THIS SECURITY HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR UNDER THE SECURITIES
ACT OF ANY STATE. THIS SECURITY MAY NOT BE SOLD OR TRANSFERRED EXCEPT WITH THE
CONSENT OF THE COMPANY AND IN TRANSACTIONS (A) REGISTERED UNDER THE 1993 ACT OR
EXEMPT FROM REGISTRATION THEREUNDER, AND (B) REGISTERED UNDER THE APPROPRIATE
STATE SECURITIES ACT OR EXEMPT FROM REGISTRATION THEREUNDER, OR OTHERWISE IN
COMPLIANCE WITH SUCH STATE SECURITIES ACT(S).
WARRANT
For the Purchase of
Common Stock, Par Value $0.00167 Per Share
of
ARMITEC, INC.
Incorporated Under the Laws of the
State of Delaware
Void After 5 P. M. Eastern time
on November 6, 2002
No. Warrant to Purchase 500,000
------------------------
Shares of Common Stock
THIS WARRANT AGREEMENT OF ARMITEC, INC. (the "Warrant") CERTIFIES THAT,
for good and valuable consideration received, Xxxxxxx Xxxxx or his successor or
assign (the "Holder") is entitled to subscribe for and purchase during the
period specified in Section 2 hereof up to 500,000 fully paid and non-assessable
shares of common stock of ARMITEC, INC., a Delaware corporation (the
"Corporation"), at a per share price equal to Fifteen Cents ($0.15) per share
(the "Warrant Price") for 250,000 shares and at a per share price equal to
Twenty Five Cents ($0.25) per share for 250,000 shares, subject to adjustment as
provided herein and to the restrictions set forth herein. However, should
Xxxxxxx Xxxxx subscribe for and purchase all 500,000 shares on or before
February 15, 2002, then the per share price will be Sven and One Half Cents
($0.075) per share.
1. Accrual of Right. During and throughout the term of that certain
Consulting Agreement between the Company and the Holder of even date herewith
(the "Consulting Agreement"), Holder's rights to exercise this Warrant to
purchase up to 500,000 shares of Common Stock will accrue pro rata in proportion
to the percentage of the Anticipated Consulting Period (as defined in the
Consulting Agreement) which has elapsed. If, prior to the expiration of the
Anticipated Consulting Period, the Consulting Agreement is terminated either (i)
by the Company, without Cause (as defined in the Consulting Agreement), or (ii)
by Holder, with Cause, then Holder's rights hereunder will be deemed fully
accrued as of the effective date of the termination. If, prior to the expiration
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of the Anticipated Consulting Period, the Consulting Agreement is terminated
either (i) by Holder, without Cause, or (ii) by the Company, with Cause, then
Holder's rights hereunder will be deemed to accrue through, and only through,
the effective date of the termination. Holder may, at any time, exercise any and
all accrued but unexercised rights to acquire shares of Common Stock pursuant to
the terms of this Warrant.
2. Duration. The right to subscribe for and purchase shares of Common
Stock represented hereby shall commence on the date hereof, and shall expire at
5:00 p.m., Eastern Time, on the November 6, 2002 (the "Expiration Date"). From
and after the Expiration Date this Warrant shall be null, void and of no further
force or effect.
3. Method of Exercise; Payment; Issuance of New Warrant; Cashless
Exercise.
(a) Subject to the remainder hereof, the Holder hereof may
exercise this Warrant, in whole or in part, at the times and subject to
the conditions set forth in Sections 1 and 2 hereof by the surrender of
this Warrant (with the subscription form attached hereto duly executed)
at the principal office of the Corporation, along with payment in good
funds in the aggregate amount equal to the Warrant Price multiplied by
the number of shares of Common Stock being purchased. In the event of
any exercise of the rights represented by this Warrant, (i) stock
certificates for the shares of Common Stock so purchased shall be
delivered to the holder hereof, and, in the event the Warrant has not
been exercised in full, a new Warrant representing the number of shares
with respect to which this Warrant shall not then have been exercised
shall also be delivered to the holder hereof, and (ii) stock
certificates for the shares of Common Stock so purchased shall be dated
the date of exercise of this Warrant, and the holder exercising this
Warrant shall be deemed for all purposes to be the holder of the shares
of Common Stock so purchased as of the date of such exercise. Such
stock certificates (and new Warrant, if applicable) shall be delivered
to the Holder hereof within a reasonable time, not exceeding ten (10)
business days, after the rights represented by this Warrant shall have
been so exercised. Each stock certificate so delivered shall be in such
denominations as may be requested by the Holder hereof and shall be
registered in the name of said Holder or such other name (upon
compliance with the transfer requirements hereinafter set forth) as
shall be designated by the Holder. The Corporation shall pay all taxes
and other expenses and charges payable in connection with the
preparation, execution and delivery of stock certificates (and new
Warrants, if applicable) pursuant to this paragraph except that, in
case such stock certificates shall be registered in a name or names
other than the holder of this Warrant or its nominee, funds sufficient
to pay all stock transfer taxes which shall be payable in connection
with the execution and delivery of such stock certificates shall be
paid by the Holder hereof to the Corporation at the time of the
delivery of such stock certificates by the Corporation as mentioned
above.
(b) Notwithstanding any other provision of this Warrant which
might otherwise be construed to the contrary, upon any exercise of this
Warrant, Holder may, in lieu of payment of the current Warrant Price in
cash, surrender this Warrant (or any successor hereto or fraction
hereof) (valued for such purpose at the current market price of the
underlying Common Stock for which such Warrant is exercisable on the
date of such exercise less the current Warrant Price then in effect)
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and apply all or a portion of the amount so determined to the payment
of the current Warrant Price for the number of shares of Common Stock
being purchased.
4. Adjustment of Warrant Price and Number of Shares.
(a) The Warrant Price and the number of shares of Common Stock
purchasable upon the exercise of this Warrant shall be subject to adjustment
from time to time upon the happening of certain events occurring after the
original issuance date, as follows:
(i) Reclassification, Consolidation or Merger. In case of any
reclassification or change of outstanding Common Stock issuable upon
exercise of this Warrant (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), or in case of any
consolidation or merger of the Corporation with or into another
corporation (other than a merger with another corporation in which the
Corporation is the surviving corporation and which does not result in
any reclassification or change other than a change in par value, or
from par value to no par value, or from no par value to par value, or
as a result of a subdivision or combination of outstanding Common Stock
issuable upon such conversion) the rights of the Holder of this Warrant
shall be adjusted in the manner described below:
(A) In the event that the Corporation is the
surviving corporation, the Warrant shall, without payment of
additional consideration therefor, be deemed modified so as to
provide that upon exercise thereof the Holder of this Warrant
shall procure, in lieu of each share of Common Stock
theretofore issuable upon such exercise, the kind and amount
of shares of stock, other securities, money and property
receivable upon such reclassification, change, consolidation
or merger by the Holder of each share of Common Stock issuable
upon such exercise had exercise occurred immediately prior to
such reclassification, change, consolidation or merger. This
Warrant (as adjusted) shall be deemed to provide for further
adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4.
The provisions of this clause (1) shall similarly apply to
successive reclassifications, changes, consolidations and
mergers.
(B) In the event that the Corporation is not the
surviving corporation, the surviving corporation shall,
without payment of any additional consideration therefor,
issue new Warrants, providing that upon exercise thereof the
Holder thereof shall procure in lieu of each share of Common
Stock theretofore issuable upon exercise of this Warrant the
kind and amount of shares of stock, other securities, money
and property receivable upon such reclassification, change,
consolidation or merger by the Holder of each share of Common
Stock issuable upon exercise of this Warrant had such exercise
occurred immediately prior to such reclassification, change,
-3-
consolidation or merger. Such new Warrants shall provide for
adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 4.
The provisions of this Section 2(a)(i)(B) shall similarly
apply to successive reclassifications, changes, consolidations
and mergers.
(ii) Subdivision or Combination of Shares. If the Corporation,
at any time while any of this Warrant is outstanding, shall subdivide
or combine its Common Stock, the Warrant Price shall be proportionately
reduced, in case of subdivision of shares, as of the effective date of
such subdivision, or if the Corporation shall take a record of holders
of its Common Stock for the purpose of a subdividing, as of such record
date, whichever is earlier, or shall be proportionately increased, in
the case of combination of shares, as of the effective date of such
combination or, if the Corporation shall take a record of holders of
its Common Stock for the purpose of so combining, as of such record
date, whichever is earlier.
(iii) Certain Dividends and Distributions. If the Corporation,
at any time while any of this Warrant is outstanding, shall:
(A) Stock Dividends. Pay a dividend payable in, or
make any other distribution of Common Stock, the Warrant Price
shall be adjusted, as of the date the Corporation shall take a
record of the holders of its Common Stock for the purpose of
receiving such dividend or other distribution (or if no such
record is taken, as of the date of such payment or other
distribution), to that price determined by multiplying the
Warrant Price by a fraction (1) the numerator of which shall
be the total number of shares of Common Stock outstanding
immediately prior to such dividend or distribution and (2) the
denominator of which shall be the total number of shares of
Common Stock outstanding immediately after such dividend or
distribution (plus in the event that the Corporation paid cash
for fractional shares, the number of additional shares which
would have been outstanding had the Corporation issued
fractional shares in connection with said dividend or
distribution); or
(B) Liquidating Dividends, etc. Make a distribution
of its property to the holders of its Common Stock as a
dividend in liquidation or partial liquidation or by way of
return of capital or other than as a dividend payable out of
funds legally available for dividends under the laws of the
State of Delaware, the Holder of this Warrant shall, upon
exercise hereof, be entitled to receive, in addition to the
number of shares of Common Stock receivable hereupon, and
without payment of any consideration therefor, a sum equal to
the amount of such property as would have been payable to them
as owners of that number of shares of Common Stock of the
Corporation receivable upon such exercise, had they been the
-4-
holders of record of such Common Stock on the record date for
such distribution; and an appropriate provision therefor shall
be made a part of any such distribution.
(iv) Adjustment of Number of Shares. Upon each adjustment in
the Warrant Price pursuant to any provision of this Section 4, the
number of shares of Common Stock issuable upon exercise hereof shall be
adjusted, to the nearest one hundredth of a whole share, to the product
obtained by multiplying the number of shares issuable upon exercise
hereof immediately prior to such adjustment in the Warrant Price by a
fraction, the numerator of which shall be the Warrant Price immediately
prior to such adjustment and the denominator of which shall be the
Warrant Price immediately thereafter.
(b) Notice of Adjustments. Whenever any Warrant Price shall be adjusted
pursuant to Section 4 hereof, the Corporation shall make a certificate signed by
its President or a Vice President and by its Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary, setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated (including a description of the basis on which the
Board of Directors of the Corporation made any determination hereunder), and the
Warrant Price after giving effect to such adjustment, and shall cause copies of
such certificate to be mailed (by first-class mail, postage prepaid) to the
Holder of this Warrant at its address shown on the books of the Corporation. The
Corporation shall make such certificate and mail it to the Holder promptly after
each adjustment.
5. Payment of Current Warrant Price with Warrants. Upon any exercise of
this Warrant as provided in Section 1, the Holder may, in lieu of the payment of
the Warrant Price in cash, surrender this Warrant (or any successor hereto or
fraction hereof) valued for such purpose at the Current Market Price (as defined
below) less the Warrant Price and apply all or a portion of the amount so
determined to the payment of the Warrant Price for the number of shares of
Common Stock being purchased. For purposes of this Warrant, the "Current Market
Price" shall mean the average closing price of the Corporation's Common Stock as
quoted on the OTC Bulletin Board for the previous ten (10) day period.
6. Shares to be Fully Paid; Reservation of Shares. The Corporation
covenants and agrees that all Common Stock issued upon exercise of this Warrant
will, upon issuance, be fully paid and non-assessable and free from preemptive
rights and all taxes, liens and charges with respect to the issuance thereof.
The Corporation further covenants and agrees that during the period within which
the rights represented by this Warrant may be exercised, the Corporation will at
all times have authorized, and reserved for the purpose of issue upon exercise
of the subscription rights evidenced by this Warrant, a sufficient number of
shares of Common Stock to provide for the exercise in full of the rights
represented by this Warrant (including any and all shares as to which the right
to acquire such shares has not been forfeited pursuant to Section 1 hereof). The
Corporation warrants and represents that this Warrant shall be binding upon any
corporation or other entity succeeding to the Corporation by merger,
consolidation or acquisitions of all or substantially all of the Corporation's
assets. Furthermore, and without limiting the generality of the foregoing, the
-5-
Corporation covenants and agrees that it will from time to time take all such
action as may be required to assure that the par value per share of Common Stock
is at all times equal to or less than the effective Warrant Price.
7. Transfer and Exchange.
(a) The transfer of this Warrant and all rights hereunder, in whole or
in part, is registerable at the office or agency of the Corporation referred to
below by the Holder hereof in person or by his/her duly authorized attorney,
upon surrender of this Warrant properly endorsed. Each taker and holder of this
Warrant, by taking or holding the same, consents and agrees that this Warrant,
when endorsed in blank, shall be deemed negotiable, and that the Holder hereof,
when this Warrant shall have been so endorsed, may be treated by the Corporation
and all other persons dealing with this Warrant as the absolute owner and Holder
hereof for any purpose and as the person entitled to exercise the rights
represented by this Warrant, or to the registration of transfer hereof on the
books of the Corporation; and until due presentment for registration of transfer
on such books the Corporation may treat the registered Holder hereof as the
owner and holder for all purposes, and the Corporation shall not be affected by
notice to the contrary.
(b) The Holder of this Warrant, by acceptance hereof, understands that
the Warrant and Common Stock issuable upon exercise hereof (collectively,
"Warrant Securities") are characterized as "restricted securities" under the
federal securities laws inasmuch as they are being or will be acquired from the
Corporation in a transaction not involving a public offering and that under such
laws and applicable regulations neither this Warrant nor the shares of Common
Stock issuable upon its exercise may be resold without registration under the
Securities Act or under certain other limited circumstances. The Holder further
agrees, by acceptance hereof that it will not offer or sell this Warrant or any
shares of Common Stock issued upon exercise hereof in the absence of an
effective registration statement for the Warrant or such Common Stock, as
applicable, under the 1933 Act and such state or other laws as may be
applicable, or receipt by the Corporation of a written opinion of counsel
(provided that such counsel, and the form and substance of such opinion are
reasonably satisfactory to the Corporation) that such registration is not
required. Furthermore, it is agreed that each Warrant and any shares of Common
Stock will include the appropriate variant of the following legend:
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR UNDER THE SECURITIES ACT OF ANY STATE. THIS WARRANT MAY
NOT BE OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SHARES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND SUCH STATE OR OTHER LAWS AS MAY BE APPLICABLE, OR RECEIPT BY THE
CORPORATION OF AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED.
The Holder of this Warrant and/or any Common Stock issued upon exercise
hereof shall be entitled to receive, without expense to such Holder, a new
certificate or Warrant, as the case may be, not bearing the above restrictive
legend if (1) such securities shall have been effectively registered under the
1933 Act and sold by the Holder thereof in accordance with such registration,
-6-
(2) receipt by the Corporation of a written opinion to the effect that such
restrictions are no longer required or necessary under any federal or state
securities law or regulation have been received from counsel for the Holder
thereof (provided that such counsel, and the form and substance of such opinion
are reasonably satisfactory to the Corporation), (3) such security shall have
been sold without registration under the 1933 Act in compliance with Rule 144 or
Rule 144A, (4) the Corporation is reasonably satisfied that the Holder of such
security shall, in accordance with the terms of Rule 144(k), be entitled to sell
such security pursuant thereto, or (5) a letter or order shall have been issued
to the Holder thereof by the Securities and Exchange Commission or its staff
stating that no enforcement shall be recommended if such security is transferred
without registration under the 1933 Act in accordance with the conditions set
forth in such letter or order, which specifies that no subsequent restrictions
on transfer are required.
8. Warrants Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the Holder hereof at the office for
new Warrants of like tenor representing in the aggregate the right to subscribe
for and purchase the number of shares which may be subscribed for and purchased
hereunder (and without changing, in the aggregate, the number of shares
constituting any tranche), each of such new Warrants to represent the right to
subscribe for and purchase such number of shares as shall be designated by said
holder hereof at the time of such surrender.
9. Cancellation; Payment of Expenses. Upon the surrender of this
Warrant in connection with any exchange, transfer or replacement, this Warrant
shall be promptly cancelled by the Corporation. The Corporation shall pay all
taxes (other than securities transfer taxes) and all other expenses and charges
payable in connection with the preparation, execution and delivery of Warrants.
10. Public Information. The Corporation covenants and agrees that if
and so long as the Common Stock shall be registered under Section 12 of the
Securities and Exchange Act of 1934, at any time when any the Holder desires to
make sales of any Warrant Securities in reliance on Rule 144 or Rule 144A under
the Securities Act either: (i) there will be available adequate current public
information with respect to the Corporation as required by Rule 144 or Rule
144A; or (ii) if such information is not available the Corporation will use its
best efforts to make such information available without delay.
11. Notices. All notices, requests and other communications required or
permitted to be given or delivered to the Corporation or the Holder shall be in
writing, and shall be deemed properly given if hand delivered or sent by
overnight courier with adequate evidence of delivery or sent by registered or
certified mail, return receipt requested and, if to the Holder, at the Holder's
address as shown on the books of the Corporation or its transfer agent, and if
to the Corporation at:
Armitec, Inc.
0000 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx, President
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If to the Holder at:
Xxxxxxx Xxxxx
-----------------------
0000 Xxxxxxxxx Xxxxxxx
-----------------------
Suite 2205
-----------------------
Xxxxxxxxxxxxx, XX 00000
-----------------------
or such other addresses or persons as the recipient shall have designated to the
sender by written notice given in accordance with this Section. Any notice,
request or other communication hereunder shall be deemed given when delivered in
person, on the next business day after being sent by overnight courier, or on
the second business day after being sent by registered or certified mail.
12. Governing Law. This Warrant shall be construed in accordance with
and governed by the laws of the State of Delaware without regard to the
principles of conflicts of laws.
13. Remedies. The Corporation stipulates that the remedies at law of
the Holder in the event of any default or threatened default by the Corporation
in the performance of or compliance with any of the terms of this Warrant are
not and will not be adequate, and that such terms may be specifically enforced
by a decree for the specific performance of any agreement contained herein or by
an injunction against a violation of any of the terms hereof or otherwise.
14. Miscellaneous.
(a) Amendments. The Warrant and any provision hereof may be
amended or waived only by an instrument in writing signed by the
Holder, and, if it is to be bound thereby, by the Corporation.
(b) Descriptive Headings. The descriptive headings of the
several paragraphs of this Warrant are inserted for purposes of
reference only, and shall not affect the meaning or construction of any
of the provisions hereof.
(c) Loss, Destruction of Warrants. Upon the receipt of
evidence satisfactory to the Corporation of the loss, theft, mutilation
or destruction of any Warrant, and in the case of any such loss, theft
or destruction upon delivery of a bond of indemnity in such form and
amount as shall be reasonably satisfactory to the Corporation, or in
the event of such mutilation upon surrender and cancellation of the
Warrant, the Corporation will make and deliver a new Warrant, of like
tenor, in lieu of such lost, stolen, destroyed or mutilated Warrant.
Any Warrant issued under the provisions of this Section 12 in lieu of
any Warrant alleged to be lost, destroyed or stolen, or in lieu of any
mutilated Warrant, shall constitute an original contractual obligation
on the part of the Corporation.
-8-
Dated: , 2002 ARMITEC, INC.
------------- By:
-----------------------------
Name:
--------------------------
Title:
--------------------------
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EXHIBIT A
ARMITEC, INC.
Subscription Form
(To be executed by the registered holder to exercise the right to purchase
Common Stock)
Armitec, Inc.
0000 Xxxxxxx Xxxx
Xxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx, President
The undersigned hereby irrevocably subscribes for the purchase of
500,000 shares of your Common Stock pursuant to and in accordance with the terms
and conditions of this Warrant, and herewith makes payment, covering the
purchase of such Common Stock. Certificates for the shares of Common Stock
should be delivered to the undersigned at the address stated below. If such
number of shares of Common Stock shall not be all of the shares of Common Stock
purchasable hereunder, please deliver a new Warrant of like tenor for the
balance of the remaining shares of Common Stock purchasable hereunder to the
undersigned at the address stated below.
The undersigned agrees that: (1) the undersigned will not offer, sell,
transfer or otherwise dispose of any such shares of Common Stock being purchased
hereunder unless either (a) a registration statement covering the sale of such
shares of Common Stock has been filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the "Act"), and
such sale, transfer or other disposition is accompanied by a prospectus meeting
the requirements of Section 10 of the Act forming a part of such registration
statement, or post-effective amendment thereto, which is in effect under the Act
covering the sale of the shares of Common Stock to be sold, transferred or
otherwise disposed of, or (b) counsel acceptable to Armitec, Inc. and
satisfactory to the undersigned has rendered an opinion acceptable to the
Corporation in writing and addressed to the Corporation that such proposed
offer, sale, transfer or other disposition of the shares of Common Stock is
exempt from the provisions of Section 5 of the Act in view of the circumstances
of such proposed offer, sale, transfer or other disposition; and (2) the
Corporation may affix the legend set forth in Section 7 of this Warrant to the
certificates for shares of Common Stock hereby subscribed for and purchasable
upon exercise of the Warrants, if such legend is applicable.
Dated: Signed:
------------------------ -------------------------------
Signature guaranteed: Address
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