Certificate and each certificate representing securities
issuable upon exercise of the Financial Advisor's Warrant (collectively,
the "Warrant Shares") shall bear the following legend unless (i) such
Financial Advisor's Warrant or Warrant Shares are distributed to the public
pursuant to a registration statement filed under the Securities Act of
1933, as amended (the "Act"), or (ii) the Company has received an opinion
of counsel, in form and substance reasonably satisfactory to counsel for
the Company, that such legend is unnecessary for any such certificate:
THE FINANCIAL ADVISOR'S WARRANT REPRESENTED BY THIS CERTIFICATE
AND THE OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO (I) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (THE
"ACT"), (II) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT
(OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION
OF SECURITIES), OR (III) AN OPINION OF COUNSEL, IF SUCH OPINION
SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT
AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE FINANCIAL ___ ADVISOR'S WARRANT
REPRESENTED BY THE CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH
THE FINANCIAL ADVISOR'S WARRANT AGREEMENT REFERRED TO HEREIN.
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9.2 PIGGYBACK REGISTRATION. If, at any time the Company proposes to
register any of its securities under the Act (other than in connection with
a merger or pursuant to Form S-4 or Form S-8), it will give written notice
by registered mail, at least thirty (30) days prior to the filing of each
such registration statement, to the Holders of the Financial Advisor's
Warrants and/or the Warrant Shares of its intention to do so. If any of the
Holders of the Financial Advisor's Warrants and/or Warrant Shares notify
the Company within twenty (20) days after mailing of any such notice of its
or their desire to include any such securities in such proposed
registration statement, the Company shall afford such Holders of the
Financial Advisor's Warrants and/or Warrant Shares the opportunity to have
any such Financial Advisor's Warrants and/or Warrant Shares registered
under such registration statement. In the event that the managing
underwriter for said offering advises the Company in writing that in its
opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
causing a diminution in the offering price or otherwise adversely affecting
the offering, the Company will include in such registration (a) FIRST, the
securities the Company proposes to sell, (b) SECOND, the securities held by
the entities that made the demand for registration, (c) THIRD, the
Financial Advisor's Warrants and/or Warrant Shares requested to be included
in such registration which in the opinion of such underwriter can be sold,
PRO RATA among the Holders of Financial Advisor's Warrants and/or Warrant
Shares on the basis of the number of Financial Advisor's Warrants and/or
Warrant Shares requested to be registered by such Holders, and (d) FOURTH,
other securities requested to be included in such registration.
Notwithstanding the provisions of this Section 9.2, the Company shall
have the right at any time after it shall have given written notice
pursuant to this Section 9.2 (irrespective of whether a written request for
inclusion of any such securities shall have been made) to elect not to file
any such proposed registration statement or to withdraw the same after the
filing but prior to the effective date thereof.
9.3 DEMAND REGISTRATION.
(a) At any time after the Engagement Date and expiring five (5) years
after the Engagement Date, the Holders of the Financial Advisor's
Warrants and/or Warrant Shares representing a "Majority" (as
hereinafter defined in Section 9.4(k) hereof) of the Financial
Advisor's Warrants and/or Warrant Shares shall have the right
(which right is in addition to the registration rights under
Section 9.2 hereof), exercisable by written notice to the
Company, to have the Company prepare and file with the Securities
and Exchange Commission (the "Commission"), on one occasion, a
registration statement (including, but not limited to, a
registration statement on Form S-3) and such other documents,
including a prospectus, as may be necessary in the opinion of
both counsel for the Company and counsel for the Holders, in
order to comply with the provisions of the Act, so as to permit a
public offering and sale by such Holders and any other Holders of
the Financial Advisor's Warrant and/or Warrant Shares who notify
the Company within fifteen (15) days after the Company mails
notice of such request pursuant to Section 9.3(b) hereof
(collectively, the "Requesting Holders") of their respective
Warrant Shares for the earlier of (i) six (6) consecutive months
or (ii) until the sale of all of the Warrant Shares requested to
be registered by the Requesting Holders.
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(b) The Company covenants and agrees to give written notice of any
registration request under this Section 9.3 by any Holder or
Holders representing a Majority of the Financial Advisor's
Warrants and/or Warrant Shares to all other registered Holders of
the Financial Advisor's Warrants and the Warrant Shares within
ten (10) days from the date of the receipt of any such
registration request.
(c) In addition to the registration rights under Section 9.2 and
subsection (a) of this Section 9.3, at any time commencing one
(1) year after the Closing Date and expiring five (5) years after
the Closing Date, the Holders of a Majority of the Financial
Advisor's Warrants and/or Warrant Shares shall have the right on
one occasion, exercisable by written request to the Company, to
have the Company prepare and file with the Commission a
registration statement so as to permit a public offering and sale
by such Holders of their respective Warrant Shares for the
earlier of (i) six (6) consecutive months or (ii) until the sale
of all of the Warrant Shares requested to be registered by such
Holders; provided, however, that the provisions of Section 9.4(b)
hereof shall not apply to any such registration request and
registration and all costs incident thereto shall be at the
expense of the Holder or Holders making such request. If the
Holders have exercised their rights under Section 9.3(a) then the
Holders may not exercise their rights under Section 9.3(c) for a
period of six (6) months following the effective date of any
registration statement filed pursuant to Section 9.3(a).
(d) Notwithstanding anything to the contrary contained herein, if the
Company shall not have filed a registration statement for the Warrant
Shares within the time period specified in Section 9.4(a) hereof pursuant
to the written notice specified in Section 9.3(a) of the Holders of a
Majority of the Financial Advisor's Warrants and/or Warrant Shares, the
Company, at its option, may repurchase (i) any and all Warrant Shares at
the higher of the Market Price (as defined in Section 9.3(e)) per share of
Common Stock on (x) the date of the notice sent pursuant to Section 9.3(a)
or (y) the expiration of the period specified in Section 9.4(a) and (ii)
any and all Financial Advisor's Warrant at such Market Price less the
exercise price of such Financial Advisor's Warrant. Such repurchase shall
be in immediately available funds and shall close within two (2) days after
the later of (i) the expiration of the period specified in Section 9.4(a)
or (ii) the delivery of the written notice of election specified in this
Section 9.3(d).
(e) DEFINITION OF MARKET PRICE. As used herein, the phrase "Market
Price" at any date shall mean the fair value as determined in good faith by
the Company's Board of Directors; provided, however, that where there
exists a public market for the Company's Common Stock at the time of
Financial Advisor's exercise of this conversion right, the Market Price per
share of Common Stock shall be deemed to be the last reported sale price of
the Common Stock on the trading day before the Financial Advisor's Warrant,
with attached Notice of Conversion, are duly surrendered to the Company for
conversion thereof or, in case no such reported sale takes place on such
day, the average of the last reported closing sale prices for the last
three (3) trading days, in either case as officially reported by the
principal securities exchange on which the Common Stock is listed or
admitted to trading, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, the average closing sale price
as furnished by the NASD through The NASDAQ Stock Market, Inc. ("NASDAQ")
or similar organization if NASDAQ is no longer-reporting such information,
or if the Common Stock is not quoted on NASDAQ, the OTC Electronic Bulletin
Board, or as determined in good faith by resolution of the Board of
Directors of the Company, based on the best information available to it.
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9.4 COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. In connection
with any registration under Sections 9.2 or 9.3 hereof, the Company covenants
and agrees as follows:
(a) The Company shall use its best efforts to file a registration
statement within sixty (60) days of receipt of any demand therefor, and to
have any registration statements declared effective at the earliest
possible time, and shall furnish each Holder desiring to sell Warrant
Shares such number of prospectuses as shall reasonably be requested.
(b) The Company shall pay all costs (excluding fees and expenses of
Holder(s) counsel and any underwriting or selling commissions), fees and
expenses in connection with all registration statements filed pursuant to
Sections 9.2 and 9.3(a) hereof including, without limitation, the Company's
legal and accounting fees, printing expenses, blue sky fees and expenses.
The Holder(s) will pay all costs, fees and expenses (including those of the
Company) in connection with the registration statement filed pursuant to
Section 9.3(c).
(c) The Company will take all necessary action which may be required
in qualifying or registering the Warrant Shares included in a registration
statement for offering and sale under the securities or blue sky laws of
such states as reasonably are requested by the Holder(s), provided that the
Company shall not be obligated to execute or file any general consent to
service of process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the Warrant Shares to
be sold pursuant to any registration statement and each person, if any, who
controls such Holders within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), against all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending
against any claim whatsoever) to which any of them may become subject under
the Act, the Exchange Act or otherwise, arising from such registration
statement but only to the same extent and with the same effect as the
provisions pursuant to which the Company has agreed to indemnify each of
the Underwriters contained in Section 7 of the Engagement Agreement.
(e) The Holder(s) of the Warrant Shares to be sold pursuant to a
registration statement, and their successors and assigns, shall severally,
and not jointly, indemnify the Company, its officers and directors and each
person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act, against all loss, claim,
damage or expense or liability (including all expenses reasonably incurred
in investigating, preparing or defending against any claim whatsoever) to
which they may become subject under the Act, the Exchange Act or otherwise,
arising from information furnished by or on behalf of such Holders, or
their successors or assigns, for specific inclusion in such registration
statement to the same extent and with the same effect as the provisions
contained in Section 7 of the Engagement Agreement pursuant to which the
Underwriters have agreed to indemnify the Company.
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(f) Nothing contained in this Agreement shall be construed as
requiring the Holder(s) to exercise their Financial Advisor's Warrant prior
to the initial filing of any registration statement or the effectiveness
thereof.
(g) The Company shall not permit the inclusion of any securities other
than the Warrant Shares to be included in any registration statement filed
pursuant to Section 9.3 hereof, or permit any other registration statement
to be or remain effective during the effectiveness of a registration
statement filed pursuant to Section 9.3 hereof, without the prior written
consent of National Securities Corporation or as otherwise required by the
terms of any existing registration rights granted prior to the date of this
Agreement by the Company to the holders of any of the Company's securities.
(h) The Company shall furnish to each Holder participating in the
offering and to each underwriter, if any, a signed counterpart, addressed
to such Holder or underwriter, of (i) an opinion of counsel to the Company,
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, an opinion dated the
date of the closing under the Engagement Agreement), and (ii) a "cold
comfort" letter dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, a
letter dated the date of the closing under the Engagement Agreement) signed
by the independent public accountants who have issued a report on the
Company's financial statements included in such registration statement, in
each case covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in the
case of such accountants' letter, with respect to events subsequent to the
date of such financial statements, as are customarily covered in opinions
of issuer's counsel and in accountants' letters delivered to underwriters
in underwritten public offerings of securities.
(i) The Company shall as soon as practicable after the effective date
of the registration statement, and in any event within 15 months
thereafter, make generally available to its security holders (within the
meaning of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the Act and covering a period of
at least 12 consecutive months beginning after the effective date of the
registration statement.
(j) The Company shall enter into an underwriting agreement with the
managing underwriters selected for such underwriting by Holders holding a
Majority of the Warrant Shares requested to be included in such
underwriting, which may be the Financial Advisor. Such agreement shall be
satisfactory in form and substance to the Company, each Holder and such
managing underwriters, and shall contain such representations, warranties
and covenants by the Company and such other terms as are customarily
contained in agreements of that type used by the managing underwriter. The
Holders shall be parties to any underwriting agreement relating to an
underwritten sale of their Warrant Shares and may, at their option, require
that any or all the representations, warranties and covenants of the
Company to or for the benefit of such underwriters shall also be made to
and for the benefit of such Holders. Such Holders shall not be required to
make any representations or warranties to or agreements with the Company or
the underwriters except as they may relate to such Holders and their
intended methods of distribution.
(k) For purposes of this Agreement, the term "Majority" in reference
to the Financial Advisor's Warrants or Warrant Shares, shall mean in excess
of fifty percent (50%) of the then outstanding Financial Advisor's Warrants
or Warrant Shares that (i) are not held by the Company, an affiliate,
officer, creditor, employee or agent thereof or any of their respective
affiliates, members of their family, persons acting as nominees or in
conjunction therewith or (ii) have not been resold to the public pursuant
to a registration statement filed with the Commission under the Act.
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10. OBLIGATIONS OF HOLDERS. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to SECTION 9 hereof that
each of the selling Holders shall:
(a) Furnish to the Company such information regarding themselves, the
Warrant Shares held by them, the intended method of sale or other
disposition of such securities, the identity of and compensation to be paid
to any underwriters proposed to be employed in connection with such sale or
other disposition, and such other information as may reasonably be required
to effect the registration of their Warrant Shares.
(b) Notify the Company, at any time when a prospectus relating to the
Warrant Shares covered by a registration statement is required to be
delivered under the Act, of the happening of any event with respect to such
selling Holder as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing.
11. ADJUSTMENTS TO COMMON STOCK EXERCISE PRICE AND NUMBER OF SECURITIES.
The Common Stock Exercise Price in effect at any time and the number and kind of
securities purchased upon the exercise of the Financial Advisor's Warrant shall
be subject to adjustment from time to time only upon the happening of the
following events:
11.1 STOCK DIVIDEND, SUBDIVISION AND COMBINATION. In case the Company
shall (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 Common Stock 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 Common Stock 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.
11.2 ADJUSTMENT IN NUMBER OF SECURITIES. Upon each adjustment of the
Common Stock Exercise Price pursuant to the provisions of this Section 11,
the number of Warrant Shares issuable upon the exercise at the adjusted
Common Stock Exercise Price of each Financial Advisor's Warrant shall be
adjusted to the nearest number of whole shares of Common Stock by
multiplying a number equal to the Common Stock Exercise Price in effect
immediately prior to such adjustment by the number of Warrant Shares
issuable upon exercise of the Financial Advisor's Warrant immediately prior
to such adjustment and dividing the product so obtained by the adjusted
Common Stock Exercise Price.
11.3 DEFINITION OF COMMON STOCK. For the purpose of this Agreement,
the term "Common Stock" shall mean (i) the class of stock designated as
Common Stock in the Articles of Incorporation of the Company as amended as
of the date hereof, or (ii) any other class of stock resulting from
successive changes or reclassifications of such Common Stock consisting
solely of changes in par value, or from par value to no par value, or from
no par value to par value.
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11.4 MERGER OR CONSOLIDATION. In case of any consolidation of the
Company with, or merger of the Company into, another corporation (other
than a consolidation or merger which does not result in any
reclassification or change of the outstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and
deliver to the Holder a supplemental warrant agreement providing that the
Holder of each Financial Advisor's Warrant then outstanding or to be
outstanding shall have the right thereafter (until the expiration of such
Financial Advisor's Warrant) to receive, upon exercise of such Financial
Advisor's Warrant, the kind and amount of shares of stock and other
securities and property receivable upon such consolidation or merger by a
holder of the number of shares of Common Stock for which such Financial
Advisor's Warrant might have been exercised immediately prior to such
consolidation or merger. Such supplemental warrant agreement shall provide
for adjustments which shall be identical to the adjustments provided in
this Section 11. The above provision of this subsection shall similarly
apply to successive consolidations or mergers.
11.5 NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No adjustment
of the Common Stock Exercise Price shall be made:
(a) Upon the issuance or sale of the Financial Advisor's Warrant or
the Warrant Shares;
(b) Upon the issuance or sale of Common Stock (or any other security
convertible, exercisable, or exchangeable into shares of Common
Stock) upon the direct or indirect conversion, exercise, or
exchange of any options, rights, warrants, or other securities or
indebtedness of the Company outstanding as of the date of this
Agreement or granted pursuant to any stock option plan of the
Company in existence as of the date of this Agreement, pursuant
to the terms thereof; or
(c) If the amount of said adjustment shall be less than two cents
($0.02) per share, provided, however, that in such case any
adjustment that would otherwise be required then to be made shall
be carried forward and shall be made at the time of and together
with the next subsequent adjustment which, together with any
adjustment so carried forward, shall amount to at least two cents
($0.02) per Financial Advisor's Warrant.
12. EXCHANGE AND REPLACEMENT OF FINANCIAL ADVISOR'S WARRANT CERTIFICATES.
Each Financial Advisor's Warrant Certificate is exchangeable, without expense,
upon the surrender thereof by the registered Holder at the principal executive
office of the Company for a new Financial Advisor's Warrant Certificate of like
tenor and date representing in the aggregate the right to purchase the same
number of Warrant Shares in such denominations as shall be designated by the
Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Financial Advisor's Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Financial Advisor's Warrant, if mutilated, the Company will make and deliver
a new Warrant Certificate of like tenor, in lieu thereof.
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13. ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not be required
to issue certificates representing fractions of shares of Common Stock upon the
exercise of the Financial Advisor's Warrant, nor shall it be required to issue
scrip or pay cash in lieu of fractional interests, it being the intent of the
parties that all fractional interests shall be eliminated by rounding any
fraction up to the nearest whole number of shares of Common Stock or other
securities, properties or rights.
14. RESERVATION AND LISTING OF SECURITIES. The Company shall at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of the Financial Advisor's
Warrant, such number of shares of Common Stock or other securities, properties
or rights as shall be issuable upon the exercise thereof. Every transfer agent
("Transfer Agent") for the Common Stock and other securities of the Company
issuable upon the exercise of the Financial Advisor's Warrant will be
irrevocably authorized and directed at all times to reserve such number of
authorized shares of Common Stock and other securities as shall be requisite for
such purpose. The Company will keep a copy of this Agreement on file with every
Transfer Agent for the Common Stock and other securities of the Company issuable
upon the exercise of the Financial Advisor's Warrant. The Company will supply
every such Transfer Agent with duly executed stock and other certificates, as
appropriate, for such purpose. The Company covenants and agrees that, upon
exercise of the Financial Advisor's Warrant and payment of the Common Stock
Exercise Price therefor, all shares of Common Stock and other securities
issuable upon such exercise shall be duly and validly issued, fully paid,
non-assessable and not subject to the preemptive rights of any stockholder. As
long as the Financial Advisor's Warrant shall be outstanding, the Company shall
use its best fforts to cause all shares of Common Stock issuable upon the
exercise of the Financial Advisor's Warrant to be listed (subject to official
notice of issuance) on all securities exchanges on which the Common Stock issued
to the public in connection herewith may then be listed and/or quoted on Nasdaq
or the OTC Electronic Bulletin Board.
15. NOTICES TO FINANCIAL ADVISOR'S WARRANT HOLDERS. Nothing contained in
this Agreement shall be construed as conferring upon the Holders the right to
vote or to consent or to receive notice as a stockholder in respect of any
meetings of stockholders for the election of directors or any other matter, or
as having any rights whatsoever as a stockholder of the Company. If, however, at
any time prior to the expiration of the Financial Advisor's Warrants and their
exercise, any of the following event shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on
the books of the Company; or
(b) the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible
into or exchangeable for shares of capital stock of the Company, or any
option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall
be proposed;
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then in any one or more of said events, the Company shall give written
notice of such event at least fifteen (15) days prior to the date fixed as a
record date or the date of closing the transfer books for the determination of
the stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
16. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made and
sent when delivered, mailed by registered or certified mail, return receipt
requested, or received via facsimile:
(a) if to the registered Holder of the Financial Advisor's Warrant, to
the address of such Holder as shown on the books of the Company; or
(b) if to the Company, to the address set forth in SECTION 4 hereof or
to such other address as the Company may designate by notice to the
Holders.
17. SUPPEMENTS; AMENDMENTS; ENTIRE AGREEMENT. This Agreement (including
the Engagement Agreement to the extent portions thereof are referred to herein)
contains the entire understanding between the parties hereto with respect to the
subject matter hereof and may not be modified or amended except by a writing
duly signed by the party against whom enforcement of the modification or
amendment is sought. The Company and the Financial Advisor may from time to time
supplement or amend this Agreement without the approval of any holders of
Financial Advisor's Warrant Certificates (other than the Financial Advisor) in
order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any provisions herein, or to
make any other provisions in regard to matters or questions arising hereunder
which the Company and the Financial Advisor may deem necessary or desirable and
which the Company and the Financial Advisor deem shall not adversely affect the
interests of the Holders of Financial Advisor's Warrant Certificates.
18. SUCCESSORS. All of the covenants and provisions of this Agreement shall
be binding upon and inure to the benefit of the Company, the Holders and their
respective successors and assigns hereunder.
19. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All statements in any
schedule, exhibit or certificate or other instrument delivered by or on behalf
of the parties hereto, or in connection with the transactions contemplated by
this Agreement, shall be deemed to be representations and warranties hereunder.
Notwithstanding any investigations made by or on behalf of the parties to this
Agreement, all representations, warranties and agreements made by the parties to
this Agreement or pursuant hereto shall survive.
20. GOVERNING LAW. This Agreement and each Financial Advisor's Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws.
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21. SEVERABILITY. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
22. CAPTIONS. The caption headings of the Sections of this Agreement are
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
23. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Financial Advisor and any other registered Holder(s) of the Financial Advisor's
Warrant Certificates or Warrant Shares any legal or equitable right, remedy or
claim under this Agreement; and this Agreement shall be for the sole and
exclusive benefit of the Company and the Underwriters and any other Holder(s) of
the Financial Advisor's Warrant Certificates or Warrant Shares.
24. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
ATTEST: MEDICAL TECHNOLOGY SYSTEMS, INC.
By:___________________________ By:_______________________________
Name: Name: Xxxx Xxxxxx
Title: Title: CEO
NATIONAL SECURITIES CORPORATION
By:_______________________________
Name: Xxxxxx X. Xxxxxxxxx
Title: CEO
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EXHIBIT A
[FORM OF FINANCIAL ADVISOR'S WARRANT CERTIFICATE]
THE FINANCIAL ADVISOR'S WARRANT REPRESENTED BY THIS CERTIFICATE AND THE
OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 (THE "ACT"), (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT
(OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES),
OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY
TO COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE FINANCIAL ADVISOR'S WARRANT REPRESENTED BY
THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE FINANCIAL ADVISOR'S
WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE 5:00 P.M., NEW YORK TIME MARCH 1, 2006
Financial Advisor's Warrant No.
Issuable for
25,000 Shares of Common Stock
WARRANT CERTIFICATE
This Warrant Certificate certifies that National Securities Corporation, a
Washington corporation, is the registered holder of Warrants to purchase
initially at any time from March 1, 2001 until 5:00 p.m., New York time on,
March 1, 2006 ("Expiration Date"), up to 25,000 shares of Common Stock, no par
value per share, of the Company (the "Common Stock"), at an exercise price of
$1.50 per share (the "Common Stock Exercise Price"), upon surrender of this
Financial Advisor's Warrant Certificate and payment of the Common Stock Exercise
Price at an office or agency of the Company, but subject to the conditions set
forth herein and in the Financial Advisor's Warrant Agreement dated as of March
1, 2001 among the Company and National Securities Corporation (the "Warrant
Agreement"). Payment of the Exercise Price shall be made either by certified or
official bank check in New York Clearing House funds payable to the order of the
Company or by surrender of the Financial Advisor's Warrant as provided in the
Warrant Agreement.
No Warrant may be exercised after 5:00 p.m., New York time, on the
Expiration Date, at which time all Financial Advisor's Warrant evidenced hereby,
unless exercised prior thereto, shall thereafter be void.
The Financial Advisor's Warrant evidenced by this Warrant Certificate is
part of a duly authorized issue of Financial Advisor's Warrants issued pursuant
to the Warrant Agreement, which Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of the Financial
Advisor's Warrant.
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The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Financial Advisor's
Warrant; provided, however, that the failure of the Company to issue such new
Warrant Certificates shall not in any way change, alter or otherwise impair, the
rights of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Financial Advisor's Warrant shall be issued to the transferees in exchange
for this Warrant Certificate, subject to the limitations provided herein and in
the Warrant Agreement, without any charge except for any tax or other
governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the Financial Advisor's Warrant
evidenced by this Certificate, the Company shall forthwith issue to the holder
hereof a new Warrant Certificate representing such unexercised Financial
Advisor's Warrant.
In addition to the right of exercise, the holder shall have the right to
convert this Warrant Certificate (in whole but not in part) by the surrender of
this Warrant Certificate (with the attached Form of Election to Convert) at the
office of the Company at any time during the duration of this Warrant, into
shares of Common Stock, as provided in the Warrant Agreement.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
This Warrant Certificate does not entitle any holder thereof to any of the
rights of a shareholder of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed.
Dated as of March 1, 2001.
ATTEST: MEDICAL TECHNOLOGY SYSTEMS, INC.
By:___________________________ By:_______________________________
Name: Name: Xxxx Xxxxxx
Title: Title: CEO
15
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 4.1]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ______ shares of Common
Stock, and herewith tenders in payment for such securities a certified or
official bank check payable in New York Clearing House Funds to the order of
Medical Technology Systems, Inc. (the "Company") in the amount of $_________,
all in accordance with the terms of Section 4.1 of the Financial Advisor's
Warrant Agreement dated as of March 1, 2001 among the Company and National
Securities Corporation. The undersigned requests that a certificate for such
securities be registered in the name of ____________________, whose address is
__________________ and that such certificate to be delivered
to____________________ whose address is _______________________, and if said
number of shares shall not be all the shares purchasable hereunder, that a new
Warrant Certificate for the balance of the shares purchasable under the within
Warrant Certificate be registered in the name of the undersigned warrant holder
or his assignee as below indicated and delivered to the address stated below.
Dated:_____________________________
Signature:_______________________________________
(Signature must conform in all
respects to name of holder as specified
on the face of the Warrant Certificate.)
Address: ______________________________
______________________________
____________________________________________
(Insert Social Security or Other Identifying
Number of Holder)
Signature Guaranteed:________________________________________________________
(Signature must be guaranteed by a bank savings and loan association,
fstockbroker, or credit union with membership in an approved signature guaranty
Medallion Program pursuant to Securities Exchange Act Rule 17Ad-15.)
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[FORM OF ASSIGNMENT]
(TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH HOLDER
DESIRES TO TRANSFER THE WARRANT CERTIFICATE.)
FOR VALUE RECEIVED ________________ hereby sells, assigns and transfers unto
[NAME OF TRANSFEREE) this Warrant Certificate, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint
________________, attorney, to transfer the within Warrant Certificate on the
books of the within-named Company, with full power of substitution.
Dated:_____________________
Signature:____________________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate.)
Address: ______________________________
______________________________
____________________________________________
(Insert Social Security or Other Identifying
Number of Holder)
Signature Guaranteed:________________________________________________________
(Signature must be guaranteed by a bank savings and loan association,
stockbroker, or credit union with membership in an approved signature guaranty
Medallion Program pursuant to Securities Exchange Act Rule 17Ad-15.)
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[FORM OF ELECTION TO CONVERT PURSUANT TO SECTION 4.2]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to convert this Warrant Certificate
into ________ shares of Common Stock (assuming a Market Price calculated on the
basis of the last sale price for Common Stock on _________________, (the trading
day immediately preceding surrender of the Warrant Certificate and this Form of
Election to Convert) of $_________), all in accordance with Section 4.2 of the
Financial Advisor's Warrant Agreement dated as of March 1, 2001 between the
Company and National Securities Corporation. The undersigned requests that a
certificate for such securities be registered in the name of
________________________, whose address is ________________________ and
________________________(attach separate sheet if necessary).
Dated:________________________
Signature:________________________________________
(Signature must conform in all
respects to name of holder as specified
on the face of the Warrant Certificate.)
Address:_______________________________
_______________________________
____________________________________________
(Insert Social Security or Other Identifying
Number of Holder)
Signature Guaranteed:__________________________________________________________
(Signature must be guaranteed by a bank savings and loan association,
stockbroker, or credit union with membership in an approved signature guaranty
Medallion Program pursuant to Securities Exchange Act Rule 17Ad-15.)
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