EXHIBIT 10.24
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THERMOENERGY CORPORATION
AND
NATIONAL SECURITIES CORPORATION
REPRESENTATIVE'S
WARRANT AGREEMENT
Dated as of August , 1997
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REPRESENTATIVE'S WARRANT AGREEMENT dated as of August ___,
1997, between THERMOENERGY CORPORATION, an Arkansas corporation
(the "Company"), and NATIONAL SECURITIES CORPORATION and its
assignees or designees (each hereinafter referred to variously as
a "Holder" or "Representative").
W I T N E S S E T H :
WHEREAS, the Representative has agreed pursuant to the
underwriting agreement (the "Underwriting Agreement") dated as of
the date hereof and entered into between the Company and the
Representative, to act as the representative of the several
underwriters listed therein (the "Underwriters") in connection
with the Company's proposed public offering (the "Public
Offering") of 1,100,000 shares of Common Stock (as hereinafter
defined) at a public offering price of $________ per share,
1,100,000 Series 1 redeemable warrant (the "Series 1 Warrants)
and 1,100,000 Series 2 redeemable warrant (the "Series 2
Warrants") (the Series 1 Warrants and the Series 2 Warrants being
sometimes referred to herein as the "Warrants").
WHEREAS, pursuant to the Underwriting Agreement, the Company
proposes to issue warrants (the "Representative's Warrants") to
the Representative to purchase up to an aggregate of 110,000
shares of Common Stock of the Company and/or 220,000 Warrants.
WHEREAS, the Representative's Warrants to be issued pursuant
to this Agreement will be issued on the Closing Date (as such
term is defined in the Underwriting Agreement) by the Company to
the Representative in consideration for, and as part of the
Underwriters' compensation in connection with, the Representative
acting as the representative pursuant to the Underwriting
Agreement.
NOW, THEREFORE, in consideration of the premises, the
payment by the Representative to the Company of an aggregate of
eleven dollars ($11.00), 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.
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The Representative is hereby collectively granted the right
to purchase, at any time from August , 1998 (one year from the
Closing Date until 5:30 p.m., New York time, on August , 2002
(5 years from the Closing Date), at which time the
Representative's Warrants expire, up to an aggregate of 160,000
shares of Common Stock, $0.01 par value per share (the "Common
Stock"), and/or 160,000 Warrants at the Exercise Price (as
defined in Section 8 hereof). One Warrant is exercisable to
purchase one additional share of Common Stock at an initial
exercise of $____ [150% of the initial public offering price per
share] from August , 1998 [one year from the Effective Date of
the Registration Statement] until 5:30 p.m. New York time on
August , 2002 [5 years from the Closing Date of the
Registration Statement], at which time the Warrants shall expire.
Except as set forth herein, the shares of Common Stock and the
Warrants issuable upon exercise of the Representative's Warrants
are in all respects identical to the shares of Common Stock and
the Warrants being purchased by the Underwriters for resale to
the public pursuant to the terms and provisions of the
Underwriting Agreement. The shares of Common Stock and the
Warrants issuable upon exercise of the Representative's Warrants
are sometimes hereinafter referred to collectively as the
"Securities."
2. Representative's Warrant Certificates.
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The Representative's warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this
Agreement shall be in the form set forth in Exhibit A, attached
hereto and made a part hereof, with such appropriate insertions,
omissions, substitutions, and other variations as required or
permitted by this Agreement.
3. Registration of Warrant.
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The Representative's Warrants shall be numbered and shall be
registered on the books of the Company when issued.
4. Exercise of Representative's Warrant.
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4.1 The Representative's Warrants initially are
exercisable at an aggregate Exercise Price (subject to adjustment
as provided in Section 11 hereof) per share of Common Stock and
Warrant as set forth in Section 8 hereof payable by certified or
official bank check in New York Clearing House funds. Upon
surrender of a Representative's Warrant Certificate with the
annexed Form of Election to Purchase duly executed, together with
payment of the Exercise Price for the Securities purchased at the
Company's principal offices in Indianapolis, Indiana, the
registered holder of a Representative's Warrant Certificate
("Holder" or "Holders") shall be entitled to receive a
certificate or certificates for the shares of Common Stock and/or
Warrants so purchased. The purchase rights represented by each
Representative's Warrant Certificate are exercisable at the
option of the Holder thereof, in whole or in part (but not as to
fractional shares of Common Stock and/or Warrants underlying the
Representative's Warrants). Representative's Warrants may be
exercised to purchase all or part of the shares of Common Stock
together with an equal or unequal number of the Warrants
represented thereby. If the Company redeems all of the Warrants
sold in the Public Offering, then thereafter the Representative's
Warrants may not be exercised to purchase any Warrants unless
such exercise is accompanied by the simultaneous exercise of all
such Warrants being purchased. In the case of the purchase of
less than all of the shares of Common Stock and/or Warrants
purchasable under any Representative's Warrant Certificate, the
Company shall cancel said Representative's Warrant Certificate
upon the surrender thereof and shall execute and deliver a new
Representative's Warrant Certificate of like tenor for the
balance of the shares of Common Stock and/or Warrants purchasable
thereunder.
4.2 In addition to the method of payment set forth in
Section 4.1 and in lieu of any cash payment required thereunder,
the Warrantholder shall have the right at any time and from time
to time to exercise the Warrant(s) in full or in part by
surrendering the Warrant Certificate in the manner specified
herein in exchange for the number of shares of Common Stock equal
to the quotient derived from dividing the numerator (which shall
be an amount equal to the difference between: (i) the number of
shares of Common Stock or other Securities as to which the
Warrant is being exercised multiplied by the per share Market
Price, and (ii) the number of shares of Common Stock or other
Securities as to which the Warrant is being exercised multiplied
by the per share Market Price, and (ii) the number of shares of
Common Stock or other Securities as to which the Warrant is being
exercised multiplied by the Exercise Price) by the denominator
which shall be the per share Market Price of the Common Stock.
Solely for the purpose of this Section 4.2, Market Price shall be
calculated either: (i) on the date on which the form of election
attached hereto is deemed to have been sent to the Company
pursuant to Section 10 hereof ("Notice Date") or (ii) as the
average of the Market Prices for each of the five trading days
preceding the Notice Date, whichever of (i) or (ii) is greater.
5. Issuance of Certificates.
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Upon the exercise of the Representative's Warrant, the
issuance of certificates for shares of Common Stock and/or
Warrants or other securities, properties or rights underlying
such Representative's Warrant shall be made forthwith (and in any
event within five (5) business days thereafter) without charge to
the Holder thereof including, without limitation, any tax which
may be payable in respect of the issuance thereof, and such
certificates shall (subject to the provisions of Sections 7 and 9
hereof) be issued in the name of, or in such names as may be
directed by, the Holder thereof; provided, however, that the
Company shall not be required to pay any tax which may be payable
in respect of any transfer involved in the issuance and delivery
of any such certificates in a name other than that of the Holder
and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
The Representative's Warrant Certificates and the
certificates representing the shares of Common Stock and/or
Warrants or other securities, property or rights issued upon
exercise of the Representative's Warrant shall be executed on
behalf of the Company by the manual or facsimile signature of the
then present President or any Vice President of the Company under
its corporate seal reproduced thereon, attested to by the manual
or facsimile signature of the then present Secretary or any
Assistant Secretary of the Company. Representative's Warrant
Certificates shall be dated the date of execution by the Company
upon initial issuance, division, exchange, substitution or
transfer.
6. Transfer of Representative's Warrant.
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The Representative's Warrant shall be transferable only on
the books of the Company maintained at its principal office,
where its principal office may then be located, upon delivery
thereof accompanied by a Form of Assignment (the form of which is
included in Exhibit A hereto) duly endorsed by the Holder or by
its duly authorized attorney or representative accompanied by
proper evidence of succession, assignment or authority to
transfer. Upon any registration of transfer, the Company shall
execute and deliver the new Representative's Warrant to the
person entitled thereto.
7. Restriction On Transfer of Representative's Warrant.
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The Holder of a Representative's Warrant Certificate, by its
acceptance thereof, covenants and agrees that the
Representative's Warrant is being acquired as an investment and
not with a view to the distribution thereof, and that the
Representative's Warrant may not be sold, transferred, assigned,
hypothecated or otherwise disposed of, in whole or in part, for
one year from the date hereof, except to officers or partners of
the Underwriters, or by operation of law.
8. Exercise Price.
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8.1 Initial and Adjusted Exercise Price.
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Except as otherwise provided in Section 11 hereof, the
initial exercise price of each Representative's Warrant shall be
$____ per share of Common Stock [120% of the initial public
offering price per share of Common Stock] and $.12 per Warrant.
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 11
hereof. Any transfer of a Representative's Warrant shall
constitute an automatic transfer and assignment of the
registration rights set forth in Section 9 hereof with respect to
the Securities or other securities, properties or rights
underlying the Representative's Warrants.
8.2 Exercise Price.
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The term "Exercise Price" herein shall mean the initial
exercise price or the adjusted exercise price, depending upon the
context or unless otherwise specified.
9. Registration Rights.
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9.1 Registration Under the Securities Act of 1933.
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Each Representative's Warrant Certificate and each
certificate representing shares of Common Stock and/or Warrants
and any of the other securities issuable upon exercise of the
Representative's Warrant (collectively, the "Warrant Shares")
shall bear the following legend unless (i) such Representative's
Warrant or Warrant Shares are distributed to the public or sold
to the underwriters for distribution to the public pursuant to
Section 9 hereof or otherwise pursuant to a registration
statement filed under the Securities Act of 1933, as amended (the
"Act"), or (ii) the Company has received an opinion of counsel,
in form and substance reasonably satisfactory to counsel for the
Company, that such legend is unnecessary for any such
certificate:
THE REPRESENTATIVE'S WARRANT REPRESENTED BY THIS CERTIFICATE
AND THE OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT
BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (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 REPRESENTATIVE'S WARRANT
REPRESENTED BY THE CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH
THE REPRESENTATIVE'S WARRANT AGREEMENT REFERRED TO HEREIN.
9.2 Piggyback Registration.
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If, at any time commencing after the effective date of
the Registration Statement relating to the Public Offering and
expiring five (5) years thereafter, the Company proposes to
register any of its securities under the Act (other than in
connection with a merger, or the offering of debt, or pursuant to
Form S-4 or Form S-8 it will give written notice by registered
mail, at least twenty (20) days prior to the filing of each such
registration statement, to the Holders of the Representative's
Warrants and/or the Warrant Shares of its intention to do so. If
any of the Holders of the Representative's Warrants and/or
Warrant Shares notify the Company within ten (10) days after
mailing of any such notice of its or their desire to include any
such securities in such proposed registration statement, the
Company shall afford such Holders of the Representative's
Warrants and/or Warrant Shares the opportunity to have any such
Representative's Warrants and/or Warrant Shares registered under
such registration statement. In the event that the managing
underwriter for said offering advises the Company in writing that
in its opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in such
offering without causing a diminution in the offering price or
otherwise adversely affecting the offering, the Company will
include in such registration (a) first, the securities the
Company proposes to sell, (b) second, the securities held by the
entities, if any, that made the demand for registration, (c)
third, the Representative's Warrants and/or Warrant Shares
requested to be included in such registration which in the
opinion of such underwriter can be sold, pro rata among all
proposed selling shareholders.
Notwithstanding the provisions of this Section 9.2, the
Company shall have the right at any time after it shall have
given written notice pursuant to this Section 9.2 (irrespective
of whether a written request for inclusion of any such securities
shall have been made) to elect not to file any such proposed
registration statement or to withdraw the same after the filing
but prior to the effective date thereof.
9.3 Demand Registration.
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(a) At any time commencing one (1) year after the
effective date of the Registration Statement relating to the
Public Offering (the "Registration Statement") and expiring five
(5) years from the effective date of the Registration Statement,
the Holders of the Representative's Warrants and/or Warrant
Shares representing a "Majority" (as hereinafter defined) of the
Representative's Warrants and/or Warrant Shares shall have the
right (which right is in addition to the registration rights
under Section 9.2 hereof), exercisable by written notice to the
Company, to have the Company prepare and file with the Securities
and Exchange Commission (the "Commission"), on one occasion, a
registration statement and such other documents, including a
prospectus, as may be necessary in the opinion of both counsel
for the Company and counsel for the Holders, in order to comply
with the provisions of the Act, so as to permit a public offering
and sale by such Holders and any other Holders of the
Representative's Warrant and/or Warrant Shares who notify the
Company within fifteen (15) days after the Company mails notice
of such request pursuant to Section 9.3(b) hereof (collectively,
the "Requesting Holders") of their respective Warrant Shares for
the earlier of (i) nine (9) consecutive months, or (ii) until the
sale of all of the Warrant Shares requested to be registered by
the Requesting Holders.
(b) The Company covenants and agrees to give
written notice of any registration request under this Section 9.3
by any Holder or Holders representing a Majority of the
Representative's Warrants and/or Warrant Shares to all other
registered Holders of the Representative's Warrants and the
Warrant Shares within ten (10) days from the date of the receipt
of any such registration request.
(c) Intentionally omitted.
(d) Notwithstanding anything to the contrary
contained herein, if the Company shall not have filed a
registration statement for the Warrant Shares within the time
period specified in Section 9.4(a) hereof pursuant to the written
notice specified in Section 9.3(a) of the Holders of a Majority
of the Representative's Warrants and/or Warrant Shares, the
Company, at its option, may repurchase (i) any and all Warrant
Shares at the higher of the Market Price (as defined in Section
9.3(e)) per share of Common Stock or per Warrant, as the case may
be, on (x) the date of the notice sent pursuant to Section 9.3(a)
or (y) the expiration of the period specified in Section 9.4(a)
and (ii) any and all Representative's Warrants at the Market
Price of the Common Stock and Warrants purchasable upon exercise
thereof less the aggregate exercise price payable upon such
exercise. Such repurchase shall be in immediately available
funds and shall close within two (2) days after the expiration of
the period specified in Section 9.4(a).
(e) Definition of Market Price.
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As used herein, the phrase "Market Price" at any
date shall be deemed to be 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 shares of Common Stock and/or
Warrants is listed or admitted to trading, or, if the shares of
Common Stock and/or Warrants is not listed or admitted to trading
on any national securities exchange, the average closing bid
price as furnished by the NASD through The Nasdaq Stock Market,
Inc. ("Nasdaq") or similar organization if Nasdaq is no longer
reporting such information, or if the shares of Common Stock
and/or Warrants or Common Stock is not quoted on Nasdaq, as
determined in good faith by resolution of the Board of Directors
of the Company, based on the best information available to it.
9.4 Covenants of the Company With Respect to
Registration.
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In connection with any registration under Sections 9.2
or 9.3 hereof, the Company covenants and agrees as follows:
(a) In connection with any registration under
Section 9.3 hereof, the Company shall use its best efforts to
file a registration statement within one hundred and twenty (120)
days of receipt of any demand therefor, and to have any
registration statements declared effective at the earliest
possible time, and shall furnish each Holder desiring to sell
Warrant Shares such number of prospectuses as shall reasonably be
requested.
(b) The Company shall pay all costs (excluding
fees and expenses of a single counsel for all Holders up to a
$25,000 maximum and any underwriting or selling commissions),
fees and expenses in connection with all registration statements
filed pursuant to Sections 9.2 and 9.3(a) hereof including,
without limitation, the Company's legal and accounting fees,
printing expenses and blue sky fees and expenses.
(c) The Company will use its commercially
reasonable efforts to take all necessary action which may be
required in qualifying or registering the Warrant Shares included
in a registration statement for offering and sale under the
securities or blue sky laws of such states as reasonably are
requested by the Holder(s), provided that the Company shall not
be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of
the Warrant Shares to be sold pursuant to any registration
statement and each person, if any, who controls such Holders
within the meaning of Section 15 of the Act or Section 20(a) of
the Securities Exchange Act of 1934, as amended ("Exchange Act"),
against all loss, claim, damage, expense or liability (including
all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may
become subject under the Act, the Exchange Act or otherwise,
arising from such registration statement but only to the same
extent and with the same effect and subject to the same
procedures as are provided by the provisions pursuant to which
the Company has agreed to indemnify each of the Underwriters
contained in Section 7 of the Underwriting Agreement.
(e) The Holder(s) of the Warrant Shares to be
sold pursuant to a registration statement, and their successors
and assigns, shall severally, and not jointly, indemnify the
Company, its officers and directors and each person, if any, who
controls the Company within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, against all loss, claim,
damage or expense or liability (including all expenses reasonably
incurred in investigating, preparing or defending against any
claim whatsoever) to which they may become subject under the Act,
the Exchange Act or otherwise, arising from information furnished
by or on behalf of such Holders, or their successors or assigns,
for specific inclusion in such registration statement to the same
extent and with the same effect as the provisions contained in
Section 7 of the Underwriting Agreement pursuant to which the
Underwriters have agreed to indemnify the Company.
(f) Nothing contained in this Agreement shall be
construed as requiring the Holder(s) to exercise their
Representative's Warrant prior to the initial filing of any
registration statement or the effectiveness thereof.
(g) The Company shall not permit the inclusion of
any securities other than the Warrant Shares to be included in
any registration statement filed pursuant to Section 9.3 hereof,
without the prior written consent of National Securities
Corporation or as otherwise required by the terms of any existing
registration rights granted prior to the date of this Agreement
by the Company to the holders of any of the Company's securities.
(h) The Company shall furnish to each Holder
participating in the offering and to each underwriter, if any, a
signed counterpart, addressed to such Holder or underwriter, of
(i) an opinion of counsel to the Company, dated the effective
date of such registration statement (and, if such registration
includes an underwritten public offering, an opinion dated the
date of the closing under the 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 respect to events subsequent to the date of such financial
statements, as are customarily covered in opinions of issuer's
counsel and in accountants' letters delivered to underwriters in
underwritten public offerings of securities.
(i) The Company shall as soon as practicable after
the effective date of the registration statement, and in any
event within 15 months thereafter, make "generally available to
its security holders" (within the meaning of Rule 158 under the
Act) an earnings statement (which need not be audited) complying
with Section 11(a) of the Act and covering a period of at least
12 consecutive months beginning after the effective date of the
registration statement.
(j) In connection with any registration under
Section 9.3 hereof, the Company shall enter into an underwriting
agreement with the managing underwriters selected for such
underwriting by Holders holding a Majority of the Warrant Shares
requested to be included in such underwriting, which may be the
Representative. Such agreement shall be satisfactory in form and
substance to the Company, each Holder and such managing
underwriters, and shall contain such representations, warranties
and covenants by the Company and such other terms as are
customarily contained in agreements of that type used by the
managing underwriter. The Holders shall be parties to any
underwriting agreement relating to an underwritten sale of their
Warrant Shares and may, at their option, require that any or all
the representations, warranties and covenants of the Company to
or for the benefit of such underwriters shall also be made to and
for the benefit of such Holders. Such Holders shall not be
required to make any representations or warranties to or
agreements with the Company or the underwriters except as they
may relate to such Holders and their intended methods of
distribution.
(k) For purposes of this Agreement, the term
"Majority" in reference to the Representative's Warrants or
Warrant Shares, shall mean in excess of fifty percent (50%) of
the then outstanding Warrant Shares (calculated as provided in
the following sentence) 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. For purposes of the
preceding sentence, the Holder of a Representative's Warrant
shall be deemed the holder of the aggregate number of Warrant
Shares that acquirable upon exercise thereof.
10. Obligations of Holders.
-----------------------
It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 9 hereof that each
of the selling Holders shall:
(a) Furnish to the Company such information regarding
themselves, the Warrant Shares held by them, the intended method
of sale or other disposition of such securities, the identity of
and compensation to be paid to any underwriters proposed to be
employed in connection with such sale or other disposition, and
such other information as may reasonably be required to effect
the registration of their Warrant Shares.
(b) Notify the Company, at any time when a prospectus
relating to the Warrant Shares covered by a registration
statement is required to be delivered under the Act, of the
happening of any event with respect to such selling Holder as a
result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
11. Adjustments to Exercise Price and Number of Securities.
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The Exercise Price in effect at any time and the number and
kind of securities purchased upon the exercise of the
Representative's Warrant shall be subject to adjustment from time
to time only upon the happening of the following events:
11.1 Stock Dividend, Subdivision and Combination.
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In case the Company shall (i) declare a dividend or
make a distribution on its outstanding shares of Common Stock in
shares of Common Stock, (ii) subdivide or reclassify its
outstanding shares of Common Stock into a greater number of
shares, or (iii) combine or reclassify its outstanding shares of
Common Stock into a smaller number of shares, the Exercise Price
in effect at the time of the record date for such dividend or
distribution or of the effective date of such subdivision,
combination or reclassification shall be adjusted so that it
shall equal the price determined by multiplying the Exercise
Price by a fraction, the denominator of which shall be the number
of shares of Common Stock outstanding after giving effect to such
action, and the numerator of which shall be the number of shares
of Common Stock outstanding immediately prior to such action.
Such adjustment shall be made successively whenever any event
listed above shall occur.
11.2 Adjustment in Number of Securities.
-----------------------------------
Upon each adjustment of the Exercise Price pursuant to
the provisions of this Section 11, the number of Warrant Shares
issuable upon the exercise at the adjusted Exercise Price of each
Representative's Warrant shall be adjusted to the nearest number
of whole shares of Common Stock by multiplying a number equal to
the Exercise Price in effect immediately prior to such adjustment
by the number of Warrant Shares issuable upon exercise of the
Representative's Warrant immediately prior to such adjustment and
dividing the product so obtained by the adjusted Exercise Price.
11.3 Definition of Common Stock.
---------------------------
For the purpose of this Agreement, the term "Common
Stock" shall mean (i) the class of stock designated as Common
Stock in the Articles of Incorporation of the Company as amended
as of the date hereof, or (ii) any other class of stock resulting
from successive changes or reclassifications of such Common Stock
consisting solely of changes in par value, or from par value to
no par value, or from no par value to par value.
11.4 Merger or Consolidation.
------------------------
In case of any consolidation of the Company with, or
merger of the Company into, another corporation (other than a
consolidation or merger which does not result in any
reclassification or change of the outstanding Common Stock), the
corporation formed by such consolidation or merger shall execute
and deliver to the Holder a supplemental warrant agreement
providing that the Holder of each Representative's Warrant then
outstanding or to be outstanding shall have the right thereafter
(until the expiration of such Representative's Warrant) to
receive, upon exercise of such Representative's Warrant, the kind
and amount of shares of stock and other securities and property
receivable upon such consolidation or merger by a holder of the
number of shares of Common Stock for which such Representative's
Warrant might have been exercised immediately prior to such
consolidation, merger, sale or transfer. Such supplemental
warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in Section 11. The above
provision of this subsection shall similarly apply to successive
consolidations or mergers.
11.5 No Adjustment of Exercise Price in Certain Cases.
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No adjustment of the Exercise Price shall be made:
(a) Upon the issuance or sale of the
Representative's Warrant or the Warrant Shares;
(b) Upon the issuance or sale of Common Stock (or
any other security convertible, exercisable, or exchangeable into
shares of Common Stock) upon the direct or indirect conversion,
exercise, or exchange of any options, rights, warrants, or other
securities or indebtedness of the Company outstanding as of the
date of this Agreement or granted pursuant to any stock option
plan of the Company in existence as of the date of this
Agreement, pursuant to the terms thereof; or
(c) If the amount of said adjustment shall be less
than two cents ($.02) per share, provided, however, that in such
case any adjustment that would otherwise be required then to be
made shall be carried forward and shall be made at the time of
and together with the next subsequent adjustment which, together
with any adjustment so carried forward, shall amount to at least
two cents ($.02) per Representative's Warrant.
12. Exchange and Replacement of Representative's Warrant
Certificates.
----------------------------------------------------
Each Representative's Warrant Certificate is exchangeable,
without expense, upon the surrender thereof by the registered
Holder at the principal executive office of the Company for a new
Representative's Warrant Certificate of like tenor and date
representing in the aggregate the right to purchase the same
number of Warrant Shares in such denominations as shall be
designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation
of any Representative's Warrant Certificate, and, in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to it and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and
cancellation of the Representative's Warrant, if mutilated, the
Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
13. Elimination of Fractional Interests.
------------------------------------
The Company shall not be required to issue certificates
representing fractions of shares of Common Stock upon the
exercise of the Representative's Warrant, nor shall it be
required to issue scrip or pay cash in lieu of fractional
interests, it being the intent of the parties that all fractional
interests shall be eliminated by rounding any fraction up to the
nearest whole number of shares of Common Stock or other
securities, properties or rights.
14. Reservation and Listing of Securities.
--------------------------------------
The Company shall at all times reserve and keep available
out of its authorized shares of Common Stock, solely for the
purpose of issuance upon the exercise of the Representative's
Warrant and the Warrants issuable upon exercise thereof, such
number of shares of Common Stock or other securities, properties
or rights as shall be issuable upon the exercise thereof. Every
transfer agent ("Transfer Agent") for the Common Stock and other
securities of the Company issuable upon the exercise of the
Representative's Warrant will be irrevocably authorized and
directed at all times to reserve such number of authorized shares
of Common Stock and other securities as shall be requisite for
such purpose. The Company will keep a copy of this Agreement on
file with every Transfer Agent for the Common Stock and other
securities of the Company issuable upon the exercise of the
Representative's Warrant. The Company will supply every such
Transfer Agent with duly executed stock and other certificates,
as appropriate, for such purpose. The Company covenants and
agrees that, upon exercise of the Representative's Warrant 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 Representative's Warrant shall be outstanding, the Company
shall use its best efforts to cause all shares of Common Stock
issuable upon the exercise of the Representative's Warrant to be
listed (subject to official notice of issuance) on all securities
exchanges on which the Common Stock issued to the public in
connection herewith may then be listed and/or quoted on Nasdaq
SmallCap Market.
15. Notices to Representative's Warrant Holders.
--------------------------------------------
Nothing contained in this Agreement shall be construed as
conferring upon the Holders the right to vote or to consent or to
receive notice as a stockholder in respect of any meetings of
stockholders for the election of directors or any other matter,
or as having any rights whatsoever as a stockholder of the
Company. If, however, at any time prior to the expiration of the
Representative's Warrants and their exercise, any of the
following events shall occur:
(a) the Company shall take a record of the holders of
its shares of Common Stock for the purpose of entitling them to
receive a dividend or distribution payable otherwise than in
cash, or a cash dividend or distribution payable otherwise than
out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the
books of the Company; or
(b) the Company shall offer to all the holders of its
Common Stock any additional shares of capital stock of the
Company or securities convertible into or exchangeable for shares
of capital stock of the Company, or any option, right or warrant
to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger)
or a sale of all or substantially all of its property, assets and
business as an entirety shall be proposed; then in any one or
more of said events, the Company shall give written notice of
such event at least fifteen (15) days prior to the date fixed as
a record date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividend,
distribution, convertible or exchangeable securities or
subscription rights, or entitled to vote on such proposed
dissolution, liquidation, winding up or sale. Such notice shall
specify such record date or the date of closing the transfer
books, as the case may be. Failure to give such notice or any
defect therein shall not affect the validity of any action taken
in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable
securities, or subscription rights, options or warrants, or any
proposed dissolution, liquidation, winding up or sale.
16. Warrants.
---------
The form of the certificate representing the Warrants (and
the form of election to purchase shares of Common Stock upon the
exercise of the Warrants and the form of assignment printed on
the reverse thereof) shall be substantially as set forth in
Exhibit "A" to the Warrant Agreement dated as of the date hereof
by and among the Company, the Representative and [American Stock
Transfer & Trust Company,] as warrant agent (the "Warrant
Agreement"). Each Warrant issuable upon exercise of the
Representative's Warrants shall evidence the right to initially
purchase a fully paid and non-assessable share of Common Stock at
an initial purchase price of $____ [150% of the initial public
offering price per share of Common Stock] from _________, 1998
[one year from the Closing Date of the Registration Statement]
until 5:30 p.m. New York time on _____________, 2002 [5 years
from the Closing Date of the Registration Statement] at which
time the Warrants, unless the exercise period has been extended,
shall expire. The exercise price of the Warrants and the number
of shares of Common Stock issuable upon the exercise of the
Warrants are subject to adjustment, whether or not the
Representative's Warrants have been exercised and the Warrants
have been issued, in the manner and upon the occurrence of the
events set forth in Section 8 of the Warrant Agreement, which is
hereby incorporated by reference and made a part hereof as if set
forth in its entirety herein. The Company covenants to, and
agrees with, the Holder(s) that without the prior written consent
of the Holder(s), which will not be unreasonably withheld, the
Warrant Agreement will not be modified, amended, canceled,
altered or superseded, and that the Company will send to each
Holder, irrespective of whether or not the Representative's
Warrants have been exercised, any and all notices required by the
Warrant Agreement to be sent to holders of the Warrants.
17. 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:
(a) if to the registered Holder of the
Representative's Warrant, to the address of such Holder as shown
on the books of the Company; or
(b) if to the Company, to the address set forth in
Section 4 hereof or to such other address as the Company may
designate by notice to the Holders.
18. Supplements; Amendments; Entire Agreement.
------------------------------------------
This Agreement (including the Underwriting Agreement to the
extent portions thereof are referred to herein) contains the
entire understanding between the parties hereto with respect to
the subject matter hereof and may not be modified or amended
except by a writing duly signed by the party against whom
enforcement of the modification or amendment is sought. The
Company and the Representative may from time to time supplement
or amend this Agreement without the approval of any holders of
Representative's Warrant Certificates (other than the
Representative) 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 Representative may deem necessary or
desirable and which the Company and the Representative deem shall
not adversely affect the interests of the Holders of
Representative's Warrant Certificates.
19. Successors.
-----------
All of the covenants and provisions of this Agreement shall
be binding upon and inure to the benefit of the Company, the
Holders and their respective successors and assigns hereunder.
20. Survival of Representations and Warranties.
-------------------------------------------
Notwithstanding any investigations made by or on behalf of
the parties to this Agreement, all representations, warranties
and agreements made by the parties to this Agreement herein shall
survive.
21. Governing Law.
--------------
This Agreement and each Representative's Warrant Certificate
issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware 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.
22. 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.
23. 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.
24. Benefits of this Agreement.
---------------------------
Nothing in this Agreement shall be construed to give to any
person or corporation other than the Company and the
Representative and any other registered Holder(s) of the
Representative's Warrant Certificates or Warrant Shares any legal
or equitable right, remedy or claim under this Agreement; and
this Agreement shall be for the sole and exclusive benefit of the
Company and the Representative and any other Holder(s) of the
Representative's Warrant Certificates or Warrant Shares.
25. 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 OF, the parties hereto have caused this Agreement
to be duly executed, as of the day and year first above written.
ATTEST: THERMOENERGY CORPORATION
------------------------ By:
Secretary ------------------------
Name:
Title:
NATIONAL SECURITIES CORPORATION
By:
----------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Chairman
EXHIBIT A
[FORM OF REPRESENTATIVE'S WARRANT CERTIFICATE]
THE REPRESENTATIVE'S WARRANT REPRESENTED BY THIS CERTIFICATE AND
THE OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, (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 REPRESENTATIVE'S WARRANT
REPRESENTED BY THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH
THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME, August , 2002
----
Representative's Warrant No.
------
Shares of Common Stock and/or Warrants
----- ----
WARRANT CERTIFICATE
This Warrant Certificate certifies that _________, or
registered assigns, is the registered holder of Warrants to
purchase initially, at any time from August _____, 1998 until
5:30 p.m., New York time on August , 2002 ("Expiration Date"),
up to ____ shares of Common Stock and/or _____ Series 1 Warrants
and/or _____ Series 2 Warrants at the initial exercise price,
subject to adjustment in certain events, of $ _____ [120% of
initial offering price per share] per share of Common Stock and
$_____ per Warrant (the "Exercise Price") upon surrender of this
Representative's 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 Representative's Warrant
Agreement dated as of August ____, 1997 between the Company and
National Securities Corporation (the "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.
No Warrant may be exercised after 5:30 p.m., New York time,
on the Expiration Date, at which time all Representative's
Warrant evidenced hereby, unless exercised prior thereto, shall
thereafter be void.
The Representative's Warrant evidenced by this Warrant
Certificate are part of a duly authorized issue of
Representative's Warrants issued pursuant to the Warrant
Agreement, which Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of
rights, obligations, duties and immunities thereunder of the
Company and the holders (the words "holders" or "holder" meaning
the registered holders or registered holder) of the
Representative's Warrant.
The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the type and/or number of
the Company's securities issuable thereupon may, subject to
certain conditions, be adjusted. In such event, the Company
will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and
the number and/or type of securities issuable upon the exercise
of the Representative's Warrant; provided, however, that the
failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the
rights of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new
Warrant Certificate or Warrant Certificates of like tenor and
evidencing in the aggregate a like number of Representative's
Warrant shall be issued to the transferee(s) in exchange for this
Warrant Certificate, subject to the limitations provided herein
and in the Warrant Agreement, without any charge except for any
tax or other governmental charge imposed in connection with such
transfer.
Upon the exercise of less than all of the Representative's
Warrant evidenced by this Certificate, the Company shall
forthwith issue to the holder hereof a new Warrant Certificate
representing such numbered unexercised Representative's Warrant.
The Company may deem and treat the registered holder(s)
hereof as the absolute owner(s) of this Warrant Certificate
(notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise hereof,
and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any
notice to the contrary.
All terms used in this Warrant Certificate which are defined
in the Warrant Agreement shall have the meanings assigned to them
in the Warrant Agreement.
This Warrant Certificate does not entitle any holder thereof
to any of the rights of a shareholder of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.
Dated as of August , 1997
-----
ATTEST: THERMOENERGY CORPORATION
---------------------- By:
Secretary -----------------------
Name:
Title:
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to purchase [ ]
shares of Common Stock and/or [ ] Series 1 Warrants and/or [ ]
Series 2 Warrants 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 ThermoEnergy Corporation
(the "Company") in the amount of $[ ], all in accordance with
the terms of Section 4 of the Representative's Warrant Agreement
dated as of August _____, 1997 between the Company and National
Securities Corporation. [Add cashless exercise provision.] The
undersigned requests that a certificate for such securities be
registered in the name of _____________________, whose address is
_________________________________________ and that such
certificate be delivered to _______________, whose address is
_________________________, and if said number of shares shall not
be all the shares purchasable hereunder, that a new Warrant
Certificate for the balance of the shares purchasable under the
within Warrant Certificate be registered in the name of the
undesigned warrantholder or his assignee as below indicated and
delivered to the address stated below.
Dated:
--------------------
Signature:
----------------------
(Signature must conform
in all respects to name
of holder as specified
on the face of the
Warrant Certificate.)
Address:
-------------------------
-------------------------
-------------------------
(Insert Social Security
or Other Identifying
Number of Holder)
Signature Guaranteed:
--------------------------------------------
(Signature must be guaranteed by a bank savings and loan
association, stockbroker, or credit union with membership in an
approved signature guaranty Medallion Program pursuant to
Securities Exchange Act Rule 17Ad-15.)
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED, ____________________ hereby sells,
assigns and transfers unto [NAME OF TRANSFEREE] this Warrant
Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ______________
Attorney, to transfer the within Warrant Certificate on the books
of the within-named Company, with full power of substitution.
Dated:
-------------------
Signature:
------------------------
(Signature must conform
in all respects to name
of holder as specified
on the face of the
Warrant Certificate.)
Address:
-------------------------
-------------------------
-------------------------
(Insert Social Security
or Other Identifying
Number of Holder)
Signature Guaranteed:
--------------------------------------------
(Signature must be guaranteed by a bank savings and loan
association, stockbroker, or credit union with membership in an
approved signature guaranty Medallion Program pursuant to
Securities Exchange Act Rule 17Ad-15.)
