EXHIBIT 4.2
WARRANT AGREEMENT
WARRANT AGREEMENT dated as of_______________,1998 (and effective as of
______________, 1998) between Rosedale Decorative Products Ltd., a corporation
organized under the laws of the Province of Ontario, Canada (the "COMPANY"), and
Continental Stock Transfer & Trust Company (the "WARRANT AGENT").
W I T N E S S E T H :
WHEREAS, the Company proposes to issue and sell to the public in a
secondary public offering (the "SECONDARY OFFERING") 833,000 shares of the
Company's Common Stock at $6.00 per share, no par value (the "SHARES"), and
833,000 Redeemable Common Stock Purchase Warrants (the "PUBLIC WARRANTS");
WHEREAS, the Company also proposes to issue and sell to X.X. Xxxxxx &
Company, L.L.C. ("X.X. XXXXXX"), and each of the other underwriters named in
Schedule I hereto (collectively, the "UNDERWRITERS"), for whom X.X. Xxxxxx is
acting as representative (in such capacity, X.X. Xxxxxx shall hereinafter be
referred to as the "REPRESENTATIVE") in the Secondary Offering Eight Hundred
Thirty-Three Thousand (833,000) shares (the "SHARES") of the Company's common
stock, no par value (the "COMMON STOCK"), and Eight Hundred Thirty-Three
Thousand (833,000) Redeemable Common Stock Purchase Warrants (the "REDEEMABLE
WARRANTS") ("FIRM SECURITIES"), each of the Redeemable Warrants entitles the
holder thereof to purchase one share of Common Stock at an exercise price of
$______ per share pursuant to a warrant agreement (the "WARRANT AGREEMENT")
between the Company and the warrant agent, set forth in Schedule II, and with
respect to the grant by the Company to the Underwriters, acting severally and
not jointly, to purchase all or any part of 124,950 additional Shares and
124,950 Redeemable Warrants (the "ADDITIONAL SECURITIES") for the purpose of
covering over-allotments, if any. The aforesaid Firm Securities together with
all or any part of the Additional Securities are hereinafter collectively
referred to as the "SECURITIES." The Company also proposes to issue and sell to
the Underwriters for an approximate price of $_____ ($0.001 per warrant), non-
callable warrants entitling the Underwriters' to purchase from the Company an
Underwriters' Warrant (the "UNDERWRITERS' WARRANT") for the purchase of an
aggregate of 833,000 Shares (the "UNDERWRITERS' SHARES") and 833,000 Redeemable
Common Stock Purchase Warrants (the "UNDERWRITERS' WARRANTS"). The shares of
Common Stock issuable upon exercise of the Redeemable Warrants and the
Underwriters' Warrants are hereinafter sometimes referred to as the "WARRANT
SHARES."
WHEREAS, the Public Warrants shall be evidenced by certificates
substantially in the form of Exhibit A annexed hereto (the "WARRANT
CERTIFICATE"), each Warrant entitling the holder thereof to purchase one share
of Common Stock;
WHEREAS, the Public Warrants will have an exercise price of $___________
per share of Common Stock, subject to certain adjustments (the "PUBLIC WARRANT
PRICE"), will be exercisable commencing on the first anniversary of the date of
the Final Prospectus dated__________, 1998 ("FIRST EXERCISE DATE") until a date
which is the fifth anniversary of the date of the Final Prospectus
dated __________, 1998 ("LAST EXERCISE DATE"), unless extended by the Company,
and, except for the Underwriter's Warrants, will be exercisable during any
period of time fixed for that Warrant's redemption in a Redemption Notice
(hereinafter defined in Section 2.03), which period of time will terminate on a
stated Redemption Date (hereinafter defined in Section 2.03);
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, exchange and replacement of the Warrant
Certificates and exercise of the Public Warrants; and
WHEREAS, the Company and the Warrant Agent desire to set forth in this
Agreement the terms and conditions upon which the Warrant Certificates shall be
issued, transferred, exchanged and placed and the Public Warrants exercised, and
to provide for the rights of the holders of the Public Warrants;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and the respective undertakings herein below set forth, the
Company and the Warrant Agent agree as follows:
ARTICLE I
ISSUANCE AND EXECUTION OF WARRANTS
SECTION 1.01. The Company hereby appoints the Warrant Agent to act on
behalf of the Company in accordance with the terms and conditions herein set
forth, and the Warrant Agent hereby accepts such appointment and agrees to
perform the same in accordance with such provisions.
SECTION 1.02. The Warrant Certificates for the Public Warrants shall be
issued in registered form only. The text of the Warrant Certificate, including
the form of assignment and subscription printed on the reverse side thereof,
shall be substantially in the form of Exhibit A annexed hereto, which text is
hereby incorporated in this Agreement by reference as though fully set forth
herein and to whose terms and conditions the Company and the Warrant Agent
hereby agree. Each Warrant Certificate shall evidence the right, subject to the
provisions of this Agreement and of such Warrant Certificate, to purchase the
number of validly issued, fully paid and non-assessable shares of Common Stock,
as that term is defined in Section 1.05 of this Agreement, stated therein, free
of preemptive rights, subject to adjustment as provided in Article III of this
Agreement.
SECTION 1.03. Upon the written order of the Company, signed by the
President or any Vice President, and the Secretary, Treasurer, Assistant
Secretary or Assistant Treasurer of the Company, the Warrant Agent shall issue
and register Public Warrants in the names and denominations specified in that
order, and will countersign and deliver Warrant Certificates evidencing the same
in accordance with that order. Each Warrant Certificate shall be dated the date
of its countersignature. Each Warrant Certificate shall be executed on behalf
of the Company by the
-2-
manual or facsimile signature of the President of the Company, under its
corporate seal, affixed or facsimile, attested by the manual or facsimile
signature of the Secretary of the Company and shall be countersigned manually by
the Warrant Agent. The Warrant Certificates shall not be valid for any purpose
unless so countersigned. In case any officer whose facsimile signature has been
placed upon any Warrant Certificate shall have ceased to be such before such
Warrant Certificate is issued, it may be issued with the same effect as if such
officer had not ceased to be such on the date of issuance.
SECTION 1.04. Except as otherwise expressly stated herein, all terms used
in the Warrant Certificate have the meanings provided in this Agreement.
SECTION 1.05. As used herein, the term "COMMON STOCK" shall mean the
aggregate number of shares that the Company, by its Certificate of
Incorporation, as from time to time amended, is authorized to issue, which are
not limited by its Certificate of Incorporation to a fixed sum or percentage of
the book value in respect of the rights of the holders thereof to participate in
dividends or in distribution of assets upon the voluntary or involuntary
liquidation, dissolution, or winding up the Company.
SECTION 1.06. The Warrant Agent understands and agrees that the Public
Warrants and shares of Common Stock are being sold separately in the Secondary
Offering and that the Shares and the Public Warrants will be traded separately
immediately upon the closing of the Secondary Offering.
ARTICLE II
PUBLIC WARRANT PRICE, DURATION AND EXERCISE OF WARRANTS,
CALL OF WARRANTS AND TRADING OF WARRANTS
SECTION 2.01. (a) Each Public Warrant shall entitle the person in whose
name at the time the Public Warrant shall be registered upon the books to be
maintained by the Warrant Agent for that purpose (the "WARRANT HOLDER"), subject
to the provisions of the Warrant Certificates and of this Agreement, to purchase
from the Company any time on or after the First Exercise Date but at or before
the Last Exercise Date, up to the number of shares of Common Stock stated
therein, as adjusted, at the Public Warrant Price in effect at such date,
payable in full at the time of purchase in the manner provided in Section 2.02
of this Agreement.
(b) Each Public Warrant shall be exercisable in accordance with the
terms herein and in the Warrant Certificate which, among other things, contains
certain terms as to the Public Warrant Price.
SECTION 2.02. (a) The Warrant Holder may exercise a Public Warrant, in
whole or in part, by surrender of the Warrant Certificate, with the form of
subscription thereon duly executed by the Warrant Agent at its corporate office,
together with the Public Warrant Price for
-3-
each share of Common Stock to be purchased in lawful money of the United States,
or by certified check, bank draft, or postal or express money order payable in
United States Dollars to the order of the Company.
(b) Upon receipt of a Warrant Certificate with the form of election
to purchase thereon duly executed and accompanied by payment of the aggregate
Public Warrant Price for the shares of Common Stock for which the Public Warrant
is then being exercised, the Warrant Agent shall requisition from the transfer
agent certificates for the total number of the shares of Common Stock for which
the Public Warrant is being exercised in such names and denominations as are
required for delivery to the Warrant Holder, and the Warrant Agent shall
thereupon deliver such certificates to or in accordance with the instructions of
the Warrant Holder. The Company covenants and agrees that it has duly
authorized and directed its transfer agent (and will authorize and direct all
its future transfer agents) to comply with all such requests of the Warrant
Agent.
(c) In case any Warrant Holder shall exercise his Public Warrant with
respect to less than all of the shares of Common Stock that may be purchased
under the Public Warrant, a new Public Warrant Certificate for the balance shall
be countersigned and delivered to or upon the order of the Warrant Holder.
(d) The Company covenants and agrees that it will pay when due and
payable any and all taxes which may be payable in respect to the issuance of
Warrants, or the issuance of any shares of Common Stock upon the exercise of
Warrants. However, neither the Company nor the Warrant Agent shall be required
to issue or deliver any Warrant Certificate or shares of Common Stock in a name
other than that of the Warrant Holder at the time of surrender if any tax is
payable in respect of such transfer until the person requesting the same has
paid to the Company the amount of such tax or has established to the Company's
satisfaction that such tax has been paid or shall not be due and payable. In
the event that any transfer tax is due and payable, the Warrant Agent shall be
under no obligation to issue or deliver any Warrant Certificate or shares of
Common Stock in a name other than that of the Warrant Holder until the Company
has notified the Warrant Agent that the transfer tax, if any, has been paid, or
in the alternative, that no transfer tax is due and payable by reason of an
exemption.
(e) The Warrant Agent shall account promptly to the Company with
respect to Warrants exercised and concurrently account to the Company for all
moneys received by the Warrant Agent for the purchase of shares of Common Stock
upon the exercise of Warrants.
(f) The Warrant Agent covenants and agrees that upon the exercise of
any of the Warrants, the Warrant Agent shall provide written notice to the
Company at 000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0, and to the
Underwriter at its office at 0000 Xxxxxxxxx Xxxxxx, XX, Xxxxx 000, Xxxxxxx,
Xxxxxxx 00000, the expense of which notice shall be borne by the Company. Each
notice shall contain the name of the exercising Warrant Holder, the number of
shares of Common Stock that the Warrant Holder has elected to purchase, the
purchase price paid on a per share basis and the cumulative number of Public
Warrants exercised by all of the Warrant Holders
-4-
as of the date of the transaction which is the subject of the aforesaid notice.
Such notice shall be made on the date of the exercise of the Public Warrant.
Nothing contained herein shall be construed so as to prevent the Warrant Agent
from providing the information required in this Section 2.02 (f) in a
consolidated or tabular form, provided that all other provisions of this Section
are complied with.
(g) The Warrant Agent covenants and agrees that it shall provide a
list of each and every holder of the Public Warrants to the Company and the
Underwriter at such time or from time to time as shall be required by the
Company or the Underwriter, but in no event shall such a list be provided less
frequently than once per annum at a date as shall be determined by the Company.
SECTION 2.03. (a) Commencing on the first anniversary of the effective
date of the Secondary Offering, the Company may, subject to the conditions set
forth herein, redeem all, but not less than all, the Public Warrants then
outstanding at a redemption price of $.001 per Public Warrant upon not less than
thirty (30) days prior written notice (the "REDEMPTION NOTICE") to the holders
thereof provided that the average closing price of the Common Stock for the 20
consecutive trading days ending three (3) days prior to the date of the
Redemption Notice is at least $________per share, subject to adjustment for
stock dividends, stock splits and other anti-dilution provisions as provided for
under Article III herein. For purposes of this Section 2.03, "closing price" at
any date shall be deemed to be: (i) the last sale price regular way as reported
on the principal national securities exchange on which the Common Stock is
listed or admitted to trading, or (ii) if the Common Stock is not listed or
admitted to trading on any national securities exchange, the average of the
closing bid and asked prices regular way for the Common Stock as reported by the
Nasdaq National Market or Nasdaq Small Cap Market of the Nasdaq Stock Market,
Inc. ("NASDAQ") or (iii) if the Common Stock is not listed or admitted for
trading on any national securities exchange, and is not reported by NASDAQ, the
average of the closing bid and asked prices in the over-the-counter market as
furnished by the National Quotation Bureau, Inc. or if no such quotation is
available, the fair market value of the Common Stock as determined in good faith
by the Board of Directors of the Company. The Redemption Notice shall be deemed
effective upon mailing and the time of mailing is the "EFFECTIVE DATE OF THE
NOTICE". The Redemption Notice shall state a redemption date not less than
thirty (30) days from the Effective Date of the Notice (the "REDEMPTION DATE").
No Redemption Notice shall be mailed unless all funds necessary to pay for
redemption of all Warrants then outstanding shall have first been set aside by
the Company in trust with the Warrant Agent for the benefit of all Warrant
Holders so as to be and continue to be available therefor. The redemption price
to be paid to the Warrant Holders will be $0.01 for each share of the Common
Stock of the Company to which the Warrant Holder would then be entitled upon
exercise of the Public Warrant being redeemed, as adjusted from time to time as
provided herein (the "REDEMPTION PRICE"). In the event the number of shares of
Common Stock issuable upon exercise of the Public Warrant being redeemed are
adjusted pursuant to Article III hereof, then upon each such adjustment the
Redemption Price will be adjusted by multiplying the Redemption Price in effect
immediately prior to such adjustment by a fraction, the numerator of which is
the number of shares of Common Stock issuable upon exercise of the Public
Warrant being redeemed immediately prior to such adjustment and the denominator
of which is the number of shares of Common Stock
-5-
issuable upon exercise of such Public Warrant being redeemed immediately after
such adjustment. The Public Warrants may only be redeemed if the Company has in
effect a current Registration Statement or post-effective amendment covering the
shares underlying the Public Warrants. The Warrant Holders may exercise their
Public Warrants between the Effective Date of the Notice and the Redemption
Date, such exercise being effective if done in accordance with Section 2.02 (a),
and if the Warrant Certificate, with form of election to purchase duly executed
and the Public Warrant Price, as applicable for such Public Warrant subject to
redemption for each share of Common Stock to be purchased is actually received
by the Warrant Agent at its office located at 0 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000, no later than 5:00 P.M. New York time on the Redemption Date.
(b) If any Warrant Holder does not wish to exercise any Warrant being
redeemed, the Warrant Holder should mail such Public Warrant to the Warrant
Agent at its office located at 0 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, after
receiving the Redemption Notice required by this Section. If such Redemption
Notice shall have been so mailed, and if on or before the Effective Date of the
Notice all funds necessary to pay for redemption of all Public Warrants then
outstanding shall have been set aside by the Company in trust with the Warrant
Agent for the benefit of all Warrant Holders so as to be and continue to be
available therefor, then, on and after said Redemption Date, notwithstanding
that any Public Warrant subject to redemption shall not have been surrendered
for redemption, the obligation evidenced by all Public Warrants not surrendered
for redemption or effectively exercised shall be deemed no longer outstanding,
and all rights with respect thereto shall forthwith cease and terminate, except
only the right of the holder of each Public Warrant subject to redemption to
receive the Redemption Price for each share of Common Stock to which he would be
entitled if he exercised the Public Warrant upon receiving the Redemption Notice
of the Public Warrant subject to redemption held by the Holder hereof.
(c) Notwithstanding anything contained in this Article II, the
Underwriter's Warrants shall not be eligible for redemption by the Company.
ARTICLE III
ADJUSTMENT OF SHARES OF COMMON STOCK
PURCHASABLE AND OF PUBLIC WARRANT PRICE
SECTION 3.01. In case the Company shall at any time after the date of this
Agreement (i) declare a dividend on the outstanding Common Stock in shares of
its capital stock, (ii) subdivide the outstanding Common Stock, (iii) combine
the outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock by reclassification of the Common Stock (including
any such reclassification in connection with a consolidation or merger in which
the Company is the continuing corporation), then, in each case, the Public
Warrant Price, and the number and kind of shares of Common Stock receivable upon
exercise, in effect at the time of the record date for such dividend or of the
effective date of such subdivision, combination, or reclassification shall be
proportionately adjusted so that the holder of any Public Warrant exercised
after such time shall be entitled to receive the aggregate number and kind of
shares which if such
-6-
Public Warrant had been exercised immediately prior to such time, he would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination, or reclassification. Such adjustment shall
be made successively whenever any event listed above shall occur.
SECTION 3.02. In case the Company after the date hereof shall issue
rights, options, or warrants to all holders of Common Stock entitling them to
subscribe for or purchase Common Stock (or securities convertible into or
exchangeable for Common Stock) at a price per share (or having a conversion
price per share, if a security convertible into or exchangeable for Common
Stock) less than the "current market price" (as defined in Section 3.04 hereof)
per share of Common Stock on the record date established for the issuance of
such rights, options or warrants, then, in such case, the Public Warrant Price
shall be adjusted by multiplying the Public Warrant Price in effect on the
record date of such issuance by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding on the record date for such
issuance plus the number of shares of Common Stock which the aggregate offering
price of the total number of shares of Common Stock so to be issued (or the
aggregate initial conversion price of the convertible securities to be issued or
sold) would purchase at such "current market price" and of which the denominator
shall be the number of shares of Common Stock outstanding on the record date for
such issuance plus the number of additional shares of Common Stock to be issued
(or into which the convertible or exchangeable securities to be issued or sold
are initially convertible or exchangeable). Such adjustment shall become
effective at the close of business on such record date; provided, however, that,
to the extent the shares of Common Stock (or securities convertible to or
exchangeable for shares of Common Stock) are not delivered, the Public Warrant
Price shall be readjusted after the expiration of such rights, options, or
warrants (but only with respect to Warrants exercised after such expiration), to
the Public Warrant Price which would then be in effect had the adjustments made
upon the issuance of such rights or warrants been made upon the basis of
delivery of only the number of shares of Common Stock or securities convertible
into or exchangeable for shares of Common Stock actually issued. In case any
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be as
determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest error. Shares of Common Stock
owned by or held for the account of the Company or any majority-owned subsidiary
shall not be deemed outstanding for the purpose of any such computation.
Notwithstanding the foregoing, no adjustment in the Public Warrant Price or
the number of shares of Common Stock issuable upon exercise of the Public
Warrants shall be made upon (i) the issuance of options (or upon exercise
thereof) by the Company pursuant to its Stock Option Plans, (ii) the issuance of
the Underwriter's Warrants, or (iii) any other options and warrants outstanding
as of the date hereof.
SECTION 3.03. In case the Company shall distribute to all holders of
Common Stock (including any such distribution made to the stockholders of the
Company in connection with a consolidation or merger in which the Company is the
continuing corporation) evidences of its
-7-
indebtedness or assets (other than cash dividends distributions and dividends
payable in shares of Common Stock), subscription rights, options, or warrants or
convertible or exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock (excluding those referred to in Section 3.02
hereof), then, in each case, the Public Warrant Price shall be adjusted by
multiplying the Public Warrant Price in effect immediately prior to the record
date for the determination of stockholders entitled to receive such distribution
by a fraction of which the numerator shall be the "current market price" per
share of Common Stock on such record date, less the fair market value (as
determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest error) of the portion of the
evidences of indebtedness or assets so to be distributed, or of such
subscription rights, options, or warrants, convertible or exchangeable
securities containing the right to subscribe for or purchase shares of Common
Stock, applicable to the share, and of which the denominator shall be such
"current market price" per share of Common Stock. Such adjustment shall be made
whenever any such distribution is made, and shall become effective on the date
of such distribution retroactive to the record date for the determination of
stockholders entitled to receive such distribution.
SECTION 3.04. For the purpose of any computation under sections 3.02 and
3.03 hereof, the "current market price" per share of Common Stock on any date
shall be deemed to be the average of the daily closing prices for the 20
consecutive trading days ending three (3) days prior to such date. The closing
price for each day shall be the last reported sales price regular way or, in
case no such reported sale takes place on such day, the closing bid price
regular way, in either case on the principal national securities exchange on
which the Common Stock is listed or admitted to trading or, if the Common Stock
is not listed or admitted to trading on any national securities exchange, the
highest reported bid price as furnished by NASDAQ. If on any such date the
Common Stock is not quoted on NASDAQ or any such organization, the closing price
shall be deemed to be the average of the closing bid and asked prices in the
over-the-counter market as reported by the National Quotation Bureau or if no
such quotation is available, the fair value of the Common Stock on such date, as
determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest error.
SECTION 3.05. No adjustment in the Public Warrant Price shall be required
if such adjustment is less than $0.01; provided, however, that any adjustments
which by reason of this Section 3.05 are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Article III shall be made to the nearest cent or to the
nearest one-thousandth of a share, as the case may be.
SECTION 3.06. In any case in which this Article III shall require that an
adjustment in the Public Warrant Price be made effective as of a record date for
a specified event, the Company may elect to defer, until the occurrence of such
event, issuing to the holder of any Warrant exercised after such record date,
the shares, if any, issuable upon such exercise over and above the shares, if
any, issuable upon such exercise on the basis of the Public Warrant Price in
effect prior to such adjustment; provided, however, that the Company shall
deliver to such holder a due xxxx or other
-8-
appropriate instrument evidencing such holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
SECTION 3.07. Upon each adjustment of the Public Warrant Price as a result
of the calculations made in Section 3.01, 3.02, or 3.03 hereof, each Warrant
outstanding prior to the making of the adjustment in the Public Warrant Price
shall thereafter evidence the right to purchase, at the adjusted Public Warrant
Price, that number of shares (calculated to the nearest thousandth) obtained by
dividing (A) the product obtained by multiplying the number of shares
purchasable upon exercise of a Warrant prior to adjustment of the number of
shares by the Public Warrant Price in effect prior to adjustment of the Public
Warrant Price by (B) the Public Warrant Price in effect after such adjustment of
the Public Warrant Price.
SECTION 3.08. In case of any capital reorganization of the Company, or of
any reclassification of the Common Stock (other than a reclassification of the
Common Stock referred to in Section 3.01 hereof), or in the case of the
consolidation of the Company with or the merger of the Company into any other
corporation or of the sale, transfer, or lease of the properties and assets of
the Company as, or substantially as, an entirety to any other corporation or
other entity, each Public Warrant shall after such capital reorganization,
reclassification of Common Stock, consolidation, merger, sale, transfer, or
lease, be exercisable, on the same terms and conditions specified in this
Agreement, for the number of shares of stock or other securities, assets, or
cash to which a holder of the number of shares purchasable (at the time of such
capital reorganization, reclassification of Common Stock, consolidation, merger,
sale, transfer, or lease) upon exercise of such Public Warrant would have been
entitled upon such capital reorganization, reclassification of Common Stock,
consolidation, merger, sale, transfer, or lease; and in any such case, if
necessary, the provisions set forth in this Article III with respect to the
rights and interests thereafter of the holders of the Public Warrants shall be
appropriately adjusted so as to be applicable, as nearly as may reasonably be,
to any shares of stock, other securities, assets, or cash thereafter deliverable
on the exercise of the Public Warrants. The subdivision or combination of
shares of Common Stock at any time outstanding into a greater or lesser number
of shares shall not be deemed to be a reclassification of the Common Stock for
the purposes of this subsection. The Company shall not effect any such
consolidation, merger, transfer, or lease, unless prior to or simultaneously
with the consummation thereof, the successor corporation (if other than the
Company) resulting from such consolidation or merger or the Corporation
purchasing, receiving, or leasing such assets or other appropriate corporation
or entity shall expressly assume, by written instrument in form satisfactory to
the Underwriter, the obligation to deliver to the holder of each Public Warrant
such shares of stock, securities, or assets as, in accordance with the foregoing
provisions, such holders may be entitled to purchase and to perform the other
obligations of the Company under this Agreement.
SECTION 3.09. The Company may make such reductions in the Public Warrant
Price, in addition to those required by this Article III, as it shall, in it
sole discretion, determine to be advisable.
-9-
ARTICLE IV
OTHER PROVISIONS RELATING TO RIGHTS OF
WARRANT HOLDERS
SECTION 4.01. No Warrant Holder, as such, shall be entitled to vote or
receive dividends or be deemed the holder of shares of Common Stock for any
purposes, nor shall anything contained in any Warrant Certificate be construed
to confer upon any Warrant Holder, as such, any of the rights of a shareholder
of the Company or any right to vote, give or withhold consent to any action by
the Company, whether upon any recapitalization, issue of stock, reclassification
of stock, consolidation, merger, conveyance or otherwise, receive dividends or
subscription rights, or otherwise, until in connection with the exercise of any
Public Warrant, such Public Warrant shall have been surrendered and the purchase
price or the shares of Common Stock for which such Public Warrant is being
exercised shall have been received by the Warrant Agent; provided, however, that
any such surrender and payment on any date when the stock transfer books of the
Company shall be closed shall constitute the person or persons in whose name or
names the certificate or certificates for those shares of Common Stock are to be
issued as the record holder or holders thereof for all purposes at the opening
of business on the next succeeding day on which such stock transfer books are
open and the Public Warrant surrendered shall not be deemed to have been
exercised, in whole or in part, as the case maybe, until such next succeeding
day on which stock transfer books are open.
SECTION 4.02. The Company covenants and agrees that it shall
contemporaneously provide to all Warrant Holders of record any publication,
mailing or notice of an event which it shall provide to all of its shareholders
of record and which event shall result in the adjustment to the Public Warrant
Price as provided in Article III hereof. For purposes of this Section 4.02, the
Warrant Holders of record shall be those Warrant Holders who are of record on a
date even with the date chosen by the Company for the purpose of determining the
shareholders of record who shall be entitled to receive such publication,
mailing or notice.
SECTION 4.03. If any Warrant Certificate is lost, stolen, mutilated or
destroyed, the Company and the Warrant Agent may, on such terms as to indemnity
or otherwise as they may in their discretion reasonably impose, which shall, in
the case of a mutilated Warrant Certificate, include the surrender thereof,
issue a new Warrant Certificate of like denomination and tenor as, and in
substitution for, the Warrant Certificate so lost, stolen mutilated or
destroyed.
SECTION 4.04. (a) The Company covenants and agrees that at all times it
shall reserve and keep available for the exercise of outstanding Warrants such
number of authorized shares of Common Stock and the aggregate number and kind of
any other securities which the Warrants are exercisable for, pursuant to the
provisions of Article III hereof, as are sufficient to permit the exercise in
full of such Warrants and that it will make available to the Warrant Agent from
time to time a number of duly executed certificates representing shares of
Common Stock and other securities, sufficient therefor.
-10-
(b) The Company shall use its best efforts to secure the listing,
upon official notice of issuance, of the shares of Common Stock issuable upon
exercise of Warrants upon any securities exchange upon which the Common Stock
becomes listed.
(c) The Company covenants that all shares of Common Stock issued on
exercise of Warrants shall be validly issued, fully paid, non-assessable and
free of preemptive rights.
(d) The Company has filed with the Securities and Exchange Commission
a Registration Statement on Form SB-2 (Registration No. 333-24145) for the
registration of, among other things, the sale of the Public Warrants and the
shares of Common Stock issuable upon exercise thereof under the Securities Act
of 1933, as amended (the "ACT") which was declared effective by the Securities
and Exchange Commission at 5:15 p.m. Eastern Daylight Time on______________,
199__. The "EFFECTIVE DATE" of the Registration Statement for purposes of this
Agreement is____________, 199__. The Company has undertaken to register or
qualify the Common Stock, Warrants and shares of Common Stock underlying the
Public Warrants under the laws of any states in which the sale of the Warrants
and shares of Common Stock was registered or qualified at the time of the
Secondary Offering and shall use its reasonable good faith efforts to register
and qualify such Common Stock, Warrants and shares of Common Stock underlying
the Warrants in such additional states and jurisdictions as may be appropriate.
The Company further agrees to use its best efforts to maintain the effectiveness
of such Registration Statement and such state qualifications, as aforesaid, by
the filing of any and all amendments to the Registration Statement and such
state qualifications as may be required from time to time under the Act or the
laws of the various states until the expiration or termination of all the
Warrants in accordance herewith.
(e) The Company will furnish to the Warrant Agent, upon request, an
opinion of counsel satisfactory to the Warrant Agent to the effect that (i) a
Registration Statement under the Act is then in effect with respect to the
Warrants and shares of Common Stock issuable upon the exercise of the Warrants
and that the prospectus included therein complies as to form in all material
respects, (except as to financial statements, including schedules, and other
accounting and financial data, as to which such counsel need express no
opinion), with the requirements of the Act and the rules and regulations of the
Commission thereunder; or a Registration Statement under the Act with respect to
said Warrants and shares of Common Stock is not required. In the event that
said opinion states that such a Registration Statement is in effect, the Company
will from time to time furnish the Warrant Agent with current prospectuses
meeting the requirements of the Act and such rules and regulations in sufficient
quantity to permit the Warrant Agent to deliver a prospectus ("PROSPECTUS") to
each Warrant Holder upon exercise thereof. The Company further agrees to pay
all fees, costs and expenses in connection with the preparation and delivery to
the Warrant Agent of the foregoing opinions and Prospectuses and the above
mentioned registrations and other actions, and to immediately notify the Warrant
Agent in the event that (i) the Commission shall have issued or threatened to
issue any order preventing or suspending the use of any Prospectus; (ii) at any
time any Prospectus shall contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading; or (iii) for
-11-
any reason it shall be necessary to amend or supplement any Prospectus in order
to comply with the Act.
SECTION 4.05. If the number of shares purchasable upon the exercise of
each Public Warrant is adjusted pursuant to Section 3.07 hereof, the Company
shall not be required to issue fractions of shares upon exercise of the Public
Warrants or to distribute share certificates which evidence fractional shares.
In lieu of fractional shares, the Company, in its sole discretion, may pay to
the registered holders of Warrant Certificates at the time such Public Warrants
are exercised as herein provided an amount in cash equal to the same fraction of
the current market value of a share. For purposes of this Section 4.05, the
current market value of a share issuable upon the exercise of a Public Warrant
shall be the closing price of a share of Common Stock, as determined pursuant to
the second and third sentences of Section 3.04, for the trading day immediately
prior to the date of such exercise.
ARTICLE V
TREATMENT OF WARRANT HOLDERS
SECTION 5.01. Prior to due presentment for registration of transfer of any
Public Warrant, the Company and the Warrant Agent may deem and treat the Warrant
Holder as the absolute owner of such warrant, notwithstanding any notation of
ownership or other writing thereon, for the purpose of any exercise thereof and
for all other purposes, and neither the Company nor the Warrant Agent shall be
affected by any notice to the contrary.
ARTICLE VI
CONCERNING THE WARRANT AGENT
AND OTHER MATTERS
SECTION 6.01. The Company will from time to time promptly pay, subject to
the provisions of Section 2.02 (d) of this Agreement, all taxes and charges that
may be imposed upon the Company or the Warrant Agent in respect of the issuance
or delivery of shares of Common Stock upon the exercise of Public Warrants.
SECTION 6.02. (a) The Warrant Agent may resign and be discharged from its
duties under this Agreement upon sixty (60) days notice in writing, mailed to
the Company by registered or certified mail, and to each Warrant Holder. The
Company may remove the Warrant Agent or any successor warrant agent upon sixty
(60) days notice in writing, mailed to the Warrant Agent or successor Warrant
Agent, as the case may be, by registered or certified mail, and to each Warrant
Holder; provided, however, the Company shall appoint a new Warrant Agent as
hereinafter provided and such removal shall not become effective until a
successor Warrant Agent has been appointed and has accepted such appointment.
If the Warrant Agent shall resign or shall otherwise become capable of acting,
the Company shall appoint a successor to the Warrant Agent. If the
-12-
Company shall fail to make such appointment within a period of sixty (60) days
after it has been notified in writing of such resignation or incapability by the
Warrant Agent by a Warrant Holder, who shall, with such notice, submit his
Warrant Certificate for inspection by the Company, then any Warrant Holder may
apply to any court of competent jurisdiction or the appointment of a successor
to the Warrant Agent. Any successor Warrant Agent, whether appointed by the
Company or by such a court shall be a registered transfer agent, bank or trust
company, subject to the terms and conditions of this Section 6.02, in good
standing and incorporated under the laws of any State of the United States,
having its principal office in the United States of America. After appointment,
the successor Warrant Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Warrant Agent without
further act or deed. The former Warrant Agent shall deliver and transfer to the
successor Warrant Agent any property at the time held by it hereunder and
execute and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Failure to give any notice provided for in this Section, however,
or any defect therein, shall not affect the legality or validity of the
resignation or removal of the Warrant Agent or the appointment of the successor
Warrant Agent, as the case may be.
(b) Any corporation into which the Warrant Agent may be merged or
with which it may be consolidated, or any corporation resulting from any merger
or consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Warrant Agent, shall be the
successor to the Warrant Agent hereunder without the execution or filing of any
paper or any further act on the part of any of the parties hereto. In case at
the time such successor to the Warrant Agent shall succeed to the agency created
by this Agreement, any of the Warrant Certificates shall have been countersigned
but not delivered, any such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent and deliver such Warrant
Certificates so countersigned, and in case at that time any of the Warrant
Certificates shall not have been countersigned, any successor to the Warrant
Agent may countersign such Warrant Certificate in its own name or in the name of
the successor Warrant Agent; and in all such cases such Warrant Certificates
shall have the full force provided in the Warrant Certificates and this
Agreement.
In case at any time the name of the Warrant Agent shall be
changed and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent may adopt the
countersignature under this prior name and deliver Warrant Certificates so
countersigned; and in case at that time any of the Warrant Certificates shall
not have been countersigned, the Warrant Agent may countersign such Warrant
Certificates either in its prior name or in its changed name; and in all such
cases such Warrant Certificates shall have the full force provided in the
Warrant Certificates and in this Agreement.
SECTION 6.03. The Company agrees to pay the Warrant Agent a reasonable fee
for all services rendered by it hereunder. The Company also agrees to indemnify
the Warrant Agent for, and to hold it harmless against, any loss, liability or
expense, incurred without gross negligence, willful misconduct or bad faith on
the part of the Warrant Agent, arising out of or in connection with
-13-
the acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.
SECTION 6.04. The Company covenants and agrees that it shall, at the
Company's expense, provide to the Warrant Agent copies of its current
prospectus, if any, in such quantity as to enable the Warrant Agent to deliver
one copy of such current prospectus to such Warrant Holder who shall exercise
his rights under a Warrant. Notwithstanding anything else contained in this
Section 6.04, the Company shall not be obligated to provide copies of its
current prospectus for the purpose of allowing the Warrant Agent to deliver such
copies to any Warrant Holder who delivers all of his redeemable warrants for
redemption pursuant to Section 2.03 or who shall notice the Company of his
intent to permit redemption of all of his Warrants pursuant to Section 2.03
herein or to any person who shall hold any Warrant subject to the terms of this
Agreement after the earlier of the Redemption Date or the Last Exercise Date of
the Warrants.
SECTION 6.05. The Warrant Agent undertakes the duties and obligations
imposed by this Agreement upon the following terms and conditions, by all of
which the Company and the holders of Warrant certificates, by their acceptance
thereof, shall be bound:
(a) Whenever in the performance of its duties under this Agreement
the Warrant Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any action
hereunder, that fact or matter, unless other evidence in respect thereof be
herein specifically prescribed, may be deemed to be conclusively proved and
established by a certificate signed by the President or the Secretary of the
Company and delivered to the Warrant Agent. That certificate shall be full
authorization to the Warrant Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon that
certificate.
(b) The Warrant Agent shall be liable hereunder only for its own
gross negligence, willful misconduct or bad faith.
(c) The Warrant Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Warrant
Certificates, except its countersignature thereof, or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(d) The Warrant Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof,
except the due execution hereof by the Warrant Agent, or in respect of the
validity or execution of any Warrant Certificate, except its countersignature
thereof; nor shall it be responsible for any Warrant Certificate; nor shall it
be responsible for the adjustment of the Public Warrant Price or the making of
any change in the number of shares of Common Stock required under the provisions
of Article III of this Agreement or responsible for the manner, method or amount
of any such change or the ascertaining of the existence of facts that would
require any such adjustment or change except with respect to the
-14-
exercise of Warrant Certificates after actual notice of any adjustment of the
Public Warrant Price; nor shall it by any act under this Agreement be deemed to
make any representation or warranty as to the authorization or reservation of
any shares of Common Stock to be issued pursuant to this Agreement or any
Warrant Certificate or as to whether any share of Common Stock will when issued
be validly issued, fully paid, non-assessable and free of preemptive rights.
(e) The Warrant Agent and any shareholder, director, officer or
employee of the Warrant Agent may buy, sell or deal in any of the Warrant
Certificates or other securities of the Company to retain a pecuniary interest
in any transaction in which the Company may be interested or contract with or
lend money to or otherwise act as fully and freely as though it was not the
Warrant Agent or subject to this Agreement. Nothing herein shall preclude the
Warrant Agent from acting in any other capacity for the Company or for any other
legal entity.
(f) The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
officer or assistant officer of the Company, and to apply to any such officer or
assistant officer for advice or instructions in connection with its duties, and
shall not be liable for any action taken or suffered to be taken by it in good
faith in accordance with instructions of any such officer or assistant officer.
(g) The Warrant Agent may consult with its counsel or other counsel
satisfactory to it, including counsel for the Company, and the opinion of such
counsel shall be full and complete authorization and protection in respect of
any action taken, offered, or omitted by it hereunder in good faith and in
accordance with the opinion of such counsel.
(h) The Warrant Agent shall incur no liability to the Company or to
any holder of any Warrant for any action taken by it in reliance upon any
Warrant Certificate or certificate for Common Stock, instrument of assignment or
transfer, power of attorney, endorsement, affidavit, letter, notice, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed, executed, and where necessary, certified or
acknowledged, by the proper person or persons.
SECTION 6.06. The Warrant Agent may, without the consent or concurrence of
the Warrant Holders, by supplemental agreement or otherwise, concur with the
Company in making any changes or corrections in this Agreement that (i) it shall
have been advised by counsel, who may be counsel for the Company, are required
to cure any ambiguity or to correct any defective or inconsistent provision or
clerical omission or mistake or manifest error herein contained, or (ii) as
provided in Section 3.09, the Company deems necessary of advisable and which
shall not be inconsistent with the provisions of the Warrant Certificates,
provided such changes or corrections do not adversely affect the privileges or
immunities of the Warrant Holders.
SECTION 6.07. All the covenants and provisions of this Agreement by or for
the benefit of the Company or the Warrant Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
-15-
SECTION 6.08. Forthwith upon the appointment after the date thereof of any
transfer agent for the Common Stock, or of any subsequent transfer agent for the
Common Stock, the Company will file with the Warrant Agent a statement setting
forth the name and address of such transfer agent.
SECTION 6.09. Notice or demand pursuant to this Agreement to be given or
made by the Warrant Agent or by any Warrant Holder to or on the Company shall be
sufficiently given or made and effective on the third business day after posting
thereof, unless otherwise provided in this Agreement, if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing by
the Company with the Warrant Agent) as follows:
Rosedale Decorative Products Ltd.
000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx
Xxxxxx X0X 0X0
notice or demand pursuant to this Agreement to be given or made by the Company
or any Warrant Holder to or on the Warrant Agent shall be sufficiently given or
made and effective on the third business day after posting thereof, unless
otherwise provided in this Agreement, if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing by the Warrant
Agent with the Company) as follows:
Continental Stock Transfer & Trust Company
0 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
notice or demand pursuant to this Agreement to be given or made by the Company
or the Warrant Agent to or on the Underwriter shall be sufficiently given or
made and effective on the third business day after posting thereof, unless
otherwise provided in this Agreement, if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing by the Underwriter
with the Company) as follows:
X.X. Xxxxxx & Company, L.L.C.
0000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
notice or demand pursuant to this Agreement to be given or made by the Company
or the Warrant Agent to or on any Warrant Holder shall be sufficiently given or
made and effective on the third business day after posting thereof, unless
otherwise provided in this Agreement, if sent by first-class mail, postage
prepaid, addressed to such Warrant Holder at his last known address as it shall
appear in the records of the Company, if such notice shall be given by the
Company, or, if such notice shall be given by the Warrant Agent, as it shall
appear on the register maintained by the Warrant Agent.
-16-
A copy of any Notice or demand given or made pursuant to this Agreement on
the Warrant Agent, Company or Underwriter shall be promptly forwarded by the
recipient thereof to each of the Company, Warrant Agent or Underwriter who shall
not have received or made such demand or Notice.
SECTION 6.10. The validity, interpretation and performance of this
Agreement and the Warrants shall be governed by the law of the State of
____________.
SECTION 6.11. Nothing in this Agreement shall be construed to give to any
person or corporation other than the parties hereto and the Warrant Holders any
right, remedy or claim under promise or agreement hereof. All covenants,
conditions, stipulations, promises and agreements contained in this Agreement
shall be for the sole and exclusive benefit of the Company and the Warrant Agent
and their successors and of the Warrant Holders, and their heirs,
representatives, successors, assigns and transferees.
SECTION 6.12. A copy of this Agreement shall be available for inspection
by any Warrant Holder during the regular business hours and at the corporate
office of the Warrant Agent in New York, New York, at which time the Warrant
Agent may require any Warrant Holder to submit his Warrant Certificate for
inspection by it.
SECTION 6.13. This Agreement shall terminate on the Last Exercise Date, or
such earlier date upon which all Warrants have been exercised or redeemed,
except that the Warrant Agent shall account to the Company pursuant to Section
2.02 (e) of this Agreement for all cash held by it. The provisions of Section
6.03 and 6.04 of this Agreement shall survive such termination.
SECTION 6.14. The Article headings in this Agreement are for convenience
only and are not part of this Agreement and shall not affect the interpretation
thereof.
SECTION 6.15. This Agreement may be executed in any number counterparts,
each of which is so executed shall be deemed to be an original, and all such
counterparts shall together constitute but one and the same agreement.
ROSEDALE DECORATIVE PRODUCTS, LTD.
By:
------------------------------
ATTEST: Xxxxxx Xxxxxxxx, President
---------------------
Secretary
CONTINENTAL STOCK TRANSFER & TRUST CO.
By:
---------------------------
ATTEST: Name:
--------------------- -------------------------
Secretary Title:
------------------------
-17-
