EXHIBIT 4.02
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OSMOTICS CORPORATION
AND
NATIONAL SECURITIES CORPORATION
PLACEMENT AGENT'S
WARRANT AGREEMENT
DATED AS OF _____________________, 1997
________________________________________
PLACEMENT AGENT'S WARRANT AGREEMENT dated as of _____________, 1997,
between OSMOTICS CORPORATION, a Delaware corporation (the "Company"), and
NATIONAL SECURITIES CORPORATION ("National") and its assignees or designees
(each hereinafter referred to variously as a "Holder" or "Placement Agent").
W I T N E S S E T H :
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WHEREAS, the Placement Agent has agreed pursuant to the placement
agent agreement (the "Placement Agent Agreement"), dated as of the date hereof
and entered into between the Company and the Placement Agent, to act as the
Placement Agent in connection with the Company's proposed public offering (the
"Public Offering") of up to 1,125,000 shares of Common Stock (as hereinafter
defined) at a public offering price of $6.00 per share.
WHEREAS, pursuant to the Placement Agent Agreement, the Company
proposes to issue warrants (the "Placement Agent's Warrants") to the Placement
Agent to purchase up to an aggregate of 112,500 shares of Common Stock of the
Company on the basis of one share of Common Stock for every ten shares of Common
Stock sold in the Public Offering.
WHEREAS, the Placement Agent's Warrants to be issued pursuant to this
Agreement will be issued on the Closing Date and the Second Closing Date, if any
(as such term is defined in the Placement Agent Agreement) by the Company to the
Placement Agent in consideration for, and as part of the Placement Agent's
compensation in connection with, the
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Placement Agent's acting as the Placement Agent pursuant to the Placement Agent
Agreement.
NOW, THEREFORE, in consideration of the premises, the payment by the
Placement Agent to the Company of an aggregate of twelve dollars ($12.00), the
agreements herein set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Grant. The Placement Agent is hereby collectively granted the
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right to purchase, at any time from ___________________, 1998 (one year from the
Effective Date of the Registration Statement) until 5:30 p.m., New York time, on
___________, 2002 (5 years from the Effective Date of the Registration
Statement), at which time the Placement Agent's Warrants expire, up to an
aggregate of 112,500 shares of Common Stock, $.001 par value (the "Common
Stock"), at an initial exercise price (subject to adjustment as provided in
Section 11 hereof) of $9.90 per share of Common Stock (the "Exercise Price").
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Except as set forth herein, the shares of Common Stock issuable upon exercise of
the Placement Agent's Warrants are in all respects identical to the shares of
Common Stock being purchased by the Underwriters for resale to the public
pursuant to the terms and provisions of the Placement Agent Agreement. The
shares of Common Stock issuable upon exercise of the Placement Agent's Warrants
are sometimes hereinafter referred to as the "Securities."
2. Placement Agent's Warrant Certificates. The Placement Agent's
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warrant certificates (the "Warrant Certificates") delivered and to be delivered
pursuant to this Agreement shall be in the form set forth in Exhibit A, attached
hereto and made a part hereof, with such
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appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
3. Registration of Warrant. The Placement Agent's Warrants shall be
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numbered and shall be registered on the books of the Company when issued.
4. Exercise of Placement Agent's Warrant.
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4.1 Method of Exercise. The Placement Agent's Warrants initially
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are exercisable at an aggregate Exercise Price (subject to adjustment as
provided in Section 11 hereof) per share of Common Stock as set forth in Section
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8 hereof payable by certified or official bank check in New York Clearing House
funds. Upon surrender of a Placement Agent's Warrant Certificate with the
annexed Form of Election to Purchase duly executed, together with payment of the
Exercise Price for the Securities purchased at the Company's principal offices
in Colorado presently located at 0000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx
00000 the registered holder of a Placement Agent's Warrant Certificate ("Holder"
or "Holders") shall be entitled to receive a certificate or certificates for the
shares of Common Stock so purchased. The purchase rights represented by each
Placement Agent's Warrant Certificate are exercisable at the option of the
Holder thereof, in whole or in part (but not as to fractional shares of Common
Stock underlying the Placement Agent's Warrants). Placement Agent's Warrants
may be exercised to purchase all or part of the shares of Common Stock
represented thereby. In the case of the purchase of less than all of the shares
of Common Stock purchasable under any Placement Agent's Warrant Certificate, the
Company shall cancel said Placement Agent's
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Warrant Certificate upon the surrender thereof and shall execute and deliver a
new Placement Agent's Warrant Certificate of like tenor for the balance of the
shares of Common Stock purchasable thereunder.
4.2 Exercise by Surrender of Placement Agent's Warrant. In
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addition to the method of payment set forth in Section 4.1 and in lieu of any
cash payment required thereunder, the Holder(s) of the Placement Agent's
Warrants shall have the right at any time and from time to time to exercise the
Placement Agent's Warrants in full or in part by surrendering the Warrant
Certificate in the manner specified in Section 4.1 in exchange for the number of
shares of Common Stock equal to the product of (x) the number of shares of
Common Stock as to which the Placement Agent's Warrants are being exercised,
multiplied by (y) a fraction, the numerator of which is the Market Price (as
defined in Section 9.3 (e) hereof) of the shares of Common Stock minus the
Exercise Price of the shares of Common Stock and the denominator of which is the
Market Price per share of Common Stock. Solely for the purposes of this Section
4.2, Market Price shall be calculated either (i) on the date on which the form
of election attached hereto is deemed to have been sent to the Company pursuant
to Section 15 hereof ("Notice Date") or (ii) as the average of the Market Price
for each of the five trading days immediately preceding the Notice Date,
whichever of (i) or (ii) results in a greater Market Price.
5. Issuance of Certificates. Upon the exercise of the Placement
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Agent's Warrant, the issuance of certificates for shares of Common Stock or
other securities, properties or rights underlying such Placement Agent's Warrant
shall be made forthwith (and in any event within five (5) business days
thereafter) without charge to the Holder thereof including, without
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limitation, any tax which may be payable in respect of the issuance thereof, and
such certificates shall (subject to the provisions of Sections 7 and 9 hereof)
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be issued in the name of, or in such names as may be directed by, the Holder
thereof; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and
delivery of any such certificates in a name other than that of the Holder and
the Company shall not be required to issue or deliver such certificates unless
or until the person or persons requesting the issuance thereof shall have paid
to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
The Placement Agent's Warrant Certificates and the certificates
representing the shares of Common Stock or other securities, property or rights
issued upon exercise of the Placement Agent's Warrant shall be executed on
behalf of the Company by the manual or facsimile signature of the then present
President or any Vice President of the Company under its corporate seal
reproduced thereon, attested to by the manual or facsimile signature of the then
present Secretary or any Assistant Secretary of the Company. Placement Agent's
Warrant Certificates shall be dated the date of execution by the Company upon
initial issuance, division, exchange, substitution or transfer.
6. Transfer of Placement Agent's Warrant. The Placement Agent's
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Warrant shall be transferable only on the books of the Company maintained at its
principal office, where its principal office may then be located, upon delivery
thereof duly endorsed by the Holder or by its duly authorized attorney or
representative accompanied by proper evidence of succession, assignment or
authority to transfer. Upon any registration transfer, the Company shall
execute
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and deliver the new Placement Agent's Warrant to the person entitled thereto.
7. Restriction On Transfer of Placement Agent's Warrant. The Holder
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of a Placement Agent's Warrant Certificate, by its acceptance thereof, covenants
and agrees that the Placement Agent's Warrant is being acquired as an investment
and not with a view to the distribution thereof, and that the Placement Agent's
Warrant may not be sold, transferred, assigned, hypothecated or otherwise
disposed of, in whole or in part, for the term of the Placement Agent's Warrant,
except to officers or partners of the Underwriters, or by operation of law.
8. Exercise Price.
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8.1 Initial and Adjusted Exercise Price. Except as otherwise
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provided in Section 11 hereof, the initial exercise price of each Placement
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Agent's Warrant shall be $9.90 per share of Common Stock. The adjusted exercise
price shall be the price which shall result from time to time from any and all
adjustments of the initial exercise price in accordance with the provisions of
Section 11 hereof. Any transfer of a Placement Agent's Warrant shall constitute
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an automatic transfer and assignment of the registration rights set forth in
Section 9 hereof with respect to the Securities or other securities, properties
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or rights underlying the Placement Agent's Warrants.
8.2 Exercise Price. The term "Exercise Price" herein shall mean
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the initial exercise price or the adjusted exercise price, depending upon the
context or unless otherwise specified.
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9. Registration Rights.
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9.1 Registration Under the Securities Act of 1933. Each
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Placement Agent's Warrant Certificate and each certificate representing shares
of Common Stock and any of the other securities issuable upon exercise of the
Placement Agent's Warrant (collectively, the "Warrant Shares") shall bear the
following legend unless (i) such Placement Agent's Warrant or Warrant Shares are
distributed to the public or sold to the underwriters for distribution to the
public pursuant to Section 9 hereof or otherwise pursuant to a registration
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statement filed under the Securities Act of 1933, as amended (the "Act"), or
(ii) the Company has received an opinion of counsel, in form and substance
reasonably satisfactory to counsel for the Company, that such legend is
unnecessary for any such certificate:
THE PLACEMENT AGENT'S WARRANT REPRESENTED BY THIS CERTIFICATE AND THE OTHER
SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY
SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR
(iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY
SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE PLACEMENT AGENT'S WARRANT REPRESENTED BY
THE CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE PLACEMENT AGENT'S
WARRANT AGREEMENT REFERRED TO HEREIN.
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9.2 Piggyback Registration. If, at any time commencing after the
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effective date of the Registration Statement and expiring five (5) years
thereafter, the Company proposes to register any of its securities under the Act
(other than in connection with a merger or pursuant to Form S-4 or Form S-8) it
will give written notice by registered mail, at least twenty (20) days prior to
the filing of each such registration statement, to the Holders of the Placement
Agent's Warrants and/or the Warrant Shares of its intention to do so. If any of
the Holders of the Placement Agent's Warrants and/or Warrant Shares notify the
Company within ten (10) days after mailing of any such notice of its or their
desire to include any such securities in such proposed registration statement,
the Company shall afford such Holders of the Placement Agent's Warrants and/or
Warrant Shares the opportunity to have any such Placement Agent's Warrants
and/or Warrant Shares registered under such registration statement. In the event
that the managing underwriter for said offering advises the Company in writing
that in its opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
causing a diminution in the offering price or otherwise adversely affecting the
offering, the Company will include in such registration (a) first, the
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securities the Company proposes to sell, (b) second, the securities held by the
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entities, if any, that made the demand for registration, (c) third, the
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Placement Agent's Warrants and/or Warrant Shares requested to be included in
such registration which in the opinion of such underwriter can be sold, pro
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rata, among all proposed selling shareholders.
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Notwithstanding the provisions of this Section 9.2, the Company shall
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have the right at any time after it shall have given written notice pursuant to
this Section 9.2 (irrespective
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of whether a written request for inclusion of any such securities shall have
been made) to elect not to file any such proposed registration statement or to
withdraw the same after the filing but prior to the effective date thereof.
9.3 Demand Registration.
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(a) At any time commencing on the first date that the Company
has been subject to the requirements of Section 12 or 15(d) of the Exchange Act
for a period of at least 12 calendar months and expiring five (5) years from the
effective date of the Registration Statement, the Holders of the Placement
Agent's Warrants and/or Warrant Shares representing a "Majority" (as hereinafter
defined) of the Placement Agent's Warrants and/or Warrant Shares shall have the
right (which right is in addition to the registration rights under Section 9.2
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hereof), exercisable by written notice to the Company, to have the Company
prepare and file with the Securities and Exchange Commission (the "Commission"),
on one occasion, a registration statement and such other documents, including a
prospectus, as may be necessary in the opinion of both counsel for the Company
and counsel for the Holders, in order to comply with the provisions of the Act,
so as to permit a public offering and sale by such Holders and any other Holders
of the Placement Agent's Warrant and/or Warrant Shares who notify the Company
within fifteen (15) days after the Company mails notice of such request pursuant
to Section 9.3(b) hereof (collectively, the "Requesting Holders") of their
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respective Warrant Shares for the earlier of (i) nine (9) consecutive months or
(ii) until the sale of all of the Warrant Shares requested to be registered by
the Requesting Holders.
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(b) The Company covenants and agrees to give written notice of
any registration request under this Section 9.3 by any Holder or Holders
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representing a Majority of the Placement Agent's Warrants and/or Warrant Shares
to all other registered Holders of the Placement Agent's Warrants and the
Warrant Shares within ten (10) days from the date of the receipt of any such
registration request.
(c) Intentionally omitted.
(d) Notwithstanding anything to the contrary contained herein,
if the Company shall not have filed a registration statement for the Warrant
Shares within the time period specified in Section 9.4(a) hereof pursuant to the
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written notice specified in Section 9.3(a) of the Holders of a Majority of the
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Placement Agent's Warrants and/or Warrant Shares, the Company, at its option,
may repurchase (i) any and all Warrant Shares at the higher of the Market Price
(as defined in Section 9.3(e)) per share of Common Stock on (x) the date of the
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notice sent pursuant to Section 9.3(a) or (y) the expiration of the period
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specified in Section 9.4(a) and (ii) any and all Placement Agent's Warrant at
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such Market Price less the exercise price of such Placement Agent's Warrant.
Such repurchase shall be in immediately available funds and shall close within
two (2) days after the later of (i) the expiration of the period specified in
Section 9.4(a) or (ii) the delivery of the written notice of election specified
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in this Section 9.3(d).
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(e) Definition of Market Price. As used herein, the phrase
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"Market Price" at any date shall be deemed to be the last reported sale price,
or, in case no such reported
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sale takes place on such day, the average of the last reported sale prices for
the last three (3) trading days, in either case as officially reported by the
principal securities exchange on which the shares of Common Stock are listed or
admitted to trading, or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, [the average closing
bid price] as furnished by the NASD through The Nasdaq Stock Market, Inc.
("Nasdaq"), the OTC Electronic Bulletin Board, or similar organization if Nasdaq
is no longer reporting such information, or if the shares of Common Stock are
not quoted on Nasdaq, as determined in good faith by resolution of the Board of
Directors of the Company, based on the best information available to it.
9.4 Covenants of the Company With Respect to Registration. In
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connection with any registration under Sections 9.2 or 9.3 hereof, the Company
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covenants and agrees as follows:
(a) The Company shall use its best efforts to file a
registration statement within one hundred and twenty (120) days of receipt of
any demand therefor, and to have any registration statements declared effective
at the earliest possible time, and shall furnish each Holder desiring to sell
Warrant Shares such number of prospectuses as shall reasonably be requested.
(b) The Company shall pay all costs (excluding fees and
expenses of a single counsel for all Holders up to a maximum of $25,000 of legal
fees and costs and any underwriting or selling commissions), fees and expenses
in connection with all registration
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statements filed pursuant to Sections 9.2 and 9.3(a) hereof including, without
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limitation, the Company's legal and accounting fees, printing expenses, blue sky
fees and expenses. The Holder(s) will pay all costs, fees and expenses
(including those of the Company) in connection with the registration statement
filed pursuant to Section 9.3(c).
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(c) The Company will use its commercially reasonable efforts to
take all necessary action which may be required in qualifying or registering the
Warrant Shares included in a registration statement for offering and sale under
the securities or blue sky laws of such states as reasonably are requested by
the Holder(s), provided that the Company shall not be obligated to execute or
file any general consent to service of process or to qualify as a foreign
corporation to do business under the laws of any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the Warrant
Shares to be sold pursuant to any registration statement and each person, if
any, who controls such Holders within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), against all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may become subject under the Act, the
Exchange Act or otherwise, arising from such registration statement but only to
the same extent and with the same effect as the provisions pursuant to which the
Company has agreed to indemnify the Placement Agent contained in Section 6 of
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the Placement Agent Agreement.
(e) The Holder(s) of the Warrant Shares to be sold pursuant to
a
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registration statement, and their successors and assigns, shall severally, and
not jointly, indemnify the Company, its officers and directors and each person,
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against all loss, claim, damage or expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the Exchange Act or otherwise, arising from information
furnished by or on behalf of such Holders, or their successors or assigns, for
specific inclusion in such registration statement to the same extent and with
the same effect as the provisions contained in Section 6 of the Placement Agent
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Agreement pursuant to which the Placement Agent has agreed to indemnify the
Company.
(f) Nothing contained in this Agreement shall be construed as
requiring the Holder(s) to exercise their Placement Agent's Warrant prior to the
initial filing of any registration statement or the effectiveness thereof.
(g) The Company shall not permit the inclusion of any
securities other than the Warrant Shares to be included in any registration
statement filed pursuant to Section 9.3 hereof, or permit any other registration
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statement (other than a registration statement on Form S-4 or S-8) to be or
remain effective during a ninety (90) day period following the effectiveness of
a registration statement filed pursuant to Section 9.3 hereof, without the prior
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written consent of National or as otherwise required by the terms of any
existing registration rights granted prior to the date of this Agreement by the
Company to the holders of any of the Company's securities.
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(h) The Company shall furnish to each Holder participating in
the offering and to each underwriter, if any, a signed counterpart, addressed to
such Holder or underwriter, of (i) an opinion of counsel to the Company, dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), and (ii) a "cold comfort" letter
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, a letter dated the date
of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such registration statement, in each case covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities.
(i) The Company shall as soon as practicable after the
effective date of the registration statement, and in any event within 15 months
thereafter, make "generally available to its security holders" (within the
meaning of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the Act and covering a period of at
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least 12 consecutive months beginning after the effective date of the
registration statement.
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(j) The Company shall enter into an underwriting agreement with
the managing underwriters selected for such underwriting by Holders holding a
Majority of the Warrant Shares requested to be included in such underwriting,
which may be the Placement Agent. Such agreement shall be satisfactory in form
and substance to the Company, each Holder and such managing underwriters, and
shall contain such representations, warranties and covenants by the Company and
such other terms as are customarily contained in agreements of that type used by
the managing underwriter. The Holders shall be parties to any underwriting
agreement relating to an underwritten sale of their Warrant Shares and may, at
their option, require that any or all the representations, warranties and
covenants of the Company to or for the benefit of such underwriters shall also
be made to and for the benefit of such Holders. Such Holders shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriters except as they may relate to such Holders and their
intended methods of distribution.
(k) For purposes of this Agreement, the term "Majority" in
reference to the Placement Agent's Warrants or Warrant Shares, shall mean in
excess of fifty percent (50%) of the then outstanding Placement Agent's Warrants
or Warrant Shares that (i) are not held by the Company, an affiliate, officer,
creditor, employee or agent thereof or any of their respective affiliates,
members of their family, persons acting as nominees or in conjunction therewith
or (ii) have not been resold to the public pursuant to a registration statement
filed with the Commission under the Act.
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10. Obligations of Holders. It shall be a condition precedent to the
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obligations of the Company to take any action pursuant to Section 9 hereof that
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each of the selling Holders shall:
(a) Furnish to the Company such information regarding
themselves, the Warrant Shares held by them, the intended method of sale or
other disposition of such securities, the identity of and compensation to be
paid to any underwriters proposed to be employed in connection with such sale or
other disposition, and such other information as may reasonably be required to
effect the registration of their Warrant Shares.
(b) Notify the Company, at any time when a prospectus relating
to the Warrant Shares covered by a registration statement is required to be
delivered under the Act, of the happening of any event with respect to such
selling Holder as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.
11. Adjustments to Exercise Price and Number of Securities. The Exercise
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Price in effect at any time and the number and kind of securities purchased upon
the exercise of the Placement Agent's Warrant shall be subject to adjustment
from time to time only upon the happening of the following events:
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11.1 Stock Dividend, Subdivision and Combination. In case the
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Company shall (i) declare a dividend or make a distribution on its outstanding
shares of Common Stock in shares of Common Stock, (ii) subdivide or reclassify
its outstanding shares of Common Stock into a greater number of shares, or (iii)
combine or reclassify its outstanding shares of Common Stock into a smaller
number of shares, the Exercise Price in effect at the time of the record date
for such dividend or distribution or of the effective date of such subdivision,
combination or reclassification shall be adjusted so that it shall equal the
price determined by multiplying the Exercise Price by a fraction, the
denominator of which shall be the number of shares of Common Stock outstanding
after giving effect to such action, and the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such action.
Such adjustment shall be made successively whenever any event listed above shall
occur.
11.2 Adjustment in Number of Securities. Upon each adjustment of
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the Exercise Price pursuant to the provisions of this Section 11, the number of
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Warrant Shares issuable upon the exercise at the adjusted Exercise Price of each
Placement Agent's Warrant shall be adjusted to the nearest number of whole
shares of Common Stock by multiplying a number equal to the Exercise Price in
effect immediately prior to such adjustment by the number of Warrant Shares
issuable upon exercise of the Placement Agent's Warrant immediately prior to
such adjustment and dividing the product so obtained by the adjusted Exercise
Price.
11.3 Definition of Common Stock. For the purpose of this
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Agreement, the term "Common Stock" shall mean (i) the class of stock designated
as Common Stock in the
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Articles of Incorporation of the Company as amended as of the date hereof, or
(ii) any other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
11.4 Merger or Consolidation. In case of any consolidation of the
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Company with, or merger of the Company into, another corporation (other than a
consolidation or merger which does not result in any reclassification or change
of the outstanding Common Stock), the corporation formed by such consolidation
or merger shall execute and deliver to the Holder a supplemental warrant
agreement providing that the Holder of each Placement Agent's Warrant then
outstanding or to be outstanding shall have the right thereafter (until the
expiration of such Placement Agent's Warrant) to receive, upon exercise of such
Placement Agent's Warrant, the kind and amount of shares of stock and other
securities and property receivable upon such consolidation or merger by a holder
of the number of shares of Common Stock for which such Placement Agent's Warrant
might have been exercised immediately prior to such consolidation, merger, sale
or transfer. Such supplemental warrant agreement shall provide for adjustments
which shall be identical to the adjustments provided in Section 11. The above
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provision of this subsection shall similarly apply to successive consolidations
or mergers.
11.5 No Adjustment of Exercise Price in Certain Cases. No
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adjustment of the Exercise Price shall be made:
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(a) Upon the issuance or sale of the Placement Agent's Warrant
or the Warrant Shares;
(b) Upon the issuance or sale of Common Stock (or any other
security convertible, exercisable, or exchangeable into shares of Common Stock)
upon the direct or indirect conversion, exercise, or exchange of any options,
rights, warrants, or other securities or indebtedness of the Company outstanding
as of the date of this Agreement or granted pursuant to any stock option plan of
the Company in existence as of the date of this Agreement, pursuant to the terms
thereof; or
(c) If the amount of said adjustment shall be less than two
cents ($.02) per share, provided, however, that in such case any adjustment that
would otherwise be required then to be made shall be carried forward and shall
be made at the time of and together with the next subsequent adjustment which,
together with any adjustment so carried forward, shall amount to at least two
cents ($.02) per Placement Agent's Warrant.
12. Exchange and Replacement of Placement Agent's Warrant Certificates.
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Each Placement Agent's Warrant Certificate is exchangeable, without expense,
upon the surrender thereof by the registered Holder at the principal executive
office of the Company for a new Placement Agent's Warrant Certificate of like
tenor and date representing in the aggregate the right to purchase the same
number of Warrant Shares in such denominations as shall be designated by the
Holder thereof at the time of such surrender.
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Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Placement Agent's Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Placement Agent's Warrant, if mutilated, the Company will make and deliver a
new Warrant Certificate of like tenor, in lieu thereof.
13. Elimination of Fractional Interests. The Company shall not be
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required to issue certificates representing fractions of shares of Common Stock
upon the exercise of the Placement Agent's Warrant, nor shall it be required to
issue scrip or pay cash in lieu of fractional interests, it being the intent of
the parties that all fractional interests shall be eliminated by rounding any
fraction up to the nearest whole number of shares of Common Stock or other
securities, properties or rights.
14. Reservation and Listing of Securities. The Company shall at all
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times reserve and keep available out of its authorized shares of Common Stock,
solely for the purpose of issuance upon the exercise of the Placement Agent's
Warrant, such number of shares of Common Stock or other securities, properties
or rights as shall be issuable upon the exercise thereof. Every transfer agent
("Transfer Agent") for the Common Stock and other securities of the Company
issuable upon the exercise of the Placement Agent's Warrant will be irrevocably
authorized and directed at all times to reserve such number of authorized shares
of Common Stock and other securities as shall be requisite for such purpose. The
Company will keep a copy
-21-
of this Agreement on file with every Transfer Agent for the Common Stock and
other securities of the Company issuable upon the exercise of the Placement
Agent's Warrant. The Company will supply every such Transfer Agent with duly
executed stock and other certificates, as appropriate, for such purpose. The
Company covenants and agrees that, upon exercise of the Placement Agent's
Warrant and payment of the Exercise Price therefor, all shares of Common Stock
and other securities issuable upon such exercise shall be duly and validly
issued, fully paid, non-assessable and not subject to the preemptive rights of
any stockholder. As long as the Placement Agent's Warrant shall be outstanding,
the Company shall use its best efforts to cause all shares of Common Stock
issuable upon the exercise of the Placement Agent's Warrant to be listed
(subject to official notice of issuance) on all securities exchanges on which
the Common Stock issued to the public in connection herewith may then be listed
and/or quoted on Nasdaq SmallCap Market.
15. Notices to Placement Agent's Warrant Holders. Nothing contained
--------------------------------------------
in this Agreement shall be construed as conferring upon the Holders the right to
vote or to consent or to receive notice as a stockholder in respect of any
meetings of stockholders for the election of directors or any other matter, or
as having any rights whatsoever as a stockholder of the Company. If, however,
at any time prior to the expiration of the Placement Agent's Warrants and their
exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a dividend
or distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current
-22-
or retained earnings, as indicated by the accounting treatment of such dividend
or distribution on the books of the Company; or
(b) the Company shall offer to all the holders of its Common
Stock any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the Company, or
any option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall be
proposed;
then in any one or more of said events, the Company shall give written notice of
such event at least fifteen (15) days prior to the date fixed as a record date
or the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
-23-
16. Notices. All notices, requests, consents and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly made and
sent when delivered, or mailed by registered or certified mail, return receipt
requested:
(a) if to the registered Holder of the Placement Agent's
Warrant, to the address of such Holder as shown on the books of the Company; or
(b) if to the Company, to the address set forth in Section 4
---------
hereof or to such other address as the Company may designate by notice to the
Holders.
17. Supplements; Amendments; Entire Agreement. This Agreement (including
-----------------------------------------
the Placement Agent Agreement to the extent portions thereof are referred to
herein) contains the entire understanding between the parties hereto with
respect to the subject matter hereof and may not be modified or amended except
by a writing duly signed by the party against whom enforcement of the
modification or amendment is sought. The Company and the Placement Agent may
from time to time supplement or amend this Agreement without the approval of any
holders of Placement Agent's Warrant Certificates (other than the Placement
Agent) in order to cure any ambiguity, to correct or supplement any provision
contained herein which may be defective or inconsistent with any provisions
herein, or to make any other provisions in regard to matters or questions
arising hereunder which the Company and the Placement Agent may deem necessary
or desirable and which the Company and the Placement Agent deem shall not
adversely affect the interests of the Holders of Placement Agent's Warrant
Certificates.
-24-
18. Successors. All of the covenants and provisions of this Agreement
----------
shall be binding upon and inure to the benefit of the Company, the Holders and
their respective successors and assigns hereunder.
19. Survival of Representations and Warranties. All statements in any
------------------------------------------
schedule, exhibit or certificate or other instrument delivered by or on behalf
of the parties hereto, or in connection with the transactions contemplated by
this Agreement, shall be deemed to be representations and warranties hereunder.
Notwithstanding any investigations made by or on behalf of the parties to this
Agreement, all representations, warranties and agreements made by the parties to
this Agreement or pursuant hereto shall survive.
20. Governing Law. This Agreement and each Placement Agent's Warrant
-------------
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be construed in
accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws.
21. Severability. If any provision of this Agreement shall be held to
------------
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Agreement.
22. Captions. The caption headings of the Sections of this Agreement
--------
are for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
-25-
23. Benefits of this Agreement. Nothing in this Agreement shall be
--------------------------
construed to give to any person or corporation other than the Company and the
Placement Agent and any other registered Holder(s) of the Placement Agent's
Warrant Certificates or Warrant Shares any legal or equitable right, remedy or
claim under this Agreement; and this Agreement shall be for the sole and
exclusive benefit of the Company and the Underwriters and any other Holder(s) of
the Placement Agent's Warrant Certificates or Warrant Shares.
24. Counterparts. This Agreement may be executed in any number of
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
IN WITNESS OF, the parties hereto have caused this Agreement to be duly
executed, as of the day and year first above written.
ATTEST: OSMOTICS CORPORATION
By:________________________
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
NATIONAL SECURITIES CORPORATION
By:_________________________
Name: Xxxxxx X. Xxxxxxxxx
Title: Chairman
-26-
EXHIBIT A
[FORM OF PLACEMENT AGENT'S WARRANT CERTIFICATE]
THE PLACEMENT AGENT'S WARRANT REPRESENTED BY THIS CERTIFICATE AND THE OTHER
SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR
RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL
FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE PLACEMENT AGENT'S WARRANT REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO
HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME, _________________, 2002
Placement Agent's Warrant No. _____
____ Shares of Common Stock
WARRANT CERTIFICATE
This Warrant Certificate certifies that ________, or registered
assigns, is the registered holder of Warrants to purchase initially, at any
time from ________________, 1998 until 5:30 p.m., New York time on ____________,
2002 ("Expiration Date"), up to ____ shares of fully-paid and nonassessable
common stock, par value $.001 ("Common Stock") of Osmotics Corporation, a
Delaware corporation (the "Company"), at the initial exercise price, subject to
adjustment in certain events, of $9.90 per Share (the "Exercise Price") upon
surrender of this Placement Agent's Warrant Certificate and payment of the
Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Placement Agent's Warrant Agreement dated
as of _________________, 1997 among the Company and National
EXH A-1
Securities Corporation (the "Warrant Agreement"). Payment of the Exercise Price
shall be made by certified or official bank check in New York Clearing House
funds payable to the order of the Company.
No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Placement Agent's Warrant evidenced hereby,
unless exercised prior thereto, shall thereafter be void.
The Placement Agent's Warrant evidenced by this Warrant Certificate is
part of a duly authorized issue of Placement Agent's Warrants issued pursuant to
the Warrant Agreement, which Warrant Agreement is hereby incorporated by
reference in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of the Placement
Agent's Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Placement Agent's
Warrant; provided, however, that the failure of the Company to issue such new
Warrant Certificates shall not in any way change, alter, or otherwise impair,
the rights of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Placement Agent's Warrant shall be issued to the transferee(s) in exchange
for this Warrant Certificate, subject to the limitations provided herein and in
the Warrant Agreement, without any charge except for any tax or other
governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the Placement Agent's Warrant
evidenced by this Certificate, the Company shall forthwith issue to the holder
hereof a new Warrant Certificate representing such numbered unexercised
Placement Agent's Warrant.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant
EXH A-2
Agreement shall have the meanings assigned to them in the Warrant Agreement.
This Warrant Certificate does not entitle any holder thereof to any of
the rights of a shareholder of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated as of ________________, 1997.
ATTEST: OSMOTICS CORPORATION
By:________________________________
Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
EXH A-3
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 4.1]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ____ shares of Common
Stock and herewith tenders in payment for such securities a certified or
official bank check payable in New York Clearing House Funds to the order of
Osmotics Corporation (the "Company") in the amount of $_____, all in accordance
with the terms of Section 4.1 of the Placement Agent's Warrant Agreement dated
as of ________ __, 1997 between the Company and National Securities Corporation.
The undersigned requests that a certificate for such securities be registered in
the name of ________________________, whose address is ________________________
and that such certificate be delivered to ________________________, whose
address is ________________________, and if said number of shares shall not be
all the shares purchasable hereunder, that a new Warrant Certificate for the
balance of the shares purchasable under the within Warrant Certificate be
registered in the name of the undersigned warrantholder or his assignee as below
indicated and delivered to the address stated below.
Dated: ___________________
Signature:_________________________________________________
(Signature must conform in all respects to name of holder
as specified on the face of the Warrant Certificate.)
Address:
(Insert Social Security or Other Identifying Number of
Holder)
Signature Guaranteed:
(Signature must be guaranteed by a bank savings and loan association,
stockbroker, or credit union with membership in an approved signature guaranty
Medallion Program pursuant to Securities Exchange Act Rule 17Ad-15.)
EXH A-4
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 4.2]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ____ shares all in
accordance with the terms of Section 4.2 of the Placement Agent's Warrant
Agreement dated as of ________ __, 1997 between the Osmotics Corporation and
National Securities Corporation. The undersigned requests that a certificate
for such securities be registered in the name of ________________________, whose
address is ________________________ and that such certificate be delivered to
________________________, whose address is ________________________.
Dated: ___________________
Signature:_________________________________________________
(Signature must conform in all respects to name of holder
as specified on the face of the Warrant Certificate.)
Address:
(Insert Social Security or Other Identifying Number of
Holder)
Signature Guaranteed:
(Signature must be guaranteed by a bank savings and loan association,
stockbroker, or credit union with membership in an approved signature guaranty
Medallion Program pursuant to Securities Exchange Act Rule 17Ad-15.)
EXH A-5
[FORM OF ASSIGNMENT]
(TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH HOLDER
DESIRES TO TRANSFER THE WARRANT CERTIFICATE.)
FOR VALUE RECEIVED ____________________ here sells, assigns and transfers unto
[NAME OF TRANSFEREE] this Warrant Certificate, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint
_____________________ Attorney, to transfer the within Warrant Certificate on
the books of the within-named Company, with full power of substitution.
Dated: ___________________
Signature:_________________________________________________
(Signature must conform in all respects to name of holder
as specified on the face of the Warrant Certificate.)
Address:
(Insert Social Security or Other Identifying Number of
Holder)
Signature Guaranteed:
(Signature must be guaranteed by a bank savings and loan association,
stockbroker, or credit union with membership in an approved signature guaranty
Medallion Program pursuant to Securities Exchange Act Rule 17Ad-15.)
EXH A-6
