MANAGING DEALER WARRANT AGREEMENT
THIS
MANAGING DEALER WARRANT AGREEMENT (the “Agreement”), dated as of July 19, 2006,
is made and entered into by and between QUINTESSENCE PHOTONICS CORPORATION,
a
Delaware corporation (the “Company”), and BROOKSTREET SECURITIES CORPORATION, a
California corporation (“Brookstreet” or the “Warrantholder”).
The
Company sold 9,445,600 shares of its Common Stock (the “Offering Shares”) in a
private offering (the “Offering”) on a best efforts basis to accredited
investors only at a purchase price of $1.25 (the “Exercise Price”) per Offering
Share. Brookstreet was the Managing Dealer of the Offering pursuant to a
Managing Dealer Agreement dated December 5, 2005, Amendment No. 1 to Managing
Dealer Agreement dated May 22, 2006 and Amendment No. 2 to Managing Dealer
Agreement dated May 30, 2006 (the “Managing Dealer Agreement”) between the
Company and Brookstreet. The Managing Dealer Agreement provides that, on
consummation of the sale of the Offering Shares, the Company shall sell and
issue to Brookstreet Warrants (as defined by Section 1.1) entitling Brookstreet
to purchase, on the terms and conditions hereinafter set forth, shares of
Company Common Stock (the “Shares”).
In
consideration of the foregoing and in satisfaction of the Company’s obligations
contained in the Managing Dealer Agreement and for the purpose of defining
the
terms and provisions of the Warrants and the respective rights and obligations
with respect thereto, the Company and the Warrantholder, for value received,
hereby agree as follows:
Section
1. Issuance
of Warrants; Transferability and Form of Warrants.
1.1 Issuance
of the Warrants.
The
Company agrees that at the final closing of the Offering, it shall issue to
the
Warrantholder warrants for the purchase of the number of Shares equal to 20%
of
the aggregate number of Offering Shares sold in the Offering (the
“Warrants”).
1.2 Number
of Shares and Certification.
Each
Warrant will entitle the Warrantholder to purchase one Share, at the Warrant
Price (as defined in Section 8 hereof). The Warrants being sold and issued
pursuant to this Agreement shall be evidenced by Warrant Certificates
substantially in the form of Exhibit A hereto (the “Warrant
Certificate”).
1.3 Registration.
The
Warrants shall be numbered and shall be registered on the books of the Company
when issued.
1.4 Transfer.
The
Warrantholder, at Warrantholder’s sole discretion, may transfer the Warrants, in
whole or in part only, to affiliates, employees, selected dealers, and others.
The Warrants shall be transferable in whole or in part only on the books of
the
Company maintained at its principal office in Sylmar, California, or wherever
its principal office may then be located, upon delivery thereof duly endorsed
by
the Warrantholder or by its duly authorized attorney or representative,
accompanied by proper evidence of succession, assignment or authority to
transfer. Upon any registration of transfer, the Company shall promptly execute
and deliver new Warrants to the person or persons entitled
thereto.
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1.5 Form
of Warrants.
The
text of the Warrants and of the form of election to purchase Shares shall be
substantially as set forth in Exhibit A attached hereto. The number of Shares
issuable upon exercise of the Warrants is subject to adjustment upon the
occurrence of certain events, all as hereinafter provided. The Warrants shall
be
executed on behalf of the Company by its President or Chief Financial Officer.
A
Warrant bearing the signature of an individual who was at the time of signature
the proper officer of the Company shall bind the Company, notwithstanding that
such individual shall have ceased to hold such office prior to the delivery
of
such Warrant or did not hold such office on the date of this Agreement. The
Warrants shall be dated as of the date of signature thereof by the Company
either upon initial issuance or upon division, exchange, substitution or
transfer.
1.6 Legend
on Shares.
Each
Warrant certificate and certificate for Shares initially issued upon exercise
of
the Warrants shall bear the following legend, unless, at the time of exercise,
such Shares are subject to a currently effective registration statement under
the Securities Act of 1933, as amended (the “Act”):
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND
MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933 OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT.”
Any
certificate issued at any time in exchange or substitution for any certificate
bearing such legend (except a new certificate issued upon completion of a public
distribution pursuant to a registration statement under the Act, of the
securities represented thereby) shall also bear the above legend unless, in
the
opinion of the Company’s counsel, the securities represented thereby need no
longer be subject to such restrictions.
Section
2. Exchange
of Warrant Certificate.
Any
Warrant certificate may be exchanged for another certificate or certificates
entitling the Warrantholder to purchase a like aggregate number of Shares as
the
certificate or certificates surrendered then entitled such Warrantholder to
purchase. Any Warrantholder desiring to exchange a Warrant certificate shall
make such request in writing delivered to the Company, and shall surrender,
properly endorsed, with signatures guaranteed, the certificate evidencing the
Warrant to be so exchanged. Thereupon, the Company shall execute and deliver
to
the person or persons entitled thereto a new Warrant certificate as so
requested.
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Section
3. Term
of Warrants; Exercise of Warrants.
3.1 Subject
to the terms of this Agreement, each Warrantholder shall have the right, at
any
time during the period commencing at 9:00 a.m., Western Time, on the date of
issuance of the Warrants and ending at 5:00 p.m. of the day preceding the fifth
anniversary date of the issuance (the “Termination Date”), to purchase from the
Company up to the number of fully paid and nonassessable Shares to which the
Warrantholder may at the time be entitled to purchase pursuant to this
Agreement. Such purchase of Shares shall be effectuated by the surrender to
the
Company, at its principal office, of the certificate evidencing the Warrants
to
be exercised, together with the purchase form on the reverse thereof duly filled
in and signed, with signatures guaranteed, and upon payment to the Company
of
the Warrant Price (as defined in and determined in accordance with the
provisions of this section 3 and section 8 hereof), for the number of Shares
in
respect of which such Warrants are then exercised.
3.2 Payment
of the aggregate Warrant Price shall be made pursuant to Section 3.3 hereof.
Upon surrender of the Warrants and payment of such Warrant Price as aforesaid,
the Company shall issue and cause to be delivered with all reasonable dispatch
to or upon the written order of the Warrantholder, and in such name or names
as
the Warrantholder may designate, a certificate or certificates for the number
of
full Shares so purchased upon the exercise of the Warrant, together with cash,
as provided in Section 10 hereof, in respect of any fractional Shares otherwise
issuable upon such surrender. Such certificate or certificates shall be deemed
to have been issued and any person so designated to be named therein shall
be
deemed to have become a holder of record of such securities as of the date
of
surrender of the Warrants and payment of the Warrant Price, as aforesaid,
notwithstanding that the certificate or certificates representing such
securities shall not actually have been delivered or that the stock transfer
books of the Company shall then be closed. The Warrants shall be exercisable,
at
the election of each Warrantholder, either in full or from time to time in
part
and, in the event that a certificate evidencing the Warrants is exercised in
respect of less than all of the Shares specified therein at any time prior
to
the Termination Date, a new certificate evidencing the remaining portion of
the
Warrants shall be issued by the Company to such Warrantholder.
3.3 Manner
of Exercising Warrant.
(a) In
order
to exercise this Warrant with respect to all or any part of the Shares for
which
this Warrant is at the time exercisable, Warrantholder (or any other person
or
persons exercising the Warrant) must take the following actions:
(i)
Execute
and deliver to the Company a written notice of exercise stating the number
of
Shares being purchased (in whole shares only) and such other information set
forth on the form of Notice of Exercise attached hereto as Appendix A;
and
(ii)
Pay
the
aggregate Exercise Price for the Shares in one or more of the following
forms:
(A)
Cash
or
check made payable to the Company.
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(B)
A
promissory note payable to the Company, but only to the extent authorized by
the
Company and applicable provisions of the California Corporations
Code.
Should
the Company’s Common Stock be registered under Section 12 of the Exchange Act at
the time the Warrant is exercised, then the Exercise Price may also be paid
as
follows:
(C)
By
surrender of this Warrant at the principal office of the Company together with
notice of cashless election, in which event the Company shall issue to
Warrantholder a number of Shares computed using the following
formula:
X
= Y
(A-B)/A
where: X
= the
number of Shares to be issued to Holder.
Y
= the
number of Shares for which this Warrant is being exercised.
A
= the
Market Price of one share of Common Stock (for purposes of this Section
3(a)(ii)(C), the "Market Price" shall be defined as the average closing price
of
the Common Stock for the five trading days prior to the date of exercise of
this
Warrant (the "Average Closing Price"), as reported by the O.T.C. Bulletin Board,
or if the Common Stock is not traded on the O.T.C. Bulletin Board, the Average
Closing Price in any other over-the-counter market; provided, however, that
if
the Common Stock is listed on a stock exchange, the Market Price shall be the
Average Closing Price on such exchange for the five trading days prior to the
date of exercise of the Warrants. If the Common Stock is/was not traded during
the five trading days prior to the date of exercise, then the closing price
for
the last publicly traded day shall be deemed to be the closing price for any
and
all (if applicable) days during such five trading day period.
B
= the
Exercise Price.
For
purposes of Rule 144 and sub-section 3.3(a)(ii)(C) hereof, it is intended,
understood and acknowledged that the Shares issuable upon exercise of this
Warrant in a cashless exercise transaction shall be deemed to have been acquired
at the time this Warrant was issued. Moreover, it is intended, understood and
acknowledged that the holding period for the Shares issuable upon exercise
of
this Warrant in a cashless exercise transaction shall be deemed to have
commenced on the date this Warrant was issued.
(D) Through
a
special sale and remittance procedure compliant with applicable federal and
state securities law pursuant to which the Warrantholder (or any other person
or
persons exercising the Warrant) shall concurrently provide irrevocable
instructions (a) to a Company-approved brokerage firm to effect the immediate
sale of the purchased Shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
Warrant Price payable for the purchased Shares plus all applicable Federal,
State and local income and employment taxes required to be withheld by the
Company by reason of such exercise and (b) to the Company to deliver the
certificates for the purchased Shares directly to such brokerage firm in order
to complete the sale.
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(b)
As
soon
as practical after the Exercise Date, the Company shall issue to or on behalf
of
the Warrantholder (or any other person or persons exercising this Warrant)
a
certificate for the purchased Shares, with the appropriate legends affixed
thereto.
(c)
In
no
event may this Warrant be exercised for any fractional Shares.
Section
4. Registration
Rights.
4.1 Registration.
Not
later than September 18, 2006, the Company shall file a registration statement
(the “Registration Statement”) covering the public sale of the Shares together
with the other Registrable Securities (defined below), and the Company will
cause such Shares to be registered under the Act and continue to keep the
Registration Statement effective for a period of 16 months. “Registrable
Securities” are defined as: (i) up to $2 million worth of shares of common stock
sold by the Company prior to the commencement of the Offerings (the “Early
Offering”); (ii) all Shares issued in the Offerings; (iii) all Shares underlying
the Warrants, (iv) all Shares underlying the Brookstreet Warrants; (v) all
Shares issued to Xxxxxxxxxx & Xxxxx LLP in connection with the Offering
and/or the contemplated Reverse Merger; (vi) all Shares underlying the warrants
issued in connection with the $500,000 bridge loan financing that closed on
or
about November 25, 2005; and (vii) all Shares underlying warrants issued by
the
Company in connection with the Loan Agreement dated on or about August 1, 2005.
The Company shall bear the expenses in connection with the registration of
the
Registrable Securities (exclusive of underwriting discounts and
commissions).
4.2
Piggyback
Registration.
In
addition to the registration rights set forth in Section 4.1, if the
registration statement is not filed with or otherwise declared effective by
the
Securities and Exchange Commission (the “Commission”), then the Warrantholder
shall also have certain “piggyback” registration rights as follows:
(a) If
at any
time after the issuance of the Shares, the Company shall file with the
Commission a registration statement under the Act registering any shares of
equity securities and which could also include for registration the Shares,
the
Company shall give written notice to each Warrantholder prior to such
filing.
(b) Within
20
calendar days after such notice from the Company, each Warrantholder shall
give
written notice to the Company whether or not such Warrantholder desires to
have
all of such Warrantholder’s Shares included in the registration statement. If
any Warrantholder fails to give such notice within such period, such
Warrantholder shall not have the right to have its Shares registered pursuant
to
such registration statement. If any Warrantholder gives such notice, then the
Company shall include such Warrantholder’s Shares in the registration statement,
at Company’s sole cost and expense, subject to the remaining terms of this
Section 4.2.
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(c) If
the
registration statement relates to an underwritten offering, and the underwriter
shall determine in writing that the total number of shares of equity securities
to be included in the offering, including the Shares, shall exceed the amount
which the underwriter deems to be appropriate for the offering, the number
of
Shares to be included in the registration statement shall be reduced in the
same
proportion as the remainder of the Shares in the offering and such participating
Warrantholder’s Shares included in such registration statement will be reduced
proportionately. For this purpose, if other securities in the registration
statement are derivative securities, their underlying shares shall be included
in the computation. Each participating Warrantholder shall enter into such
agreements as may be reasonably required by the underwriters and each
Warrantholder shall pay the underwriter’s commissions relating to the sale of
their respective Shares.
(d) The
Warrantholders shall have an unlimited number of opportunities to have the
Shares registered under this Section 4.2 provided that the Company shall not
be
required to register any Shares or keep any registration statement effective
beyond such period required under Section 4.4(a) of this Agreement.
(e) The
Warrantholder shall furnish in writing to the Company such information as the
Company shall reasonably require in connection with a registration
statement.
4.3 Expenses
of Registration.
All
expenses of registration (“Registration Expenses”) incurred in connection with
any registration, qualification or compliance pursuant to Section 4 shall be
borne by the Company. All expenses of sale of the Shares on the public market
after registration shall be borne by the Warrantholders.
4.4 Registration
Procedures.
In the
case of each registration, qualification or compliance effected by the Company
pursuant to this Agreement, the Company will keep each Warrantholder advised
in
writing as to the initiation of each registration, qualification and compliance
and as to the completion thereof. At its expense, the Company will:
(a) Effectiveness.
Prepare
and file with the Commission a registration statement with respect to such
securities and use its commercially reasonable best efforts to cause such
registration statement to become and remain effective for at least 16 months
or
until the distribution described in the registration statement has been
completed, whichever is shorter;
(b) Amendments.
Prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of
the
Act with respect to the disposition of all securities covered by such
registration statement;
(c) Copies
of Documents.
Furnish
to the Warrantholders participating in such registration and to the underwriters
of the securities being registered such reasonable number of copies of the
registration statement, preliminary prospectus, final prospectus and such other
documents as such underwriters or such Warrantholders may reasonably request
in
order to facilitate the public offering of such securities;
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(d) Blue
Sky Laws.
Use its
commercially reasonable best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue
sky
laws of such jurisdictions as shall be reasonably requested by the
Warrantholders; provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions,
unless the Company is already subject to service in such jurisdiction and except
as may be required by the Act;
(e) Notification.
Notify
each Warrantholder whose Shares are covered by such registration statement
if at
any time the Company shall determine that the registration statement or any
prospectus included therein shall contain an untrue statement of material fact
or omit to state a material fact necessary to make the statements therein,
in
light of the circumstances in which they were made, not misleading, and
thereafter, subject to Section 4.4(f) and the last paragraph of this Section
4,
promptly prepare and file with the Commission an amendment to the registration
statement or a supplement to the prospectus as may be necessary to correct
such
untrue statement or omission, and notify the selling Warrantholders of such
filing;
(f) Amendment
or Supplement to Registration Statement.
Prepare
and file as soon as reasonably practicable with the Commission and promptly
notify each Warrantholder whose Shares are covered by such registration
statement of the filing of such amendment or supplement to the registration
statement or prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such securities is
required to be delivered under the Act, the Company determines that any event
shall have occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a material
fact or omit to state a material fact necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading or if
the
Company determines that an amendment to the registration statement or supplement
to the prospectus is advisable before further sales of Shares should be made;
provided that if the Board of Directors of the Company determines that amending
the registration statement or supplementing the prospectus might be detrimental
to the Company, then notwithstanding this Section 4.4(f) the Company may defer
such amendment or supplement for up to 120 days, provided that: (i) the Company
shall not use such right of deferral with respect to any registration statement
for more than an aggregate of 120 days in any 12-month period; and (ii) the
number of days the Company is required to keep the registration statement
effective shall be extended by the number of days for which the Company shall
have used such right of deferral;
(g) Stop
Order.
Advise
each Warrantholder whose Shares are covered by such registration statement
promptly after it shall receive notice or obtain knowledge thereof, of the
issuance of any stop order by the Commission suspending the effectiveness of
the
Registration Statement or the initiation or threatening of any proceeding for
that purpose and promptly use its commercially reasonable best efforts to
prevent the issuance of any stop order or to obtain its withdrawal if such
stop
order should be issued;
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(j) Listing.
Cause
Shares registered pursuant hereunder to be listed on each securities exchange
on
which similar securities issued by the Company are then listed; and
(i) Transfer
Agent and Registrar.
Provide
a transfer agent and registrar for all Shares registered pursuant hereunder
and
a CUSIP number for all such Shares in each case not later than the effective
date of such registration.
If
a
Warrantholder receives a notification from the Company pursuant to this Section
4 that a registration statement or prospectus contains an untrue statement
or
omission or that the Company is exercising its rights pursuant to Section
4.4(f), then such Warrantholder shall: (i) keep the fact of such notification
and its contents confidential and (ii) immediately suspend all sales of
securities of the Company and any use of the registration statement or
prospectus as to which the notification applies, until such time as such
Warrantholder receives notification from the Company that an amendment to the
registration statement or a supplement to the prospectus has been filed and
that
sales may be made.
4.5 Transfer
of Registration Rights.
The
rights granted hereunder to cause the Company to register securities or to
participate in a registration of the Company may not be assigned to any
transferee or assignee of the Warrants unless the transferee agrees to be bound
by the terms and conditions of this Agreement; provided however that Brookstreet
may distribute the warrants to affiliates, agents and employees at its
discretion in conformity with applicable law.
Section
5. Payment
of Taxes.
The
Company will pay all documentary stamp taxes, if any, attributable to the
initial issuance of the Warrants or the securities comprising the Shares;
provided, however, the Company shall not be required to pay any tax which may
be
payable in respect of any secondary transfer of the Warrants or the securities
comprising the Shares.
Section
6. Mutilated
or Missing Warrants.
In case
the certificate or certificates evidencing the Warrants shall be mutilated,
lost, stolen or destroyed, the Company shall, at the request of the
Warrantholder, issue and deliver in exchange and substitution for and upon
cancellation of the mutilated certificate or certificates, or in lieu of and
substitution for the certificate or certificates lost, stolen or destroyed,
a
new Warrant certificate or certificates of like tenor and representing an
equivalent right or interest, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction of such Warrant
and payment of the reasonable out-of-pocket expenses incurred by the Company
in
issuing a replacement Warrant Certificate.
Section
7. Reservation
of Shares.
There
has been reserved, out of its authorized Capital Stock, such number of shares
of
Common Stock as shall be subject to purchase under the Warrants, and the Company
shall at all times keep reserved, for so long as any of the Warrants remain
outstanding, such shares of Common Stock that from time to time are, and such
additional shares or other securities that, pursuant to Section 10 hereof,
become issuable on exercise of the Warrants.
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Section
8. Exercise
Price.
The
price per share at which Shares shall be purchasable upon the exercise of the
Warrants shall be $1.25, subject to any adjustments thereto required pursuant
to
Section 9 hereof (and as so adjusted, the “Exercise Price”).
Section
9. Adjustment
of Number of Shares.
Unless
otherwise set forth in Section 9 of this Agreement, the number and kind of
securities purchasable upon the exercise of the Warrants and the Warrant Price
shall be subject to adjustment from time to time upon the happening of certain
events, as follows:
9.1 Adjustment
of Number of Shares and Class of Capital Stock Purchasable.
If the
Company:
(a) subdivides
its outstanding shares of Common Stock into a greater number of shares;
or
(b) issues
by
reclassification of its shares of Common Stock any shares of its capital
stock;
then
the
number and classes of shares purchasable upon exercise of each Warrant in effect
immediately prior to such action shall be adjusted so that the holder of any
Warrant thereafter exercised may receive the number and classes of shares of
capital stock of the Company which such holder would have owned immediately
following such action if such holder had exercised the Warrant immediately
prior
to such action. The adjustment shall become effective immediately after the
effective date of the subdivision or reclassification.
If
after
an adjustment, the holder of a Warrant upon exercise of it may receive shares
of
two or more classes of capital stock of the Company, the Board of Directors
of
the Company shall in good faith determine the allocation of the adjusted
Exercise Price between or among the classes of capital stock. After such
allocation, that portion of the Exercise Price applicable to each share of
each
such class of capital stock shall thereafter be subject to adjustment on terms
comparable to those applicable to Common Stock in this Agreement.
Notwithstanding the allocation of the Exercise Price between or among shares
of
capital stock as provided by this Section 9.1, a Warrant may only be exercised
in full by payment of the entire Exercise Price currently in
effect.
9.2 Par
Value of Shares of Common Stock.
Before
taking any action which would cause an adjustment effectively reducing the
portion of the Warrant Price allocable to each Share below the then par value
(if any) per share of the Common Stock issuable upon exercise of the Warrants,
the Company will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable Common Stock upon exercise of the
Warrants.
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9.3 Independent
Public Accountants.
The
Company may retain a firm of independent public accountants of recognized
national standing (which may be any such firm regularly employed by the Company)
to make any computation required under this Section 9, and a certificate signed
by such firm shall be conclusive evidence of the correctness of any computation
made under this Section 9.
9.4 Statement
on Warrant Certificates.
Irrespective of any adjustments in the number of Shares or other securities
issuable upon exercise of Warrants, Warrant certificates theretofore or
thereafter issued may continue to express the same number of securities as
are
stated in the similar Warrant certificates initially issuable pursuant to this
Agreement. However, the Company may, at any time in its sole discretion (which
shall be conclusive), make any change in the form of Warrant certificate that
it
may deem appropriate and that does not affect the substance thereof; and any
Warrant certificate thereafter issued, whether upon registration of transfer
of,
or in exchange or substitution for, an outstanding Warrant certificate, may
be
in the form so changed.
Section
10. Fractional
Interests; Current Market Price.
The
Company shall not be required to issue fractional Shares on the exercise of
any
of the Warrants. If any fraction of a Share would, except for the provisions
of
this Section 10, be issuable on the exercise of the Warrants (or any specified
portion thereof being exercised), the Company shall pay to the Warrantholder,
in
lieu of the issuance of such fractional Share, an amount in cash equal to the
then Current Market Price multiplied by such fraction. For purposes of this
Agreement, the term “Current Market Price” shall mean (i) if the Common Stock is
traded in the over-the-counter market and not on any national securities
exchange, the average of the per share closing bid prices of the Common Stock
on
the 30 consecutive trading days immediately preceding the date in question,
or
(ii) if the Common Stock is traded on a national securities exchange, the
average for the 30 consecutive trading days immediately preceding the date
in
question of the daily per share closing prices of the Common Stock on the
principal stock exchange on which it is listed, as the case may be. For purposes
of clause (i) above, the bid price referred to in said clause shall be the
lowest bid price as reported in the “pink sheets” published by National
Quotation Bureau, Incorporated or the O.T.C. Bulletin Board, as applicable.
The
closing price referred to in clause (ii) above shall be the last reported sale
price or, in case no such reported sale takes place on such day, the average
of
the reported closing bid and asked prices, on the national securities exchange
on which the Common Stock is then listed.
Section
11. No
Rights as Shareholder; Notices to Warrantholder.
Nothing
contained in this Agreement or in the Warrants shall be construed as conferring
upon the Warrantholder or its transferees any rights as a shareholder of the
Company, including the right to vote, receive dividends, consent or receive
notices as a shareholder in respect of any meeting of shareholders for the
election of directors of the Company or any other matter, unless and until
the
Warrantholder or such transferee (as the case may be) exercises the Warrants,
in
whole or in part, and pays the Warrant Price thereof to the Company.
Notwithstanding the foregoing, however, if at any time prior to the earlier
of
the expiration of the Warrants and or their exercise in full, any one or more
of
the following events shall occur:
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(a) any
action which would require an adjustment pursuant to Section 9.1;
or
(b) a
dissolution, liquidation or winding up of the Company (other than in connection
with a consolidation, merger or sale of its property, assets and business as
an
entirety or substantially as an entirety) shall be proposed;
then,
the
Company shall give notice in writing of such event to the Warrantholder, in
the
manner provided in Section 14 hereof, at least 20 days prior to the date fixed
as a record date or the date of closing the transfer books for the determination
of the shareholders entitled to any relevant dividend, distribution,
subscription rights or other rights or for the determination of shareholders
entitled to vote on such proposed dissolution, liquidation or winding up. Such
notice shall specify such record date or the date of closing of the transfer
books, as the case may be.
Section
12. Indemnification.
12.1 Indemnification
of Warrantholder.
In the
event of the filing of any registration statement with respect to the Shares
pursuant to Section 4 hereof, the Company agrees to indemnify and hold harmless
each Warrantholder and any holder of such Shares and each person, if any, who
controls (within the meaning of the Act) the Warrantholder or any holder of
such
Shares, against any losses, claims, damages or liabilities, joint or several
(which shall, for all purposes of this Agreement, include, but not be limited
to, all costs of defense and investigation and all attorneys’ fees), to which
such Warrantholder or any holder of such Shares or such controlling person
may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based
upon any untrue statement or alleged untrue statement of any material fact
contained in any such Registration Statement, or any related preliminary
prospectus, final prospectus, or amendment or supplement thereto, or arise
out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Company will not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement, preliminary
prospectus, final prospectus or amendment or supplement thereto in reliance
upon, and in conformity with, written information furnished to the Company
by
such Warrantholder or the holder of such Shares specifically for inclusion
therein. This indemnity will be in addition to any liability which the Company
may otherwise have.
12.2 Indemnification
of the Company.
The
Warrantholder and the holders of the Shares agree that they will indemnify
and
hold harmless the Company, each other person referred to in subparts (1), (2)
and (3) of Section 11(a) of the Act in respect of any registration statement
and
each person, if any, who controls the Company within the meaning of the Act,
against any losses, claims, damages or liabilities (which shall, for all
purposes of this Agreement, include but not be limited to, all costs of defense
and investigation and all attorneys’ fees) to which the Company or any such
director, officer or controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in such registration statement,
or any related preliminary prospectus, final prospectus or amendment or
supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but in each case
only to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission was made in such registration statement,
preliminary prospectus, final prospectus or amendment or supplement thereto
in
reliance upon, and in conformity with, written information furnished to the
Company by the Warrantholder or such holder of Shares specifically for inclusion
therein. This indemnity agreement will be in addition to any liability which
the
Warrantholder or such holder of Shares may otherwise have.
11
12.3 Indemnification
Procedures.
Promptly after receipt by an indemnified party under this Section 12 of notice
of the commencement of any action, such indemnified party will, if a claim
in
respect thereof is to be made against the indemnifying party under this Section
12, notify the indemnifying party of the commencement thereof; but the omission
so to notify the indemnifying party will not relieve the indemnifying party
from
any liability which it may have to any indemnified party. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will
be
entitled to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, reasonably assume the defense
thereof, subject to the provisions herein stated, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section 12 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation, unless the indemnifying party shall
not
pursue the action to its final conclusion. The indemnified party shall have
the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall not be at
the
expense of the indemnifying party if the indemnifying party has assumed the
defense of the action with counsel reasonably satisfactory to the indemnified
party; provided, however, that if the indemnified party is a Warrantholder
or a
holder of Shares or a person who controls a Warrantholder or a holder of Shares
within the meaning of the Act, the fees and expenses of such counsel shall
be at
the expense of the indemnifying party if (i) the employment of such counsel
has
been specifically authorized in writing by the indemnifying party or (ii) the
named parties to any such action, including any impleaded parties, include
both
a Warrantholder or a holder of Shares or such controlling person and the
indemnifying party and a Warrantholder or a holder of Shares or such controlling
person shall have been advised by such counsel that there may be one or more
legal defenses available to a Warrantholder or a holder of Shares or controlling
person which are not available to or in conflict with any legal defenses which
may be available to the indemnifying party (in which case the indemnifying
party
shall not have the right to assume the defense of such action on behalf of
a
Warrantholder or a holder of Shares or such controlling person, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action or separate but substantially similar or related actions
in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than
one
separate firm of attorneys for the Warrantholder, the holders of the Shares
and
controlling persons, which firm shall be designated in writing by a majority
in
interest of such holders and controlling persons based upon the value of the
securities included in the Registration Statement). No settlement of any action
against an indemnified party shall be made without the consent of the
indemnified and the indemnifying parties, which shall not be unreasonably
withheld in light of all factors of importance to such parties.
12
Section
13. Contribution.
In
order to provide for just and equitable contribution under the Act in any case
in which (i) a Warrantholder or any holder of the Shares or controlling person
makes a claim for indemnification pursuant to Section 12 hereof but it is
judicially determined (by the entry of a final judgment or decree by a court
of
competent jurisdiction and the expiration of time to appeal or the denial of
the
last right of appeal) that such indemnification may not be enforced in such
case
notwithstanding the fact that the express provisions of Section 13 hereof
provide for indemnification in such case or (ii) contribution under the Act
may
be required on the part of any Warrantholder or any holder of the Shares or
controlling person, then the Company and any Warrantholder or any such holder
of
the Shares or controlling person shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (which shall, for
all purposes of this Agreement, include, but not be limited to, all costs of
defense and investigation and all attorneys’ fees), in either such case (after
contribution from others) on the basis of relative fault as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material
fact
relates to information supplied by the Company on the one hand or a
Warrantholder or holder of Shares or controlling person on the other and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and such holders
of
such securities and such controlling persons agree that it would not be just
and
equitable if contribution pursuant to this Section 13 were determined by pro
rata allocation or by any other method which does not take account of the
equitable considerations referred to in this Section 13. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages
or
liabilities (or actions in respect thereof) referred to above in this Section
13
shall be deemed to include any legal or other expenses reasonably incurred
by
such indemnified party in connection with investigating or defending any such
action or claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11 of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
Section
14. Notices.
Any
notice pursuant to this Agreement by the Company or by a Warrantholder or a
holder of Shares shall be in writing and shall be deemed to have been duly
given
on the date of delivery or refusal indicated on the return receipt if delivered
or mailed by certified mail, return receipt requested:
14.1 Warrantholder
Address.
If to
the Warrantholder or a holder of Shares, addressed to Brookstreet Securities
Corporation, 0000 Xxxxxx Xxxxx, Xxxxx 000, Xxxxxx, XX, 00000, Attention: Xxxxxxx
X. Xxxxxx, President.
14.2 Company
Address.
If to
the Company addressed to it a 00000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000-0000,
Attention: Xxxxxx Xxxxx, COO.
13
Each
party may from time to time change the address to which notices to it are to
be
delivered or mailed hereunder by notice in accordance herewith to the other
party.
Section
15. Survival
of Representations and Warranties.
All
statements contained in any schedule, exhibit, 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.
Section
16. Miscellaneous.
16.1 Applicable
Law.
This
Agreement shall be deemed to be a contract made under the laws of the State
of
California and for all purposes shall be construed in accordance with the laws
of said State.
16.2 Jurisdiction.
The
parties submit to the jurisdiction of the Courts of the County of Orange, State
of California or a Federal Court empaneled in the State of California for the
resolution of all legal disputes arising under the terms of this Agreement,
including, but not limited to, enforcement of any arbitration
award.
16.3 Successors.
All the
covenants and provisions of this Agreement by or for the benefit of the Company,
the Warrantholder, or the holders of Shares shall bind and inure to the benefit
of their respective successors and assigns hereunder. Notwithstanding the
foregoing, however, nothing in this Agreement shall be construed to give to
any
person or corporation other than the Company, the Warrantholder and the holders
of Shares, and their respective permitted transferees (other than transferees
who acquire any Shares that are free of restrictions on transfer under this
Agreement and under the Act), any legal or equitable right, remedy or claim
under this Agreement. This Agreement shall be for the sole and exclusive benefit
of the Company, the Warrantholder and the holders of Shares and such permitted
transferees (other than transferees who acquire any Shares that are free of
restrictions on transfer under this Agreement and under the Act).
16.4 Amendments.
This
Agreement may be amended only by a written instrument executed by duly
authorized representatives of the Company and the Warrantholder.
16.5 Severability.
In the
event any provision of this Agreement becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision, but only to
the
extent necessary to cure the infirmity that caused such provision to be held
illegal, unenforceable or void.
16.6 Interpretation.
This
Agreement is the result of arms’-length negotiations between the parties hereto
and no provision hereof, because of any ambiguity found to be contained in
any
of the provisions hereof, shall be construed against a party by reason of the
fact that such party or its legal counsel was the draftsman of those provisions.
Unless otherwise indicated elsewhere in this
Agreement, (i) the term “or” shall not be exclusive, (ii) the term “including”
shall mean “including, but not limited to,” and (iii) unless the context
indicates otherwise the terms “herein,” “hereof,” “hereto,” “hereunder” and
other terms similar to such terms shall refer to this Agreement as a whole
and
not merely to the specific section, subsection, paragraph or clause where such
terms may appear.
14
16.7 Headings.
The
captions or headings of the sections and subsections of this Agreement are
for
convenience of reference only and shall be disregarded in interpreting,
construing or applying any of the provisions of this Agreement.
16.8 Counterparts.
This
Agreement may be executed in separate counterparts, each of which shall be
an
original of and all of which together shall constitute one and the same
instrument.
16.9
Attorneys’
Fees.
If any
legal action or is brought for the interpretation or enforcement of this
Agreement, the prevailing party shall be entitled to recover reasonable
attorneys’ fees and other costs incurred in that action or proceeding, in
addition to any other relief to which it may be entitled.
IN
WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed,
all
as of the day and year first above written.
|
QUINTESSENCE
PHOTONICS CORPORATION
a Delaware corporation
|
||
|
BY:
Xxxxxx Xxxxx
ITS: Chief
Financial Officer
|
||
|
BROOKSTREET
SECURITIES CORPORATION,
a California corporation
|
||
|
BY:
Xxxxxxxx X. XxXxxxxxx
ITS:
Executive Vice
President
|
||
15
Exhibit
A
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
EXCHANGED, HYPOTHECATED OR TRANSFERRED IN ANY MANNER EXCEPT PURSUANT TO A
REGISTRATION OR AN EXEMPTION FROM SUCH REGISTRATION AND IN COMPLIANCE WITH
SECTION 1.4 OF THE AGREEMENT PURSUANT TO WHICH THEY WERE ISSUED.
Warrant
Certificate No. _____
WARRANTS
TO PURCHASE ___________ SHARES OF COMMON STOCK
QUINTESSENCE
PHOTONICS CORPORATION,
A
Delaware corporation
This
certifies that, for value received, Brookstreet Securities Corporation, a
California corporation, the registered holder hereof or assigns (the
“Warrantholder”), is entitled to purchase from Quintessence Photonics
Corporation, a Delaware corporation (the “Company”), at any time prior to: 5:00
PM Western Time on _____________, at the purchase price per share of $1.25
(the
“Warrant Price”), the number of Shares of Common Stock of the Company set forth
above (the “Shares”). The number of Shares issuable upon exercise of each
Warrant evidenced hereby and the Warrant Price shall be subject to adjustment
from time to time as set forth in the Warrant Agreement referred to
below.
The
Warrants evidenced hereby represent the right to purchase an aggregate of up
to
_________ Shares, subject to certain adjustments, and are issued under and
in
accordance with a Managing Dealer Warrant Agreement, dated as of _______________
(the “Warrant Agreement”), between the Company and Brookstreet Securities
Corporation and are subject to the terms and provisions contained in the Warrant
Agreement, to all of which the Warrantholder by acceptance hereof consents.
All
capitalized terms in this Warrant Certificate, to the extent not otherwise
defined herein, shall have the meaning assigned to such terms in the Warrant
Agreement. The Warrants have certain registration rights set forth in the
Warrant Agreement.
The
Warrants evidenced hereby may be exercised in whole or in part by presentation
of this Warrant Certificate with the Purchase Form attached hereto duly executed
(with a signature guarantee as provided thereon) and simultaneous payment of
the
Warrant Price at the principal office of the Company. Payment of such price
shall be made as described in the Warrant Agreement.
Upon
any
partial exercise of the Warrants evidenced hereby, there shall be signed and
issued to the Warrantholder a new Warrant Certificate in respect of the Shares
as to which the Warrants evidenced hereby shall not have been exercised. These
Warrants may be exchanged at the office of the Company by surrender of this
Warrant Certificate properly endorsed for one or more new Warrants of the same
aggregate number of Shares as evidenced by the Warrant or Warrants exchanged.
No
fractional Shares will be issued upon the exercise of rights to purchase
hereunder, but the Company shall pay the cash value of any fraction upon the
exercise of one or more Warrants. These Warrants are transferable at the office
of the Company in the manner and subject to the limitations set forth in the
Warrant Agreement.
This
Warrant Certificate does not entitle any Warrantholder to any of the rights
of a
stockholder of the Company unless and until the Warrantholder exercises its
rights to purchase Shares hereunder.
|
QUINTESSENCE
PHOTONICS CORPORATION
a Delaware corporation
|
||
| Dated: _____________, _____ |
By:
_________________________________
Its:
_________________________________
|
|
PURCHASE
FORM
QUINTESSENCE
PHOTONICS CORPORATION
00000
Xxxxxxx Xxxxxx
Xxxxxx,
XX 00000-0000
The
undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
____________ Shares of Common Stock (the “Shares”) provided for therein, and
requests that certificates for the Shares be issued in the name of:
(Please
Print or Type Name)
(Address,
including zip code)
(Social
Security No. or Tax I.D. No.)
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
Warrantholder or his Assignee as below indicated and delivered to the address
stated below.
Name
of
Warrantholder
or
Assignee:
(Please Print)
Address:
|
Signature:
______________________________
|
Dated:
_________________________
|
Note:
The
above signature must correspond with the name as written upon the face of this
Warrant Certificate in every particular, without alteration or enlargement
or
any change whatever, unless these Warrants have been assigned.
ASSIGNMENT
(To
be
signed only upon assignment of Warrants)
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto the assignee
named below all of the rights of the undersigned represented by the attached
Warrant with respect to the number of Shares covered by the Warrant set forth
below:
(Name
and
Address of Assignee Must Be Printed or Typewritten)
|
Name
of Assignee
|
Social
Security No. or
Tax ID No.
|
Address
|
No.
of Shares
|
and
does
hereby irrevocably constitute and appoint _________________________________
Attorney to transfer said Warrants on the books of the Company, with full power
of substitution in the premises.
|
Dated:
______________________________
|
_____________________________
Signature
of Registered Holder
|
Note: The
signature on this assignment must correspond with the name as it appears upon
the face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatever.
