WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of _________, 1996, between PACIFIC
BIOMETRICS, INC., a Delaware corporation (the "Company"), and American
Securities Transfer & Trust, Incorporated, as warrant agent (the "Warrant
Agent");
WHEREAS, the Company proposes to issue (a) 1,700,000 Warrants (hereinafter
called the "Warrants"), each entitling the holder thereof to purchase one share
of common stock, $.01 par value, of the Company ("Common Stock"), in connection
with the proposed issuance by the Company of 1,700,000 Units ("Units"), each
Unit consisting of one share of Common Stock and one Warrant, (b) up to 255,000
Warrants underlying the Underwriter's over-allotment option, and (c) 170,000
Warrants underlying a warrant to purchase Units to be granted to the Underwriter
pursuant to a certain Underwriting Agreement, dated _________, 1996, by and
among the Company and Paradise Valley Securities, Inc., as the Underwriter; and
WHEREAS, the Company proposes to register the Units on a Form SB-2
Registration Statement filed with the Securities and Exchange Commission (File
Number 333-11551) ("Registration Statement");
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, registration, transfer, exchange, replacement and exercise of Warrants
and other matters as provided herein;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
1. Appointment of Warrant Agent. The Company hereby appoints the Warrant
Agent to act as agent for the Company in accordance with the instructions set
forth in this Agreement, and the Warrant Agent hereby accepts such appointment.
2. Warrant Certificates. The Warrant Certificates shall be registered form
only. The text of the Warrant Certificates shall be substantially as set forth
in Exhibit A attached hereto. Warrant Certificates shall be executed on behalf
of the Company by the manual or facsimile signature of the President or a Vice
President of the Company and its Secretary or any Assistant Secretary, and shall
bear a facsimile of the Company's corporate seal. Warrant Certificates shall be
dated as of the date of issuance thereof by the Warrant Agent either upon
initial issuance or upon transfer or exchange.
3. Countersignature and Registration. The Warrant Agent shall maintain
books for the transfer and registration of the Warrant Certificates. Warrant
Certificates shall be countersigned by the Warrant Agent and shall not be valid
for any purpose unless so countersigned. Warrant Certificates may be so
countersigned, however, by the Warrant Agent and be delivered by the Warrant
Agent, notwithstanding that the persons whose manual or facsimile signatures
appear thereon as proper officers of the Company shall have ceased to be such
officers at the time of such counter signature or delivery.
4. Registration of Transfers and Exchanges. The Warrants are exercisable,
detachable and separately transferable immediately after the sale of the Units
upon the effectiveness of the Registration Statement. The Warrant Agent shall
register the transfer from time to time of any outstanding Warrant Certificates
upon records to be maintained by the Warrant Agent for that purpose, upon
surrender thereof for transfer properly endorsed or accompanied by appropriate
instructions for transfer. Upon any such transfer, a new Warrant Certificate
shall be issued to the transferee and the surrendered Warrant Certificate shall
be canceled by the Warrant Agent. Warrant Certificates so canceled shall be
delivered by the Warrant Agent to the Company from time to time. Warrant
Certificates may be exchanged at the option
of the holder thereof, when surrendered at the office of the Warrant Agent, for
another Warrant Certificate or other Warrant Certificates of different
denominations, of like tenor and representing in the aggregate the right to
purchase a like number of shares of Common Stock. The Warrant Agent is hereby
irrevocably authorized to countersign in accordance with Section 3 of this
Agreement the new Warrant Certificates required pursuant to the provisions of
this Section, and the Company, whenever required by the Warrant Agent, will
supply the Warrant Agent with Warrant Certificates duly executed on behalf of
the Company for such purpose.
5. Exercise of Warrants. The Warrants shall expire on January 31, 1998 at
5:00 p.m., New York City time ("Warrant Expiration Date").
Subject to the provisions of this Agreement, any whole number or all of
the Warrants evidenced by a Warrant Certificate may be exercised at any time
before the Warrant Expiration Date. A Warrant shall be exercised by surrender to
the Warrant Agent of the Warrant Certificate with the exercise form thereon duly
completed and executed and payment to the Warrant Agent in lawful money of the
United States of the Exercise Price for each share of Common Stock purchased.
Upon such surrender of a Warrant Certificate 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 registered holder of
such Warrant Certificate and in such name or names as such registered holder may
designate, a certificate or certificates for the number of full shares of Common
Stock so purchased upon the exercise of such Warrants. Such certificate or
certificates shall be deemed to be issued as of the date of the surrender of
such Warrant Certificates and payment of the Exercise Price, whichever shall
last occur.
If less than all of the Warrants evidenced by a Warrant Certificate are
exercised upon a single occasion, a new Warrant Certificate will be issued for
the balance of the Warrants not so exercised, which shall be issued and
delivered to, or in accordance with instructions given by, the holder of such
Warrant, and the Warrant Agent is hereby irrevocably authorized to countersign
and to deliver the required new Warrant Certificates pursuant to the provisions
of this Section and of Section 3 of this Agreement and the Company, whenever
required by the Warrant Agent, will supply the Warrant Agent with Warrants duly
executed on behalf of the Company for such purpose.
6. Reservation and Registration of Common Stock.
a. The Company shall at all times reserve and keep available for
issuance the full number of shares of Common Stock issuable upon the
exercise of all outstanding Warrants. The Transfer Agent for the Common
Stock is hereby irrevocably authorized and directed at all times to
reserve such number of authorized and unissued shares as shall be
requisite for such purpose. The Warrant Agent is hereby irrevocably
authorized to requisition from time to time such Transfer Agent for stock
certificates required to honor outstanding Warrant Certificates. The
Company will supply such Transfer Agent with duly executed stock
certificates for such purpose and will itself provide or otherwise make
available any cash or scrip which may be issuable as provided in Section 8
of this Agreement. All Warrant Certificates surrendered in the exercise of
the rights thereby evidenced shall be canceled by the Warrant Agent and
shall thereafter be delivered to the Company, and such canceled Warrants
shall constitute sufficient evidence of the number of shares of Common
Stock which have been issued upon the exercise of such Warrants. The
Company covenants that all shares of Common Stock which may be issued upon
exercise of the Warrants will upon issue be fully paid and nonassessable.
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b. Upon the effectiveness of the Registration Statement, the Company
represents that it will have registered under the Securities Act of 1933,
as amended, the shares of Common Stock issuable upon exercise of the
Warrants ("Warrant Shares") and will use its best efforts to maintain the
effectiveness of such registration by post-effective amendment during the
entire period in which the Warrants are exercisable, and that it will use
its best efforts to qualify such Common Stock for sale under the
securities laws of such states of the United States as may be necessary to
permit the exercise of the Warrants in the states in which the Units are
initially qualified and to maintain such qualifications during the entire
period in which the Warrants are exercisable.
7. Exercise Price; Adjustments.
a. The price at which Common Stock shall be purchasable upon
exercise of Warrants at any time after the Common Stock and Warrants
become separately tradeable until the Warrant Expiration Date shall be
twelve dollars ($12.00) per share of Common Stock or, if adjusted as
provided in this Section, shall be such price as so adjusted (the
"Exercise Price"). The Company may in its discretion at any time and from
time to time decrease the Exercise Price below the price then in effect,
notwithstanding any provision to the contrary herein. Any such decrease
shall be determined by the Board of Directors of the Company and shall be
described in a statement filed with the Warrant Agent.
b. The Exercise Price shall be subject to adjustment from time to
time as follows:
(1) In case the Company shall at any time after the date of
this Agreement (a) declare a dividend on the Common Stock payable in the
capital stock of the Company (whether Common Stock or capital stock of any
other class), (b) subdivide the outstanding Common Stock, (c) combine the
outstanding Common Stock into a smaller number, or (d) other than in a
transaction to which Section 7(b)(7) hereof applied, issue any shares of
its capital stock in a reclassification in connection with a consolidation
or merger in which the Company is the continuing corporation), the
Exercise Price in effect at the time of the record date for that dividend
or of the effective date of that subdivision, combination or
reclassification and/or the number and kind of shares of capital stock
issuable on that date shall be proportionately adjusted so that the holder
of any Warrant exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if the Warrant
had been exercised immediately prior to that date, he or she would have
owned upon exercise and been entitled to receive by virtue of that
dividend, subdivision, combination or reclassification. The foregoing
adjustment shall be made successively whenever any event listed above
shall occur.
(2) In case the Company shall fix a record date for the making
of a distribution to all holders of Common Stock (including any such
distribution made in connection with a consolidation or merger in which
the Company is the continuing corporation) of evidences of indebtedness or
assets (other than cash dividends or cash distributions payable out of
consolidated earnings or earned surplus or dividends payable in ordinary
shares) or subscription rights or warrants, the Exercise Price to be in
effect after that record date shall be determined by multiplying the
Exercise Price in effect immediately prior to that record date by a
fraction, of which the numerator shall be the current market price per
share of Common Stock on that record date, less the fair market value (as
determined by the Board of Directors of the Company, whose determination
shall be conclusive, and described in a statement filed with the Warrant
Agent) of the portion of the assets or evidences of indebtedness so to be
distributed or of the subscription rights or warrants applicable to one
share of Common Stock and of which the denominator shall be the current
market price per share of Common Stock. The adjustment shall be made
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successively whenever a record date is fixed; and in the event that the
distribution is not so made, the Exercise Price shall again be adjusted to
be the Exercise Price which would then be in effect if the record date had
not been fixed, but the subsequent adjustment shall not affect the number
of Warrant Shares issued upon the exercise of any Warrants prior to the
date the subsequent adjustment is made.
(3) For the purpose of any computation under Section 7(b) the
current market price per share of Common Stock on any date shall be the
last reported sale price, or if none is reported, the average of the
reported closing bid and asked prices, in the over-the-counter market, in
each such case averaged over a period of ten consecutive trading days
prior to the day as of which the market price is being determined. If
there is no such closing price or closing bid and asked prices, the market
price shall be determined in any reasonable manner approved by the Board
of Directors of the Company.
(4) No adjustment in the Exercise Price shall be required
unless the adjustment would require an increase or decrease of at least
$.25; provided, however, that any adjustments which by reason of this
Section 7(b) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under
this Section 7(b) shall be made to the nearest cent or the nearest
one-hundredth of a share, as the case may be, but in no event shall the
Company be obligated to issue fractional shares upon the exercise of any
Warrant.
(5) In any case in which this Section 7 shall require that any
adjustment in the Exercise Price be made effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of
the event the issuing to the holder of any Warrant exercised after that
record date the Warrant Shares and other capital stock of the Company, if
any, issuable upon the exercise over and above the Warrant Shares and
other capital stock of the Company, if any, issuable upon the exercise on
the basis of the Exercise Price in effect prior to such adjustment;
provided, however, that the Company shall deliver to the holder an
appropriate instrument evidencing the holder's right to receive such
additional shares upon the occurrence of the event requiring such
adjustment.
(6) Upon each adjustment of the Exercise Price as a result of
the calculation made in Section 7(b)(1) or (2), each Warrant Certificate
outstanding immediately prior to the making of that adjustment shall
thereafter evidence the right to purchase, at the adjusted Exercise Price,
that number of Warrant Shares (calculated to the nearest hundredth)
obtained by (A) multiplying the number of Warrant Shares purchasable upon
exercise of a Warrant immediately prior to that adjustment of the number
of Warrant Shares by the Exercise Price in effect immediately prior to
that adjustment of the Exercise Price, and (B) dividing the product so
obtained by the Exercise Price in effect immediately after that adjustment
of the Exercise Price.
(7) In case of any capital reorganization of the Company, or
of any reclassification of the Common Stock (other than a change in par
value or as a result of subdivision or combination), or in the case of the
consolidation of the Company with or the merger of the Company into any
other corporation (other than a consolidation or merger in which the
Company is the continuing corporation) or of the sale of the properties
and assets of the Company as, or substantially as, an entirety to any
other corporation, each Warrant shall after such reorganization,
reclassification, consolidation, merger or sale be exercisable, upon the
terms and conditions specified in this Agreement, for the number of shares
of stock or other securities or property to which a holder of the number
of Warrant Shares purchasable (at the time of such
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reorganization, reclassification, consolidation, merger or sale) upon
exercise of the Warrant would have been entitled upon that reorganization,
reclassification, consolidation, merger or sale; and in any such case, if
necessary, the provisions set forth in this Agreement with respect to the
rights and interests thereafter of the holders of the Warrants shall be
appropriately adjusted so as to be applicable, as nearly as may reasonably
be, to any shares of stock or other securities or property thereafter
deliverable on the exercise of the Warrants. The subdivision or
combination of shares of Common Stock at any time outstanding into a
greater or lesser number of shares shall not be deemed to be a
reclassification of the Shares for the purposes of this Section. The
Company shall not effect any consolidation, merger or sale, unless prior
to or simultaneously with the consummation thereof the successor
corporation (if other than the Company) resulting from the consolidation
or merger of the corporation purchasing the assets or other appropriate
corporation or entity shall assume, by written instrument executed and
delivered to the Warrant Agent, the obligation to deliver to the holder of
each Warrant the shares of stock securities or assets as, in accordance
with the foregoing provisions, the holders may be entitled to purchase and
the other obligations under this Agreement. Notwithstanding an adjustment
pursuant to this Section in the number of Warrant Shares purchasable upon
the exercise of a Warrant, the Company shall not be required to issue
fractions of Warrant Shares upon exercise of the Warrants or to distribute
certificates which evidence fractional Warrant Shares. In lieu of
fractional Warrant Shares, there shall be paid to the registered holders
of Warrants at the time such are exercised as herein provided an amount in
cash equal to the same fraction of the current market value of the Common
Stock as the fraction of a share which the Warrant would otherwise entitle
the holder to purchase. For purposes of this Section 7(b)(7) the current
market value of the Common Stock shall be determined pursuant to Section
7(b)(3) hereof.
8. Notice to Warrantholders.
a. No holder of any of the Warrants, as such, shall have any rights
of a stockholder of the Company, either at law or equity, and the rights
of the holders of the Warrants, as such, are limited to those rights
expressly provided in this Agreement or in the Warrant Certificates.
b. The Company and the Warrant Agent may treat the registered holder
of any Warrant Certificate as the absolute owner thereof for all purposes
notwithstanding any notice to the contrary.
c. If the Company shall make any distribution on, or to holders of,
its Common Stock (or other property which may be purchasable in lieu
thereof upon the exercise of Warrants) of any property (other than a cash
dividend), the Company shall cause a notice thereof to be given to the
registered holders of the outstanding Warrants as aforesaid at least
twenty (20) 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 receive such distribution. 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.
9. Disposition of Proceeds on Exercise of Warrants.
a. The Warrant Agent shall account to the Company once a week, with
respect to Warrants exercised, and concurrently pay to the Company all
monies, including interest, received by the Warrant Agent for the purchase
of shares of the Company's stock through the exercise of such Warrants.
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b. The Warrant Agent shall keep copies of this Agreement available
for inspection by holders of Warrants during normal business hours at its
principal office.
10. Redemption of Warrants.
a. At any time the Company may, at its option, redeem some or all of
the outstanding Warrants at ten cents ($0.10) per Warrant, upon thirty
(30) days prior written notice, if the closing sale price of the Common
Stock on any national securities exchange or the closing sale price
quotation or the average of the closing bid and asked price quotation, the
case may be, on the NASDAQ Small-Cap Market, as the case may be, has
equaled or is more than sixteen dollars and eighty cents ($16.80) for
twenty (20) consecutive trading days within the ninety (90) day period
immediately preceding the date notice of redemption is given (the
"Redemption Price"). In the event of an adjustment in the Exercise Price
pursuant to Section 7, the Redemption Price shall not be adjusted.
b. The election of the Company to redeem some or all of the Warrants
shall be evidenced by a resolution of the Board of Directors of the
Company.
c. Warrants may be exercised at any time on or before the date fixed
for redemption (the "Redemption Date").
d. Notice of redemption shall be given by first class mail, postage
prepaid, mailed not less than thirty (30) nor more than sixty (60) days
prior to the Redemption Date, to each holder of Warrants, at his address
appearing in the Warrant register.
All notices of redemption shall state:
(1) The Redemption Date;
(2) That on the Redemption Date the Redemption Price will
become due and payable upon each Warrant;
(3) The place where such Warrants are to be surrendered for
redemption and payment of the Redemption Price; and
(4) The current Exercise Price of the Warrants, the place or
places where such Warrants may be surrendered for exercise, and the
time at which the right to exercise the Warrants will terminate in
accordance with this Agreement.
e. Notice of redemption of Warrants at the election of the Company
shall be given by the Company or, at the Company's request, by the Warrant
Agent in the name and at the expense of the Company.
f. Prior to any Redemption Date, the Company shall deposit with the
Warrant Agent an amount of money sufficient to pay the Redemption Price of
all the Warrants which are to be redeemed on that date. If any Warrant is
exercised pursuant to Section 5 prior to the Redemption Date, any money so
deposited with the Warrant Agent for the redemption of such Warrant shall
be paid to the Company.
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g. Notice of redemption having been given as aforesaid, the Warrants
so to be redeemed shall, on the Redemption Date, become redeemable at the
Redemption Price therein specified, and on such date (unless the Company
shall default in the payment of the Redemption Price) such Warrants shall
cease to be exercisable and thereafter represent only the right to receive
the Redemption Price. Upon surrender of such Warrants for redemption in
accordance with said notice, such Warrants shall be redeemed by the
Company for the Redemption Price.
11. Merger or Consolidation or Change of Name of Warrant Agent. Any
corporation into which the Warrant Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Warrant Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor warrant agent under
the provisions of Section 14 of this Agreement. In case at the time such
successor to the Warrant Agent shall succeed to the agency created by this
Agreement and at such time any of the Warrants shall have been countersigned but
not delivered, any such successor to the Warrant Agent may adopt the
countersignature of the Warranty Agent and deliver such Warrants so
countersigned; and in case at the time any of the Warrants shall not have been
countersigned, any successor to the Warrant Agent may countersign such Warrants
either in the name of the predecessor Warrant Agent or in the name of the
successor warrant agent; and in all such cases such Warrants shall have the full
force provided in the Warrant and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrants shall have been countersigned but not delivered,
the Warrant Agent may adopt the countersignature under its prior name and
deliver Warrants so countersigned; and in case at that time any of the Warrants
shall not have been countersigned, the Warrant Agent may countersign such
Warrants whether in its prior name or in its changed name; and in all such cases
such Warrants shall have the full force provided in the Warrants and in this
Agreement.
12. Duties of Warrant Agent. The Warrant Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Warrants, by their acceptance
thereof, shall be bound:
a. The statements contained herein and in the Warrants shall be
taken as statements of the Company, and the Warrant Agent assumes no
responsibility for the correctness of any of the same except such as
describe the Warrant Agent or action taken or to be taken by it. The
Warrant Agent assumes no responsibility with respect to the distribution
of the Warrants or the Warrant Certificates except as herein otherwise
provided.
b. The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or
in the Warrant Certificates to be complied with by the Company.
c. The Warrant Agent may execute and exercise any of the rights or
powers hereby vested in it to perform any duty hereunder either itself or
by or through its attorneys, agents or employees.
d. The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant
Agent shall incur no liability or responsibility to the Company or to any
holder of any Warrant in respect of any action taken, suffered or
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omitted by it hereunder in good faith and in accordance with the opinion
or the advice of such counsel, provided the Warrant Agent shall have
exercised reasonable care in the selection and continued employment of
such counsel.
e. The Warrant Agent shall incur no liability or responsibility to
the Company or to any holder of any Warrant for any action taken in
reliance on any notice, resolution, waiver, consent, order, certificate,
or other paper, document or instrument believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties.
f. The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the
execution of this Agreement, to reimburse the Warrant Agent for all
expenses, taxes and governmental charges and other charges of any kind and
nature incurred by the Warrant Agent in the execution of this Agreement
and to indemnify the Warrant Agent and save it harmless against any and
all liabilities, including judgments, costs and reasonable counsel fees,
for anything done or omitted by the Warrant Agent in the execution of this
Agreement except as a result of the Warrant Agent's negligence or bad
faith.
g. The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to
involve expense unless the Company or one or more registered holders of
Warrants shall furnish the Warrant Agent with reasonable security and
indemnity for any cost and expense which may be incurred, but this
provision shall not affect the power of the Warrant Agent to take such
action as the Warrant Agent may consider proper, whether with or without
any such security or indemnity. All rights of action under this Agreement
or under any of the Warrants may be enforced by the Warrant Agent without
the possession of any of the Warrants or the production thereof at any
trial or other proceeding relative thereto, and any such action, suit or
proceeding instituted by the Warrant Agent shall be brought in its name as
Warrant Agent, and any recovery of judgment shall be for the ratable
benefit of the registered holders of the Warrants, as their respective
rights or interests may appear.
h. The Warrant Agent and any stockholder, director, officer or
employee of the Warrant Agent may buy, sell or deal in any of the Warrants
or other securities of the Company or become peculiarly interested in any
transaction in which the Company may be interested, or contract with or
lend money to or otherwise act as fully and freely as though it were not
Warrant Agent under this Agreement. Nothing herein shall preclude the
Warrant Agent from acting in any other capacity for the Company or for any
other legal entity.
i. The Warrant Agent shall act hereunder solely as agent and not in
a ministerial capacity, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not be liable for anything
which it may do or refrain from doing in connection with this Agreement
except as a result of its own negligence or bad faith.
13. Change of Warrant Agent. The Warrant Agent may resign and be
discharged from its duties under this Agreement by giving to the Company notice
in writing, and by giving notice in writing to the holders of the Warrants at
their respective addresses appearing on the Warrant register prior to the date
so specified, specifying a date when such resignation shall take effect, which
notice shall be sent at least 30 days prior to the date so specified. The
Warrant Agent may be removed by like notice to the Warrant Agent from the
Company. If the Warrant Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor to the Warrant
Agent. If the Company shall fail to make such appointment within a period of
thirty (30) days after such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Warrant Agent
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or by any registered holder of a Warrant, then any registered holder of a
Warrant may apply to any court of competent jurisdiction for the appointment of
a successor to the Warrant Agent. Any successor warrant agent, whether appointed
by the Company or by such a court, shall be a bank or trust company having its
principal office, and having capital and surplus as shown by its last published
report to its stockholders, of at least five million dollars ($5,000,000). After
appointment, the successor warrant agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Warrant Agent without further act or deed; but the former Warrant Agent shall
deliver and transfer to the successor warrant agent any property at the time
held by it hereunder, and execute and deliver any further assurance, conveyance,
act or deed necessary for the purpose. Failure to give any notice provided for
in this Section, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Warrant Agent or the
appointment of the successor warrant agent, as the case may be.
14. Identity of Transfer Agent. Forthwith upon the appointment of any
Transfer Agent for the Common Stock or of any subsequent Transfer Agent for
shares of the Common Stock or other shares of the Company's capital stock
issuable upon the exercise of the rights of purchase represented by the Warrant
Certificates, the Company will file with the Warrant Agent a statement setting
forth the name and address of such Transfer Agent.
15. Mutilated or Missing Warrant Certificates. In case any of the Warrant
Certificates shall be mutilated, lost, stolen or destroyed, the Company will
issue and the Warrant Agent will countersign and deliver in exchange and
substitution for and upon cancellation of the mutilated Warrant Certificate, or
in lieu of and substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent right or interest; but only upon receipt of evidence satisfactory to
the Company and the Warrant Agent of such loss, theft or destruction of such
Warrant Certificate and indemnity, if requested, also satisfactory to them.
Applicants for such substitute Warrant Certificates shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Company or the Warrant Agent may prescribe.
16. Notices. Any notice pursuant to this Agreement to be given or made by
the Warrant Agent or the registered holder of any Warrant to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing by the Company
with the Warrant Agent) as follows:
Pacific Biometrics, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: President
Any notice pursuant to this Agreement to be given or made by the Company or the
registered holder of any Warrant to or on the Warrant Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing by the Warrant Agent with
the Company) as follows:
American Securities Transfer & Trust, Incorporated
000 Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000-0000
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17. Supplements and Amendments. The Company and the Warrant Agent may from
time to supplement or amend this Agreement without the approval of any holders
of Warrants in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Warrant Agent may deem
necessary or desirable and which shall not be inconsistent with the provisions
of the Warrants and which shall not adversely affect the interests of the
holders of Warrants.
18. Successors. All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Warrant Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
19. Merger or Consolidation of the Company. The Company shall not effect
any consolidation or merger with, or sale of substantially all its property to,
any other corporation unless the corporation resulting from such merger (if not
the Company) or consolidation or the corporation purchasing such property shall
expressly assume, by supplemental agreement satisfactory in form to the Warrant
Agent and executed and delivered to the Warrant Agent, the due and punctual
performance and observance of each and every covenant and condition of this
Agreement to be performed and observed by the Company.
20. Benefits of This Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company, the
Warrant Agent and the registered holders of the Warrants any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Warrant Agent and the registered
holders of the Warrants.
21. Governing Law. This Agreement and each Warrant Certificate issued
hereunder shall be governed by and construed in accordance with the laws of the
State of Delaware.
22. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes by deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
PACIFIC BIOMETRICS, INC.
By: ____________________________________________
Xxxx X. Xxxxx, President and Chief Executive
Officer
AMERICAN SECURITIES TRANSFER & TRUST,
INCORPORATED, as Warrant Agent
By: ____________________________________________
Authorized Signatory
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EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
No._______________________
For the Purchase of ______
Shares of Common Stock
October _____, 1996
PACIFIC BIOMETRICS, INC.
Redeemable Common Stock Purchase Warrants
Void After January 31, 1998 ("Warrant Expiration Date")
THIS CERTIFIES that ________________ is entitled to purchase from PACIFIC
BIOMETRICS, INC., a Delaware corporation (hereinafter called the "Company"),
upon the surrender of this Warrant Certificate to the Company at the principal
office of the Warrant Agent hereinafter mentioned (or of its successor as
Warrant Agent), provided, and only if, this Warrant Certificate shall be
surrendered and before 5:00 p.m., New York City time, on the Warrant Expiration
Date, the number of fully paid and nonassessable shares of Common Stock, $.01
par value of the Company ("Common Stock"), set forth above, evidenced by a
certificate therefor, upon payment of the Exercise Price for the number of
shares in respect of which this Warrant Certificate is exercised; provided,
however, that under certain conditions set forth in the Warrant Agreement
hereinafter mentioned, the number of shares of Common Stock which may become
purchasable pursuant to this Warrant may be adjusted, or property other than
shares of Common Stock may become purchasable pursuant to the Warrants evidenced
hereby. The Exercise Price at which the Common Stock shall be purchasable upon
the exercise of Warrants shall be $12.00 per share, payable upon exercise,
either in cash or by certified or official bank check, in United States dollars,
to the order of the Warrant Agent. No adjustment shall be made for any dividends
on any shares of stock issuable upon exercise of this Warrant and no fractional
shares shall be issued. The right of purchase represented by this Warrant is
exercisable, at the election of the registered holder hereof, either as an
entirety or from time to time in part only of the shares specified herein and,
in the event that this Warrant Certificate is exercised in respect of fewer than
all of such shares, a new Warrant Certificate for the remaining number of such
shares will be issued on such surrender.
The Warrant is issued under, and the rights represented hereby are subject
to the terms and provisions contained in a Warrant Agreement dated as of
_______________, 1996, between the Company and the Warrant Agent named therein,
to all the terms and provisions of which the registered holder of this Warrant
Certificate, by acceptance hereof, assents. Reference is hereby made to said
Warrant Agreement for a more complete statement of the rights and limitations of
rights of the registered holder hereof, the rights and duties of the Warrant
Agent and the rights and obligations of the Company thereunder. Copies of the
Warrant Agreement are on file at the office of the Warrant Agent.
The Warrants represented by this Warrant Certificate may be redeemed by
the Company, at its option, at any time, on thirty days' prior written notice,
at $.10 per Warrant, if the closing sale price of the Common Stock on any
national securities exchange or the average of closing bid and asked quotation
of the Common Stock on the NASDAQ Small-Cap Market has equaled or is greater
than sixteen dollars and eighty cents ($16.80) for twenty (20) consecutive
trading days. This Warrant Certificate may not be exercised after the close of
business on the day preceding the redemption date.
The Warrant Certificate is transferable at the office of the Warrant Agent
(or its successor as warrant agent) by the registered holder hereof in person or
by attorney duly authorized in writing, but only in the manner and subject to
the limitations provided in the Warrant Agreement, and upon surrender of this
Warrant Certificate. Upon any such transfer, a new Warrant Certificate, or new
Warrant Certificates of different denominations, of like tenor and representing
in the aggregate the right to purchase a like number of shares of Common Stock
will be issued to the transferee in exchange for this Warrant Certificate.
This Warrant Certificate and similar Warrant Certificates when surrendered
at the office of the Warrant Agent (or its successor as warrant agent) by the
registered holder in person or by attorney duly authorized in writing may be
exchanged, in the manner and subject to the limitations provided in the Warrant
Agreement, for another Warrant Certificate, or other Warrant Certificates of
different denominations, of like tenor and representing in the aggregate the
right to purchase a like number of shares of Common Stock.
This Warrant Certificate may be exercised only if a current prospectus
relating to the Common Stock is then in effect and only if the shares of Common
Stock are qualified for sale under the securities law of the state or states in
which the Warrantholder resides.
This Warrant Certificate shall not be valid unless countersigned by the
Warrant Agent.
IN WITNESS WHEREOF, PACIFIC BIOMETRICS, INC. has caused to be printed
herein the facsimile signature of its President or a Vice President as of the
date written above.
PACIFIC BIOMETRICS, INC.
By:_____________________________________
President
AMERICAN SECURITIES TRANSFER & TRUST,
INCORPORATED, as Warrant Agent
By:_____________________________________
Authorized Signature
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[ FORM OF ]
ELECTION TO PURCHASE
PACIFIC BIOMETRICS, INC.
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant(s) for, and to purchase thereunder,
____________________ shares of the stock provided for therein, and requests that
certificates for such shares shall be issued in the name of ____________________
_________________________ (Please Print) and be delivered to ___________________
___________________________ at ______________________________ and, if said
number of shares shall not be all of the shares purchasable thereunder, that a
new Warrant Certificate for the balance remaining of the shares purchasable
under the within Warrant Certificate be registered in the name of, and delivered
to, the undersigned at the address stated below.
Dated: _____________________________, 199__
Name of Warrantholder: ___________________________________________________
( Please Print )
Address:__________________________________________________________________
Signature: _______________________________________________________________
Note: The above signature must correspond with the name
as written upon the face of this Warrant in every
particular, without alteration or enlargement or any
change whatever.
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[ FORM OF ]
ASSIGNMENT
For value received, the undersigned registered holder of the attached
Warrant Certificate hereby sells, assigns and transfers unto the Assignee(s)
named below (including the undersigned with respect to any Warrants that are
evidenced by the Warrant Certificates that are not being assigned hereby) all of
the right of the undersigned under the Warrant Certificate, with respect to the
number of Warrants set forth below, and does hereby irrevocably constitute and
appoint __________________ the undersigned's attorney-in-fact, to make such
transfer on the books of the within-named Corporation maintained for the
purpose, with full power of substitution in the premises.
Social Security of other
Name of identifying number of Number of
Assignee(s) Address Assignee(s) Warrants
----------- ------- ------------------------ ---------
Date: ________________________, 199__
Signature: _______________________________________________________________
Note: The above signature must correspond with the name
as written upon the face of this Warrant in every
particular, without alteration or enlargement or any
change whatever.
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