WARRANT AGREEMENT
between
X.XXX INTERNATIONAL, INC.
and
TRANSECURITIES INTERNATIONAL, INC.
Dated as of September 9, 1997
This Agreement, dated as of September 9, 1997, is between
X.XXX International, Inc., an Oregon corporation (the "Company"), and
TranSecurities International, Inc., a Washington corporation, (the "Warrant
Agent").
The Company, at or about the time that it is entering
into this Agreement, proposes to issue and sell to certain accredited
investors up to 1,500 Units ("Units"). Each Unit consists of one thousand
(1,000) shares of common stock of the Company ("Common Stock") and one
thousand (1,000) Warrants (collectively, the "Warrants"), each Warrant
exercisable to purchase one share of Common Stock for $3.50, upon the terms
and conditions and subject to adjustment in certain circumstances, all as set
forth in this Agreement.
The Company proposes to issue to the Selling Agent in the
placement of Units referred to above warrants to purchase up to 150
additional Units.
The Company wishes to retain the Warrant Agent to act on
behalf of the Company, and the Warrant Agent is willing so to act, in
connection with the issuance, transfer, exchange and replacement of the
certificates evidencing the Warrants to be issued under this Agreement (the
"Warrant Certificates") and the exercise of the Warrants;
The Company and the Warrant Agent wish to enter into this
Agreement to set forth the terms and conditions of the Warrants and the
rights of the holders thereof ("Warrantholders") and to set forth the
respective rights and obligations of the Company and the Warrant Agent. Each
Warrantholder is an intended beneficiary of this Agreement with respect to
the rights of Warrantholders herein.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties hereto agree as follows:
Section 1. APPOINTMENT OF WARRANT AGENT
The Company appoints the Warrant Agent to act as agent
for the Company in accordance with the instructions in this Agreement and the
Warrant Agent accepts such appointment.
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Section 2. DATE, DENOMINATION AND EXECUTION OF WARRANT CERTIFICATES
The Warrant Certificates (and the Form of Election to
Purchase and the Form of Assignment to be printed on the reverse thereof)
shall be in registered form only and shall be substantially of the tenor and
purport recited in Exhibit A hereto, and may have such letters, numbers or
other marks of identification or designation and such legends, summaries or
endorsements printed, lithographed or engraved thereon as the Company may
deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law, or with any rule or
regulation made pursuant thereto, or with any rule or regulation of any stock
exchange on which the Common Stock or the Warrants may be listed or any
automated quotation system, or to conform to usage. Each Warrant Certificate
shall entitle the registered holder thereof, subject to the provisions of
this Agreement and of the Warrant Certificate, to purchase, on or before the
close of business on December 31, 2002 (the "Expiration Date"), one fully
paid and non-assessable share of Common Stock for each Warrant evidenced by
such Warrant Certificate, subject to adjustments as provided in Sections 6
hereof, for $3.50 (the "Exercise Price"). Each Warrant Certificate issued as
a part of a Unit offered to the public as described in the recitals, above,
shall be dated September ____, 1997; each other Warrant Certificate shall be
dated the date on which the Warrant Agent receives valid issuance
instructions from the Company or a transferring holder of a Warrant
Certificate or, if such instructions specify another date, such other date.
For purposes of this Agreement, the term "close of
business" on any given date shall mean 5:20 p.m., Pacific time, on such date;
provided, however, that if such date is not a business day, it shall mean
5:20 p.m., Pacific time, on the next succeeding business day. For purposes
of this Agreement, the term "business day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in Oregon are
authorized or obligated by law to be closed.
Each Warrant Certificate shall be executed on behalf of
the Company by the Chairman of the Board or its President or a Vice
President, either manually or by facsimile signature printed thereon, and
have affixed thereto the Company's seal or a facsimile thereof which shall be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. Each Warrant Certificate shall be
manually countersigned by the Warrant Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any Warrant Certificate shall cease to be such officer of the
Company before countersignature by the Warrant Agent and issue and delivery
thereof by the Company, such Warrant Certificate, nevertheless, may be
countersigned by the Warrant Agent, issued and delivered with the same force
and effect as though the person who signed such Warrant Certificate had not
ceased to be such officer of the Company.
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Section 3. SUBSEQUENT ISSUE OF WARRANT CERTIFICATES
Subsequent to their original issuance, no Warrant
Certificates shall be reissued except (i) Warrant Certificates issued upon
transfer thereof in accordance with Section 4 hereof, (ii) Warrant
Certificates issued upon any combination, split-up or exchange of Warrant
Certificates pursuant to Section 4 hereof, (iii) Warrant Certificates issued
in replacement of mutilated, destroyed, lost or stolen Warrant Certificates
pursuant to Section 5 hereof, (iv) Warrant Certificates issued upon the
partial exercise of Warrant Certificates pursuant to Section 7 hereof, and
(v) Warrant Certificates issued to reflect any adjustment or change in the
Exercise Price or the number or kind of shares purchasable thereunder
pursuant to Section 22 hereof. The Warrant Agent is hereby irrevocably
authorized to countersign and deliver, in accordance with the provisions of
said Sections 4, 5, 7 and 22, the new Warrant Certificates required for
purposes thereof, 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 purposes.
Section 4. TRANSFERS AND EXCHANGES OF WARRANT CERTIFICATES
The Warrant Agent will keep or cause to be kept books for
registration of ownership and transfer of the Warrant Certificates issued
hereunder. Such registers shall show the names and addresses of the
respective holders of the Warrant Certificates and the number of Warrants
evidenced by each such Warrant Certificate.
The Warrant Agent shall, from time to time, register the
transfer of any outstanding Warrants upon the books to be maintained by the
Warrant Agent for that purpose, upon surrender of the Warrant Certificate
evidencing such Warrants, with the Form of Assignment duly filled in and
executed with such signature guaranteed by a banking institution or NASD
member and such supporting documentation as the Warrant Agent or the Company
may reasonably require, to the Warrant Agent at its stock transfer office in
Spokane, Washington at any time on or before the Expiration Date, and upon
payment to the Warrant Agent for the account of the Company of an amount
equal to any applicable transfer tax. Payment of the amount of such tax may
be made in cash, or by certified or official bank check, payable in lawful
money of the United States of America to the order of the Company.
Upon receipt of a Warrant Certificate, with the Form of
Assignment duly filled in and executed, accompanied by payment of an amount
equal to any applicable transfer tax, the Warrant Agent shall promptly cancel
the surrendered Warrant Certificate and countersign and deliver to the
transferee a new Warrant Certificate for the number of full Warrants
transferred to such transferee; PROVIDED, HOWEVER, that in case the
registered holder of any Warrant Certificate shall elect to transfer fewer
than all of the Warrants evidenced by such Warrant Certificate, the Warrant
Agent in addition
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shall promptly countersign and deliver to such registered holder a new Warrant
Certificate or Certificates for the number of full Warrants not so transferred.
Any Warrant Certificate or Certificates may be exchanged
at the option of the holder thereof for another Warrant Certificate or
Certificates of different denominations, of like tenor and representing in
the aggregate the same number of Warrants, upon surrender of such Warrant
Certificate or Certificates, with the Form of Assignment duly filled in and
executed, to the Warrant Agent, at any time or from time to time after the
close of business on the date hereof and prior to the close of business on
the Expiration Date. The Warrant Agent shall promptly cancel the surrendered
Warrant Certificate and deliver the new Warrant Certificate pursuant to the
provisions of this Section.
Section 5. MUTILATED, DESTROYED, LOST OR STOLEN WARRANT CERTIFICATES
Upon receipt by the Company and the Warrant Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of any Warrant Certificate, and in the case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to them, and
reimbursement to them of all reasonable expenses incidental thereto, and, in
the case of mutilation, upon surrender and cancellation of the Warrant
Certificate, the Warrant Agent shall countersign and deliver a new Warrant
Certificate of like tenor for the same number of Warrants.
Section 6. ADJUSTMENTS OF NUMBER AND KIND OF SHARES PURCHASABLE AND EXERCISE
PRICE
The number and kind of securities or other property
purchasable upon exercise of a Warrant shall be subject to adjustment from
time to time upon the occurrence, after the date hereof, of any of the
following events:
A. If, at any time after the close of business on the date
that is ninety (90) days after the last date on which the Warrants subject
to this Agreement are sold by the Company (the "Final Closing Date"), there
shall not be effective a registration statement under the Securities Act of
1933, as amended, (the "Act") with respect to the Common Stock and Warrants
comprising the Units and the Common Stock issuable on exercise of the
Warrants then, commencing on the ninety-first day the Exercise Price shall be
reduced by $0.01 (or such adjusted amount as may be appropriate in light of
any other adjustment of the Exercise Price pursuant to this Section 6) and
shall be further reduced by an additional $0.01 (or such adjusted amount as
may be appropriate in light of any other adjustment of the Exercise Price
pursuant to this Section 6) for each subsequent day until such registration
statement is declared effective. If the Company fails to deliver Common
Stock on exercise of any Warrants within five (5) business days following the
valid exercise of such Warrants in reliance on the provisions of Section 9
and does not elect to redeem such Warrants for cash as provided in Section 9,
then
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commencing on the sixth business day following such exercise, the Exercise Price
shall be reduced by $0.01 (or such adjusted amount as may be appropriate in
light of any other adjustment of the Exercise Price pursuant to this Section 6)
for each day until such Common Stock is delivered; PROVIDED, HOWEVER, that no
adjustment to the Exercise Price shall occur (1) if the Company determines in
good faith that due to subsequent events or developments, statements in the
registration statement which were accurate at the time the registration
statement became effective have become materially misleading or the registration
statement contains material omissions which did not exist at the time the
registration statement became effective, and as a result the Company is unable
to deliver a valid prospectus in accordance with Section 7, PROVIDED that the
Company shall make all reasonable efforts and take all reasonable steps to
correct such material misstatement or material omission as soon as practicable;
or (2) if, in the opinion of the Board of Directors of the Company, upon advice
of counsel, a prospectus to be delivered in accordance with Section 7 would
require the disclosure of some fact or circumstance which has not otherwise been
disclosed in the registration statement, and the Board of Directors determines
in good faith that disclosure of such fact or circumstance is not in the best
interest of the Company, PROVIDED that the Board of Directors may do so not more
than twice and for not more than 90 days. If, as a result of the application of
this Section 6A, the Exercise Price is reduced to zero, the Warrants will be
deemed exercised on the first date on which the Exercise Price is zero without
further action by any Holder and the Company will issue and deliver Common Stock
issuable upon such exercise to the record holders as of the close of business on
such date.
B. In case the Company shall (1) pay a dividend in, or make a
distribution of, shares of capital stock on its outstanding Common Stock, (2)
subdivide its outstanding shares of Common Stock into a greater number of such
shares or (3) combine its outstanding shares of Common Stock into a smaller
number of such shares, the total number of shares of Common Stock purchasable
upon the exercise of each Warrant outstanding immediately prior thereto shall be
adjusted so that the holder of any Warrant Certificate thereafter surrendered
for exercise shall be entitled to receive at the same aggregate Exercise Price
the number of shares of capital stock (of one or more classes) which such holder
would have owned or have been entitled to receive immediately following the
happening of any of the events described above had such Warrant been exercised
in full immediately prior to the record date with respect to such event. Any
adjustment made pursuant to this Subsection shall, in the case of a stock
dividend or distribution, become effective as of the record date therefor and,
in the case of a subdivision or combination, be made as of the effective date
thereof. If, as a result of an adjustment made pursuant to this Subsection, the
holder of any Warrant Certificate thereafter surrendered for exercise shall
become entitled to receive shares of two or more classes of capital stock of the
Company, the Board of Directors of the Company (whose determination shall be
conclusive and shall be evidenced by a Board resolution filed with the Warrant
Agent) shall determine the allocation of the adjusted Exercise Price between or
among shares of such classes of capital stock.
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C. In the event of a capital reorganization or a
reclassification of the Common Stock (except as provided in Subsection B.
above or Subsection F. below), any Warrantholder, upon exercise of Warrants,
shall be entitled to receive, in substitution for the Common Stock to which
he would have become entitled upon exercise immediately prior to such
reorganization or reclassification, the shares (of any class or classes) or
other securities or property of the Company (or cash) that he would have been
entitled to receive at the same aggregate Exercise Price upon such
reorganization or reclassification if such Warrants had been exercised
immediately prior to the record date with respect to such event; and in any
such case, appropriate provision (as determined by the Board of Directors of
the Company, whose determination shall be conclusive and shall be evidenced
by a certified Board resolution filed with the Warrant Agent) shall be made
for the application of this Section 6 with respect to the rights and
interests thereafter of the Warrantholders (including but not limited to the
allocation of the Exercise Price between or among shares of classes of
capital stock), to the end that this Section 6 (including the adjustments of
the number of shares of Common Stock or other securities purchasable and the
Exercise Price thereof) shall thereafter be reflected, as nearly as
reasonably practicable, in all subsequent exercises of the Warrants for any
shares or securities or other property (or cash) thereafter deliverable upon
the exercise of the Warrants.
D. Whenever the number of shares of Common Stock or other
securities purchasable upon exercise of a Warrant is adjusted as provided in
this Section 6, the Company will promptly file with the Warrant Agent a
certificate signed by a Chairman or co-Chairman of the Board or the President
or a Vice President of the Company and by the Treasurer or an Assistant
Treasurer or the Secretary or an Assistant Secretary of the Company setting
forth the number and kind of securities or other property purchasable upon
exercise of a Warrant, as so adjusted, stating that such adjustments in the
number or kind of shares or other securities or property conform to the
requirements of this Section 6, and setting forth a brief statement of the
facts accounting for such adjustments. Promptly after receipt of such
certificate, the Company, or the Warrant Agent at the Company's request, will
deliver, by first-class, postage prepaid mail, a brief summary thereof (to be
supplied by the Company) to the registered holders of the outstanding Warrant
Certificates; PROVIDED, HOWEVER, that failure to file or to give any notice
required under this Subsection, or any defect therein, shall not affect the
legality or validity of any such adjustments under this Section 6; and
PROVIDED, FURTHER, that, where appropriate, such notice may be given in
advance and included as part of the notice required to be given pursuant to
Section 12 hereof. Whenever the Exercise Price of a Warrant is adjusted as
provided in this Section 6, the Company will promptly file with the Warrant
Agent a certificate signed by a Chairman or co-Chairman of the Board or the
President or a Vice President of the Company and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of the Company
setting forth the Exercise Price of the Warrant, as so adjusted, stating that
such adjustment in the Exercise Price conforms to the requirements of this
Section 6.
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E. In case of any consolidation of the Company with, or
merger of the Company into, another corporation (other than a consolidation
or merger which does not result in any reclassification or change of the
outstanding Common Stock), or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as
an entirety, the corporation formed by such consolidation or merger or the
corporation which shall have acquired such assets, as the case may be, shall
execute and deliver to the Warrant Agent a supplemental warrant agreement
providing that the holder of each Warrant then outstanding shall have the
right thereafter (until the expiration of such Warrant) to receive, upon
exercise of such Warrant, solely the kind and amount of shares of stock and
other securities and property (or cash) receivable upon such consolidation,
merger, sale or transfer by a holder of the number of shares of Common Stock
of the Company for which such 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 as nearly
equivalent as may be practicable to the adjustments provided in this Section.
The above provision of this Subsection shall similarly apply to successive
consolidations, mergers, sales or transfers.
The Warrant Agent shall not be under any responsibility
to determine the correctness of any provision contained in any such
supplemental warrant agreement relating to either the kind or amount of
shares of stock or securities or property (or cash) purchasable by holders of
Warrant Certificates upon the exercise of their Warrants after any such
consolidation, merger, sale or transfer or of any adjustment to be made with
respect thereto, but subject to the provisions of Section 20 hereof, may
accept as conclusive evidence of the correctness of any such provisions, and
shall be protected in relying upon, a certificate of a firm of independent
certified public accountants (who may be the accountants regularly employed
by the Company) with respect thereto.
F. Irrespective of any adjustments in the number or kind of
shares issuable upon exercise of Warrants, Warrant Certificates theretofore
or thereafter issued may continue to express the same price and number and
kind of shares as are stated in the similar Warrant Certificates initially
issuable pursuant to this Warrant Agreement.
G. The Company may retain a firm of independent public
accountants of recognized standing, which may be the firm regularly retained
by the Company, selected by the Board of Directors of the Company or the
Executive Committee of said Board, and not disapproved by the Warrant Agent,
to make any computation required under this Section, and a certificate signed
by such firm shall, in the absence of fraud or gross negligence, be
conclusive evidence of the correctness of any computation made under this
Section.
H. For the purpose of this Section, the term "Common Stock"
shall mean (i) the class of stock designated as Common Stock in the Articles
of Incorporation of the Company, as amended, at the date of this Agreement,
or (ii) any other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting
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solely of changes in par value, or from par value to no par value, or from no
par value to par value. In the event that at any time as a result of an
adjustment made pursuant to this Section, the holder of any Warrant thereafter
surrendered for exercise shall become entitled to receive any shares of capital
stock of the Company other than shares of Common Stock, thereafter the number of
such other shares so receivable upon exercise of any Warrant shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock contained in this
Section, and all other provisions of this Agreement, with respect to the Common
Stock, shall apply on like terms to any such other shares.
I. The Company may, from time to time and to the extent
permitted by law, reduce the exercise price of the Warrants by any amount for
a period of not less than 20 days. If the Company so reduces the exercise
price of the Warrants, it will give not less than 15 days' notice of such
decrease, which notice may be in the form of a press release, and shall take
such other steps as may be required under applicable law in connection with
any offers or sales of securities at the reduced price.
Section 7. EXERCISE AND REDEMPTION OF WARRANTS
Unless the Warrants have been redeemed as provided in
this Section 7, the registered holder of any Warrant Certificate may exercise
the Warrants evidenced thereby, in whole at any time or in part from time to
time at or prior to the close of business, on the Expiration Date, subject to
the provisions of Section 9, at which time the Warrant Certificates shall be
and become wholly void and of no value. Warrants may be exercised by their
holders or redeemed by the Company as follows:
A. Exercise of Warrants shall be accomplished upon surrender
of the Warrant Certificate evidencing such Warrants, with the Form of
Election to Purchase on the reverse side thereof duly filled in and executed,
to the Warrant Agent at its stock transfer office in Spokane, Washington,
together with payment of the Exercise Price (as of the date of such
surrender) of the Warrants then being exercised and an amount equal to any
applicable transfer tax and, if requested by the Company, any other taxes or
governmental charges which the Company may be required by law to collect in
respect of such exercise. Payment of the Exercise Price and other amounts
may be made by wire transfer of good funds, or by certified or bank cashier's
check, payable in lawful money of the United States of America to the order
of the Company. No adjustment shall be made for any cash dividends, whether
paid or declared, on any securities issuable upon exercise of a Warrant.
B. Upon receipt of a Warrant Certificate, with the Form of
Election to Purchase duly filled in and executed, accompanied by payment of
the Exercise Price of the Warrants being exercised (and of an amount equal to
any applicable taxes or government charges as aforesaid), the Warrant Agent
shall promptly request from the Transfer Agent with respect to the securities
to be issued and within five (5) business
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days following the valid exercise of such Warrants deliver to or upon the order
of the registered holder of such Warrant Certificate, in such name or names as
such registered holder may designate, a certificate or certificates for the
number of full shares of the securities to be purchased, together with cash made
available by the Company pursuant to Section 8 hereof in respect of any fraction
of a share of such securities otherwise issuable upon such exercise. The
Company will take such action as may be required to cause all of the securities
of the Company issuable upon exercise of Warrants to be freely tradable under
the Act and applicable state securities laws by the Exercising Warrantholder
immediately upon such delivery. If it is required by law and upon instruction
by the Company, the Warrant Agent will deliver to each Warrantholder a
prospectus which complies with the provisions of Section 9 of the Act and the
Company agrees to supply Warrant Agent with sufficient number of prospectuses to
effectuate that purpose. If the Warrant is then exercisable to purchase
property other than securities, the Warrant Agent shall take appropriate steps
to cause such property to be delivered to or upon the order of the registered
holder of such Warrant Certificate.
C. In case the registered holder of any Warrant Certificate
shall exercise fewer than all of the Warrants evidenced by such Warrant
Certificate, the Warrant Agent shall promptly countersign and deliver to the
registered holder of such Warrant Certificate, or to his duly authorized
assigns, a new Warrant Certificate or Certificates evidencing the number of
Warrants that were not so exercised.
D. Each person in whose name any certificate for securities
is issued upon the exercise of Warrants shall for all purposes be deemed to
have become the holder of record of the securities represented thereby as of,
and such certificate shall be dated, the date upon which the Warrant
Certificate was duly surrendered in proper form and payment of the Exercise
Price (and of any applicable taxes or other governmental charges) was made;
PROVIDED, HOWEVER, that if the date of such surrender and payment is a date
on which the stock transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares as of, and
the certificate for such shares shall be dated, the next succeeding business
day on which the stock transfer books of the Company are open (whether
before, on or after the Expiration Date) and the Warrant Agent shall be under
no duty to deliver the certificate for such shares until such date. The
Company covenants and agrees that it shall not cause its stock transfer books
to be closed for a period of more than 20 consecutive business days except
upon consolidation, merger, sale of all or substantially all of its assets,
dissolution or liquidation or as otherwise provided by law.
E. The Warrants outstanding at the time of a redemption may
be redeemed at the option of the Company, in whole or in part on a pro-rata
basis, at any time if, at the time notice of such redemption is given by the
Company as provided in Paragraph F, below, the Daily Price has exceeded $5.00
for the twenty consecutive trading days immediately preceding the date of
such notice, at a price equal to $0.25 per Warrant (the "Redemption Price").
For the purpose of the foregoing sentence, the term "Daily Price" shall mean,
for any relevant day, the closing or closing bid price on that day as
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reported by the principal exchange or quotation system on which prices for the
Common Stock are reported, provided, however, that, if the principal quotation
system publishes a range of bid prices, the highest closing bid price shall be
used. On the redemption date the holders of record of redeemed Warrants shall
be entitled to payment of the Redemption Price upon surrender of such redeemed
Warrants to the Company at the principal office of the Warrant Agent in Spokane,
Washington.
F. Notice of redemption of Warrants shall be given at least
30 days prior to the redemption date by mailing, by registered or certified
mail, return receipt requested, a copy of such notice to the Warrant Agent
and to all of the holders of record of Warrants at their respective addresses
appearing on the books or transfer records of the Company or such other
address designated in writing by the holder of record to the Warrant Agent
not less than 40 days prior to the redemption date.
G. From and after the redemption date, all rights of the
Warrantholders (except the right to receive the Redemption Price) shall
terminate, but only if (a) no later than one day prior to the redemption date
the Company shall have irrevocably deposited with the Warrant Agent as paying
agent a sufficient amount to pay on the redemption date the Redemption Price
for all Warrants called for redemption and (b) the notice of redemption shall
have stated the name and address of the Warrant Agent and the intention of
the Company to deposit such amount with the Warrant Agent no later than one
day prior to the redemption date.
H. The Warrant Agent shall pay to the holders of record of
redeemed Warrants all monies received by the Warrant Agent for the redemption
of Warrants to which the holders of record of such redeemed Warrants who
shall have surrendered their Warrants are entitled.
I. Any amounts deposited with the Warrant Agent that are not
required for redemption of Warrants may be withdrawn by the Company. Any
amounts deposited with the Warrant Agent that shall be unclaimed after six
months after the redemption date may be withdrawn by the Company, and
thereafter the holders of the Warrants called for redemption for which such
funds were deposited shall look solely to the Company for payment. The
Company shall be entitled to the interest, if any, on funds deposited with
the Warrant Agent and the holders of redeemed Warrants shall have no right to
any such interest.
J. If the Company fails to make a sufficient deposit with
the Warrant Agent as provided above, the holder of any Warrants called for
redemption may at the option of the holder (a) by notice to the Company
declare the notice of redemption a nullity as to such holder, or (b) maintain
an action against the Company for the Redemption Price. If the holder brings
such an action, the Company will pay reasonable attorneys' fees of the
holder. If the holder fails to bring an action against the Company for the
Redemption Price within 60 days after the redemption date, the holder shall
be deemed to have elected to declare the notice of redemption to be a nullity
as to such holder and
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such notice shall be without any force or effect as to such holder. Except as
otherwise specifically provided in this Paragraph J, a notice of redemption,
once mailed by the Company as provided in Paragraph F shall be irrevocable.
Section 8. FRACTIONAL INTERESTS
The Company shall not be required to issue any Warrant
Certificate evidencing a fraction of a Warrant or to issue fractions of
shares of securities on the exercise of the Warrants. If any fraction
(calculated to the nearest one-hundredth) of a Warrant or a share of
securities would, except for the provisions of this Section, be issuable on
the exercise of any Warrant, the Company shall, at its option and upon notice
to the Warrant Agent, either purchase such fraction for an amount in cash
equal to the current value of such fraction computed on the basis of the
closing market price (as quoted on the principal exchange or quotation system
on which prices for the Common Stock are reported) on the trading day
immediately preceding the day upon which such Warrant Certificate was
surrendered for exercise in accordance with Section 7 hereof or issue the
required fractional Warrant or share. By accepting a Warrant Certificate,
the holder thereof expressly waives any right to receive a Warrant
Certificate evidencing any fraction of a Warrant or to receive any fractional
share of securities upon exercise of a Warrant, except as expressly provided
in this Section 8.
Section 9. RESERVATION OF EQUITY SECURITIES
The Company covenants that it will at all times reserve
and keep available, free from any preemptive rights, out of its authorized
and unissued equity securities, solely for the purpose of issue upon exercise
of the Warrants, such number of shares of equity securities of the Company as
shall then be issuable upon the exercise of all outstanding Warrants ("Equity
Securities"). The Company covenants that all Equity Securities which shall
be so issuable shall, upon such issue, be duly authorized, validly issued,
fully paid and non-assessable.
The Company covenants that if any equity securities,
required to be reserved for the purpose of issue upon exercise of the
Warrants hereunder, require registration with or approval of any governmental
authority under any federal or state law before such shares may be issued
upon exercise of Warrants, the Company will use all commercially reasonable
efforts to cause such securities to be duly registered, or approved, as the
case may be, and, to the extent practicable, take all such action in
anticipation of and prior to the exercise of the Warrants, including, without
limitation, filing any and all post-effective amendments to the Company's
registration statement filed as described in Section 6A. necessary to permit
a public offering of the securities underlying the Warrants at any and all
times during the term of this Agreement, PROVIDED, HOWEVER, that in no event
shall such securities be issued, and the Company is authorized to refuse to
honor the exercise of any Warrant, if such exercise would result
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in the opinion of the Company's Board of Directors, upon advice of counsel, in
the violation of any law; and PROVIDED FURTHER that, in the case of a Warrant
exercisable solely for securities listed on a securities exchange or for which
there are at least two independent market makers, in lieu of obtaining such
registration or approval, the Company may elect to redeem Warrants submitted to
the Warrant Agent for exercise for a price equal to the difference between the
aggregate low asked price, or closing price, as the case may be, of the
securities for which such Warrant is exercisable on the date of such submission
and the Exercise Price of such Warrants; in the event of such redemption, the
Company will pay to the holder of such Warrants the above-described redemption
price in cash within 10 business days after receipt of notice from the Warrant
Agent that such Warrants have been submitted for exercise.
Section 10. REDUCTION OF CONVERSION PRICE BELOW PAR VALUE
Before taking any action that would cause an adjustment
pursuant to Section 6 hereof reducing the portion of the Exercise Price
required to purchase one share of capital stock below the then par value (if
any) of a share of such capital stock, the Company will use its best efforts
to take any corporate action which, in the opinion of its counsel, may be
necessary in order that the Company may validly and legally issue fully paid
and non-assessable shares of such capital stock.
Section 11. PAYMENT OF TAXES
The Company covenants and agrees that it will pay when
due and payable any and all federal and state documentary stamp and other
original issue taxes which may be payable in respect of the original issuance
of the Warrant Certificates, or any shares of Common Stock or other
securities upon the exercise of Warrants. The Company shall not, however, be
required (i) to pay any tax which may be payable in respect of any transfer
involved in the transfer and delivery of Warrant Certificates or the issuance
or delivery of certificates for Common Stock or other securities in a name
other than that of the registered holder of the Warrant Certificate
surrendered for purchase or (ii) to issue or deliver any certificate for
shares of Common Stock or other securities upon the exercise of any Warrant
Certificate until any such tax shall have been paid, all such tax being
payable by the holder of such Warrant Certificate at the time of surrender.
Section 12. NOTICE OF CERTAIN CORPORATE ACTION
In case the Company after the date hereof shall propose
(i) to offer to the holders of Common Stock, generally, rights to subscribe
to or purchase any additional shares of any class of its capital stock, any
evidences of its indebtedness or assets, or any other rights or options or
(ii) to effect any reclassification of Common Stock (other
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than a reclassification involving merely the subdivision or combination of
outstanding shares of Common Stock) or any capital reorganization, or any
consolidation or merger to which the Company is a party and for which approval
of any stockholders of the Company is required, or any sale, transfer or other
disposition of its property and assets substantially as an entirety, or the
liquidation, voluntary or involuntary dissolution or winding-up of the Company,
then, in each such case, the Company shall file with the Warrant Agent and the
Company, or the Warrant Agent on its behalf, shall mail (by first-class, postage
prepaid mail) to all registered holders of the Warrant Certificates notice of
such proposed action, which notice shall specify the date on which the books of
the Company shall close or a record be taken for such offer of rights or
options, or the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, other disposition, liquidation, voluntary
or involuntary dissolution or winding-up shall take place or commence, as the
case may be, and which shall also specify any record date for determination of
holders of Common Stock entitled to vote thereon or participate therein and
shall set forth such facts with respect thereto as shall be reasonably necessary
to indicate any adjustments in the Exercise Price and the number or kind of
shares or other securities purchasable upon exercise of Warrants which will be
required as a result of such action. Such notice shall be filed and mailed in
the case of any action covered by clause (i) above, at least ten days prior to
the record date for determining holders of the Common Stock for purposes of such
action or, if a record is not to be taken, the date as of which the holders of
shares of Common Stock of record are to be entitled to such offering; and, in
the case of any action covered by clause (ii) above, at least 20 days prior to
the earlier of the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, other disposition, liquidation, voluntary
or involuntary dissolution or winding-up is expected to become effective and the
date on which it is expected that holders of shares of Common Stock of record on
such date shall be entitled to exchange their shares for securities or other
property deliverable upon such reclassification, reorganization, consolidation,
merger, sale, transfer, other disposition, liquidation, voluntary or involuntary
dissolution or winding-up.
Failure to give any such notice or any defect therein
shall not affect the legality or validity of any transaction listed in this
Section 12.
Section 13. DISPOSITION OF PROCEEDS ON EXERCISE OF WARRANT CERTIFICATES, ETC.
The Warrant Agent shall account promptly to the Company
with respect to Warrants exercised and concurrently pay to the Company all
moneys received by the Warrant Agent for the purchase of securities or other
property through the exercise of such Warrants.
The Warrant Agent shall keep copies of this Agreement
available for inspection by Warrantholders during normal business hours at
its stock transfer office.
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Copies of this Agreement may be obtained upon written request addressed to the
Warrant Agent at its stock transfer office in Spokane, Washington.
Section 14. WARRANTHOLDER NOT DEEMED A STOCKHOLDER
No Warrantholder, as such, shall be entitled to vote,
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
of the Warrants represented thereby for any purpose whatever, nor shall
anything contained herein or in any Warrant Certificate be construed to
confer upon any Warrantholder, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issuance of stock, reclassification of stock, change of par value or change
of stock to no par value, consolidation, merger, conveyance or otherwise), or
to receive notice of meetings or other actions affecting stockholders (except
as provided in Section 12 hereof), or to receive dividend or subscription
rights, or otherwise, until such Warrant Certificate shall have been
exercised in accordance with the provisions hereof and the receipt of the
Exercise Price and any other amounts payable upon such exercise by the
Warrant Agent.
Section 15. RIGHT OF ACTION
All rights of action in respect to this Agreement are
vested in the respective registered holders of the Warrant Certificates; and
any registered holder of any Warrant Certificate, without the consent of the
Warrant Agent or of any other holder of a Warrant Certificate, may, in his
own behalf for his own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company suitable to enforce, or
otherwise in respect of, his right to exercise the Warrants evidenced by such
Warrant Certificate, for the purchase of shares of the Common Stock in the
manner provided in the Warrant Certificate and in this Agreement.
Section 16. AGREEMENT OF HOLDERS OF WARRANT CERTIFICATES
Every holder of a Warrant Certificate by accepting the
same consents and agrees with the Company, the Warrant Agent and with every
other holder of a Warrant Certificate that:
A. the Warrant Certificates are transferable on the registry
books of the Warrant Agent only upon the terms and conditions set forth in
this Agreement; and
B. the Company and the Warrant Agent may deem and treat the
person in whose name the Warrant Certificate is registered as the absolute
owner of the Warrant
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(notwithstanding any notation of ownership or other writing thereon made by
anyone other than the Company or the Warrant Agent) for all purposes whatever
and neither the Company nor the Warrant Agent shall be affected by any notice to
the contrary.
Section 17. CANCELLATION OF WARRANT CERTIFICATES
In the event that the Company shall purchase or otherwise
acquire any Warrant Certificate or Certificates after the issuance thereof,
such Warrant Certificate or Certificates shall thereupon be delivered to the
Warrant Agent and be canceled by it and retired. The Warrant Agent shall
also cancel any Warrant Certificate delivered to it for exercise, in whole or
in part, or delivered to it for transfer, split-up, combination or exchange.
Warrant Certificates so canceled shall be delivered by the Warrant Agent to
the Company from time to time, or disposed of in accordance with the
instructions of the Company.
Section 18. CONCERNING THE WARRANT AGENT
The Company agrees to pay to the Warrant Agent from time
to time, on demand of the Warrant Agent, reasonable compensation for all
services rendered by it hereunder and also its reasonable expenses, including
counsel fees, and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Warrant Agent for, and
to hold it harmless against, any loss, liability or expense, incurred without
gross negligence, bad faith or willful misconduct on the part of the Warrant
Agent, arising out of or in connection with the acceptance and administration
of this Agreement.
Section 19. 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 21
hereof. In case at the time such successor to the Warrant Agent shall
succeed to the agency created by this Agreement, any of the Warrant
Certificates shall have been countersigned but not delivered, any such
successor to the Warrant Agent may adopt the countersignature of the original
Warrant Agent and deliver such Warrant Certificates so countersigned; and in
case at that time any of the Warrant Certificates shall not have been
countersigned, any successor to the Warrant Agent may countersign such
Warrant
-15-
Certificates either in the name of the predecessor Warrant Agent or in the name
of the successor Warrant Agent; and in all such cases such Warrant Certificates
shall have the full force provided in the Warrant Certificates and in this
Agreement.
In case at any time the name of the Warrant Agent shall
be changed and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent may adopt the
countersignature under its prior name and deliver Warrant Certificates so
countersigned; and in case at that time any of the Warrant Certificates shall
not have been countersigned, the Warrant Agent may countersign such Warrant
Certificates either in its prior name or in its changed name; and in all such
cases such Warrant Certificates shall have the full force provided in the
Warrant Certificates and in this Agreement.
Section 20. 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 Warrant Certificates, by their
acceptance thereof, shall be bound:
A. The Warrant Agent may consult with counsel satisfactory
to it (who may be counsel for the Company or the Warrant Agent's in-house
counsel), and the opinion of such counsel shall be full and complete
authorization and protection to the Warrant Agent as to any action taken,
suffered or omitted by it in good faith and in accordance with such opinion;
PROVIDED, HOWEVER, that the Warrant Agent shall have exercised reasonable
care in the selection of such counsel. Fees and expenses of such counsel, to
the extent reasonable, shall be paid by the Company.
B. Whenever in the performance of its duties under this
Agreement, the Warrant Agent shall deem it necessary or desirable that any
fact or matter be proved or established by the Company prior to taking or
suffering any action hereunder, such fact or matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by a Chairman or
co-Chairman of the Board or the President or a Vice President or the
Secretary of the Company and delivered to the Warrant Agent; and such
certificate shall be full authorization to the Warrant Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement
in reliance upon such certificate.
C. The Warrant Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.
D. The Warrant Agent shall not be liable for or by reason of
any of the statements of fact or recitals contained in this Agreement or in
the Warrant Certificates (except its countersignature on the Warrant
Certificates and such statements or recitals as describe the Warrant Agent or
action taken or to be taken by it) or be required to
-16-
verify the same, but all such statements and recitals are and shall be deemed
to have been made by the Company only.
E. The Warrant Agent shall not be under any responsibility
in respect of the validity of this Agreement or the execution and delivery
hereof (except the due execution hereof by the Warrant Agent) or in respect
of the validity or execution of any Warrant Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Warrant Certificate; nor shall it be responsible for the making of any change
in the number of shares of Common Stock for which a Warrant is exercisable
required under the provisions of Section 6 or responsible for the manner,
method or amount of any such change or the ascertaining of the existence of
facts that would require any such adjustment or change (except with respect
to the exercise of Warrant Certificates after actual notice of any adjustment
of the Exercise Price); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any
shares of Common Stock to be issued pursuant to this Agreement or any Warrant
Certificate or as to whether any shares of Common Stock will, when issued, be
validly issued, fully paid and non-assessable.
F. The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or take any other action
likely to involve expense unless the Company or one or more registered
holders of Warrant Certificates shall furnish the Warrant Agent with
reasonable security and indemnity for any costs and expenses which may be
incurred. 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
Warrant Certificates, as their respective rights or interests may appear.
G. 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 pecuniarily 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.
H. The Warrant Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder
from a Chairman or co-Chairman of the Board or President or a Vice President
or the Secretary or the Chief Financial Officer of the Company, and to apply
to such officers for advice or instructions in connection with the Warrant
Agent's duties, and it shall not be liable for
-17-
any action taken or suffered or omitted by it in good faith in accordance with
instructions of any such officer.
I. The Warrant Agent will 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.
J. The Warrant Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys, agents or employees and the Warrant
Agent shall not be answerable or accountable for any act, default, neglect or
misconduct of any such attorneys, agents or employees or for any loss to the
Company resulting from such neglect or misconduct; PROVIDED, HOWEVER, that
reasonable care shall have been exercised in the selection and continued
employment of such attorneys, agents and employees.
K. The Warrant Agent will not incur any liability or
responsibility to the Company or to any holder of any Warrant Certificate for
any action taken, or any failure to take action, in reliance on any notice,
resolution, waiver, consent, order, certificate, or other paper, document or
instrument reasonably believed by the Warrant Agent to be genuine and to have
been signed, sent or presented by the proper party or parties.
L. The Warrant Agent will act hereunder solely as agent of
the Company in a ministerial capacity, and its duties will be determined
solely by the provisions hereof. The Warrant Agent will not be liable for
anything which it may do or refrain from doing in connection with this
Agreement except for its own negligence, bad faith or willful conduct.
Section 21. CHANGE OF WARRANT AGENT
The Warrant Agent may resign and be discharged from its
duties under this Agreement upon 30 days' prior notice in writing mailed, by
registered or certified mail, to the Company. The Company may remove the
Warrant Agent or any successor warrant agent upon 30 days' prior notice in
writing, mailed to the Warrant Agent or successor warrant agent, as the case
may be, by registered or certified mail. 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 and shall, within 15 days
following such appointment, give notice thereof in writing to each registered
holder of the Warrant Certificates. If the Company shall fail to make such
appointment within a period of 15 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by
the resigning or incapacitated Warrant Agent, then the Company agrees to
perform the duties of the Warrant Agent hereunder until a successor Warrant
Agent is appointed. After appointment and execution of a copy of this
Agreement in effect at that time, the successor Warrant
-18-
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, within a reasonable time, 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.
Section 22. ISSUANCE OF NEW WARRANT CERTIFICATES
Notwithstanding any of the provisions of this Agreement
or the several Warrant Certificates to the contrary, the Company may, at its
option, issue new Warrant Certificates in such form as may be approved by its
Board of Directors to reflect any adjustment or change in the Exercise Price
or the number or kind of shares purchasable under the several Warrant
Certificates made in accordance with the provisions of this Agreement.
Section 23. NOTICES
Notice or demand pursuant to this Agreement to be given
or made on the Company by the Warrant Agent or by the registered holder of
any Warrant Certificate shall be sufficiently given or made if sent by
first-class or registered mail, postage prepaid, addressed (until another
address is filed in writing by the Company with the Warrant Agent) as
follows:
X.Xxx International, Inc.
0000 XX Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, President and Chief Executive
Officer
Subject to the provisions of Section 21, any notice
pursuant to this Agreement to be given or made by the Company or by the
holder of any Warrant Certificate to or on the Warrant Agent shall be
sufficiently given or made if sent by first-class or registered mail, postage
prepaid, addressed (until another address is filed in writing by the Warrant
Agent with the Company) as follows:
TranSecurities Inc.
North 0000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, President
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Any notice or demand authorized to be given or made to
the registered holder of any Warrant Certificate under this Agreement shall
be sufficiently given or made if sent by first-class or registered mail,
postage prepaid, to the last address of such holder as it shall appear on the
registers maintained by the Warrant Agent.
Section 24. MODIFICATION OF AGREEMENT
The Warrant Agent may, without the consent or concurrence
of the Warrantholders, by supplemental agreement or otherwise, concur with
the Company in making any changes or corrections in this Agreement that the
Warrant Agent shall have been advised by counsel (who may be counsel for the
Company) are necessary or desirable to cure any ambiguity or to correct any
defective or inconsistent provision or clerical omission or mistake or
manifest error herein contained, or to make any other provisions in regard to
matters or questions arising hereunder and which shall not be inconsistent
with the provisions of the Warrant Certificates and which shall not adversely
affect the interests of the Warrantholders. As of the date hereof, this
Agreement contains the entire and only agreement, understanding,
representation, condition, warranty or covenant between the parties hereto
with respect to the matters herein, supersedes any and all other agreements
between the parties hereto relating to such matters, and may be modified or
amended only by a written agreement signed by both parties hereto pursuant to
the authority granted by the first sentence of this Section.
Section 25. 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.
Section 26. OREGON CONTRACT
This Agreement and each Warrant Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State
of Oregon and for all purposes shall be construed in accordance with the laws
of said State.
Section 27. TERMINATION
This Agreement shall terminate as of the close of
business on the Expiration Date, or such earlier date upon which all
Warrants shall have been exercised or redeemed, except that the Warrant Agent
shall account to the Company as to all Warrants outstanding and all cash held
by it as of the close of business on the Expiration Date.
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Section 28. BENEFITS OF THIS AGREEMENT
Nothing in this Agreement or in the Warrant Certificates
shall be construed to give to any person or corporation other than the
Company, the Warrant Agent, and their respective successors and assigns
hereunder and the registered holders of the Warrant Certificates 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, their respective successors and assigns hereunder and the registered
holders of the Warrant Certificates.
Section 29. DESCRIPTIVE HEADINGS
The descriptive headings of the several Sections of this
Agreement are inserted for convenience only and shall not control or affect
the meaning or construction of any of the provisions hereof.
Section 30. COUNTERPARTS
This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, all as of the day and year first above written.
X.XXX INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxxx
President and Chief Executive Officer
TRANSECURITIES INTERNATIONAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxx
President
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EXHIBIT A
VOID AFTER 5 P.M. PACIFIC TIME ON DECEMBER 31, 2002
WARRANTS TO PURCHASE COMMON STOCK
W_____ _________ Warrants
X.XXX INTERNATIONAL, INC.
CUSIP _______________
THIS CERTIFIES THAT
or registered assigns, is the registered holder of the number of Warrants
("Warrants") set forth above. Each Warrant entitles the holder thereof to
purchase from X.Xxx International, Inc., a corporation incorporated under the
laws of the State of Oregon ("Company"), subject to the terms and conditions set
forth hereinafter and in the Warrant Agreement hereinafter more fully described
(the "Warrant Agreement") referred to, one fully paid and non-assessable share
of Common Stock of the Company ("Common Stock") upon presentation and surrender
of this Warrant Certificate with the instructions for the registration and
delivery of Common Stock filled in, at any time prior to 5:20 P.M., Pacific
time, on December 31, 2002 or, if such Warrant is redeemed as provided in the
Warrant Agreement, at any time prior to the effective time of such redemption,
at the stock transfer office in Spokane, Washington, of TranSecurities
International, Inc., Warrant Agent of the Company ("Warrant Agent") or of its
successor warrant agent or, if there be no successor warrant agent, at the
corporate offices of the Company, and upon payment of the Exercise Price (as
defined in the Warrant Agreement) and any applicable taxes paid either in cash,
or by certified or official bank check, payable in lawful money of the United
States of America to the order of the Company. Each Warrant initially entitles
the holder to purchase one share of Common Stock for $3.50 (the "Exercise
Price"), subject to reduction by $0.01 per day for each day after the 90th day
following the last day on which Warrants are sold by the Company until a
registration relating in part to the Warrants and the Common Stock obtainable on
exercise thereof has been declared effective under the Securities Act of 1933,
as amended (the "Act"). A reduction of the Exercise Price by $0.01 per day will
also occur if the Company invokes its right (described below) to fail to deliver
securities upon any exercise of Warrants or to redeem such exercised Warrants
for cash; PROVIDED, HOWEVER that no adjustment to the Exercise Price shall occur
(1) if the Company determines in good faith that due to subsequent events or
developments, statements in
the registration statement which were accurate at the time the registration
statement became effective have become materially misleading or the registration
statement contains material omissions which did not exist at the time the
registration statement became effective, and as a result the Company is unable
to deliver a valid prospectus in accordance with the terms of the Warrant
Agreement, PROVIDED that the Company shall make all reasonable efforts and take
all reasonable steps to correct such material misstatement or material omission
as soon as practicable; or (2) if, in the opinion of the Board of Directors of
the Company, upon advice of counsel, a prospectus to be delivered in accordance
with the terms of the Warrant Agreement would require the disclosure of some
fact or circumstance which has not otherwise been disclosed in the registration
statement, and the Board of Directors determines in good faith that disclosure
of such fact or circumstance is not in the best interest of the Company,
PROVIDED that the Board of Directors may do so not more than twice and for not
more than 90 days. The number and kind of securities or other property for
which the Warrants are exercisable (and the rate of reduction in the Exercise
Price described in the foregoing two sentences) are subject to further
adjustment in certain events, such as mergers, splits, stock dividends,
recapitalizations and the like, to prevent dilution. The Company may redeem any
or all outstanding and unexercised Warrants at any time if the Daily Price has
exceeded $5.00 for twenty consecutive trading days immediately preceding the
date of notice of such redemption, upon 30 days notice, at a price equal to
$0.25 per Warrant. For the purpose of the foregoing sentence, the term "Daily
Price" shall mean, for any relevant day, the closing bid price on that day as
reported by the principal exchange or quotation system on which prices for the
Common Stock are reported, provided, however, that, if the principal quotation
system publishes a range of bid prices, the highest closing bid price shall be
used. All Warrants not theretofore exercised or redeemed will expire on
December 31, 2002.
This Warrant Certificate is subject to all of the terms, provisions
and conditions of the Warrant Agreement, dated as of September ___, 1997
("Warrant Agreement"), between the Company and the Warrant Agent, to all of
which terms, provisions and conditions the registered holder of this Warrant
Certificate consents by acceptance hereof. The Warrant Agreement is
incorporated herein by reference and made a part hereof and reference is made to
the Warrant Agreement for a full description of the rights, limitations of
rights, obligations, duties and immunities of the Warrant Agent, the Company and
the holders of the Warrant Certificates. In the event of any discrepancy
between the provisions of this Warrant Certificate and of the Warrant Agreement,
the Warrant Agreement shall control. Copies of the Warrant Agreement are
available for inspection at the stock transfer office of the Warrant Agent or
may be obtained upon written request addressed to the Company at 0000 Xxxxxx
Xxxxx, Xxxxxxxxx, Xxxxxx 00000, Attention: Chief Financial Officer.
The Company shall not be required upon the exercise of the Warrants
evidenced by this Warrant Certificate to issue fractions of Warrants, Common
Stock or other securities, but shall make adjustment therefor in cash on the
basis of the current market value of any fractional interest as provided in the
Warrant Agreement.
In certain cases, the sale of securities by the Company upon
exercise of Warrants would violate the securities laws of the United States,
certain states thereof or other jurisdictions. The Company has agreed to use
its best efforts to cause a registration statement to continue to be effective
during the term of the Warrants with respect to such sales under the Act, and
to take such action under the laws of various states as may be required to
cause the sale of securities upon exercise to be lawful. However, the Company
will not be required to honor the exercise of Warrants if, in the opinion of
the Board of Directors, upon advice of counsel, the sale of securities upon
such exercise would be unlawful. In certain cases, the Company may, but is not
required to, purchase Warrants submitted for exercise for a cash price equal to
the difference between the market price of the securities obtainable upon such
exercise and the exercise price of such Warrants.
This Warrant Certificate, with or without other Certificates, upon
surrender to the Warrant Agent, any successor warrant agent or, in the absence
of any successor warrant agent, at the corporate offices of the Company, may be
exchanged for another Warrant Certificate or Certificates evidencing in the
aggregate the same number of Warrants as the Warrant Certificate or Certificates
so surrendered. If the Warrants evidenced by this Warrant Certificate shall be
exercised in part, the holder hereof shall be entitled to receive upon surrender
hereof another Warrant Certificate or Certificates evidencing the number of
Warrants not so exercised.
No holder of this Warrant Certificate, as such, shall be entitled to
vote, receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose whatever, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder of this Warrant
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof or give or withhold consent to any corporate
action (whether upon any matter submitted to stockholders at any meeting
thereof, or give or withhold consent to any merger, recapitalization, issuance
of stock, reclassification of stock, change of par value or change of stock to
no par value, consolidation, conveyance or otherwise) or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Warrant Agreement) or to receive dividends or subscription rights or otherwise
until the Warrants evidenced by this Warrant Certificate shall have been
exercised and the Common Stock purchasable upon the exercise thereof shall have
become deliverable as provided in the Warrant Agreement.
If this Warrant Certificate shall be surrendered for exercise within
any period during which the transfer books for the Company's Common Stock or
other class of stock purchasable upon the exercise of the Warrants evidenced by
this Warrant Certificate are closed for any purpose, the Company shall not be
required to make
delivery of certificates for shares purchasable upon such transfer until the
date of the reopening of said transfer books.
Every holder of this Warrant Certificate by accepting the same
consents and agrees with the Company, the Warrant Agent, and with every other
holder of a Warrant Certificate that:
(a) this Warrant Certificate is transferable on the registry books of
the Warrant Agent only upon the terms and conditions set forth in the Warrant
Agreement, and
(b) the Company and the Warrant Agent may deem and treat the person in
whose name this Warrant Certificate is registered as the absolute owner hereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone other than the Company or the Warrant Agent) for all purposes whatever
and neither the Company nor the Warrant Agent shall be affected by any notice to
the contrary.
The Company shall not be required to issue or deliver any
certificate for shares of Common Stock or other securities upon the exercise of
Warrants evidenced by this Warrant Certificate until any tax which may be
payable in respect thereof by the holder of this Warrant Certificate pursuant
to the Warrant Agreement shall have been paid, such tax being payable by the
holder of this Warrant Certificate at the time of surrender.
This Warrant Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Warrant Agent.
WITNESS the facsimile signatures of the proper officers of the
Company and its corporate seal.
Dated: September ____, 1997
X.XXX INTERNATIONAL, INC.
By:
----------------------------
Xxxxxxx X. Xxxxxxxx
President and Chief Executive Officer
Attest:
-------------------------
Xxxxxx X. Xxxxxx
Secretary
Countersigned
TRANSECURITIES INTERNATIONAL, INC.
By:
-------------------------
Xxxxxxx X. Xxxxxxx
President
