THIS WARRANT AS WELL AS THE SECURITIES ISSUABLE UPON THE EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE ACT"), AND MAY NOT BE OFFERED OR SOLD UNLESS REGISTERED UNDER THE
ACT OR AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS AVAILABLE.
Void after 5:00 P.M., New York City Time, on the third anniversary of the
Commencement Date, as that term is hereinafter defined (the "Termination Date")
WARRANT TO PURCHASE SHARES OF THE COMMON STOCK OF
ADM TRONICS UNLIMITED, INC.
This is to Certify That, FOR VALUE RECEIVED, Electropharmacology, Inc.
(collectively with any successors, assignees or transferees, the "Holder"), is
entitled to purchase, subject to the provisions of this Warrant, from ADM
TRONICS UNLIMITED, INC., a Delaware corporation (the "Company"), shares of the
Common Stock of the Company, $.0005 par value (the "Common Stock") at any time
or from time to time from the Commencement Date, as that term is hereinafter
defined, until 5:00 P.M., New York City Time on the Termination Date. The
purchase price per share shall be the Fair Market Value on the original issue
date hereof. The number of shares to be received upon the exercise of this
Warrant and the price to be paid for each such share may be adjusted from time
to time as hereinafter set forth. The shares deliverable upon such exercise, and
as adjusted from time to time, are hereinafter sometimes referred to as "Warrant
Shares" and the exercise price of this Warrant as in effect at any time as
adjusted from time to time is hereinafter sometimes referred to as the "Exercise
Price." For purposes of this Warrant, the Fair Market Value shall be determined
as follows: 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 system, Fair Market Value shall be the average of the last
reported sale prices of the Common Stock on such exchange or system for the five
trading days for which such prices are available immediately preceding the day
for which the determination is being made; or if the Common Stock is not so
listed or admitted to unlisted trading privileges, Fair Market Value shall be
the average of the means of the last reported high bid and low asked prices
reported by the National Quotation Bureau, Inc. for the five trading days for
which such prices are available immediately preceding the day for which the
determination is being made; or if the Common Stock is not so listed or admitted
to unlisted trading privileges and bid and asked prices are not so reported, the
Fair Market Value shall be the book value per share as at the end of the most
recent fiscal quarter of the Company ending prior to the date for which the
determination is being made, as adjusted for any additional shares of Common
Stock which may have been issued since the end of such quarter and determined in
accordance with generally accepted accounting principles applied consistently.
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EXCEPT AS PROVIDED IN CLAUSE (iii) OF THE PROVISO TO THE FIRST SENTENCE OF
SECTION 1 HEREOF, (A) UNLESS THE COMPANY REALIZES CONSOLIDATED CUMULATIVE GROSS
REVENUES FROM RENTALS AND SALES OF SOFPULSES, LESS RETURNS AND ALLOWANCES
(WITHOUT DEDUCTION FOR UNCOLLECTABLE RECEIVABLES), DURING THE TWELVE MONTH
PERIOD COMMENCING ON THE ORIGINAL ISSUE DATE HEREOF ("SOFPULSE TWELVE MONTH
REVENUES") OF AT LEAST $1,650,000, THIS WARRANT SHALL BE VOID AND OF NO FORCE
AND EFFECT, (B) IF THE SOFPULSE TWELVE MONTH REVENUES ARE AT LEAST $1,650,000
BUT LESS THAN $2,640,000, THIS WARRANT SHALL ONLY ENTITLE THE HOLDER TO PURCHASE
UP TO 750,000 SHARES OF THE COMMON STOCK, LESS ANY SHARES THERETOFORE PURCHASED
UPON EXERCISE HEREOF, AND (C) IF THE SOFPULSE TWELVE MONTH REVENUES ARE AT LEAST
$2,640,000, THIS WARRANT SHALL ENTITLE THE HOLDER TO PURCHASE UP TO 1,500,000
SHARES OF THE COMMON STOCK, LESS ANY SHARES THERETOFORE PURCHASED UPON EXERCISE
HEREOF. As used herein, SofPulse shall mean the pulsed electromagnetic
stimulation device designed, developed, manufactured and marketed by
Electropharmacology, Inc. ("EI")under the name MRT-SofPulse or SofPulse and
related models including electrical and mechanical design modifications that are
deemed substantially equivalent for use in the label indication specified in the
Section 510(k) premarket notification pursuant to which Magnetic Resonance
Therapeutics, Inc., the predecessor of EI, received clearance for commercial
marketing of the MRT 100 SofPulse pulsed electromagnetic stimulation device from
the United States Food and Drug Administration in January 1991. The Company
shall be deemed to have realized revenues
upon the earlier of (i) the date the Company accepts a purchase order for a
SofPulse, or (ii) the date a SofPulse is shipped to a customer, or (iii) the
date a customer is invoiced in the ordinary course of business.
The Commencement Date, as that term is defined in this Warrant, shall be the
date that is thirteen months after the original issue date hereof.
SECTION 1. EXERCISE OF WARRANT.
This Warrant may be exercised in whole or in part at any time
or from time to time during the period commencing on Commencement Date and
terminating at 5:00 P.M., New York City Time, on the Termination Date (the
"Exercise Period") provided, however, that (I) if the Termination Date is a day
on which banking institutions in the State of New York are authorized by law to
close, then on the next succeeding day which shall not be such a day, and (ii)
in the event of any merger, consolidation or sale of substantially all the
assets of the Company resulting in any distribution to the Company's
stockholders occurring not later than the Termination Date, upon exercise of
this Warrant the Holder shall receive, in lieu of Warrant Shares, the kind and
amount of securities and property (including cash) receivable by a holder of the
number of shares of Warrant Shares into which this Warrant might have been
exercisable immediately prior thereto and (iii) if during the twelve month
period commencing on the original issue date hereof, the Company sells or agrees
to sell all or substantially all of the assets constituting its SofPulse
business, in a single transaction or in a series of related transactions, other
than in the ordinary course of business, this
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Warrant shall become exercisable to the same extent as if SofPulse Twelve Month
Revenues exceeded $2,640,000. For purposes of this Warrant, the term "Warrant
Shares" shall include such securities and property. This Warrant may be
exercised by presentation and surrender hereof to the Company at its principal
office, or at the office of its stock transfer agent, if any, with the Purchase
Form annexed hereto duly executed and accompanied by payment of the Exercise
Price for the number of Warrant Shares specified in such form. Such payment may
be made, at the option of the Holder, by check or wire transfer. As soon as
practicable after each such exercise of the Warrant, but not later than two
business days from the date of such exercise, the Company shall issue and
deliver to the Holder a certificate or certificates representing the Warrant
Shares issuable upon such exercise, registered in the name of the Holder or the
Holder's designee. If this Warrant should be exercised in part only, the Company
shall, upon surrender of this Warrant for cancellation, execute and deliver a
new Warrant evidencing the rights of the Holder thereof to purchase the balance
of the Warrant Shares purchasable thereunder. Upon receipt by the Company of
this Warrant at its office, or by the stock transfer agent of the Company at its
office, in proper form for exercise, the Holder shall be deemed to be the holder
of record of the Warrant Shares issuable upon such exercise, notwithstanding
that the stock transfer books of the Company shall then be closed or that
certificates representing such shares shall not then be physically delivered to
the Holder.
SECTION 2. RESERVATION OF SHARES.
The Company shall at all times reserve for issuance and/or delivery
upon exercise of this Warrant such number of Warrant Shares as shall be required
for issuance and delivery upon exercise of this Warrant.
SECTION 3. FRACTIONAL SHARES.
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of this Warrant. With respect to any fraction of a
share called for upon any exercise hereof, the Company shall pay to the Holder
an amount in cash equal to such fraction multiplied by the Fair Market Value of
a share, determined as set forth above.
SECTION 4. RIGHTS AND LIABILITIES OF THE HOLDER.
The Holder shall not, by virtue hereof, be entitled to any rights of a
shareholder in the Company, either at law or equity, and the rights of the
Holder are limited to those expressed in the Warrant and are not enforceable
against the Company except to the extent set forth herein. No provision of this
Warrant, in the absence of affirmative action by the Holder to purchase the
Warrant Shares, and no mere enumeration herein of the rights or privileges of
the Holder, shall give rise to any liability of the Holder for the Exercise
Price or as a shareholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.
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SECTION 5. ADJUSTMENTS, NOTICE PROVISIONS AND RESTRICTIONS ON
ISSUANCE OF ADDITIONAL SECURITIES.
SECTION 5.1 Adjustment of Exercise Price. The Exercise Price in effect from time
to time shall be subject to adjustment, as follows:
(a) In case the Company shall (i) declare a dividend or make a
distribution on the outstanding shares of its capital stock that is payable in
shares of its Common Stock, (ii) subdivide, split or reclassify the outstanding
shares of its Common Stock into a greater number of shares, or (iii) combine or
reclassify the outstanding shares of its Common Stock into a smaller number of
shares, the Exercise Price in effect immediately after the record date for such
dividend or distribution or 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 in effect immediately prior thereto
by a fraction, of which the numerator shall be the number of shares of Common
Stock outstanding immediately before such dividend, distribution, split,
subdivision, combination or reclassification, and of which the denominator shall
be the number of shares of Common Stock outstanding immediately after such
dividend, distribution, split, subdivision, combination or reclassification. Any
shares of Common Stock issuable in payment of a dividend shall be deemed to have
been issued immediately prior to the record date for such dividend for purposes
of calculating the number of outstanding shares of Common Stock of the Company
under this Section. Such adjustment shall be made successively upon the
occurrence of each event specified above.
(b) In case the Company fixes a record date for the issuance to holders
of its Common Stock of rights, options, warrants or convertible or exchangeable
securities generally entitling such holders to subscribe for or purchase shares
of Common Stock at a price per share less than the Current Market Price (as such
term is defined in Subsection 5.1(d) hereof) per share of Common Stock on such
record date, 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, of which the numerator shall be the
number of shares of Common Stock outstanding on such record date plus the number
of shares of Common Stock which the aggregate offering price of the total number
of shares of Common Stock so offered would purchase at the Current Market Price
per share, and of which the denominator shall be the number of shares of Common
Stock outstanding on such Record Date plus the number of additional shares of
Common Stock offered for subscription or purchase. Such adjustment shall be made
successively on each date whenever a record date is fixed.
(c) In case the Company fixes a record date for the making of a
distribution to all holders of shares of its Common Stock (i) of shares of any
class of capital stock other than its Common Stock or (ii) of evidences of its
indebtedness or (iii) of assets (other than dividends or distributions referred
to in Subsection 5.1(a) hereof) or (iv) of rights, options, warrant or
convertible or exchangeable securities (excluding those rights, options,
warrants or convertible or exchangeable securities referred to in Subsection
5.1(b) hereof), then in each such case the Exercise Price in effect immediately
thereafter shall be determined by multiplying the Exercise Price in effect
immediately prior thereto by a fraction, of which the numerator shall be the
total number of shares of Common
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Stock outstanding on such record date multiplied by the Current Market Price (as
such term is defined in Subsection 5.1(d) hereof) per share on such record date,
less the aggregate fair value as determined in good faith by the Board of
Directors of the Company of said shares or evidences of indebtedness or assets
or rights, options, warrants or convertible or exchangeable securities so
distributed, and of which the denominator shall be the total number of shares of
Common Stock outstanding on such record date multiplied by such Current Market
Price per share on such record date. Such adjustment shall be made successively
each time such a record date is fixed. In the event that such distribution is
not so made, the Exercise Price then in effect shall be readjusted to the
Exercise Price which would then be in effect if such record date had not been
fixed.
(d) For the purpose of any computation under Subsection 5.1(a), 5.1(b)
or 5.1(c) hereof, the "Current Market Price" per share at any date (the
"Computation Date") shall be deemed to be the Fair Market Value except that the
respective five day periods referred to in the definition of such term shall be
twenty day periods, provided, however, upon the occurrence, prior to the
Computation Date, of any event described in Subsections 5.1(a), 5.1(b) or 5.1(c)
which shall have become effective with respect to market transactions at any
time (the "Market-Effect Date") on or after the beginning of any such applicable
20-day period, the Current Market Price, for each trading day preceding the
Market-Effect Date shall be adjusted, for purposes of calculating such average,
by multiplying such price by a fraction the numerator of which is the Exercise
Price as in effect immediately after the Market-Effect Date and the denominator
of which is the Exercise Price immediately prior to the Market-Effect Date, it
being understood that the purpose of this proviso is to ensure that the effect
of such event on the market price of the Common Stock shall, as nearly as
possible, be eliminated in order that the distortion in the calculation of the
Current Market Price may be minimized.
(e) All calculations under this Section 5.1 shall be made to the
nearest cent.
SECTION 5.2 Adjustment of Number of Shares. Upon each adjustment of the Exercise
Price pursuant to Subsection 5.1 hereof, this Warrant shall thereupon evidence
the right to purchase, in addition to any other securities to which the Holder
is entitled to purchase, that number of Warrant Shares (calculated to the
nearest one-hundred thousandth of a share) obtained by multiplying the number of
shares of Common Stock purchasable upon exercise of the Warrant immediately
prior to such adjustment by the Exercise Price in effect immediately prior to
such adjustment and dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment.
SECTION 5.3 Verification of Computations. The Company shall select a firm of
independent public accountants, which may be the Company's independent auditors,
and which selection may be changed from time to time, to verify the computations
made in accordance with this Section 5. The certificate, report of other written
statement of any such firm shall be conclusive evidence of the correctness of
any computation made under this Section 5 in the absence of manifest error.
Promptly upon its receipt of such certificate, report or statement from such
firm of independent public accountants, the Company shall deliver a copy thereof
to the Holder.
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SECTION 5.4 Warrant Certificate Amendments. Irrespective of any adjustments
pursuant to this Section 5, Warrant Certificates theretofore or thereafter
issued need not be amended or replaced, but Warrant Certificates thereafter
issued shall bear an appropriate legend or other notice of any adjustments and
which legend and/or notice has been provided by the Company to the Holder,
provided the Company may, at its option, issue new Warrant Certificates
evidencing Warrants in the form attached hereto to reflect any adjustment in the
Exercise Price and the number of Warrant Shares evidenced by such Warrant
Certificates and deliver the same to the Holder in substitution for existing
Warrant Certificates.
SECTION 6. OFFICER'S CERTIFICATE.
Whenever the Exercise Price, the number of Warrant Shares underlying
this Warrant or either of them shall be adjusted as required by the provisions
of the foregoing Section, the Company shall forthwith file in the custody of its
Secretary or an Assistant Secretary at its principal office and with its stock
transfer agent, if any, an officer's certificate showing the adjusted Exercise
Price and number of Warrant Shares determined as herein provided, setting forth
in reasonable detail the facts requiring such adjustment, including a statement
of the number of additional shares of Common Stock, if any, and such other facts
as shall be necessary to show the reason for and the manner of computing such
adjustment. Each such officer's certificate shall be made available at all
reasonable times for inspection by the Holder or any holder of a Warrant
executed and delivered pursuant to Section 1 hereof and the Company shall,
forthwith after each such adjustment, mail a copy by certified mail of such
certificate to the Holder or any such holder.
SECTION 7. NOTICES TO WARRANT HOLDERS.
So long as this Warrant shall be outstanding, (i) if the Company shall
pay any dividend or make any distribution upon the Common Stock, (ii) if the
Company shall offer to the holders of its Common Stock rights to subscribe for,
purchase, or exchange property for any shares of any class of stock, or any
other rights or options or (iii) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation or merger of
the Company with or into another corporation, sale, lease or transfer of all or
substantially all of the property and assets of the Company to another
corporation, or voluntary or involuntary dissolution, liquidation or winding up
of the Company shall be effected, then in any such case, the Company shall cause
to be sent by overnight mail or courier service to the Holder, at least fifteen
days prior to the date specified in (x) or (y) below, as the case may be, a
notice containing a brief description of the proposed action and stating the
date on which (x) a record date is to be set for the purpose of such dividend,
distribution or subscription rights, or (y) such reclassification,
reorganization, consolidation, merger, conveyance, lease, dissolution,
liquidation or winding up is to take place and the date, if any is to be fixed,
as of which the holders of Common Stock or other securities shall receive cash
or other property deliverable upon such reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation or winding up.
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SECTION 8. RECLASSIFICATION, REORGANIZATION OR MERGER.
In case of any reclassification, capital reorganization or other change
of outstanding shares of Common Stock of the Company, or in case of any
consolidation or merger of the Company with or into another corporation (other
than a merger with a subsidiary in which merger the Company is the continuing
corporation and which does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock of the
class issuable upon exercise of this Warrant) or in case of any sale, lease or
conveyance to another corporation of the property of the Company as an entirety
(collectively such actions being hereinafter referred to as "Reorganizations"),
the Company shall, as a condition precedent to such Reorganization transaction,
cause effective provisions to be made so that the Holder shall have the right
thereafter by exercising this Warrant at any time prior to the expiration of the
Warrant, to receive in lieu of the amount of securities otherwise deliverable,
the kind and amount of shares of stock and other securities and property
receivable upon such Reorganization by a holder of the number of shares of
Common Stock which might have been purchased upon exercise of this Warrant and
the warrants included in the Shares immediately prior to such Reorganization.
Any such provision shall include provision for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Warrant. The foregoing provisions of this Section 8 shall similarly apply to
successive Reorganizations.
SECTION 9. ISSUE TAX.
The issuance of certificates representing the Warrant Shares upon the
exercise of this Warrant as well as securities underlying the Share Warrants
shall be made without charge to the Holder for any issuance tax in respect
thereof.
SECTION 10. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF WARRANT.
This Warrant is exchangeable, without expense, at the option of the
Holder, upon presentation and surrender hereof to the Company or at the office
of its stock transfer agent, if any, for other warrants of different
denominations entitling the holder thereof to purchase in the aggregate the same
number of shares of Common Stock purchasable hereunder. The term "Warrant" as
used herein includes any Warrants into which this Warrant may be divided or
exchanged. Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
execute and deliver a new Warrant of like tenor and date. Any such new Warrant
executed and delivered shall constitute an additional contractual obligation on
the part of the Company, whether or not this Warrant so lost, stolen, destroyed,
or mutilated shall be at any time enforceable by anyone.
This Warrant may be assigned by the Holder provided that such
assignment, in the opinion of counsel to the Company, does not violate the
registration provisions of the Act or any other applicable securities laws,
rules or regulations.
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SECTION 11. GOVERNING LAW, JURISDICTION AND VENUE.
This Warrant shall be governed by and construed and enforced in
accordance with the laws of the State of New Jersey. The Company hereby consents
to the exclusive jurisdiction and venue of the courts of the State of New Jersey
located in Bergen County, New Jersey or the United States District Court having
original jurisdiction over matters arising in such county with respect to any
matter relating to this Warrant and the performance of the Company's obligations
hereunder and the Company hereto hereby further consents to the personal
jurisdiction of such courts. Any action suit or proceeding brought by or on
behalf of the Company relating to such matters shall be commenced, pursued,
defended and resolved only in such courts and any appropriate appellate court
having jurisdiction to hear an appeal from any judgment entered in such courts.
ADM TRONICS UNLIMITED, INC.
By: /s/ Xxxxx Xx Xxxx
------------------------
[SEAL]
Dated: August 18, 1998
Attest:
/s/
---------------------------
Secretary
-8-
PURCHASE FORM
-------------
Dated _____________, 19__
The undersigned hereby irrevocably elects to exercise the
within Warrant to the extent of purchasing ____ Warrant Shares and hereby makes
payment of in payment of ____ the actual exercise price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
--------------------------------------
Name_________________________________________________________________________
(Please typewrite or print in block letters)
Address______________________________________________________________________
Signature____________________________________________________________________
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