IDM ENVIRONMENTAL CORP.
AND
XXXXXX CAPITAL GROUP, LTD.
WARRANT AGREEMENT
Dated as of February 11, 1997
WARRANT AGREEMENT, dated as of February 11, 1997 by and between IDM
ENVIRONMENTAL CORP., a New Jersey corporation (the "Company"), and XXXXXX
CAPITAL GROUP, LTD. (the "Placement Agent").
The Company proposes to issue to the Placement Agent the warrants as
hereinafter described (the "Warrants") to purchase 100,000 shares of common
stock of the Company, $.001 par value per share ("Common Stock"), subject to
adjustment as provided in Section 8 hereof (such number of shares, as adjusted,
being hereinafter referred to as the "Shares"), each Warrant entitling the
holder ("Holder") thereof to purchase one share of Common Stock. All capitalized
terms used herein and not otherwise defined herein shall have the same meanings
as assigned thereto in that certain Placement Agency Agreement, dated as of
February 10, 1997, by and between the Company and the Placement Agent.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Issuance of Warrants; Form of Warrant. On the Closing Date the Company
will issue, sell and deliver the Warrants to the Placement Agent or its bona
fide officers or principals. The form of the Warrant and of the form of Election
to Purchase to be attached thereto shall be substantially as set forth on
Exhibit A attached hereto. The Warrants shall be executed on behalf of the
Company by the manual or facsimile signature of the present or any future
Chairman or Co-Chairman, President or any Vice President of the Company, under
its corporate seal, affixed or in facsimile, and attested by the manual or
facsimile signature of the present or any future Secretary or Assistant
Secretary of the Company.
2. Registration. The Warrants shall be numbered and shall be registered in
a Warrant register (the "Warrant Register"). The Company shall be entitled to
treat the registered holder of any Warrant on the Warrant Register as the owner
in fact thereof for all purposes and shall not be bound to recognize any
equitable or other claim to or interest in such Warrant on the part of any other
person, and shall not be liable for any registration or transfer of Warrants
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which are registered or are to be registered in the name of a fiduciary or the
nominee of a fiduciary unless made with the actual knowledge that a fiduciary or
nominee is committing a breach of trust in requesting such registration or
transfer, or with such knowledge of such facts that its participation therein
amounts to bad faith. The Warrants shall be registered initially in the name of
the Placement Agent in such denominations as the Placement Agent may request in
writing to the Company; provided, however, that the Placement Agent may
designate that all or a portion of the Warrants be issued in varying amounts
directly to its bona fide officers or principals and not to itself. Such
designation will only be made by the Placement Agent if it determines that such
issuances would not violate the interpretation of the Board of Governors of the
National Association of Securities Dealers, Inc. (the "NASD"), relating to the
review of corporate financing arrangements.
3. Transfer of Warrants. The Holder of a Warrant Certificate, by its
acceptance thereof, acknowledges that the Warrants are "restricted securities"
which have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), and represents that the Warrants are being acquired as an
investment and not with a view to the distribution thereof and will not transfer
such Warrants, except to bona fide officers, directors, shareholders,
principals, employees or registered representatives of the Holder upon written
request to the Company delivered in accordance with Section 12 hereof and upon
delivery of the Warrant Certificate duly endorsed by the Holder or by his duly
authorized attorney or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer. In all cases of transfer by an
attorney, the original power of attorney, duly approved, or an official copy
thereof, duly certified, shall be deposited with the Company. In case of
transfer by executors, administrators, guardians or other legal representatives,
duly authenticated evidence of their authority shall be produced, and may be
required to be deposited with the Company in its discretion. Upon any
registration of transfer, the Company shall deliver a new Warrant or Warrants to
the persons entitled thereto. The Warrants may be exchanged at the option of the
Holder thereof for other Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of shares of
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Common Stock upon surrender to the Company or its duly authorized agent. The
Company may require payment of a sum sufficient to cover all taxes and other
governmental charges that may be imposed in connection with any voluntary
transfer, exchange or other disposition of the Warrants. Notwithstanding the
foregoing, the Company shall have no obligation to cause Warrants to be
transferred on its books to any person, if such transfer would violate the
Securities Act or applicable state securities laws.
4. Exercise of Warrants.
(a) Term of Warrants; Exercise of Warrants. The Placement Agent is
hereby granted 100,000 Warrants. Each Warrant entitles the registered owner
thereof to purchase one Share at a purchase price equal to one hundred and
fifty percent (150%) of the average closing bid price of the Common Stock
(the "Closing Date Average") as calculated over the five (5) trading-day
period ending on the Closing Date (as adjusted from time to time pursuant
to the provisions hereof, the "Exercise Price"). The Exercise Price and the
Shares issuable upon exercise of Warrants are subject to adjustment upon
the occurrence of certain events, pursuant to the provisions of Section 8
of this Agreement. Subject to the provisions of this Agreement, each Holder
shall have the right, which may be exercised for a period of four (4) years
commencing on the first anniversary of the Closing Date, to purchase from
the Company (and the Company shall issue and sell to such Holder) the
number of fully paid and nonassessable shares (rounded up to the nearest
full share) specified in such Warrants, upon surrender to the Company, or
its duly authorized agent, of such Warrants, with the form of Election to
Purchase attached thereto duly completed and signed, with signatures
guaranteed by a member firm of a national securities exchange, a commercial
bank (not a savings bank or savings and loan association) or trust company
located in the United States or a member of the NASD and upon payment to
the Company of the Exercise Price, as adjusted in accordance with the
provisions of Section 8 of this Agreement, for the number of Shares in
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respect of which such Warrants are then exercised. Payment of such Exercise
Price may be made in cash or by certified check or official bank check
payable to the order of the Company. No adjustment shall be made for any
dividends on any Shares issuable upon exercise of a Warrant. Upon each
surrender of Warrants and payment of the Exercise Price as aforesaid, the
Company shall issue and cause to be delivered with all reasonable dispatch
to or upon the written order of the Holder of such Warrants and in such
name or names as such Holder may designate, a certificate or certificates
for the number of full Shares so purchased upon the exercise of such
Warrants. Such certificate or certificates shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to
have become a holder of record of such Shares as of the date of the
surrender of Warrants and payment of the Exercise Price as aforesaid;
provided, however, that if, at the date of surrender of such Warrants and
payment of such Exercise Price, the transfer books for the Common Stock or
other class of securities issuable upon the exercise of such Warrants shall
be closed, the certificates for the Shares shall be issuable as of the date
on which such books shall next be opened and until such date the Company
shall be under no duty to deliver any certificate for such Shares;
provided, further, however, that the transfer books of record, unless
otherwise required by law, shall not be closed at any one time for a period
longer than twenty (20) days. The rights of purchase represented by the
Warrants shall be exercisable, at the election of the Holder(s) thereof,
either in full or from time to time in part and, in the event that any
Warrant is exercised in respect of less than all of the Shares issuable
upon such exercise, a new Warrant or Warrants will be issued for the
remaining number of Shares specified in the Warrant so surrendered.
(b) Exercise by Surrender of Warrant. In addition to the method of
payment set forth in subsection (a) above and in lieu of any cash payment
required thereunder, the Holder of the Warrants shall have the right at any
time and from time to time to exercise the Warrants in full or in part by
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surrendering the Warrant in the manner specified in the Warrant in exchange
for the number of Shares equal to the product of (x) the number of shares
as to which the Warrants are being exercised multiplied by (y) a fraction,
the numerator of which is the Market Price (as defined below) of the Shares
less the Exercise Price and the denominator of which is such Market Price.
Solely for the purposes of this paragraph, Market Price shall be the
average closing bid price of the Common Stock as calculated over the five
(5) trading-day period preceding the date on which the Election to Purchase
is sent to the Company.
5. Payment of Taxes. The Company will pay all documentary stamp taxes, if
any, attributable to the issuance of Shares upon the exercise of Warrants;
provided, however, that the Company shall not be required to pay any tax or
taxes which may be payable in respect of any transfer involved in the issue or
delivery of any certificates for Shares in a name other than that of the Holder
of Warrants in respect of which such Shares are issued.
6. Mutilated or Missing Warrants. In case any of the Warrants shall be
mutilated, lost, stolen or destroyed, the Company shall issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and representing an equivalent right or interest, but only
upon receipt of evidence reasonably satisfactory to the Company of such
mutilation, loss, theft or destruction of such Warrant and indemnity, if
requested, reasonably satisfactory to the Company. An applicant for such
substitute Warrants shall also comply with such other reasonable regulations and
pay such other reasonable charges and expenses as the Company may prescribe.
7. Reservation of Shares, etc. There have been reserved, and the Company
shall at all times keep reserved, out of the authorized and unissued Common
Stock of the Company, a number of shares of Common Stock sufficient to provide
for the exercise of the rights of purchase represented by the outstanding
Warrants. Continental Stock Transfer & Trust Company, transfer agent for the
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Common Stock (the "Transfer Agent"), and every subsequent transfer agent, if
any, for the Company's securities issuable upon the exercise of the Warrants
will be irrevocably authorized and directed at all times to reserve such number
of authorized and unissued shares as shall be required for such purpose. The
Company will keep a copy of this Agreement on file with the Transfer Agent and
with every subsequent transfer agent for any shares of the Company's securities
issuable upon the exercise of the Warrants. The Company will supply the Transfer
Agent or any subsequent transfer agent with duly executed certificates for such
purpose. All Warrants surrendered in the exercise of the rights thereby
evidenced shall be canceled, and such canceled Warrants shall constitute
sufficient evidence of the number of Shares that have been issued upon the
exercise of such Warrants.
8. Adjustments of Exercise Price and Number of Shares. The Exercise Price
and the number and kind of securities issuable upon exercise of each Warrant
shall be subject to adjustment from time to time upon the happening of certain
events, as follows:
(a) In case the Company shall (i) declare a dividend on its Common
Stock in shares of Common Stock or make a distribution in shares of Common
Stock, (ii) subdivide its outstanding shares of Common Stock, (iii) combine
its outstanding shares of Common Stock into a smaller number of shares of
Common Stock or (iv) issue by reclassification of its shares of Common
Stock other securities of the Company (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing corporation), the number of Shares purchasable upon exercise of
each Warrant immediately prior thereto shall be adjusted so that the Holder
of each Warrant shall be entitled to receive the kind and number of Shares
or other securities of the Company which he would have owned or have been
entitled to receive after the happening of any of the events described
above, had such Warrant been exercised immediately prior to the happening
of such event or any record date with respect thereto. An adjustment made
pursuant to this paragraph (a) shall become effective immediately after the
effective date of such event retroactive to immediately after the record
date, if any, for such event.
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(b) In case the Company shall issue rights, options or warrants to all
holders of its shares of Common Stock, without any charge to such holders,
entitling them (for a period expiring within 45 days after the record date
mentioned below in this paragraph (b)) to subscribe for or to purchase
shares of Common Stock at a price per share that is lower at the record
date mentioned below than the then current market price per share of Common
Stock (as defined in paragraph (d) below), the number of Shares thereafter
purchasable upon exercise of each Warrant shall be determined by
multiplying the number of Shares theretofore purchasable upon exercise of
each Warrant by a fraction, of which the numerator shall be the number of
shares of Common Stock outstanding on such record date plus the number of
additional shares of Common Stock offered for subscription or purchase, and
of which the denominator shall be the number of shares of Common Stock
outstanding on such record date plus the number of shares which the
aggregate offering price of the total number of shares of Common Stock so
offered would purchase at the then current market price per share of Common
Stock. Such adjustment shall be made whenever such rights, options or
warrants are issued, and shall become effective retroactively to
immediately after the record date for the determination of shareholders
entitled to receive such rights, options or warrants.
(c) In case the Company shall distribute to all holders of its shares
of Common Stock shares of stock other than Common Stock or evidences of its
indebtedness or assets (excluding cash dividends payable out of
consolidated earnings or retained earnings and dividends or distributions
referred to in paragraph (a) above) or 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
paragraph (b) above), then in each case the number of Shares thereafter
issuable upon the exercise of each Warrant shall be determined by
multiplying the number of Shares theretofore issuable upon the exercise of
each Warrant, by a fraction, of which the numerator shall be the current
market price per share of Common Stock (as defined in paragraph (d) below)
on the record date mentioned below in this paragraph (c), and of which the
denominator shall be the current market price per share of Common Stock on
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such record date, less the then fair value (as determined in good faith by
the Board of Directors of the Company, whose determination shall be
conclusive) of the portion of the shares of stock other than Common Stock
or assets or evidences of indebtedness so distributed or of such
subscription rights, options or warrants, or of such convertible or
exchangeable securities applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made, and shall
become effective on the date of distribution retroactive to immediately
after the record date for the determination of shareholders entitled to
receive such distribution.
(d) For the purpose of any computation under paragraphs (b) and (c) of
this Section 8, the current market price per share of Common Stock at any
date (the "Current Market Price") shall be the average of the daily closing
prices for fifteen (15) consecutive trading days commencing twenty (20)
trading days before the date of such computation. The closing price for
each day shall be the last reported sale price or, in case no such reported
sale takes place on such day, the average of the closing bid and asked
prices for such day, in either case on the principal national securities
exchange on which the shares are listed or admitted to trading, or if they
are not listed or admitted to trading on any national securities exchange,
but are traded in the over-the-counter market, the closing sale price of
the Common Stock or, in case no sale is publicly reported, the average of
the representative closing bid and asked quotations for the Common Stock on
the Nasdaq system or any comparable system, or if the Common Stock is not
listed on the Nasdaq system or a comparable system, the closing sale price
of the Common Stock or, in case no sale is publicly reported, the average
of the closing bid and asked prices as furnished by two members of the NASD
selected from time to time by the Company for that purpose.
(e) No adjustment in the number of Shares purchasable hereunder shall
be required unless such adjustment would require an increase or decrease of
at least one percent (1%) in the number of Shares purchasable upon the
exercise of each Warrant; provided, however, that any adjustments which by
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reason of this paragraph (e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment but not later
than three years after the happening of the specified event or events. All
calculations shall be made to the nearest one thousandth of a share.
(f) Whenever the number of Shares purchasable upon the exercise of
each Warrant is adjusted, as herein provided, the Exercise Price shall be
adjusted by multiplying the Exercise Price in effect immediately prior to
such adjustment by a fraction, of which the numerator shall be the number
of Shares purchasable upon the exercise of each Warrant immediately prior
to such adjustment, and of which the denominator shall be the number of
Shares so purchasable immediately thereafter.
(g) For the purpose of this Section 8, the term "shares of Common
Stock" shall mean (i) the class of stock designated as the Common Stock of
the Company at the date of this Agreement or (ii) any other class of stock
resulting from successive changes or reclassifications of such shares
consisting solely of changes in par value, or from no par value to par
value, or from par value to no par value. In the event that at any time, as
a result of an adjustment made pursuant to paragraph (a) above, the Holders
shall become entitled to purchase any shares of capital stock of the
Company other than shares of Common Stock, thereafter the number of such
other shares so purchasable upon exercise of each Warrant and the Exercise
Price of such shares shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Shares contained in paragraphs (a) through (f),
inclusive, and paragraphs (h) through (m), inclusive, of this Section 8,
and the provisions of Sections 4, 5, 7 and 10, with respect to the Shares,
shall apply on like terms to any such other shares.
(h) Upon the expiration of any rights, options, warrants or conversion
rights or exchange privileges, if any thereof shall not have been
exercised, the Exercise Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall, upon such expiration,
be readjusted and shall thereafter be such as it would have been had it
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originally been adjusted (or had the original adjustment not been required,
as the case may be) as if (i) the only shares of Common Stock so issued
were the shares of Common Stock, if any, actually issued or sold upon the
exercise of such rights, options, warrants or conversion rights or exchange
privileges and (ii) such shares of Common Stock, if any, were issued or
sold for the consideration actually received by the Company upon such
exercise plus the aggregate consideration, if any, actually received by the
Company for the issuance, sale or grant of all of such rights, options,
warrants or conversion rights or exchange privileges whether or not
exercised; provided, however, that no such readjustment shall have the
effect of decreasing the number of shares issuable upon the exercise of
each Warrant or increasing the Exercise Price by an amount in excess of the
amount of the adjustment initially made in respect of the issuance, sale or
grant of such rights, options, warrants or conversion rights or exchange
privileges.
(i) The Company may, at its option at any time during the term of the
Warrants, reduce the then current Exercise Price to any amount deemed
appropriate by the Board of Directors of the Company.
(j) Whenever the number of Shares issuable upon the exercise of each
Warrant or the Exercise Price of such Shares is adjusted, as herein
provided, the Company shall promptly mail by first class mail, postage
prepaid, to each Holder, notice of such adjustment or adjustments. The
Company shall retain a firm of independent public accountants (who may be
the regular accountants employed by the Company) to make any computation
required by this Section 8 and shall cause such accountants to prepare a
certificate setting forth the number of Shares issuable upon the exercise
of each Warrant and the Exercise Price of such Shares after such
adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was
made. Such certificate shall be conclusive as to the correctness of such
adjustment and each Holder shall have the right to inspect such certificate
during reasonable business hours.
(k) Except as provided in this Section 8, no adjustment in respect of
any dividends shall be made during the term of a Warrant or upon the
exercise of a Warrant.
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(l) In case of any consolidation of the Company with or merger of the
Company with or into another corporation or in case of any sale or
conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, the Company or such successor or
purchasing corporation (or an affiliate of such successor or purchasing
corporation), as the case may be, agrees that each Holder shall have the
right thereafter upon payment of the Exercise Price in effect immediately
prior to such action to purchase upon exercise of each Warrant the kind and
amount of shares and other securities and property (including cash) which
he would have owned or have been entitled to receive after the happening of
such consolidation, merger, sale or conveyance had such Warrant been
exercised immediately prior to such action. The provisions of this
paragraph (l) shall similarly apply to successive consolidations, mergers,
sales or conveyances.
(m) Notwithstanding any adjustment in the Exercise Price or the number
or kind of shares purchasable upon the exercise of the Warrants pursuant to
this Agreement, certificates for Warrants issued prior or subsequent to
such adjustment may continue to express the same price and number and kind
of Shares as are initially issuable pursuant to this Agreement.
9. Reserved.
10. Registration Rights.
(a) Demand Registration Rights. The Company covenants and agrees with
the Placement Agent and any other or subsequent Holders of the Registrable
Securities (as defined in paragraph (f) of this Section 10) that, subject
to the availability of audited financial statements which would comply with
Regulation S-X under the Securities Act, upon written request of the then
Holder(s) of at least a majority of the Warrants or the Registrable
Securities, or both, which were originally issued to the Placement Agent or
its designees, made at any time within the period commencing one year and
ending five years after the Closing Date, the Company will file as promptly
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as practicable and, in any event, within 60 days after receipt of such
written request, at its expense (other than the fees of counsel and sales
commissions for such Holders), no more than once, a post-effective
amendment (the "Amendment") to a registration statement, or a new
registration statement or a Regulation A Offering Statement (an "Offering
Statement") under the Securities Act, registering or qualifying the
Registrable Securities for sale. Within fifteen (15) days after receiving
any such notice, the Company shall give notice to the other Holders of the
Registrable Securities advising that the Company is proceeding with such
Amendment, registration statement or Offering Statement and offering to
include therein the Registrable Securities of such Holders. The Company
shall not be obligated to any such other Holder unless such other Holder
shall accept such offer by notice in writing to the Company within ten (10)
days thereafter. The Company will use its best efforts, through its
officers, directors, auditors and counsel in all matters necessary or
advisable, to file and cause to become effective such Amendment,
registration statement or Offering Statement as promptly as practicable and
for a period of nine months thereafter to reflect in the Amendment,
registration statement or Offering Statement financial statements which are
prepared in accordance with Section 10(a)(3) of the Securities Act and any
facts or events arising that, individually, or in the aggregate, represent
a fundamental and/or material change in the information set forth in the
Amendment, registration statement or Offering Statement to enable any
Holders of the Warrants to either sell such Warrants or to exercise such
Warrants and sell Shares, or to enable any holders of Shares to sell such
Shares, during said nine-month period. The Holders may sell the Registrable
Securities pursuant to the Amendment, registration statement or the
Offering Statement without exercising the Warrants. If any registration
pursuant to this paragraph (a) is an underwritten offering, the Holders of
a majority of the Registrable Securities to be included in such
registration shall be entitled to select the underwriter or managing
underwriter (in the case of a syndicated offering) of such offering,
subject to the Company's approval which shall not be unreasonably withheld.
(b) Piggyback Registration Rights. The Company covenants and agrees
with the Placement Agent and any other Holders or subsequent Holders of the
Registrable Securities that if, at any time within the period commencing
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one year and ending five years after the Closing Date, it proposes to file
a registration statement or Offering Statement with respect to any class of
equity or equity-related security (other than in connection with an
offering to the Company's employees or in connection with an acquisition,
merger or similar transaction) under the Securities Act in a primary
registration on behalf of the Company and/or in a secondary registration on
behalf of holders of such securities and the registration form or Offering
Statement to be used may be used for registration of the Registrable
Securities, the Company will give prompt written notice (which, in the case
of a registration statement or notification pursuant to the exercise of
demand registration rights other than those provided in Section 10(a) of
this Agreement, shall be within ten (10) business days after the Company's
receipt of notice of such exercise and, in any event, shall be at least 30
days prior to such filing) to the Holders of Registrable Securities
(regardless of whether some of the Holders shall have theretofore availed
themselves of the right provided in Section 10(a) of this Agreement) at the
addresses appearing on the records of the Company of its intention to file
a registration statement or Offering Statement and will offer to include in
such registration statement or Offering Statement all but not less than 20%
of the Registrable Securities and limited, in the case of a Regulation A
offering, to the amount of the available exemption, subject to paragraphs
(i) and (ii) of this paragraph (b), such number of Registrable Securities
with respect to which the Company has received written requests for
inclusion therein within ten (10) days after the giving of notice by the
Company. All registrations requested pursuant to this paragraph (b) are
referred to herein as "Piggyback Registrations". All Piggyback
Registrations pursuant to this paragraph (b) will be made solely at the
Company's expense. This paragraph is not applicable to a registration
statement filed by the Company with the Commission on Forms S-4 or S-8 or
any successor forms.
(i) Priority on Primary Registrations. If a Piggyback
Registration includes an underwritten primary registration on behalf
of such Company and the underwriter(s) for such offering determines in
good faith and advises the Company in writing that in its/their
opinion the number of Registrable Securities requested to be included
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in such registration exceeds the number that can be sold in such
offering without materially adversely affecting the distribution of
such securities by the Company, the Company will include in such
registration (A) first, the securities that the Company proposes to
sell and (B) second, the Registrable Securities requested to be
included in such registration, apportioned pro rata among the Holders
of Registrable Securities, provided, however, the Company will use its
best efforts to include not less than 20% of the Registrable
Securities, and (C) third, securities of the holders of other
securities requesting registration.
(ii) Priority on Secondary Registrations. If a Piggyback
Registration consists only of an underwritten secondary registration
on behalf of holders of securities of the Company (other than pursuant
to Section 10(a)), and the underwriter(s) for such offering advises
the Company in writing that in its/their opinion the number of
Registrable Securities requested to be included in such registration
exceeds the number which can be sold in such offering without
materially adversely affecting the distribution of such securities by
the Company, the Company will include in such registration (A) first,
the securities requested to be included therein by the holders
requesting such registration and the Registrable Securities requested
to be included in such registration, pro rata among all such holders
on the basis of the number of shares requested to be included by each
such holder, provided, however, the Company will use its best efforts
to include not less than 20% of the Registrable Securities, and (B)
second, other securities requested to be included in such
registration.
Notwithstanding the foregoing, if any such underwriter shall determine in
good faith and advise the Company in writing that the distribution of the
Registrable Securities requested to be included in the registration concurrently
with the securities being registered by the Company would materially adversely
affect the distribution of such securities by the Company, then the Holders of
such Registrable Securities shall delay their offering and sale for such period
ending on the earliest of (1) 90 days following the effective date of the
Company's registration statement, (2) the day upon which the underwriting
syndicate, if any, for such offering shall have been disbanded or, (3) such date
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as the Company, managing underwriter and Holders of Registrable Securities shall
otherwise agree. In the event of such delay, the Company shall file such
supplements, post-effective amendments and take any such other steps as may be
necessary to permit such Holders to make their proposed offering and sale for a
period of 120 days immediately following the end of such period of delay. If any
party disapproves of the terms of any such underwriting, it may elect to
withdraw therefrom by written notice to the Company, the underwriter, and the
Placement Agent. Notwithstanding the foregoing, the Company shall not be
required to file a registration statement to include Shares pursuant to this
Section 10(b) if independent counsel, reasonably satisfactory to counsel for the
Company and counsel for the Placement Agent, renders an opinion to the Company
that the Shares proposed to be disposed of may be transferred pursuant to the
provisions of Rule 144 under the Securities Act or otherwise without
registration under the Securities Act.
(c) Other Registration Rights. In addition to the rights above
provided, the Company will cooperate with the then Holders of the
Registrable Securities in preparing and signing any registration statement
or Offering Statement, in addition to the registration statements and
Offering Statements discussed above, required in order to sell or transfer
the Registrable Securities and will supply all information required
therefor, but such additional registration statement or Offering Statement,
shall be at the then Holders' cost and expense; provided, however, that if
the Company elects to register or qualify additional shares of Common
Stock, the cost and expense of such registration statement or Offering
Statement will be pro rated between the Company and the Holders of the
Registrable Securities according to the aggregate sales price of the
securities being issued. Notwithstanding the foregoing, the Company will
not be required to file a registration statement or Offering Statement
pursuant to this paragraph (c), (i) at a time when the audited financial
statements required to be included therein are not available, which time
shall be limited to the period commencing 45 days after the end of the
Company's last fiscal year and ending 90 days after the end of such fiscal
year, or (ii) within 90 days after completion of a public offering by the
Company of any of its Common Stock or equity-related securities or (iii) if
it would adversely impact the Company in its capital raising plans or
otherwise (in which latter case filing may be delayed no longer than 120
days).
-15-
(d) Action to be Taken by the Company. In connection with the
registration of Registrable Securities in accordance with paragraphs (a),
(b) or (c) of this Section 10, the Company agrees to:
(i) Bear the expenses of any registration or qualification under
paragraphs (a) or (b) of this Section 10, including, but not limited
to, legal, accounting and printing fees; provided, however, that in no
event shall the Company be obligated to pay (A) any fees and
disbursements of special counsel for Holders of Registrable
Securities, or (B) any underwriters' discount or commission in respect
of such Registrable Securities, (C) any stock transfer taxes
attributable to the sale of the Registrable Securities, or (D) upon
the exercise of any demand registration right provided for in
paragraph (a) of this Section 10, the cost of any liability or similar
insurance required by an underwriter, to the extent that such costs
are attributable solely to the offering of such Registrable
Securities, payment of which shall, in each case, be the sole
responsibility of the Holders of the Registrable Securities.
(ii) Use its best efforts to register or qualify the Registrable
Securities for offer or sale under state securities or Blue Sky laws
of such jurisdictions in which the Placement Agent or such Holders
shall reasonably request, provided, however, that no qualification
shall be required in any jurisdiction where, as a result thereof, the
Company would be subject to service of general process or to taxation
as a foreign corporation doing business in such jurisdiction to which
it is not then subject, and to do any and all other acts and things
which may be necessary or advisable to enable the holders to
consummate the proposed sale, transfer or other disposition of such
securities in any jurisdiction; and
(iii) Enter into a cross-indemnity agreement, in customary form,
with each underwriter, if any, and each holder of securities included
in such Amendment, registration statement or Offering Statement.
-16-
(e) Action to be Taken by the Holders. In connection with the
registration of Registrable Securities in accordance with paragraphs (a),
(b) or (c) of this Section 10, the Company's obligation shall be
conditioned as to each such public offering upon a timely receipt by the
Company in writing of:
(i) Information as to the terms of such public offering furnished
by or on behalf of each Holder intending to make a public offering of
his, her or its Registrable Securities; and
(ii) Such other information as the Company may reasonably require
from such Holders, or any underwriter for any of them, for inclusion
in such registration statement or Notification on Form 1-A.
(f) For purposes of this Section 10, (i) the term "Holder" shall
include holders of Shares, and (ii) the term "Registrable Securities" shall
mean the Shares, if issued.
11. Notices to Holders.
(a) Nothing contained in this Agreement or in any of the Warrants
shall be construed as conferring upon the Holders thereof the right to vote
or to receive dividends or to consent or to receive notice as shareholders
in respect of the meetings of shareholders or the election of directors of
the Company or any other matter, or any rights whatsoever as shareholders
of the Company; provided, however, that in the event that a meeting of
shareholders shall be called to consider and take action on a proposal for
the voluntary dissolution of the Company, other than in connection with a
consolidation, merger or sale of all, or substantially all, of its
property, assets, business and good will as an entirety, then and in that
event the Company shall cause a notice thereof to be sent by first-class
mail, postage prepaid, at least twenty (20) days prior to the date fixed as
a record date or the date of closing the transfer books in relation to such
meeting, to each registered Holder of Warrants at such Holder's address
appearing on the Warrant Register; but failure to mail or to receive such
notice or any defect therein or in the mailing thereof shall not affect the
validity of any action taken in connection with such voluntary dissolution.
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(b) In the event the Company intends to make any distribution on its
Common Stock (or other securities which may be issuable in lieu thereof
upon the exercise of Warrants), including, without limitation, any such
distribution to be made in connection with a consolidation or merger in
which the Company is the continuing corporation, or to issue subscription
rights or warrants to holders of its Common Stock, the Company shall cause
a notice of its intention to make such distribution to be sent by
first-class mail, postage prepaid, at least twenty (20) days prior to the
date fixed as a record date or the date of closing the transfer books in
relation to such distribution, to each registered Holder of Warrants at
such Holder's address appearing on the Warrant Register, but failure to
mail or to receive such notice or any defect therein or in the mailing
thereof shall not affect the validity of any action taken in connection
with such distribution.
12. Notices. Any notice pursuant to this Agreement to be given or made by
the Holder of any Warrant and/or the holder of any Share to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed as follows or to such other address as the Company may
designate by notice given in accordance with this Section 12, to the Holders of
Warrants and/or the holders of Shares:
IDM ENVIRONMENTAL CORPORATION
000 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Attention: Chief Financial Officer
Notices or demands authorized by this Agreement to be given or made by the
Company to or on the Holder of any Warrant and/or the holder of any Share shall
be sufficiently given or made (except as otherwise provided in this Agreement)
if sent by first-class mail, postage prepaid, addressed to such Holder or such
holder of Shares at the address of such Holder or such holder of Shares as shown
on the Warrant Register or the books of the Company, as the case may be.
-18-
13. Governing Law. This Agreement and each Warrant issued hereunder shall
be governed by and construed in accordance with the substantive laws of the
State of New York. The Company hereby agrees to accept service of process by
notice given to it pursuant to the provisions of Section 12.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original; but
such counterparts together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day, month and year first above written.
IDM ENVIRONMENTAL CORPORATION
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
XXXXXX CAPITAL GROUP, LTD.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
-19-
EXHIBIT A
No. 100,000 Warrants
--------
IDM ENVIRONMENTAL CORPORATION
Warrant Certificate
THIS CERTIFIES THAT for value received Xxxxxx Capital Group, Ltd., or
registered assigns, is the owner of the number of Warrants set forth above, each
of which entitles the owner thereof to purchase one fully paid and nonassessable
share of common stock, $.001 par value (the "Common Stock"), of IDM
ENVIRONMENTAL CORPORATION, a New Jersey corporation (the "Company"), at the
purchase price equal to $3.32813, which is the Exercise Price, as defined in the
Warrant Agreement, dated as of February 11, 1997 (the "Warrant Agreement"),
between the Company and Xxxxxx Capital Group, Ltd., upon presentation and
surrender of this Warrant Certificate with the Form of Election to Purchase duly
executed. The number of Warrants evidenced by this Warrant Certificate (and the
number of shares which may be purchased upon exercise thereof, rounded up to the
nearest full share) set forth above, and the Exercise Price per share set forth
above, are the number and Exercise Price as of the date of original issuance of
the Warrants, based on the shares of Common Stock of the Company as constituted
at such date. As provided in the Warrant Agreement, the Exercise Price and the
number or kind of shares which may be purchased upon the exercise of the
Warrants evidenced by this Warrant Certificate are, upon the happening of
certain events, subject to modification and adjustment.
This Warrant Certificate is subject to, and entitled to the benefits of,
all of the terms, provisions and conditions of the Warrant Agreement, which
Warrant Agreement is hereby incorporated herein by reference and made a part
hereof and to which Warrant Agreement reference is hereby made for a full
description of the rights, limitations of rights, duties and immunities
hereunder of the Company and the holders of the Warrant Certificates. Copies of
the Warrant Agreement are on file at the principal office of the Company.
-1-
This Warrant Certificate, with or without other Warrant Certificates, upon
surrender at the principal office of the Company, may be exchanged for another
Warrant Certificate or Warrant Certificates of like tenor and date evidencing
Warrants entitling the holder to purchase a like aggregate number of shares of
Common Stock as the Warrants evidenced by the Warrant Certificate or Warrant
Certificates surrendered entitled such holder to purchase. If this Warrant
Certificate shall be exercised in part, the holder hereof shall be entitled to
receive upon surrender hereof another Warrant Certificate or Warrant
Certificates for the number of whole Warrants not exercised.
No holder of this Warrant Certificate shall be entitled to vote, receive
dividends, subscription rights or be deemed the holder of Common Stock or any
other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder hereof, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action (whether
upon any recapitalization, issue of stock, reclassification of stock, change of
par value or change of stock to no par value, consolidation, merger, conveyance,
or otherwise) or, except as provided in the Warrant Agreement, to receive notice
of meetings, until the Warrant or Warrants evidenced by this Warrant Certificate
shall have been exercised and the Shares shall have become deliverable as
provided in the Warrant Agreement.
If this Warrant shall be surrendered for exercise within any period during
which the transfer books for the Company's Common Stock or other class of stock
purchasable upon the exercise of this Warrant are closed for any purpose, the
Company shall not be required to make delivery of certificates for shares
purchasable upon such exercise until the date of the reopening of said transfer
books, provided, however, that such books shall not be closed for longer than a
20-day period.
-2-
IN WITNESS WHEREOF, THE COMPANY has caused the signature (or facsimile
signature) of its President and its Secretary to be printed hereon and its
corporate seal (or facsimile) to be printed hereon.
Dated: February , 1997
----
IDM ENVIRONMENTAL CORP.
By:
-------------------------------------
Name: Xxxx X. Xxxxxxxx
Title: President
Attest:
By:
------------------------------
Name: Xxxxx X. Xxxxx
Title: Secretary
-3-
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Warrant Certificates.)
FOR VALUE RECEIVED hereby sells, assigns and
----------------------
transfers unto this Warrant Certificate, together with all right, title and
interest therein, and does hereby irrevocably constitute and appoint
, to transfer the within Warrant Certificate on the books of
--------------------
the within-named Company, with full power of substitution.
Dated: , 199
----------------------- --
-----------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature of the foregoing Assignment must correspond to the name as
written upon the face of this Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever.
-4-
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Warrant Certificate).
TO: IDM ENVIRONMENTAL CORPORATION
The undersigned hereby irrevocably elects to exercise Warrants represented
by this Warrant Certificate to purchase shares of Common Stock issuable
---------
upon the exercise of such Warrants and requests that certificates for such
shares be issued in the name of:
(Please insert social security, tax identification or other identifying
number)
-------------------------------------
-------------------------------------
-------------------------------------
(Please print name and address)
If such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, a new Warrant Certificate for the balance remaining of such
Warrants shall be registered in the name of and delivered to:
(Please insert social security, tax identification or other identifying
number)
-------------------------------------
-------------------------------------
-------------------------------------
(Please print name and address)
Dated: , 19
----------------- ---
---------------------------------
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Warrant Certificate)
Signature Guaranteed:
-1-
