EXHIBIT 1(v)
Form of Underwriter's Warrant Agreement and Amended Underwriter's Warrant
Certificate
UNDERWRITERS WARRANT AGREEMENT dated as of __________, 1998 between XETAL,
INC., a Utah corporation (the Company) and XXXXXX XXXXX CAPITAL CORP.
(formerly Worthington Capital Group, Inc.), its successors, designees and
assigns (hereinafter referred to as the Underwriter).
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to Xxxxxx Xxxxx Capital Corp. warrants
(the Underwriters Warrants) to purchase up to an aggregate of 54,000 shares
of the Companys common stock, $0.001 par value per share (the Common Stock),
each Warrant entitling the holder to purchase one share of Common Stock (the
Underwriters Warrants and the shares of Common Stock issuable upon exercise of
the Underwriters Warrants being collectively referred to as the Warrant
Securities); and
WHEREAS, the Underwriter has agreed pursuant to the underwriting agreement (the
Underwriting Agreement) dated as of the date hereof among the Underwriter and
the Company to act as to act as the exclusive agent for the Company, on a best
efforts basis, in connection with the Company's proposed public offering of up
to 540,000 shares of Common Stock and 540,000 redeemable common stock purchase
warrants (the Warrants) at a public offering price of $5.00 per share of
Common Stock and $.10 per Warrant (the Public Offering); and
WHEREAS, the Underwriters Warrants to be issued pursuant to this Agreement
will be issued on the Closing Date and Option Closing Date(s) (as such terms
are defined in the Underwriting Agreement) by the Company to the Underwriter in
consideration for, and as part of the Underwriters compensation in connection
with, and pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises, the payment by the
Underwriter to the Company of an aggregate five dollars and forty cents
($5.40), the agreements herein set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Grant. The Underwriter is hereby granted the right to prchase, at any time
from ____________, 1999 until 5:00 P.M., New York time, on _______________,
2003, up to an aggregate of 54,000 shares of Common Stock (the Shares) at an
initial exercise price (subject to adjustment as provided in Section 8 hereof)
of $8.25 per share of Common Stock subject to the terms and conditions of this
Agreement. The Underwriters Warrants and the shares of Common Stock issuable
upon exercise of the Underwriters Warrants will be separately transferable
immediately upon issuance. Except as set forth herein, the Underwriters
Warrants are in all respects identical to the Warrants being sold by the
Underwriter to the public pursuant to the terms and provisions of the
Underwriting Agreement and the Warrant Agreement (as such term is defined in
Section 8.8 hereof.) Except as set forth herein, the shares of Common Stock
issuable upon exercise of the Underwriters Warrants are in all respects
identical to the shares of Common Stock being sold by the Underwriter to the
public pursuant to the terms and provisions of the Underwriting Agreement.
2. Warrant Certificates. The warrant certificates (the Warrant
Certificates) delivered and to be delivered pursuant to this Agreement shall
be in the form set forth in Exhibit A, attached hereto and made a part hereof,
with such appropriate insertions, omissions, substitutions, and other
variations as required or permitted by this Agreement.
3. Exercise of Warrant.
3.1 Method of Exercise. The Underwriters Warrants initially are exercisable
at an aggregate initial exercise price (subject to adjustment as provided in
Section 8 hereof) per Warrant set forth in Section 6 hereof payable by
certified or official bank check in New York Clearing House funds, subject to
adjustment as provided in Section 8 hereof. Upon surrender of a Warrant
Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price (as hereinafter defined) for the
Common Stock purchased at the Company's principal offices (presently located at
0000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 11572) the registered holder of a
Warrant Certificate (Holder or Holders) shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased. The
purchase rights represented by each Warrant Certificate are exercisable at the
option of the Holders thereof, in whole or part (but not as to fractional
shares of t e Common Stock). In the case of the purchase of less than all
shares of Common Stock purchasable under any Warrant Certificate, the Company
shall cancel said Warrant Certificate upon the surrender thereof and shall
execute and deliver a new Warrant Certificate of like tenor for the balance of
the shares of Common Stock purchasable thereunder.
3.2 Exercise by Surrender of Warrant. In addition to the method of payment set
forth in Section 3.1 and in lieu of any cash payment required thereunder, the
Holder(s) of the Underwriters Warrants shall have the right at any time and
from time to time to exercise the Underwriters Warrants in full or in part by
surrendering the Warrant Certificate in the manner specified in Section 3.1.
The number of shares of Common Stock to be issued pursuant to this Section 3.2
shall be equal to the difference between (a) the number of shares of Common
Stock in respect of which the Underwriters Warrants are exercised and (b) a
fraction, the numerator of which shall be the number of shares of Common Stock
in respect of which the Underwriters Warrants are exercised multiplied by the
Exercise Price (as hereinafter defined) and the denominator of which shall be
the Market Price.
3.3 Definition of Market Price. As used herein, the phrase Market Price at
any date shall be deemed to be, when referring to the Common Stock, the last
reported sale price, or, in case no such reported sale takes place on such day,
the average of the last reported sale prices for the last three (3) trading
days, in either case as officially reported by the principal securities
exchange on which the Common Stock is listed or admitted to trading or by the
Nasdaq National Market (NNM), or, if the Common Stock is not listed or
admitted to trading on any national securities exchange or quoted by NNM, the
average closing bid price as furnished by the National Association of
Securities Dealers, Inc. (NASD) through Nasdaq or similar organization
including the NASD Electronic Bulletin Board if Nasdaq is no longer reporting
such information, or if the Common Stock is not quoted on Nasdaq, or such
similar organization as determined in good faith by resolution of the Board of
Directors of he Company, based on the best information available to it.
Notwithstanding the foregoing, for purposes of Section 8, the Market Price of a
share of Common Stock shall be determined by reference to the relevant
information set forth above during the thirty (30) trading days immediately
preceding the date of the event requiring the determination of the Market Price
(except that, in the event of a public offering of shares of Common Stock, the
Market Price of a share of Common Stock shall be determined by reference to the
trading day immediately preceding the effective date of the public offering and
not such thirty (30) trading day period).
4. Issuance of Certificates. Upon the exercise of the Underwriters Warrants,
the issuance of certificates for shares of Common Stock and/or other
securities, properties or rights underlying such Underwriters Warrants shall
be made forthwith (and in any event within five (5) business days thereafter)
without charge to the Holder thereof including, without limitation, any tax
which may be payable in respect of the issuance thereof, and such certificates
shall (subject to the provisions of Sections 5 and 7 hereof) be issued in the
name of, or in such names as may be directed by, the Holder thereof; provided,
however, that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
such certificates in a name other than that of the Holder and the Company shall
not be required to issue or deliver such certificates unless or until the
person or persons requesting the issuance thereof shall have paid to the ompany
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares (and/or
other securities, property or rights issuable upon the exercise of the
Underwriters Warrants) shall be executed on behalf of the Company by the
manual or facsimile signature of the then present Chairman or Vice Chairman of
the Board of Directors or President or Vice President of the Company under its
corporate seal reproduced thereon, attested to by the manual or facsimile
signature of the then present Secretary or Assistant Secretary of the Company.
Warrant Certificates shall be dated the date of execution by the Company upon
initial issuance, division, exchange, substitution or transfer.
5. Restriction On Transfer of Warrants. The Holder of a Warrant Certificate,
by its acceptance thereof, covenants and agrees that the Underwriters Warrants
are being acquired as an investment and not with a view to the distribution
thereof; that the Underwriters Warrants may not be sold, transferred,
assigned, hypothecated or otherwise disposed of, in whole or in part, for a
period of one (1) year from the date hereof, except to officers of the
Underwriters.
6. Exercise Price.
6.1 Initial and Adjusted Exercise Price. Except as otherwise provided in
Section 8 hereof, the initial exercise price of each Underwriter Warrant shall
be $8.25 per share of Common Stock. The adjusted exercise price shall be the
price which shall result from time to time from any and all adjustments of the
initial exercise price in accordance with the provisions of Section 8 hereof.
6.2 Exercise Price. The term Exercise Price herein shall mean the initial
exercise price or the adjusted exercise price, depending upon the context.
7. Registration Rights.
7.1 Current Registration Under the Securities Act of 1933. The Underwriters
Warrants and the Shares issuable upon exercise of the Underwriters Warrants
have been registered under the Securities Act of 1933, as amended (the Act),
pursuant to the Company's Registration Statement on Form SB-2 (Registration No.
333-20525) (the Registration Statement). The Company covenants and agrees to
use its best efforts to maintain the effectiveness of the Registration
Statement for a period of five (5) years from its effective date.
7.2 Contingent Registration Rights. In the event that, for any reason
whatsoever, the Company shall fail to maintain the effectiveness of the
Registration Statement for a period of five (5) years from its effective date
and, in any event, from and after the fifth (5th) anniversary of the effective
date of the Registration Statement, the Underwriter and other Holders shall
have, commencing the date of any such occasion, the contingent registration
rights (Registration Rights) set forth in Sections 7.3 and 7.4 hereof.
7.3 Piggyback Registration. (1) If, at any time commencing after the effective
date of the Registration Rights and expiring on the seventh (7th) anniversary
of the effective date of the Registration Statement, the Company proposes to
register any of its securities under the Act, either for its own account or the
account of any other security holder or holders of the Company possessing
registration rights (Other Stockholders) (other than pursuant to Form S-4,
Form S-8 or comparable registration statement), it shall give written notice,
at least thirty (30) days prior to the filing of each such registration
statement, to the Underwriter and to all other Holders of Underwriters
Warrants and/or the Shares (collectively the Registrable Securities) of its
intention to do so. If the Underwriter or other Holders of Registrable
Securities notify the Company within twenty-one (21) days after the receipt of
any such notice of its or their desire to include any such securities in such
pro osed registration statement, the Company shall afford the Underwriter and
such other Holders of such securities the opportunity to have any such
securities registered under such registration statement. (2) If the
registration of which the Company gives notice is for a registered public
offering involving an underwriting, the Company shall so advise the Underwriter
and such other Holders as part of the written notice given pursuant to Section
7.3(a) hereof. The right of the Underwriter or any such other Holders to
registration pursuant to this Section 7.3 shall be conditioned upon their
participation in such underwriting and the inclusion of their Registrable
Securities in the underwriting to the extent hereinafter provided. The
Underwriter and all other Holders proposing to distribute their securities
through such underwriting shall (together with the Company and any officers,
directors or other Stockholders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
Underwriter of the underwriter or underwriters selected by the Company.
Notwithstanding any other provision of this Section 7.3, if the Underwriter of
the u nderwriter or underwriters advises the Company in writing that marketing
factors require a limitation or elimination of the number of shares of Common
Stock or other securities to be underwritten, the Underwriter may limit the
number of shares of Common Stock or other securities to be included in the
registration and underwriting. The Company shall so advise the Underwriter and
all other Holders of Registrable Securities requesting registration, and the
number of shares of Common Stock or other securities that are entitled to be
included in the registration and underwriting shall be allocated among the
Underwriter and other Holders requesting registration, in each case, in
proportion, as nearly as practicable, to the respective amounts of securities
which they had requested to be included in such registration at the time of
filing the registration statement. (3) Notwithstanding the provisions of this
Section 7.3, the Company shall have the right at any time after it shall have
given written notice pursuant to Section 7.3(a) hereof (irrespective of whether
a written request for inclusion of any such securities shall have been made) to
elect not to file any such proposed registration statement, or to withdraw the
same after the filing but prior to the effective date thereof.
7.4 Demand Registration. (1) At any time commencing after the effective date
of the Registration Statement and ending on the fifth (5th) anniversary of the
effective date of the Registration Statement, the Holders of Registrable
Securities representing a Majority (as hereinafter defined) of such
securities (assuming the exercise of all of the Underwriters Warrants) (the
Initiating Holders) shall have the right (which right is in addition to the
registration rights under Section 7.3 hereof), exercisable by written notice to
the Company, to have the Company prepare and file with the Commission, on one
occasion, a registration statement and such other documents, including a
prospectus, as may be necessary in the opinion of both counsel for the Company
and counsel for the Holders, in order to comply with the provisions of the Act,
so as to permit a public offering and sale of their respective Registrable
Securities for up to two hundred and seventy (270) days by such Holders and a y
other Holders of Registrable Securities, as well as any other security holders
possessing similar registration rights, who notify the Company within
twenty-one (21) days after receiving notice from the Company of such request.
(2) The Company covenants and agrees to give written notice of any registration
request under this Section 7.4 by any Holder or Holders to all other registered
Holders of Registrable Securities, as well as any other security holders
possessing similar registration rights, within ten (10) days after the date of
the receipt of any such registration request. (3) If the Initiating Holders
intend to distribute the Registrable Securities covered by their request by
means of an underwriting, they shall so advise the Company as a part of their
request made pursuant to Section 7.4(a) hereof. The right of any Holder to
registration pursuant to this Section 7.4 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent and subject to the
limitations provided herein. A Holder may elect to include in such
underwriting all or a part of the Registrable Securities it holds. (4) The
Company shall (together with all Holders, officers, directors and other
stockholders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
Underwriter of the underwriters selected for such underwriting by the
Initiating Holders, which underwriter(s) shall be reasonably acceptable to the
Underwriter. Notwithstanding any other provision of this Section 7.4, if the
Underwriter of the underwriter or underwriters advises the Initiating Holders
in writing that marketing factors require a limitation or elimination of the
number of shares of Common Stock or other securities to be underwritten, the
Underwriter may limit the number of shares of Common Stock or other securities
to be included in the registration and underwriting. The Company shall so
advise the Underwriter and all Holders of Registrable Securities requesting
registration, and the number of shares of Common Stock or other securities that
are en titled to be included in the registration and underwriting shall be
allocated among the Underwriter and other Holders requesting registration, in
each case, in proportion, as nearly as practicable, to the respective amounts
of securities which they had requested to be included in such registration at
the time of filing the registration statement. If the Company or any Holder of
Registrable Securities who has requested inclusion in such registration as
provided above disapproves of the terms of any such underwriting, such person
may elect to withdraw its securities therefrom by written notice to the
Company, the underwriter and the Initiating Holders. Any securities so
excluded shall be withdrawn from such registration. No securities excluded
from such registration by reason of such underwriters' marketing limitations
shall be included in such registration. To facilitate the allocation of shares
in accordance with this Section 7.4(d), the Company or underwriter or
underwriters selec xxx as provided above may round the number of securities of
any holder which may be included in such registration to the nearest 100
shares. (5) In the event that the Initiating Holders are unable to sell all of
the Registrable Securities for which they have requested registration due to
the provisions of Section 7.4(d) hereof and if, at that time, the Initiating
Holders are not permitted to sell Registrable Securities under Rule 144(k), the
Initiating Holders shall be entitled to require the Company to afford the
Initiating Holders an opportunity to effect one additional demand registration
under this Section 7.4. (6) In addition to the registration rights under
Section 7.3 and subsection (a) of Section 7.4 hereof, at any time commencing on
the date hereof and expiring five (5) years thereafter any Holder of
Registrable Securities shall have the right, exercisable by written request to
the Company, to have the Company prepare and file, on one occasion, with the
Commission a registration statement so as to permit a public offering and sale
for 270 days by any such Holder of its Registrable Securities provided,
however, that the provisions of Section 7.5(b) hereof, shall not apply to any
such registration request and registration and all costs incident thereto shall
be at the expense of the Holder or Holder's making such request.
(7) Notwithstanding anything to the contrary contained herein, if the Company
shall not have filed a registration statement for the Registrable Securities of
the Initiating Holders or the Holder(s) referred to in Section 7.5(f) above
(the Paying Holders), within the time period specified in Section 7.5(a)
below, the Company shall upon the written notice of election of the Initiating
Holders or the Paying Holders, as the case may be, repurchase (i) any and all
Shares and/or Underlying Warrants at the higher of the Market Price per share
of Common Stock or per Underlying Warrant, as the case may be, on (x) the date
of the notice sent to the Company under Section 7.4(a) or (f), as the case may
be, or (y) the expiration of the period specified in Section 7.5(a) and (ii)
any and all Warrants at such Market Price less the Exercise Price of such
Warrant. Such repurchase shall be in immediately available funds and shall
close within five (5) business days after the expiration of the period
specified in Section 7.5(a).
7.5 Covenants of the Company With Respect to Registration. In connection with
any registration under Sections 7.3 and 7.4 hereof, the Company covenants and
agrees as follows: (1) The Company shall use its best efforts to file a
registration statement within sixty (60) days of receipt of any demand
therefor, shall use its best efforts to have any registration statements
declared effective at the earliest possible time, and shall furnish each Holder
desiring to sell Registrable Securities such number of prospectuses as shall
reasonably be requested. (2) The Company shall pay all costs (excluding fees
and expenses of Holder(s)' counsel and any underwriting or selling
commissions), fees and expenses in connection with all registration statements
filed pursuant to Sections 7.3 and 7.4 hereof including, without limitation,
the Company's legal and accounting fees, printing expenses, blue sky fees and
expenses. If the Company shall fail to comply with the provisions of Section
7.5(a), the Company shall, in addition to any other equitable or other relief
available to the Holder(s), extend the exercise period of the Underwriters
Warrants by such number of days as shall equal the delay caused by the
Company's failure. (3) The Company will take all necessary action which may be
required in qualifying or registering the Registrable Securities included in a
registration statement for offering and sale under the securities or blue sky
laws of such states as reasonably are requested by the Holder(s); provided that
the Company shall not be obligated to execute or file any general consent to
service of process or to qualify as a foreign corporation to do business under
the laws of any such jurisdiction. (4) The Company shall indemnify the
Holder(s) of the Registrable Securities to be sold pursuant to any registration
statement and each person, if any, who controls such Holders within the meaning
of Section 15 of the Act or Section 20(a) of the Securities Exchange Act of
1934, as amended (Exchange Act), against all loss, claim, damage, expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which any of them may
become subject under the Act, the Exchange Act or otherwise, arising from such
registration statement but only to the same extent and with the same effect as
the provisions pursuant to which the Company has agreed to indemnify the
Underwriter contained in Section 7 of the Underwriting Agreement. (5) The
Holder(s) of the Registrable Securities to be sold pursuant to a registration
statement, and their successors and assigns, shall severally, and not jointly,
indemnify the Company, its officers and directors and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against all loss, claim, damage or expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the exchange Act or otherwise, arising from information
furnished by or on behalf of such Holders, or their successors or assigns, for
specific inclusion in such registration statement to the same extent and with
the same effect as the provisions contained in Section 7 of the Underwriting
Agreement pursuant to which the Underwriter has agreed to indemnify the
Company. (6) For a period of one hundred eighty (180) days after the
effectiveness of any registration statement filed pursuant to Section 7.4
hereof, the Company shall not permit any other registration statement (other
than (1) a registration statement relating to the securities for which the
Company has granted demand registration rights, as described in the Prospectus
included in the Registration Statement, (2) a registration statement relating
to the shares of Common Stock issuable upon exercise of the Warrants issued to
the public pursuant to the Registration Statement, (3) a registration statement
relating to the securities for which the Company has granted piggyback
registration rights, as described in the Prospectus included in the
Registration Statement and (4) a registration statement filed on Forms S-4 or
S-8 to be or remain effective during the effectiveness of a registration
statement filed pursuant to Section 7.4 hereof, without the prior written
consent of the Holders of the Xxxx xxxxxxx Securities representing a Majority
of such securities. (7) The Company shall furnish upon request to each Holder
participating in the offering and to each underwriter, if any, a signed
counterpart, addressed to such Holder or underwriter, of (i) an opinion of
counsel to the Company, dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, an opinion
dated the date of the closing under the underwriting agreement), and (ii) a
cold comfort letter dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, a letter
dated the date of the closing under the underwriting agreement) signed by the
independent public accountants who have issued a report on the Company's
financial statements included in such registration statement, in each case
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with resp ect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to underwriters in underwritten
public offerings of securities. (8) The Company shall as soon as practicable
after the effective date of any registration statement filed pursuant to
Sections 7.3 and 7.4 hereof, and in any event within 15 months thereafter,
make generally available to its security holders (within the meaning of Rule
158 under the Act) an earnings statement (which need not be audited) complying
with Section 11(a) of the Act and covering a period of at least 12 consecutive
months beginning after the effective date of the registration statement.
(9) The Company shall deliver promptly to each Holder participating in the
offering requesting the correspondence and memoranda described below and to the
managing underwriters, copies of all written correspondence between the
Commission and the Company, its counsel or auditors and all memoranda relating
to discussions with the Commission or its staff with respect to the
registration statement and permit each Holder and underwriters to do such
investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the registration statement as it deems reasonably
necessary to comply with applicable securities laws or rules of the NASD. Such
investigation shall include access to books, records and properties and
opportunities to discuss the business of the Company with its officers and
independent auditors, all to such reasonable extent and at such reasonable
times and as often as any such Holder or underwriter shall reasonably request.
(10) With respect to any registration under Section 7.4 hereof, the Company
shall enter into an underwriting agreement with the managing underwriter
selected for such underwriting by the Initiating Holders or the Paying Holders,
as the case may be. Such agreement shall be satisfactory in form and substance
to the Company, each Holder and such managing underwriters, and shall contain
such representations, warranties and covenants by the Company and such other
terms as are customarily contained in agreements of that type used by the
managing underwriter. The Holders shall be parties to any underwriting
agreement relating to an underwritten sale of their Registrable Securities and
may, at their option, require that any or all the representations, warranties
and covenants of the Company to or for the benefit of such underwriters shall
also be made to and for the benefit of such Holders. Such Holders shall not
be required to make any representations or warranties to or agreements with t
he Company or the underwriters, except as they may relate to such Holders and
their intended methods of distribution. (11) For purposes of this Agreement,
the term Majority in reference to the Holders of Registrable Securities,
shall mean in excess of fifty percent (50%) of the then outstanding
Underwriters Warrants and/or shares of Common Stock issuable upon exercise of
the Underwriters Warrants that (i) are not held by the Company, an affiliate,
officer, creditor, employee or agent thereof or any of their respective
affiliates, members of their family, persons acting as nominees or in
conjunction therewith and (ii) have not been resold to the public pursuant to a
registration statement filed with the Commission under the Act. (12) Nothing
contained in this Agreement shall be construed as requiring the Holder(s) to
exercise their Underwriters Warrants prior to the initial filing of any
registration statement or the effectiveness thereof. (13) In addition to the
Registrable Securities, upon the written request therefor, by any Holder(s),
the Company shall include in the registration statement any other securities of
the Company held by such Holder(s) as of the date of filing of such
registration statement, including without limitation restricted shares of
Common Stock, options, warrants or any other securities convertible into shares
of Common Stock.
7.6 Restrictive Legends. In the event that the Company fails to maintain the
effectiveness of the Registration Statement, such that the exercise, in part or
in whole, of the Underwriters Warrants are not, at the time of such exercise,
registered under the Act, any certificates representing the Shares underlying
the Underwriters Warrants, and any of the other securities issuable upon
exercise of the Underwriters Warrants shall bear the following restrictive
legend: The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (Act), and may not be offered or
sold except pursuant to (i) an effective registration statement under the Act,
(ii) to the extent applicable, Rule 144 under the Act (or any similar rule
under such Act relating to the disposition of securities), or (iii) an opinion
of counsel, if such opinion shall be reasonably satisfactory to counsel to the
issuer, that an exemption from registration under such Act is available.
8. Adjustments to Exercise Price and Number of Securities. 8.1 Computation of
Adjusted Exercise Price. Except as hereinafter provided, in the event the
Company shall at any time after the date hereof issue or sell any shares of
Common Stock (other than the issuances or sales referred to in Section 8.7
hereof), including shares held in the Company's treasury and shares of Common
Stock issued upon the exercise of any options, rights or warrants to subscribe
for shares of Common Stock and shares of Common Stock issued upon the direct or
indirect conversion or exchange of securities for shares of Common Stock, for a
consideration per share less than the Market Price in effect immediately prior
to the issuance or sale of such shares, or without consideration, then
forthwith upon such issuance or sale, the Exercise Price shall (until another
such issuance or sale) be reduced to the price (calculated to the nearest full
cent) equal to the quotient derived by dividing (i) an amount equal to the sum
of (a) the total number of shares of Common Stock ou tstanding immediately
prior to the issuance or sale of such shares, multiplied by the Exercise Price
in effect immediately prior to such issuance or sale, and (b) the aggregate of
the amount of all consideration, if any, received by the Company upon such
issuance or sale, by (ii) the total number of shares of Common Stock
outstanding immediately after such issuance or sale; provided, however, that in
no event shall the Exercise Price be adjusted pursuant to this computation to
an amount in excess of the Exercise Price in effect immediately prior to such
computation, except in the case of a combination of outstanding shares of
Common Stock, as provided by Section 8.3 hereof. For the purposes of this
Section 8 the term Exercise Price shall mean the Exercise Price per share of
Common Stock set forth in Section 6 hereof, as adjusted from time to time
pursuant to the provisions of this Section 8. For the purposes of any
computation to be made in accordance with this Section 8.1, the following
provisions shall be applicable: (i) In case of the issuance or sale of
shares of Common Stock for a consideration part or all of which shall be cash,
the amount of the cash consideration therefor shall be deemed to be the amount
of cash received by the Company for such shares (or, if shares of Common Stock
are offered by the Company for subscription, the subscription price, or, if
either of such securities shall be sold to underwriters or dealers for public
offering without a subscription offering, the initial public offering price)
before deducting therefrom any compensation paid or discount allowed in the
sale, underwriting or purchase thereof by underwriters or dealers or other
performing similar services, or any expenses incurred in connection therewith.
(ii) In case of the issuance or sale (other than as a dividend or other
distribution on any stock of the Company) of shares of Common Stock for a
consideration part or all of which shall be other than cash, the amount of the
consideration therefor other than cash shall be deemed to be the value of such
consideration as determined in good faith by the Board of Directors of the
Company and shall include any amounts payable to security holders or any
affiliates thereof, including without limitation, pursuant to any employment
agreement, royalty, consulting agreement, covenant not to compete, earnout or
contingent payment right or similar arrangement, agreement or understanding,
whether oral or written; all such amounts being valued for the purposes hereof
at the aggregate amount payable thereunder, whether such payments are absolute
or contingent, and irrespective of the period or uncertainty of payment, the
rate of interest, if any, or the contingent nature thereof; provide d, however,
that if any Holder(s) does not agree with such evaluation, a mutually
acceptable independent appraiser shall make such evaluation, the cost of which
shall be borne by the Company. (iii) Shares of Common Stock issuable by way
of dividend or other distribution on any stock of the Company shall be deemed
to have been issued immediately after the opening of business on the day
following the record date for the determination of stockholders entitled to
receive such dividend or other distribution and shall be deemed to have been
issued without consideration. (iv) The reclassification of securities of
the Company other than shares of Common Stock into securities including shares
of Common Stock shall be deemed to involve the issuance of such shares of
Common Stock for a consideration other than cash immediately prior to the close
of business on the date fixed for the determination of security holders
entitled to receive such shares, and the value of the consideration allocable
to such shares of Common Stock shall be determined as provided in subsection
(ii) of this Section 8.1. (v) The number of shares of Common Stock at any
one time outstanding shall include the aggregate number of shares issued or
issuable (subject to readjustment upon the actual issuance thereof) upon the
exercise of options, rights, warrants and upon the conversion or exchange of
convertible or exchangeable securities.
8.2 Options, Rights, Warrants and Convertible and Exchangeable Securities. In
case the Company shall at any time after the date hereof issue options, rights
or warrants to subscribe for shares of Common Stock, or issue any securities
convertible into or exchangeable for shares of Common Stock, for a
consideration per share less than the Market Price in effect immediately prior
to the issuance of such options, rights or warrants, or such convertible or
exchangeable securities, or without consideration, the Exercise Price in effect
immediately prior to the issuance of such options, rights or warrants, or such
convertible or exchangeable securities, as the case may be, shall be reduced to
a price determined by making a computation in accordance with the provisions of
Section 8.1 hereof, provided that:
(1) The aggregate maximum number of shares of Common Stock, as
the case may be, issuable under such options, rights or warrants shall be
deemed to be issued and outstanding at the time such options, rights or
warrants were issued, and for a consideration equal to the minimum purchase
price per share provided for in such options, rights or warrants at the time of
issuance, plus the consideration (determined in the same manner as
consideration received on the issue or sale of shares in accordance with the
terms of the Underwriterss Warrants), if any, received by the Company for
such options, rights or warrants.
(2) The aggregate maximum number of shares of Common Stock issuable upon
conversion or exchange of any convertible or exchangeable securities shall be
deemed to be issued and outstanding at the time of issuance of such securities,
and for a consideration equal to the consideration (determined in the same
manner as consideration received on the issue or sale of shares of Common Stock
in accordance with the terms of the Underwriters Warrants) received by the
Company for such securities, plus the minimum consideration, if any, receivable
by the Company upon the conversion or exchange thereof.
(3) If any change shall occur in the price per share provided for in any of the
options, rights or warrants referred to in subsection (a) of this Section 8.2,
or in the price per share at which the securities referred to in subsection (b)
of this Section 8.2 are convertible or exchangeable, such options, rights or
warrants or conversion or exchange rights, as the case may be, shall be deemed
to have expired or terminated on the date when such price change became
effective in respect of shares not theretofore issued pursuant to the exercise
or conversion or exchange thereof, and the Company shall be deemed to have
issued upon such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or the
conversion or exchange of such convertible or exchangeable securities.
8.3 Subdivision and Combination. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
8.4 Adjustment in Number of Securities. Upon each adjustment of the Exercise
Price pursuant to the provisions of this Section 8, the number of shares of
Common Stock issuable upon the exercise at the adjusted exercise price of each
Underwriters Warrant shall be adjusted to the nearest full amount by
multiplying a number equal to the Exercise Price in effect immediately prior to
such adjustment by the number of shares of Common Stock issuable upon exercise
of the Underwriters Warrants immediately prior to such adjustment and dividing
the product so obtained by the adjusted Exercise Price. For purpose of this
Section 8 the Exercise Price for the Underwriters Warrants shall be $8.00
per Underwriters Warrant.
8.5 Definition of Common Stock. For the purpose of this Agreement, the term
Common Stock shall mean (i) the class of stock designated as Common Stock in
the Certificate of Incorporation of the Company as may be amended as of the
date hereof, or (ii) any other class of stock resulting from successive changes
or reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
In the event that the Company shall after the date hereof issue securities
with greater or superior voting rights than the shares of Common Stock
outstanding as of the date hereof, the Holder, at its option, may receive upon
exercise of any Underwriters Warrant either shares of Common Stock or a like
number of such securities with greater or superior voting rights.
8.6 Merger or Consolidation. In case of any consolidation of the Company with,
or merger of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger which does not result in any
reclassification or change of the outstanding Common Stock), the corporation
formed by such consolidation or merger shall execute and deliver to the Holder
a supplemental warrant agreement providing that the holder of each
Underwriters Warrant then outstanding or to be outstanding shall have the
right thereafter (until the expiration of such Underwriters Warrant) to
receive, upon exercise of such warrant, the kind and amount of shares of stock
and other securities and property receivable upon such consolidation or merger,
by a holder of the number of shares of Common Stock of the Company for which
such Underwriters Warrant might have been exercised immediately prior to such
consolidation, merger, sale or transfer. Such supplemental warrant agreement
shall rovide for adjustments which shall be identical to the adjustments
provided in Section 8. The above provision of this subsection shall similarly
apply to successive consolidations or mergers.
8.7 No Adjustment of Exercise Price in Certain Cases. No adjustment of the
Exercise Price shall be made: (1) Upon the issuance or sale of the
Underwriters Warrants or the shares of Common Stock issuable upon the exercise
of the Underwriters Warrants; or (2) If the amount of said adjustment shall be
less than two cents (2) per Warrant Security, provided, however, that in such
case any adjustment that would otherwise be required then to be made shall be
carried forward and shall be made at the time of and together with the next
subsequent adjustment which, together with any adjustment so carried forward,
shall amount to at least two cents (2) per Warrant Security.
8.8 Dividends and Other Distributions. In the event that the Company shall at
any time prior to the exercise of all Underwriters Warrants declare a dividend
(other than a dividend consisting solely of shares of Common Stock) or
otherwise distribute to its stockholders any assets, property, rights,
evidences of indebtedness, securities (other than shares of Common Stock),
whether issued by the Company or by another, or any other thing of value, the
Holders of the unexercised Underwriters Warrants shall thereafter be entitled,
in addition to the shares of Common Stock or other securities and property
receivable upon the exercise thereof, to receive, upon the exercise of such
Underwriters Warrants, the same property, assets, rights, evidences of
indebtedness, securities or any other thing of value that they would have been
entitled to receive at the time of such dividend or distribution as if the
Underwriters Warrants had been exercised immediately prior to such dividend or
distribu ion. At the time of any such dividend or distribution, the Company
shall make appropriate reserves to ensure the timely performance of the
provisions of this subsection 8.8.
9. Exchange and Replacement of Warrant Certificates. Each Warrant Certificate
is exchangeable without expense, upon the surrender thereof by the registered
Holder at the principal executive office of the Company, for a new Warrant
Certificate of like tenor and date representing in the aggregate the right to
purchase the same number of shares of Common Stock in such denominations as
shall be designated by the Holder thereof at the time of such surrender. Upon
receipt by the Company of evidence reasonably satisfactory to it of the loss,
theft, destruction or mutilation of any Warrant Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
it, and reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of the Underwriters Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company shall not be required to
issue fractional shares of Common Stock upon the exercise of Underwriters
Warrants. Underwriters Warrants may only be exercised in such multiples as
are required to permit the issuance by the Company of one or more whole shares
of Common Stock. If one or more Underwriters Warrants shall be presented for
exercise in full at the same time by the same Holder, the number of whole
shares of Common Stock which shall be issuable upon such exercise thereof shall
be computed on the basis of the aggregate number of shares of Common Stock
purchasable on exercise of the Underwriters Warrants so presented. If any
fraction of a share of Common Stock would, except for the provisions provided
herein, be issuable on the exercise of any Underwriters Warrant (or specified
portion thereof), the Company shall pay an amount in cash equal to such
fraction multiplied by the then current market value of a share of Common St
ck, determined as follows: (1) If the Common Stock is listed, or admitted to
unlisted trading privileges on the NYSE or the AMEX, or is traded on the NNM,
the current market value of a share of Common Stock shall be the closing sale
price of the Common Stock at the end of the regular trading session on the last
business day prior to the date of exercise of the Underwriters Warrants on
whichever of such exchanges or NNM had the highest average daily trading volume
for the Common Stock on such day; or (2) If the Common Stock is not listed or
admitted to unlisted trading privileges, on either the NYSE or the AMEX and is
not traded on NNM, but is quoted or reported on Nasdaq, the current market
value of a share of Common Stock shall be the average of the Underwriter
closing bid and asked prices (or the last sale price, if then reported by
Nasdaq) of the Common Stock at the end of the regular trading session on the
last business day prior to the date of exercise of the Underwriters Warrants
as quoted or reported on Nasdaq, as the case may be; or (3) If the Common Stock
is not listed, or admitted to unlisted trading privileges, on either of the
NYSE or the AMEX, and is not traded on NNM or quoted or reported on Nasdaq, but
is listed or admitted to unlisted trading privileges on the BSE or another
national securities exchange (other than the NYSE or the AMEX), the current
market value of a share of Common Stock shall be the closing sale price of the
Common Stock at the end of the regular trading session on the last business day
prior to the date of exercise of the Underwriters Warrants on whichever of
such exchanges has the highest average daily trading volume for the Common
Stock on such day; or (4) If the Common Stock is not listed or admitted to
unlisted trading privileges on any national securities exchange, or listed for
trading on NNM or quoted or reported on Nasdaq, but is traded in the
over-the-counter market, the current market value of a share of Common Stock
shall be the average of the last reported bid and asked prices of the Common
Stock reported by the National Quotation Bureau, Inc. on the last business day
prior to the date of exercise of the Underwriters Warrants; or (5) If the
Common Stock is not listed, admitted to unlisted trading privileges on any
national securities exchange, or listed for trading on NNM or quoted or
reported on Nasdaq, and bid and asked prices of the Common Stock are not
reported by the National Quotation Bureau, Inc., the current market value of a
share of Common Stock shall be an amount, not less than the book value thereof
as of the end of the most recently completed fiscal quarter of the Company
ending prior to the date of exercise, determined in accordance with generally
acceptable accounting principles, consistently applied.
11. Reservation and Listing of Securities. The Company shall at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of the Underwriters Warrants,
such number of shares of Common Stock or other securities, properties or rights
as shall be issuable upon the exercise thereof. The Company covenants and
agrees that, upon exercise of the Underwriters Warrants and payment of the
Exercise Price therefor, all shares of Common Stock and other securities
issuable upon such exercise shall be duly and validly issued, fully paid,
non-assessable and not subject to the preemptive rights of any stockholder. As
long as the Underwriters Warrants shall be outstanding, the Company shall use
its best efforts to cause the Underwriters Warrants and all shares of Common
Stock issuable upon the exercise of the Underwriters Warrants to be listed
(subject to official notice of issuance) on all securities exchanges on whic
the Warrants and the Common Stock issued to the public in connection herewith
may then be listed and/or quoted on NNM.
12. Notices to Warrant Holders. Nothing contained in this Agreement shall be
construed as conferring upon the Holders the right to vote or to consent or to
receive notice as a stockholder in respect of any meetings of stockholders for
the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company. If, however, at any time prior to
the expiration of the Underwriters Warrants and their exercise, any of the
following events shall occur:
(1) the Company shall take a record of the holders of its shares of Common
Stock for the purpose of entitling them to receive a dividend or distribution
payable other than in cash, or a cash dividend or distribution payable other
than out of current or retained earnings, as indicated by the accounting
treatment of such dividend or distribution on the books of the Company; or
(2) the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible
into or exchangeable for shares of capital stock of the Company, or any option,
right or warrant to subscribe therefor; or
(3) a dissolution, liquidation or winding up of the Company (other than in
connection with a consolidation or merger) or a sale of all or substantially
all of its property, assets and business as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall
specify such record date or the date of closing the transfer book, as the case
may be. Failure to give such notice or any defect therein shall not affect the
validity of any action taken in connection with the declaration or payment of
any such dividend, or the issuance of any convertible or exchangeable
securities, or subscription rights, options or warrants, or any proposed
dissolution, liquidation, winding up or sale.
130 Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made and
sent when delivered, or mailed by registered or certified mail, return receipt
requested:
(1) If to the registered Holder of the Underwriters Warrants, to the address
of such Holder as shown on the books of the Company; or
(2) If to the Company, to the address set forth in Section 3 hereof or to such
other address as the Company may designate by notice to the Holders.
140 Supplements and Amendments. The Company and the Underwriter may from time
to time supplement or amend this Agreement without the approval of any Holders
of Warrant Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or
inconsistent with any provisions herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and the
Underwriter may deem necessary or desirable and which the Company and the
Underwriter deem shall not adversely affect the interests of the Holders of
Warrant Certificates.
150 Successors. All the covenants and provisions of this Agreement shall be
binding upon and inure to the benefit of the Company, the Holders and their
respective successors and assigns hereunder.
160 Termination. This Agreement shall terminate at the close of business on
___________, 2003. Notwithstanding the foregoing, the indemnification
provisions of Section 7 shall survive such termination until the close of
business on ___________, 2008.
170 Governing Law; Submission to Jurisdiction. This Agreement and each Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws. The Company, the Underwriter and
any other registered Holders hereby agree that any action, proceeding or claim
against it arising out of, or relating in any way to, this Agreement shall be
brought and enforced in the courts of the State of New York or of the United
States of America for the Southern District of New York, and irrevocably
submits to such jurisdiction, which jurisdiction shall be exclusive. The
Company, the Underwriter and any other registered Holders hereby irrevocably
waive any objection to such exclusive jurisdiction or inconvenient forum. Any
such process or summons to be served upon any of the Company, the Underwriter
and the Holders (at the option of the party bringing such action, proceeding or
claim) may be served by transmitting a copy thereof, by registered or certified
mail, return receipt requested, postage prepaid, addressed to it at the address
set forth in Section 13 hereof. Such mailing shall be deemed personal service
and shall be legal and binding up on the party so served in any action,
proceeding or claim. The Company, the Underwriter and any other registered
Holders agree that the prevailing party(ies) in any such action or proceeding
shall be entitled to recover from the other party(ies) all of its'/their
reasonable legal costs and expenses relating to such action or proceeding
and/or incurred in connection with the preparation therefor.
180 Entire Agreement; Modification. This Agreement (including the Underwriting
Agreement and the Warrant Agreement to the extent portions thereof are referred
to herein) contains the entire understanding between the parties hereto with
respect to the subject matter hereof and may not be modified or amended except
by a writing duly signed by the party against whom enforcement of the
modification or amendment is sought.
190 Severability. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
200 Captions. The caption headings of the Sections of this Agreement are for
convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive
effect.
210 Benefits of this Agreement. Nothing in this Agreement shall be construed
to give to any person or corporation other than the Company and the Underwriter
and any other registered Holder(s) of the Warrant Certificates or Warrants
Securities any legal or equitable right, remedy or claim under this Agreement;
and this Agreement shall be for the sole benefit of the Company and the
Underwriter and any other registered Holders of Warrant Certificates or Warrant
Securities.
220 Counterparts. This Agreement may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first above written.
[SEAL] XETAL, INC.
By:
Xx. Xxx Xxxxx, Chief Executive Officer
Attest: By:____________________________
Xxxxx Xxxxx, President
XXXXXX XXXXX CAPITAL CORP.
By:
Xxxxxxx Xxxxxx, President
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT
AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK TIME, _______________, 2003
No. RW-101Warrants to Purchase
54,000 Shares of Common Stock
WARRANT CERTIFICATE
This Warrant Certificate certifies that Xxxxxx Xxxxx Capital Corp., or
registered assigns, is the registered holder of Warrants to purchase initially,
at any time from _________, 1999 until 5:00 p.m. New York time on ___________,
2003 (the Expiration Date), up to 54,000 fully-paid and non-assessable shares
of common stock, $.001 par value (Common Stock) of Xetal, Inc., a Utah
corporation (the Company), at the initial exercise price, subject to
adjustment in certain events (the Exercise Price), of $8.25 per share of
Common Stock upon surrender of this Warrant Certificate and payment of the
Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Underwriter's Warrant Agreement dated as
of ________________, 1998 between the Company and Xxxxxx Xxxxx Capital Corp.
(the Underwriter's Warrant Agreement). Payment of the Exercise Price shall
be made by certified or official bank check in New York Clearing House funds
payable to the order of the Company or by surrender of this Warrant
Certificate.
No Warrant may be exercised after 5:00 p.m., New York time, on the Expiration
Date, at which time all Warrants evidenced hereby, unless exercised prior
thereto, hereby shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Underwriter's Warrant
Agreement, which Underwriter's Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the holders (the words holders or
holder meaning the registered holders or registered holder) of the Warrants.
The Underwriter's Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the type and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter, or otherwise impair, the
rights of the holder as set forth in the Underwriter's Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant Certificate
at an office or agency of the Company, a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of
Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the
Underwriter's Warrant Agreement, without any charge except for any tax or other
governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this Warrant
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such numbered unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the absolute
owner(s) of this Warrant Certificate (notwithstanding any notation of ownership
or other writing hereon made by anyone), for the purpose of any exercise
hereof, and of any distribution to the holder(s) hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
All terms used in this Warrant Certificate which are defined in the
Underwriter's Warrant Agreement shall have the meanings assigned to them in the
Underwriter's Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
executed under its corporate seal.
Dated as of ____________, 1998
[SEAL] XETAL, INC.
By:
Xx. Xxx Xxxxx, Chief Executive Officer
By:
Xxxxx Xxxxx, President
Attest:
Xx. Xxx Xxxxx, Secretary
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase:
shares of Common Stock
and herewith tenders in payment for such securities a certified or official
bank check payable in New York Clearing House Funds to the order of Xetal, Inc.
in the amount of $ , all in accordance with the terms of Section
3.1 of the Underwriter's Warrant Agreement dated as of ___________________,
1998 between Xetal, Inc. and Xxxxxx Xxxxx Capital Corp. The undersigned
request that a certificate for such shares of Common Stock be registered in the
name of whose address is and that
such Certificate be delivered to whose address is
.
Signature
(Signature must conform in all respects to name of holder as specified on the
face of the Warrant Certificate)
(Insert Social Security or Other Identifying Number of Holder)
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder desires to transfer the
Warrant Certificate.)
FOR VALUE RECEIVED hereby sells, assigns and
unto
(Please print name and address of transferee)
Warrant Certificate, together with all right, title and interest
therein, and does hereby reasonably constitute and appoint
, as Attorney, to transfer the within Warrant Certificate on the books of the
within-named Company, with full power of substitution.
Date: Signature:
(Signature must conform in all respects to name
of holder as specified on the face of the Warrant Certificate)
(Insert Social Security or Other Identifying
Number of Assignee)
XETAL, INC.
AND
XXXXXX XXXXX CAPITAL CORP.
UNDERWRITER'S
WARRANT AGREEMENT
Dated as of _______________, 1998
EXHIBIT 5
Opinion of B. Xxxxx Xxxxxxx
B. XXXXX XXXXXXX
Attorney at Law
00 Xxxxxxxxx Xxxxxx
_____________
Telephone (000) 000 0000
Telecopier (000) 000 0000
October , 1998
Xetal, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000
Gentlemen:
This opinion and the consent to use my name is furnished in connection with the
Registration Statement on Form SB-2 filed with the Securities and Exchange
Commission, Washington, D.C., by Xetal, Inc. (hereinafter referred to as the
"Company") pursuant to the Securities Act of 1933, as amended, covering a total
of 540,000 shares of the common stock of the Company (hereafter the "Common
Stock") and common stock purchase warrants (hereinafter "Warrants") to
purchase a total of 540,000 shares of Common Stock. I have acted as counsel to
the Company in connection with the preparation and filing of the Registration
Statement and as such counsel, I am familiar with the Registration Statement
and proceedings to date with respect to the authorization by the Company of the
Common Stock and Warrants. Based upon the foregoing, I advise you that: 1. The
540,000 shares of Common Stock covered by the Registration Statement have been
duly authorized by the Company and upon full receipt of consideration for such
shares, such shares will be legally issued, fully paid and non-assessable
shares of the Common Stock of the Company. 2. The Warrants covered by the
Registration Statement have been duly authorized by the Company and when full
consideration has been received for such Warrants, they will be legally issued
and will permit the holder thereof to purchase from the Company up to a total
of 540,000 shares of Common Stock.
3. A total of 540,000 shares of Common Stock have been authorized by the
Company as being issuable upon exercise of the Warrants. When properly
exercised by the Warrantholder as provided in the Warrant Agreement and Warrant
Certificate and consideration is received, such shares will be legally issued,
fully paid and non-assessable shares of the Common Stock of the Company.
Consent is hereby given to the use of this opinion as an exhibit to the
Registration Statement and the use of my name in the Prospectus forming a part
of the Registration Statement under the caption "Legal Opinions."
Very truly yours,
B. Xxxxx Xxxxxxx
BBF:emk
EXHIBIT 10(viii)
Form of Amended Warrant Agreement and Warrant Certificate
AGREEMENT, dated this _____ day of _____________, 1998, between XETAL, INC., a
Utah corporation (the Company), and AMERICAN STOCK TRANSFER AND TRUST
COMPANY, as Warrant Agent (the Warrant Agent).
W I T N E S S E T H:
WHEREAS, in connection with (i) the offering to the public pursuant to the
Prospectus (the Prospectus) contained in the Company's Registration Statement
on Form SB-2 (Registration No. 333-20525) of 540,000 shares of the Company's
common stock, $0.001 par value per share (the Common Stock), (ii) the
offering to the public pursuant to the Prospectus of 540,000 redeemable common
stock purchase warrants (the Warrants), each Warrant entitling the holder
thereof to purchase one share of Common Stock, and (iii) the sale to Xxxxxx
Xxxxx Capital Corp. (formerly Worthington Capital Group, Inc.) (Xxxxxx Xxxxx
or the Underwriter), its successors and assigns, of warrants (the
Underwriters Warrants) to purchase an aggregate of 54,000 shares of Common
Stock, each Warrant entitling the holder thereof to purchase one share of
Common Stock, the Company will issue to the public up to 540,000 Warrants and
to the Underwriter the Underwriters Warrants to purchase up to 54,000 shares
of Common
Stock (subject to adjustment); and
WHEREAS, the Company desires to provide for the issuance of certificates
representing the Warrants; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the Company,
and the Warrant Agent is willing to so act, in connection with the issuance,
registration, transfer and exchange of certificates representing the Warrants
and the exercise of the Warrants.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth and for the purpose of defining the terms and provisions
of the Warrants and the certificates representing the Warrants and the
respective rights and obligations thereunder of the Company, the holders of
certificates representing the Warrants and the Warrant Agent, the parties
hereto agree as follows:
SECTION 1. Definitions. As used herein, the following terms shall have the
following meanings, unless the context shall otherwise require: (a) Common
Stock shall mean stock of the Company of any class whether now or hereafter
authorized, which has the right to participate in the voting and in the
distribution of earnings and assets of the Company without limit as to amount
or percentage.
(b) Corporate Office shall mean the office of the Warrant Agent (or its
successor) at which at any particular time its principal business in New York,
New York, shall be administered, which office is located on the date hereof at
00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
(c) Exercise Date shall mean, subject to the provisions of Section 5(b) hereof,
as to any Warrant, the date on which the Warrant Agent shall have received both
(i) the Warrant Certificate representing such Warrant, with the exercise form
thereon duly executed by the Registered Holder hereof or his attorney duly
authorized in writing, and (ii) payment in cash or by certified or bank check
made payable to the Warrant Agent for the account of the Company, of the amount
in lawful money of the United States of America equal to the applicable
Purchase Price in good funds.
(d) Initial Warrant Exercise Date shall mean ____________, 1998.
(e) Initial Warrant Redemption Date shall mean __________, 1999.
(f) Purchase Price shall mean, subject to modification and adjustment as
provided in Section 8, $5.00.
(g) Registered Holder shall mean the person in whose name any certificate
representing the Warrants shall be registered on the books maintained by the
Warrant Agent pursuant to Section 6.
(h) Underwriters Warrant Agreement shall mean the agreement dated as of
______________, 1998 between the Company and the Underwriter relating to and
governing the terms and provisions of the Underwriters Warrants.
(i) Subsidiary or Subsidiaries shall mean any corporation or corporations, as
the case may be, of which stock having ordinary power to elect a majority of
the Board of Directors of such corporation (regardless of whether or not at the
time stock of any other class or classes of such corporation shall have or may
have voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned by the Company or by one or more Subsidiaries, or
by the Company and one or more Subsidiaries.
(j) Transfer Agent shall mean American Stock Transfer and Trust Company, or
its authorized successor.
(k) Underwriting Agreement shall mean the underwriting agreement dated
______________, 1997 between the Company and the Underwriters relating to the
sale to the public by Xxxxxx Xxxxx, as the Companys exclusive agent, on a best
efforts basis, of the 540,000 shares of Common Stock and 540,000 Warrants.
(l) Warrant Certificate shall mean a certificate representing each of the
Warrants substantially in the form annexed hereto as Exhibit A.
(m) Warrant Expiration Date shall mean, unless the Warrants are redeemed as
provided in Section 9 hereof prior to such date, 5:00 p.m. (New York time), on
______________, 2003, or, if such date shall in the State of New York be a
holiday or a day on which banks are authorized to close, then 5:00 p.m. (New
York time) on the next following day which in the State of New York is not a
holiday or a day on which banks are authorized to close.
(n) Warrant Agent shall mean American Stock Transfer and Trust Company, or
its authorized successor.
SECTION 2. Warrants and Issuance of Warrant Certificates.
(a) Each Warrant shall initially entitle the Registered Holder of the Warrant
Certificate representing such Warrant to purchase at the Purchase Price
therefor from the Initial Warrant Exercise Date until the Warrant Expiration
Date one share of Common Stock upon the exercise thereof, subject to
modification and adjustment as provided in Section 8.
(b) Upon execution of this Agreement, Warrant Certificates representing 540,000
Warrants to purchase up to an aggregate of 540,000 shares of Common Stock
(subject to modification and adjustment as provided in Section 8) shall be
executed by the Company and delivered to the Warrant Agent.
(c) Upon exercise of the Underwriters Warrants as provided therein, Warrant
Certificates representing all of 54,000 Warrants, to purchase up to an
aggregate of 54,000 shares of Common Stock (subject to modification and
adjustment as provided in Section 8 hereof and in the Underwriters' Warrant
Agreement), shall be countersigned, issued and delivered by the Warrant Agent
upon written order of the Company signed by its Chairman of the Board,
President or a Vice President and by its Treasurer or an Assistant Treasurer or
its Secretary or an Assistant Secretary.
(d) From time to time, up to the Warrant Expiration Date, as the case may be,
the Warrant Agent shall countersign and deliver Warrant Certificates in
required denominations of one or whole number multiples thereof to the person
entitled thereto in connection with any transfer or exchange permitted under
this Agreement. No Warrant Certificates shall be issued except (i) Warrant
Certificates initially issued hereunder, (ii) Warrant Certificates issued upon
any transfer or exchange of Warrants, (iii) Warrant Certificates issued in
replacement of lost, stolen, destroyed or mutilated Warrant Certificates
pursuant to Section 7, (iv) Warrant Certificates issued pursuant to the
Underwriters Warrant Agreement (including Warrants in excess of the
Underwriter's Warrants to purchase 54,000 shares of Common Stock issued as a
result of the anti-dilution provisions contained in the Underwriter's Warrant
Agreement), and (v) at the option of the Company, Warrant Certificates in such
form as may be a proved by its Board of Directors, to reflect any adjustment or
change in the Purchase Price, the number of shares of Common Stock purchasable
upon exercise of the Warrants or the redemption price therefor made pursuant to
Section 8 hereof.
SECTION 3. Form and Execution of Warrant Certificates.
(a) The Warrant Certificates shall be substantially in the form annexed hereto
as Exhibit A (the provisions of which are hereby incorporated herein) and may
have such letters, numbers or other marks of identification or designation and
such legends, summaries or endorsements printed, lithographed or engraved
thereon as the Company may deem appropriate and as are not inconsistent with
the provisions of this Agreement, or as may be required to comply with any law
or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which Warrants may be listed, or to conform
to usage. The Warrant Certificates shall be dated the date of issuance thereof
(whether upon initial issuance, transfer, exchange or in lieu of mutilated,
lost, stolen or destroyed Warrant Certificates). (b) Warrant Certificates shall
be executed on behalf of the Company by its Chairman of the Board, President or
any Vice President and by its Treasurer or an Assistant Treasurer or its
Secretary or an Assistant Secretary, by manual signatures or by facsimile
signatures printed thereon, and shall have imprinted thereon a facsimile of the
Company's seal. Warrant Certificates shall be manually countersigned. In case
any officer of the Company who shall have signed any of the Warrant
Certificates shall cease to be such officer of the Company before the date of
issuance of the Warrant Certificates or before countersignature by the Warrant
Agent and issue and delivery thereof, such Warrant Certificates, nevertheless,
may be countersigned by the Warrant Agent, issued and delivered with the same
force and effect as though the person who signed such Warrant Certificates had
not ceased to be such officer of the Company.
SECTION 4. Exercise.
(a) Warrants in denominations of one or whole number multiples thereof may be
exercised commencing at any time on or after the Initial Warrant Exercise Date,
but not after the Warrant Expiration Date, upon the terms and subject to the
conditions set forth herein (including the provisions set forth in Sections 5
and 9 hereof) and in the applicable Warrant Certificate. A Warrant shall be
deemed to have been exercised immediately prior to the close of business on the
Exercise Date, provided that the Warrant Certificate representing such Warrant,
with the exercise form thereon duly executed by the Registered Holder thereof
or his attorney duly authorized in writing, together with payment in cash or by
check made payable to the Warrant Agent for the account of the Company, of an
amount in lawful money of the United States of America equal to the applicable
Purchase Price has been received in good funds by the Warrant Agent. The
person entitled to receive the securities deliverable upon such exercise shall
be treated for all purposes as the holder of such securities as of the close of
business on the Exercise Date. As soon as practicable on or after the Exercise
Date and in any event within five business days after having received
authorization from the Company, the Warrant Agent on behalf of the Company
shall cause to be issued to the person or persons entitled to receive the same
a Common Stock certificate or certificates for the shares of Common Stock
deliverable upon such exercise, and the Warrant Agent shall deliver the same to
the person or persons entitled thereto. Upon the exercise of any Warrant, the
Warrant Agent shall promptly notify the Company in writing of such fact and of
the number of securities delivered upon such exercise and, subject to
subsection (b) below, shall cause all payments of an amount in cash or by check
made payable to the order of the Company, equal to the Purchase Price, to be
deposited promptly in the Company's bank account.
(b) At any time upon the exercise of any Warrants after one (1) year and one
day from the date hereof, the Warrant Agent shall, on a daily basis, within two
business days after such exercise, notify the Underwriter, and its and their
successors or assigns, of the exercise of any such Warrants and shall, on a
weekly basis (subject to collection of funds constituting the tendered Purchase
Price, but in no event later than five business days after the last day of the
calendar week in which such funds were tendered), remit to the Underwriter (so
long as the Underwriter solicited the exercise of such Warrant as indicated
upon the Subscription Form attached to the Warrant Certificate tendered for
exercise), an amount equal to seven percent (7%) of the Purchase Price of such
Warrants being then exercised if written certification is received that (i) the
Warrant is exercised at least 12 months after the date of this Prospectus; (ii)
the market price of the Common Stock on the date that the Warrant is exercised
is greater than the exercise price of the Warrants; (iii) the exercise of the
Warrants was solicited by a member of the National Association of Securities
Dealers, Inc.; (iv) the Warrant is not held in a discretionary account; (v)
disclosure of the compensation arrangements is made at the time of the exercise
of the Warrant; (vi) the holder of the Warrant has stated in writing that the
exercise was solicited and designated in writing the soliciting broker-dealer;
and (vii) the solicitation of exercise of the Warrant was not in violation of
Rule 10b-6 promulgated under the Exchange Act; provided that the Warrant Agent
shall not be obligated to pay any amounts pursuant to this Section 4(b) during
any week that such amounts payable are less than $1,000 and the Warrant Agent's
obligation to make such payments shall be suspended until the amount payable
aggregate $1,000, and provided further, that, in any event, any such payment
(regard less of amount) shall be made not less frequently than monthly. (c) The
Company shall not be required to issue fractional shares upon the exercise of
Warrants. Warrants may only be exercised in such multiples as are required to
permit the issuance by the Company of one or more whole shares. If one or more
Warrants shall be presented for exercise in full at the same time by the same
Registered Holder, the number of whole shares which shall be issuable upon such
exercise thereof shall be computed on the basis of the aggregate number of
shares purchasable on exercise of the Warrants so presented. If any fraction
of a share would, except for the provisions provided herein, be issuable on the
exercise of any Warrant (or specified portion thereof), the Company shall pay
an amount in cash equal to such fraction multiplied by the then current market
value of a share of Common Stock, determined as follows: (1) If the Common
Stock is listed or admitted to unlisted trading privileges on the NYSE or the
AMEX or is traded on the Nasdaq/NM, the current market value of a share of
Common Stock shall be the closing sale price of the Common Stock at the end of
the regular trading session on the last business day prior to the date of
exercise of the Warrants on whichever of such exchanges or Nasdaq/NM had the
highest average daily trading volume for the Common Stock on such day; or
(2) If the Common Stock is not listed or admitted to unlisted trading
privileges on either the NYSE or the AMEX and is not traded on Nasdaq/NM, but
is quoted or reported on Nasdaq, the current market value of a share of Common
Stock shall be the average of the last reported closing bid and asked prices
(or the last sale price, if then reported by Nasdaq) of the Common Stock at the
end of the regular trading session on the last business day prior to the date
of exercise of the Warrants as quoted or reported on Nasdaq, as the case may
be; or (3) If the Common Stock is not listed or admitted to unlisted trading
privileges on either of the NYSE or the AMEX, and is not traded on Nasdaq/NM or
quoted or reported on Nasdaq, but is listed or admitted to unlisted trading
privileges on the BSE or other national securities exchange (other than the
NYSE or the AMEX), the current market value of a share of Common Stock shall be
the closing sale price of the Common Stock at the end of the regular trading
session on the last business day prior to the date of exercise of the Warrants
on whichever of such exchanges has the highest average daily trading volume for
the Common Stock on such day; or (4) If the Common Stock is not listed or
admitted to unlisted trading privileges on any national securities exchange, or
listed for trading on Nasdaq/NM or quoted or reported on Nasdaq, but is traded
in the over-the-counter market, the current market value of a share of Common
Stock shall be the average of the last reported bid and asked prices of the
Common Stock reported by the National Quotation Bureau, Inc. on the last
business day prior to the date of exercise of the Warrants; or (5) If the
Common Stock is not listed or admitted to unlisted trading privileges on any
national securities exchange, or listed for trading on Nasdaq/NM or quoted or
reported on Nasdaq, and bid and asked prices of the Common Stock are not
reported by the National Quotation Bureau, Inc., the current market value of a
share of Common Stock shall be an amount, not less than the book value thereof
as of the end of the most recently completed fiscal quarter of the Company
ending prior to the date of exercise, determined in accordance with generally
accepted accounting principles, consistently applied. SECTION 5. Reservation of
Shares; Listing; Payment of Taxes; etc. (a) The Company covenants that it will
at all times reserve and keep available out of its authorized Common Stock,
solely for the purpose of issue upon exercise of Warrants, such number of
shares of Common Stock as shall then be issuable upon the exercise of all
outstanding Warrants. The Company covenants that all shares of Common Stock
which shall be issuable upon exercise of the Warrants shall, at the time of
delivery thereof, be duly and validly issued and fully paid and nonassessable
and free from all preemptive or similar rights, taxes, liens and charges with
respect to the issue thereof, and that upon issuance such shares shall be
listed on each securities exchange, if any, on which the other shares of
outstanding Common Stock of the Company are then listed. (b) The Company
covenants that if any securities to be reserved for the purpose of exercise of
Warrants hereunder require registration with, or approval of, any governmental
authority under any federal securities law before such securities may be
validly issued or delivered upon such exercise, then the Company will file a
registration statement under the federal securities laws or a post effective
amendment, use its best efforts to cause the same to become effective and use
its best efforts to keep such registration statement current while any of the
Warrants are outstanding and deliver a prospectus which complies with Section
10(a)(3) of the Securities Act of 1933, as amended, (the Act), to the
Registered Holder exercising the Warrant (except, if in the opinion of counsel
to the Company, such registration is not required under the federal securities
law or if the Company receives a letter from the staff of the Securities and
Exchange Commission (the Commission) stating that it would not take any
enforcement action if such registration is not effected). The Company will
use best efforts to obtain appropriate approvals or registrations under state
blue sky securities laws. With respect to any such securities, however,
Warrants may not be exercised by, or shares of Common Stock issued to, any
Registered Holder in any state in which such exercise would be unlawful.
(c) The Company shall pay all documentary, stamp or similar taxes and other
governmental charges that may be imposed with respect to the issuance of
Warrants, or the issuance or delivery of any shares of Common Stock upon
exercise of the Warrants; provided, however, that if shares of Common Stock are
to be delivered in a name other than the name of the Registered Holder of the
Warrant Certificate representing any Warrant being exercised, then no such
delivery shall be made unless the person requesting the same has paid to the
Warrant Agent the amount of transfer taxes or charges incident thereto, if any.
(d) The Warrant Agent is hereby irrevocably authorized as the Transfer Agent to
requisition from time to time certificates representing shares of Common Stock
or other securities required upon exercise of the Warrants, and the Company
will comply with all such requisitions.
SECTION 6. Exchange and Registration of Transfer.
(a) Warrant Certificates may be exchanged for other Warrant Certificates
representing an equal aggregate number of Warrants or may be transferred in
whole or in part. Warrant Certificates to be so exchanged shall be surrendered
to the Warrant Agent at its Corporate Office, and the Company shall execute and
the Warrant Agent shall countersign, issue and deliver in exchange therefor the
Warrant Certificate or Certificates which the Registered Holder making the
exchange or other trading market shall be entitled to receive.
(b) The Warrant Agent shall keep, at such office, books in which, subject to
such reasonable regulations as it may prescribe, it shall register Warrant
Certificates and the transfer thereof. Upon due presentment for registration
of transfer of any Warrant Certificate at such office, the Company shall
execute and the Warrant Agent shall issue and deliver to the transferee or
transferees a new Warrant Certificate or Certificates representing an equal
aggregate number of Warrants.
(c) With respect to any Warrant Certificates presented for registration or
transfer, or for exchange or exercise, the subscription or exercise form, as
the case may be, on the reverse thereof shall be duly endorsed or be
accompanied by a written instrument of instruments or transfer and
subscription, in form satisfactory to the Company and the Warrant Agent, duly
executed by the Registered Holder thereof or his attorney duly authorized in
writing.
(d) No service charge shall be made for any exchange or registration of
transfer of Warrant Certificates. However, the Company may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith.
(e) All Warrant Certificates surrendered for exercise or for exchange shall be
promptly canceled by the Warrant Agent.
(f) Prior to due presentment for registration or transfer thereof, the Company
and the Warrant Agent may deem and treat the Registered Holder of any Warrant
Certificate as the absolute owner thereof of each Warrant represented thereby
(notwithstanding any notations of ownership or writing thereon made by anyone
other than the Company or the Warrant Agent) for all purposes and shall not be
affected by any notice to the contrary.
SECTION 7. Loss or Mutilation. Upon receipt by the Company and the Warrant
Agent of evidence satisfactory to them of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate and (in the case of loss,
theft or destruction) of indemnity satisfactory to them, and (in case of
mutilation) upon surrender and cancellation thereof, the Company shall execute
and the Warrant Agent shall countersign and deliver in lieu thereof a new
Warrant Certificate representing an equal aggregate number of Warrants.
Applicants for a substitute Warrant Certificate shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Warrant Agent may prescribe.
SECTION 8. Adjustment of Purchase Price and Number of Shares of Common Stock
Deliverable.
(a) (i) Except as hereinafter provided, in the event the Company shall, at any
time or from time to time after the date hereof, issue any shares of Common
Stock for a consideration per share less than the Fair Market Value (as
defined in Section 8(g)) or issue any shares of Common Stock as a stock
dividend to the holders of Common Stock, or subdivide or combine the
outstanding shares of Common Stock into a greater or lesser number of shares
(any such issuance, subdivision or combination being herein called a Change of
Shares), then, and thereafter upon each further Change of Shares, the Purchase
Price for the Warrants (whether or not the same shall be issued and
outstanding) in effect immediately prior to such Change of Shares shall be
changed to a price (including any applicable fraction of a cent to the nearest
cent) determined by dividing (i) the sum of (a) the total number of shares of
Common Stock outstanding immediately prior to such Change of Shares, multiplied
by the Purchse Price in effect immediately prior to such Change of Shares and
(b) the consideration, if any, received by the Company upon such sale,
issuance, subdivision or combination, by (ii) the total number of shares of
Common Stock outstanding immediately after such Change of Shares; provided,
however, that in no event shall the Purchase Price be adjusted pursuant to this
computation to an amount in excess of the Purchase Price in effect immediately
prior to such computation, except in the case of a combination of outstanding
shares of Common Stock. For the purposes of any adjustment to be made in
accordance with this Section 8(a), the following provisions shall be
applicable:
(A) In case of the issuance or sale of shares of Common Stock (or of
other securities deemed hereunder to involve the issuance or sale of shares of
Common Stock) for a consideration part or all of which shall be cash, the
amount of the cash portion of the consideration therefor deemed to have been
received by the Company shall be (i) the subscription price, if shares of
Common Stock are offered by the Company for subscription, or (ii) the public
offering price (before deducting therefrom any compensation paid or discount
allowed in the sale, underwriting or purchase thereof by underwriters or
dealers or others performing similar services, or any expenses incurred in
connection therewith), if such securities are sold to underwriters or dealers
for public offering without a subscription offering, or (iii) the gross amount
of cash actually received by the Company for such securities, in any other
case, in each case, without deduction for any expenses incurred by the Company
in connection with such transaction.
(B) In case of the issuance or sale (other than as a dividend or
other distribution on any stock of the Company) of shares of Common Stock (or
of other securities deemed hereunder to involve the issuance or sale of shares
of Common Stock) for a consideration part or all of which shall be other than
cash, the amount of the consideration therefor other than cash deemed to have
been received by the Company shall be the value of such consideration as
determined in good faith by the Board of Directors of the Company on the basis
of a record of values of similar property or services.
(C) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been issued
immediately after the opening of business on the day following the record date
for the determination of shareholders entitled to receive such dividend or
other distribution and shall be deemed to have been issued without
consideration.
(D) The reclassification of securities of the Company other than
shares of Common Stock into securities including shares of Common Stock shall
be deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on the
date fixed for the determination of security holders entitled to receive such
shares, and the value of the consideration allocable to such shares of Common
Stock shall be determined as provided in subsection (B) of this Section 8(a).
(E) The number of shares of Common Stock at any time outstanding shall be
deemed to include the aggregate maximum number of shares issuable (subject to
readjustment upon the actual issuance thereof) upon the exercise of options,
rights or warrants and upon the conversion or exchange of convertible or
exchangeable securities.
(ii) Upon each adjustment of the Purchase Price pursuant to this Section 8, the
number of shares of Common Stock purchasable upon the exercise of each Warrant
shall be the number derived by multiplying the number of shares of Common Stock
purchasable immediately prior to such adjustment by the Purchase Price in
effect prior to such adjustment and dividing the product so obtained by the
applicable adjusted Purchase Price.
(b) In case the Company shall at any time after the date hereof issue options,
rights or warrants to subscribe for shares of Common Stock, or issue any
securities convertible into or exchangeable for shares of Common Stock, for a
consideration per share (determined as provided in Section 8(a)(i) and as
provided below) less than the Fair Market Value in effect immediately prior to
the issuance of such options, rights or warrants, or such convertible or
exchangeable securities, or without consideration (including the issuance of
any such securities by way of dividend or other distribution), the Purchase
Price for the Warrants (whether or not the same shall be issued and
outstanding) in effect immediately prior to the issuance of such options,
rights or warrants, or such convertible or exchangeable securities, as the case
may be, shall be reduced to a price determined by making the computation in
accordance with the provisions of Section 8(a)(i) hereof, provided that:
(A) The aggregate maximum number of shares of Common Stock, as the case may
be, issuable or that may become issuable under such options, rights or warrants
(assuming exercise in full even if not then currently exercisable or currently
exercisable in full) shall be deemed to be issued and outstanding at the time
such options, rights or warrants were issued, for a consideration equal to the
minimum purchase price per share provided for in such options, rights or
warrants at the time of issuance, plus the consideration, if any, received by
the Company for such options, rights or warrants; provided, however, that upon
the expiration or other termination of such options, rights or warrants, if any
thereof shall not have been exercised, the number of shares of Common Stock
deemed to be issued and outstanding pursuant to this subsection (A) (and for
the purposes of subsection (E) of Section 8(a)(I) hereof) shall be reduced by
the number of shares as to which options, warrants and/or rights s hall have
expired, and such number of shares shall no longer be deemed to be issued and
outstanding, and the Purchase Price then in effect shall forthwith be
readjusted and thereafter be the price that it would have been had adjustment
been made on the basis of the issuance only of the shares actually issued plus
the shares remaining issuable upon the exercise of those options, rights or
warrants as to which the exercise rights shall not have expired or terminated
unexercised.
(B) The aggregate maximum number of shares of Common Stock issuable or that
may become issuable upon conversion or exchange of any convertible or
exchangeable securities (assuming conversion or exchange in full even if not
then currently convertible or exchangeable in full) shall be deemed to be
issued and outstanding at the time of issuance of such securities, for a
consideration equal to the consideration received by the Company for such
securities, plus the minimum consideration, if any, receivable by the Company
upon the conversion or exchange thereof; provided, however, that upon the
termination of the right to convert or exchange such convertible or
exchangeable securities (whether by reason of redemption or otherwise), the
number of shares of Common Stock deemed to be issued and outstanding pursuant
to this subsection (B) (and for the purposes of subsection (E) of Section
8(a)(I) hereof) shall be reduced by the number of shares as to which the
conversion or exchange rights shal l have expired or terminated unexercised,
and such number of shares shall no longer be deemed to be issued and
outstanding, and the Purchase Price then in effect shall forthwith be
readjusted and thereafter be the price that it would have been had adjustment
been made on the basis of the issuance only of the shares actually issued plus
the shares remaining issuable upon conversion or exchange of those convertible
or exchangeable securities as to which the conversion or exchange rights shall
not have expired or terminated unexercised.
(C) If any change shall occur in the price per share provided for in any of
the options, rights or warrants referred to in subsection (A) of this Section
8(b), or in the price per share or ratio at which the securities referred to in
subsection (B) of this Section 8(b) are convertible or exchangeable, such
options, rights or warrants or conversion or exchange rights, as the case may
be, to the extent not theretofore exercise, shall be deemed to have expired or
terminated on the date when such price change became effective in respect of
shares not theretofore issued pursuant to the exercise or conversion or
exchange thereof, and the Company shall be deemed to have issued upon such date
new options, rights or warrants or convertible or exchangeable securities.
(c) In case of any reclassification or change of outstanding shares of Common
Stock issuable upon exercise of the Warrants (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 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 or change of the then outstanding
shares of Common Stock or other capital stock issuable upon exercise of the
Warrants (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 subdivision or combination)
or in case of any sale or conveyance to another corporation of the property of
the Company as an entirety or substantially as an entirety, then, as a
condition of such reclassification, change, consolidation, merger, s ale or
conveyance, the Company, or such successor or purchasing corporation, as the
case may be, shall make lawful and adequate provision whereby the Registered
Holder of each Warrant then outstanding shall have the right thereafter to
receive on exercise of such Warrant the kind and amount of securities and
property receivable upon such reclassification, change, consolidation, merger,
sale or conveyance by a holder of the number of securities issuable upon
exercise of such Warrant immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance and shall forthwith file at the
Corporate Office of the Warrant Agent a statement signed by its President or a
Vice President and by its Treasurer or an Assistant Treasurer or its Secretary
or an Assistant Secretary evidencing such provision. Such provisions shall
include provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in Section 8(a) and (b). The above
provisions of this Section 8(c) shall similarly apply to successive
reclassifications and changes of shares of Common Stock and to successive
consolidations, mergers, sales or conveyances.
(d) Irrespective of any adjustments or changes in the Purchase Price or the
number of shares of Common Stock purchasable upon exercise of the Warrants, the
Warrant Certificates theretofore and thereafter issued shall, unless the
Company shall exercise its option to issue new Warrant Certificates pursuant to
Section 2(e) hereof, continue to express the Purchase Price per share and the
number of shares purchasable thereunder as the Purchase Price per share.
(e) After each adjustment of the Purchase Price pursuant to this Section 8, the
Company will promptly prepare a certificate signed by the Chairman or
President, and by the Treasurer or an Assistant Treasurer or the Secretary or
an Assistant Secretary, of the Company setting forth: (i) the Purchase Price
as so adjusted, (ii) the number of shares of Common Stock purchasable upon
exercise of each Warrant, after such adjustment, and (iii) a brief statement of
the facts accounting for such adjustment. The Company will promptly file such
certificate with the Warrant Agent and cause a brief summary thereof to be sent
by ordinary first class mail to each Registered Holder at his last address as
it shall appear on the registry books of the Warrant Agent. No failure to mail
such notice nor any defect therein or in the mailing thereof shall affect the
validity thereof except as the Registered Holder to whom the Company failed to
mail such notice, or except as to the Registered Holder whose not ice was
defective. The affidavit of an officer of the Warrant Agent or the Secretary
or an Assistant Secretary of the Company that such notice has been mailed
shall, in the absence of fraud, be prima facie evidence of the facts stated
therein.
(f) No adjustment of the Purchase Price shall be made as a result of or in
connection with (A) the issuance of shares of Common Stock underlying the
Warrants or the securities issuable upon exercise of the Underwriters Warrants
pursuant to the Underwriters Warrant Agreement, or (B) the issuance or sale of
shares of Common Stock if the amount of said adjustment shall be less than
$.10, provided, however, that in such case, any adjustment that would otherwise
be required then to be made shall be carried forward and shall be made at the
time of and together with the next subsequent adjustment that shall amount,
together with any adjustment so carried forward, to at least $.10. In
addition, Registered Holders shall not be entitled to cash dividends paid by
the Company prior to the exercise of any Warrant or Warrants held by them.
(g) Fair Market Value shall mean the value of a share of Common Stock as
determined in accordance with the following provisions:
(1) If the Common Stock is listed or admitted to unlisted trading privileges
on the NYSE or the AMEX or is traded on the Nasdaq/NM, the Fair Market Value of
a share of Common Stock shall be equal to the average of the closing sale price
of the Common Stock during the thirty (30) trading days immediately preceding
the date of the event which requires the determination of Fair Market Value on
whichever of such exchanges or Nasdaq/NM had the total highest daily trading
volume for the Common Stock during such thirty (30) day trading period.
(2) If the Common Stock is not listed or admitted to unlisted trading
privileges on either the NYSE or the AMEX and is not traded on Nasdaq/NM, but
is quoted or reported on Nasdaq, the Fair Market Value of a share of Common
Stock shall be the average of the last reported closing bid and asked prices
(or the last sale price, if then reported on Nasdaq) of the Common Stock during
the thirty (30) trading days immediately preceding the date of event which
requires the determination of Fair Market Value.
(3) If the Common Stock is not listed or admitted to unlisted trading
privileges on either of the NYSE or the AMEX and is not traded on Nasdaq/NM or
quoted or reported on Nasdaq, but is listed or admitted to unlisted trading
privileges on the BSE or another national securities exchange (other than the
NYSE or the AMEX), the Fair Market Value of a share of Common Stock shall be
the average of the closing sale price of the Common Stock during the thirty
(30) trading days immediately preceding the date of the event which requires
the determination of Fair Market Value.
(4) If the Common Stock is not listed or admitted to unlisted trading
privileges on any national securities exchange, or listed for trading on
Nasdaq/NM or quoted or reported on Nasdaq, but is traded in the
over-the-counter market, the Fair Market Value of a share of Common Stock shall
be the average of the average of the last reported bid and asked prices of the
Common Stock reported by the National Quotation Bureau, Inc. for the thirty
(30) trading days immediately preceding the date of the event which requires
the determination of Fair Market Value.
(5) If the Common Stock is not listed or admitted to unlisted trading
privileges on any national securities exchange, or listed for trading on
Nasdaq/NM or quoted or reported on Nasdaq, and bid and asked prices of the
Common Stock are not reported by the National Quotation Bureau, Inc., the Fair
Market Value of a share of Common Stock shall be an amount, not less than the
book value thereof as of the end of the most recently completed fiscal quarter
of the company ending prior to the date requiring a determination of fair
market value, determined in accordance with general accepted accounting
principles, consistently applied. SECTION 9. Redemption. (a) Commencing on the
Initial Warrant Redemption Date, the Company may, on 30 days' prior written
notice redeem all the Warrants, other than the Warrants underlying the
Underwriter's Warrants which shall not be redeemable, at five cents ($.05) per
Warrant, provided, however, that before any such call for redemption of
Warrants can take place the closing sale price of the Common Stock as quoted on
NASDAQ or if such shares are not trading on NASDAQ then on the principal market
on which such shares shall then be trading, shall have, for each of the twenty
(20) consecutive trading days ending on the tenth (10th) day prior to the date
on which the notice contemplated by (b) and (c) below is given, equaled or
exceeded $7.50 per share (subject to adjustment in the event of any stock
splits or other similar events as provided in Section 8 hereof). (b) In case
the Company shall exercise its right to redeem all of the Warrants so
redeemable, it shall give or cause notice to such effect to be given to the
Underwriter in the same manner that notice is required to be given by the
Underwriter's Warrant Agreement. The Underwriter may, at its option, solicit
exercises of the Warrants. In the event that the Underwriter does not commence
solicitation of exercises of the Warrants within thirty (30) days of notice
from the Company, the Company may give notice of redemption to the Registered
Holders of the Warrants by mailing to such Registered Holders a notice of
redemption, first class, postage prepaid, at their last address as shall appear
on the records of the Warrant Agent. Any notice mailed in the manner provided
herein shall be conclusively presumed to have been duly given whether or not
the Registered Holder receives such notice. Not less than five business days
prior to the mailing to the Registered Holders of the Warrants of the notice of
redemption, the Company shall deliver or cause to be delivered to the
Underwriter a similar notice telephonically and confirmed in writing together
with a list of the Registered Holders (including their respective addresses and
number of Warrants beneficially owned) to whom such notice of redemption has
been or will be given.
(c) The notice of redemption shall specify (i) the redemption price, (ii) the
date fixed for redemption, which shall in no event be less than thirty (30)
days after the date of mailing of such notice, (iii) the place where the
Warrant Certificate shall be delivered and the redemption price shall be paid,
(iv) that the Underwriter is the Company's warrant solicitation agent and may
receive the commission contemplated by Section 4(b) hereof, and (v) that the
right to exercise the Warrant shall terminate at 5:00 p.m. (New York time) on
the business day immediately preceding the date fixed for redemption. The date
fixed for the redemption of the Warrants shall be the Redemption Date. No
failure to mail such notice nor any defect therein or in the mailing thereof
shall affect the validity of the proceedings for such redemption except as to a
holder (a) to whom notice was not mailed or (b) whose notice was defective. An
affidavit of the Warrant Agent or the Secretary or Assistant Secretar y of the
Company that notice of redemption has been mailed shall, in the absence of
fraud, be prima facie evidence of the facts stated therein.
(d) Any right to exercise a Warrant shall terminate at 5:00 p.m. (New York
time) on the business day immediately preceding the Redemption Date. The
redemption price payable to the Registered Holders shall be mailed to such
persons at their addresses of record.
(e) The Company shall indemnify the Underwriter and each person, if any, who
controls the Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act against all loss, claim, damage, expense or liability
(including all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may become subject
under the Act, the Exchange Act or otherwise, arising from the registration
statement or prospectus referred to in Section 5(b) hereof to the same extent
and with the same effect (including the provisions regarding contribution) as
the provisions pursuant to which the Company has agreed to indemnify the
Underwriter contained in Section 7 of the Underwriting Agreement.
(f) Five business days prior to the Redemption Date, the Company shall furnish
to the Underwriter (i) an opinion of counsel to the Company, dated such date
and addressed to the Underwriter, and (ii) a cold comfort letter dated such
date addressed to the Underwriter, signed by the independent public accountants
who have issued a report on the Company's financial statements included in such
registration statement, in each case covering substantially the same matters
with respect to such registration statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities.
(g) The Company shall as soon as practicable after the Redemption Date, and in
any event within 15 months thereafter, make generally available to its
security holders (within the meaning of Rule 158 under the Act) an earnings
statement (which need not be audited) complying with Section 11(a) of the Act
and covering a period of at least 12 consecutive months beginning after the
Redemption Date.
(h) The Company shall deliver within five business days prior to the Redemption
Date copies of all correspondence between the Commission and the Company, its
counsel or auditors and all memoranda relating to discussions with the
Commission or its staff with respect to such registration statement and permit
the Underwriter to do such investigation, upon reasonable advance notice, with
respect to information contained in or omitted from the registration statement
as it deems reasonably necessary to comply with applicable securities laws or
rules of the NASD. Such investigation shall include access to books, records
and properties and opportunities to discuss the business of the Company with
its officers and independent auditors, all to such reasonable extent and at
such reasonable times and as often as the Underwriter shall reasonably request.
SECTION 10. Concerning the Warrant Agent.
(a) The Warrant Agent acts hereunder as agent and in a ministerial capacity for
the Company and the Underwriter, and its duties shall be determined solely by
the provisions hereof. The Warrant Agent shall not, by issuing and delivering
Warrant Certificates or by any other act hereunder, be deemed to make any
representations as to the validity or value or authorization of the Warrant
Certificates or the Warrants represented thereby or of any securities or other
property delivered upon exercise of any Warrant or whether any stock issued
upon exercise of any Warrant is fully paid and nonassessable.
(b) The Warrant Agent shall not at any time be under any duty or responsibility
to any holder of Warrant Certificates to make or cause to be made any
adjustment of the Purchase Price provided in this Agreement, or to determine
whether any fact exists which may require any such adjustment, or with respect
to the nature or extent of any such adjustment, when made, or with respect to
the method employed in making the same. It shall not (i) be liable for any
recital or statement of fact contained herein or for any action taken, suffered
or omitted by it in reliance on any Warrant Certificate or other document or
instrument believed by it in good faith to be genuine and to have been signed
or presented by the proper party or parties, (ii) be responsible for any
failure on the part of the Company to comply with any of its covenants and
obligations contained in this Agreement or in any Warrant Certificate, or (iii)
be liable for any act or omission in connection with this Agreement except fo r
its own gross negligence or willful misconduct.
(c) The Warrant Agent may at any time consult with counsel satisfactory to it
(who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken, suffered or omitted by it in good faith in
accordance with the opinion or advice of such counsel.
(d) Any notice, statement, instruction, request, direction, order or demand of
the Company shall be sufficiently evidenced by an instrument signed by the
Chairman of the Board of Directors, President or any Vice President (unless
other evidence in respect thereof is herein specifically prescribed). The
Warrant Agent shall not be liable for any action taken, suffered or omitted by
it in accordance with such notice, statement, instruction, request, direction,
order or demand.
(e) The Company agrees to pay the Warrant Agent reasonable compensation for its
services hereunder and to reimburse it for its reasonable expenses hereunder;
the Company further agrees to indemnify the Warrant Agent and save it harmless
against any and all losses, expenses and liabilities, including judgments,
costs and counsel fees, for anything done or omitted by the Warrant Agent in
the execution of its duties and powers hereunder except losses, expenses and
liabilities arising as a result of the Warrant Agents gross negligence or
willful misconduct.
(f) The Warrant Agent may resign its duties and be discharged from all further
duties and liabilities hereunder (except liabilities arising as a result of the
Warrant Agents own gross negligence or willful misconduct), after giving 30
days prior written notice to the Company. At least 15 days prior to the date
such resignation is to become effective, the Warrant Agent shall cause a copy
of such notice of resignation to be mailed to the Registered Holder of each
Warrant Certificate at the Company's expense. Upon such resignation the
Company shall appoint in writing a new warrant agent. If the Company shall
fail to make such appointment within a period of 30 days after it has been
notified in writing of such resignation by the resigning Warrant Agent, then
the Registered Holder of any Warrant Certificate may apply to any court of
competent jurisdiction for the appointment of a new warrant agent. Any new
warrant agent, whether appointed by the Company or by such a court, shall be a
bank or trust company having a capital and surplus, as shown by its last
published report to its stockholders, of not less than $10,000,000 or a stock
transfer company doing business in New York. After acceptance in writing of
such appointment by the new warrant agent is received by the Company, such new
warrant agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the warrant
agent, without any further assurance, conveyance, act or deed; but if for any
reason it shall be necessary or expedient to execute and deliver any further
assurance, conveyance, act or deed, the same shall be done at the expense of
the Company and shall be legally and validly executed and delivered by the
resigning Warrant Agent. Not later than the effective date of any such
appointment the Company shall file notice thereof with the resigning Warrant
Agent and shall forthwith cause a copy of such notice to be mailed to the
Registered Holder of each Warrant Certificate. (g) Any corporation into which
the Warrant Agent or any new warrant agent may be converted or merged, any
corporation resulting from any consolidation to which the Warrant Agent or any
new warrant agent shall be a party, or any corporation succeeding to the
corporate trust business of the Warrant Agent or any new warrant agent shall be
a successor warrant agent under this Agreement without any further act,
provided that such corporation is eligible for appointment as successor to the
Warrant Agent under the provisions of the preceding paragraph. Any such
successor warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed to the Company and to the Registered Holders of each
Warrant Certificate.
(h) The Warrant Agent, its subsidiaries and affiliates, and any of its or their
officers or directors, may buy and hold or sell Warrants or other securities of
the Company and otherwise deal with the Company in the same manner and to the
same extent and with like effect as though it were not Warrant Agent. Nothing
herein shall preclude the Warrant Agent from acting in any other capacity for
the Company or for any other legal entity.
(i) The Warrant Agent shall retain for a period of two years from the date of
exercise any Warrant Certificate received by it upon such exercise.
SECTION 11. Modification of Agreement.
The Warrant Agent and the Company may by supplemental agreement make any
changes or corrections in this Agreement (i) that they shall deem appropriate
to cure any ambiguity or to correct any defective or inconsistent provision or
manifest mistake or error herein contained; or (ii) that they may deem
necessary or desirable and which shall not adversely affect the interests of
the holders of Warrant Certificates; provided, however, that this Agreement
shall not otherwise be modified, supplemented or altered in any respect except
with the consent in writing of the Registered Holders representing not less
that 66-2/3% of the Warrants then outstanding (including, for this purpose
Warrants issuable to the Underwriter pursuant to the Underwriters Warrant
Agreement, whether or not then outstanding); provided, further, that no change
in the number or nature of the securities purchasable upon the exercise of any
Warrant, or to increase the Purchase Price therefor, shall be made without the
consent in writing of the Registered Holder of the Warrant Certificate, other
than such changes as are specifically prescribed by this Agreement as
originally executed. In addition, this Agreement may not be modified, amended
or supplemented without the prior written consent of the Underwriter, other
than to cure any ambiguity or to correct any provision which is inconsistent
with any other provision of this Agreement or to make any such change that is
necessary or desirable and which shall not adversely affect the interests of
the Underwriter and the Underwriters and except as may be required by law.
SECTION 12. Notices.
All notices, requests, consents and other communications hereunder shall
be in writing and shall be deemed to have been made when delivered or mailed
first-class postage prepaid, or delivered to a telegraph office for
transmission if to the Registered Holder of a Warrant Certificate, at the
address of such holder as shown on the registry books maintained by the Warrant
Agent; if to the Company at 0000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000,
Attention: Xx. Xxx Xxxxx, Chief Executive Officer, or at such other address as
may have been furnished to the Warrant Agent in writing by the company; and if
to the Warrant Agent, at its Corporate Office. Copies of any notice delivered
pursuant to this Agreement shall be delivered to Xxxxxx Xxxxx at Xxxxxx Xxxxx
Capital Corp., 00 Xxxxxxx Xxxx, Xxxxxx Xxxx, Xxx Xxxx 00000, Attention: Mr.
Xxxxxxx Xxxxxx, President, or at such other address as may have been furnished
to the Company and the Warrant Agent in writing.
SECTION 13. Applicable Law
This Agreement shall be governed by and construed in accordance with the laws
of the State of New York without giving effect to conflicts of laws.
SECTION 14. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
Company, the Warrant Agent and their respective successors and assigns and the
holders from time to time of Warrant Certificates or any of them. Except as
hereinafter stated, nothing in this Agreement is intended or shall be construed
to confer upon any other person any right, remedy or claim or to impose upon
any other person any duty, liability or obligation. The Underwriter is and
shall at all times irrevocably be deemed to be, third-party beneficiaries of
this Agreement, with full power, authority and standing to enforce the rights
granted to it hereunder.
SECTION 15. Counterparts. This Agreement may be executed in several
counterparts, which taken together shall constitute a single document. IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the first date first above written.
[SEAL]
AMERICAN STOCK TRANSFER AND
TRUST COMPANY, as Warrant Agent
By:
XETAL, INC.
By:
Xx. Xxx Xxxxx, Chief Executive Officer
By:
Xxxxx Xxxxx, President
ATTEST:
_________________________
Xx. Xxx Xxxxx, Secretary
EXHIBIT A
No. W VOID AFTER ___________, 2003
WARRANTS
WARRANT CERTIFICATE TO
PURCHASE ONE SHARE OF COMMON STOCK
XETAL, INC.
CUSIP
THIS CERTIFIES THAT, FOR VALUE RECEIVED
or registered assigns (the Registered Holder) is the owner of the number of
Warrants (the Warrants) specified above. Each Warrant initially entitles the
Registered Holder to purchase, subject to the terms and conditions set forth in
this Certificate and the Warrant Agreement (as hereinafter defined), one fully
paid and nonassessable share of Common Stock, $.001 par value, of XETAL, INC.,
a Utah corporation (the Company), at any time between _____________, 1999,
(the Initial Warrant Exercise Date), and the Expiration Date (as hereinafter
defined) upon the presentation and surrender of this Warrant Certificate with
the Subscription Form on the reverse hereof duly executed, at the corporate
office of American Stock Transfer and Trust Company, 00 Xxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, as Warrant Agent, or its successor (the Warrant Agent),
accompanied by payment of $5.00 subject to adjustment (the Purchase Price),
in lawful money of the United States of America in cash or by certified or bank
check made payable to the Warrant Agent for the account of the Company.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the Warrant Agreement), dated
_______________, 1998, by and between the Company and the Warrant Agent.
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional interests will be issued. In the case of
the exercise of less than all of the Warrants represented hereby, the Company
shall cancel this Warrant Certificate upon the surrender hereof and shall
execute and deliver a new Warrant Certificate or Warrant Certificates of like
tenor, which the Warrant Agent shall countersign, for the balance of such
Warrants.
The term Expiration Date shall mean 5:00 p.m. (New York time) on
_______________, 2003. If such date shall in the State of New York be a
holiday or a day on which the banks are authorized to close, then the
Expiration Date shall mean 5:00 p.m. (New York time) the next following day
which in the State of New York is not a holiday or a day on which banks are
authorized to close. The Company shall not extend the Expiration Date nor
reduce the Purchase Price. The Company shall not be obligated to deliver any
securities pursuant to the exercise of this Warrant unless a registration
statement under the Securities Act of 1933, as amended (the Act), with
respect to such securities is effective or an exemption thereunder is
available. The Company has covenanted and agreed that it will file a
registration statement under the Federal securities laws, use its best efforts
to cause the same to become effective, use its best efforts to keep such
registration statement current, if required under the Act, while any of the
Warrants are outstanding, and deliver a prospectus which complies with Section
10(a)(3) of the Act to the Registered Holder exercising this Warrant. This
Warrant shall not be exercisable by a Registered Holder in any state where such
exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the surrender hereof by
the Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to
represent such number of Warrants as shall be designated by such Registered
Holder at the time of such surrender. Upon due presentment and payment of any
tax or other charge imposed in connection therewith or incident thereto, for
registration of transfer of this Warrant Certificate at such office, a new
Warrant Certificate or Warrant Certificates representing an equal aggregate
number of Warrants will be issued to the transferee in exchange therefor,
subject to the limitations provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.
Subject to the provisions of the Warrant Agreement, this Warrant may be
redeemed at the option of the Company, at a redemption price of $.05 per
Warrant, at any time commencing two years after the Initial Warrant Exercise
Date, provided that (i) the closing sale price for the Common Stock as reported
by the National Association of Securities Dealers Automated Quotation System
(Nasdaq) or the National Quotation Bureau, Inc., if the Common Stock is then
traded in the over-the-counter market or (ii) the closing sale price, if the
Common Stock is then traded on Nasdaq/NM or a national securities exchange,
shall have equaled or exceeded for each of the twenty (20) consecutive trading
days ending on the tenth (10) day prior to the Notice of Redemption, as defined
below, $7.50 per share (subject to adjustment in the event of any stock splits
or other similar events). Notice of redemption (the Notice of Redemption)
shall be given not later than the thirtieth day before the date fixed for
redemption, all as provided in the Warrant Agreement. On and after the close
of business on the day immediately preceding the date fixed for redemption, the
Registered Holder shall have no rights with respect to the Warrants except to
receive the $.05 per Warrant upon surrender of this Warrant Certificate.
Under certain circumstances, the Underwriter shall be entitled to
receive an aggregate of seven percent (7%) of the Purchase Price of the
Warrants represented hereby in accordance with Section 4(b) of the Warrant
Agreement. Prior to due presentment for registration of transfer hereof, the
Company and the Warrant Agent may deem and treat the Registered Holder as the
absolute owner hereof and of each Warrant represented hereby (notwithstanding
any notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary, except as provided in the
Warrant Agreement.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to
conflicts of laws.
This Warrant Certificate is not valid unless countersigned by the Warrant
Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
executed, manually or in facsimile by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.
Dated: _____________, 1998
[SEAL] XETAL, INC.
By:
Xx. Xxx Xxxxx, Chief Executive Officer
By:_______________________________
Xx. Xxx Xxxxx, Secretary
COUNTERSIGNED:
AMERICAN STOCK TRANSFER
AND TRUST COMPANY
as Warrant Agent
By:
Name:
Title:
SUBSCRIPTION FORM
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to exercise
Warrants represented by this Warrant Certificate, and to purchase the
securities issuable upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in name of
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
(please print or type name and address)
and be delivered to
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
IMPORTANT: PLEASE COMPLETE THE FOLLOWING:
1. The exercise of this Warrant was
solicited by Worthington Capital Group, Inc. ______
2. The exercise of this Warrant was not
solicited.
Dated:
Address
Social Security or Taxpayer
Identification Number
Signature Guaranteed
ASSIGNMENT
To Be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, ,hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER
(please print or type name and address)
of the Warrants represented by this
Warrant Certificate, and hereby irrevocably constitutes and appoints Attorney
to transfer this Warrant Certificate on the of the Company, with full power of
substitution in the premises.
Dated: X
Signature Guaranteed
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND MUST BE
GUARANTEED BY A COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, PACIFIC STOCK EXCHANGE, MIDWEST STOCK EXCHANGE OR
BOSTON STOCK EXCHANGE.
XETAL, INC.
AND
AMERICAN STOCK TRANSFER
AND TRUST COMPANY
WARRANT AGREEMENT
Dated as of _____________________, 1998
EXHIBIT 10(ix)
Agreement Canceling Underwriter's Warrants
A G R E E M E N T
AGREEMENT made this 18th day of August, 1998 by and between Xxxxxx Xxxxx
Capital Corp. (formerly Worthington Capital Group, Inc.) (Xxxxxx Xxxxx) and
Xetal, Inc. (the Company).
WHEREAS, on October 1, 1996 Warrants (the Warrants) were issued by the
Company to Xxxxxx Xxxxx entitling the holder thereof to purchase 250,000 shares
of the Companys common stock; and
WHEREAS, as of the date hereof Xxxxxx xxxxx and the Company are desirous of
cancelling the Warrants in their entirety;
NOW THEREFORE, in consideration of the mutual agreements herein, the
sufficiency of which is hereby acknowledged, the parties hereto agree as
follow:
1. As of the date hereof the Warrants are cancelled in their entirety.
2. This Agreement has been approved by unanimous consent of the respective
Board of Directors of each of Xxxxxx Xxxxx and the Company.
This Agreement may be executed in multiple counterparts and on facsimile paper
and by facsimile transmission as necessary. When each of the parties has
signed and delivered at least one such counterpart, each counterpart will be
deemed an original and, when taken together with the other signed
counterpart(s), shall constitute one fully executed copy of this Agreement,
which shall be binding upon and effective as to the parties according to its
terms.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals the day
and year first above written.
XXXXXX XXXXX CAPITAL CORP.
By:
Xxxxxxx Xxxxxx, President
XETAL, INC.
By:
Xxx Xxxxx,
Chief Executive Officer
TERMINATION AGREEMENT
THIS AGREEMENT made and entered into this day of September, 1998 by,
between and among XETAL, INC., a corporation organized under the State of Utah
with offices at 0000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxx Xxxx 00000 hereinafter
called "Xetal" and XXXXXX XXXXX CAPITAL CO., INC. a corporation organized under
the laws of New York having its principal offices at 00 Xxxxxxx Xxxx, Xxxxxx
Xxxx, Xxx Xxxx 00000 hereinafter referred to as "Xxxxxx."
W I T N E S S E T H
WHEREAS the parties have hereunto previously entered into a consulting
agreement wherein Xxxxxx was to provide financial and other consulting services
for Xetal and the parties now desire to terminate such agreement;
NOW THEREFORE in consideration of the mutual covenants and agreements
hereinafter set forth and for other good and valuable considerations, the
parties mutually agree as follows:
1. Termination of Agreement. The parties hereby mutually agree to
terminate the Consulting Agreement previously entered into between them and
hereby declare said agreement to be null and void and of no further effect..
2. No Liability. The parties hereby mutually agree that no party
shall be liable to the other party for any debt, obligation, fee or performance
of any service arising from said Agreement.
IN WITNESS WHEREOF the parties have set their hands and seals the year and date
first above written.
XETAL, INC.
By_______________________
XXXXXX XXXXX CAPITAL CO., INC.
By________________________
EXHIBIT 23(ii)
Consent of Xxxxxx & Xxxxxx
INDEPENDENT AUDITORS' CONSENT
To: The Board of Directors
And Stockholders
Xetal, Inc. and Subsidiaries
We consent to the reference to our firm under the caption "Experts" and the
use of our report dated December 12, 1997 with respect to the consolidated
financial statements of Xetal, Inc. and subsidiaries included in the Prospectus
of Xetal, Inc. that is made part of the Registration Statement on Form SB-2
filed in behalf of Xetal, Inc. with the Securities and Exchange Commission.
/s/ Xxxxxx & Xxxxxx
Xxxxxx & Xxxxxx
Certified Public Accountants
Xxx Hills, New York
September 24, 1998
