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EXHIBIT 99.4
WARRANT SOLICITATION AGREEMENT
THIS WARRANT SOLICITATION AGREEMENT ("Agreement") is dated as of
February 9, 2000, by and between JMAR TECHNOLOGIES, INC. (the "Company") and
XXXXXXXX, XXXXXX & XXXXXXXXXX, INC. ("Xxxxxxxx").
RECITALS
WHEREAS, the Company desires to retain Xxxxxxxx to act as the warrant
Solicitation Agent in connection with the solicitation of the exercise of the
Company's publicly traded warrants; and
WHEREAS, as of February 7, 2000, the Company has outstanding 2,411,585
Redeemable Common Stock Purchase Warrants, trading on the NASDAQ National Market
System under the symbol "JMARW" (the "Public Warrants"); and
WHEREAS, each Public Warrant entitles the holder to purchase one share
of the Company's Common Stock for $5.50 per share; and
WHEREAS, the Company desires Xxxxxxxx to act on behalf of the Company,
and Xxxxxxxx is willing to do so in connection with the exercise of the Public
Warrants;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
1. Appointment of the Solicitation Agent. The Company hereby
appoints Xxxxxxxx to act as the exclusive Solicitation Agent for the Company in
connection with the exercise of the Public Warrants and Xxxxxxxx hereby accepts
such appointment. The services to be provided by Xxxxxxxx shall consist of the
following:
(a) Advice to the Company regarding the timing and other
financial considerations related to the solicitation of exercises by the
holders of the Public Warrants and the exercise by the Company of its
right to issue a notice of redemption of the Public Warrants ("Notice of
Redemption");
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(b) The development of a comprehensive action plan and strategy
in connection with the solicitation of the exercise of the Public
Warrants and the retention of the shares purchased by the holders
following exercise of the Public Warrants;
(c) Its reasonable best efforts to maximize the number of Public
Warrants which are exercised, including appropriate communications with
the record owners and beneficial owners of the Public Warrants, as well
as with said owners' brokers, agents or other representatives;
(d) Reasonably assisting the holders of the Public Warrants in
the processing of their Public Warrant exercises in a timely manner;
(e) Providing financial advice to the Company in connection with
the possible uses of the proceeds received from the exercise of the
Public Warrants; and
(f) Providing the Company with such additional advice and
services related to the Warrant Solicitation as the Company may
reasonably request during the effectiveness of this Agreement.
2. Warrant Solicitation Fee.
(a) Amount of Solicitation Fee. The Company shall pay Xxxxxxxx a
fee consisting of the following (the "Solicitation Fee"):
(i) A non-refundable deposit of $30,000, to be credited against
any other cash fees received, which shall become due and payable upon
execution of this Agreement; plus
(ii) A cash payment equal to five percent (5%) of the total
proceeds received from all exercises of the Public Warrants occurring
after the date of issuance of a Notice of Redemption by the Company;
plus
(iii) Warrants to purchase shares of the Company's Common Stock
("Solicitor's Warrants"), with an exercise price of $5.50 per share, a
term of 3 years, with the number of shares purchasable under the
Solicitor's Warrants equal to eight percent (8 %) of the Public Warrants
which are exercised during the term of this Agreement. The Solicitor's
Warrants will contain a vesting provision which provides that the
Solicitor's Warrants are not exercisable prior to six months after the
Redemption Date (defined as thirty days after the issuance of the Notice
of Redemption) and thereafter shall only become exercisable on the first
trading day after one of the following has occurred: (x) the closing
price (regular session) of the Company's Common Stock as reported by
NASDAQ has exceeded $9.50 for any ten trading days in any twenty trading
day period, or (y) the average of the closing price (regular session) of
the Company's Common Stock as reported by NASDAQ for any ten consecutive
trading day period exceeds $9.50. The Solicitor's Warrants shall also
contain protection against dilution due to stock splits, stock
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combinations and stock dividends in accordance with NASD rules, as well
as cashless exercise provisions, and will be exercisable immediately in
the event of a change of control in the Company. The Company agrees to
include the resale of the shares issuable under the Solicitor's Warrants
in a Form S-3 Registration Statement or other appropriate form of
registration statement to be filed by the Company no later than upon the
expiration of the six month period after the Redemption Date.
(b) Conditions to Payment of Solicitation Fee. The Company shall
only be obligated to pay the Warrant Solicitation Fee to Xxxxxxxx if all
of the following conditions are met: (i) the actions of Xxxxxxxx in
soliciting the exercise of the Public Warrants have been consistent with
the guidelines of the National Association of Securities Dealers and
applicable SEC rules and regulations, including Regulation M; (ii)
disclosure of the Company's compensation arrangement with Xxxxxxxx is
made in documents provided to the holders of the Public Warrants.
(c) Timing of Payment of Solicitation Fee. Within ten (10)
business days after the earlier of (i) the Redemption Date, in the event
that the Company has issued a Notice of Redemption, or (ii) the
expiration of the Public Warrants, the Company will deliver a notice to
Xxxxxxxx setting forth the number of Public Warrant certificates which
have been properly completed for exercise by holders of the Public
Warrants, together with payment of the Solicitation Fee with respect to
the Public Warrants so exercised and any documentation requested by
Xxxxxxxx.
(d) Entire Solicitation Fee. The amounts to be paid to Xxxxxxxx
under Section 2(a) above represent the entire amount payable by JMAR to
Xxxxxxxx, its agents, brokers or representatives in connection with the
services described under Section 1 of this Agreement and shall also
include any amounts which are adjudicated to be owed to any third
parties as a result of Xxxxxxxx'x commitments to such third parties.
3. Representations and Warranties of the Company. The Company
represents and warrants as follows:
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has
full corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. All corporate
proceedings on the part of the Company necessary to authorize this
Agreement and the transactions contemplated hereby have been duly and
validly taken. This Agreement has been duly and validly authorized,
executed and delivered by the Company, constitutes the legal, valid and
binding agreement and obligation of the Company, enforceable against it
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting
creditors' rights generally, including, without limitation laws
regarding fraudulent or preferential transfers, or by the principles
governing the availability of equitable remedies.
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(b) The Company's Registration Statement ("Registration
Statement") on Form S-3 (File No. 33-47390), registering, among other
transactions, the sale of the Public Warrants and the sale of the shares
of Common Stock issuable upon exercise of the Public Warrants (the
"Warrant Shares"), was declared effective by the Securities and Exchange
Commission (the "Commission") on February 16, 1993. The Registration
Statement is effective and will continue to remain effective during the
effectiveness of this Agreement. The Commission has not issued any
orders preventing or suspending the use of the Prospectus contained in
the Registration Statement and the Prospectus (as modified or
supplemented by information incorporated by reference into such
Prospectus) as well as the Company's other public filings (the "SEC
filings") conforms, and during the effectiveness of this Agreement will
conform, in all material respects with the requirements of the
Securities Act of 1933 and the Securities Exchange Act of 1934, as
amended, and do not, and during the effectiveness of this Agreement will
not, include any untrue statement of material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. At the time of the filing with the SEC of the
"Post-Effective Amendment No. 1 to Form S-1 Registration Statement on
Form S-3," the Company met the Registrant Requirements and Transaction
Requirements of Form S-3 to cover the exercise of the Public Warrants
and will continue to meet such requirements during the effectiveness of
this Agreement.
(c) The Public Warrants have been duly authorized and are validly
issued, fully paid and non-assessable. The Warrant Shares have been duly
authorized, have been duly reserved for issuance and upon exercise of
the Public Warrants and payment to the Company of the exercise price
therefor, the Warrant Shares will be validly issued, fully paid and
non-assessable. In addition, the Solicitor's Warrants will be duly
authorized and validly issued, fully paid and non-assessable. The
Solicitor's Warrant Shares will be duly authorized, duly reserved for
issuance and, upon exercise of the Solicitor's Warrants, will be validly
issued, fully paid and non-assessable.
(d) Neither the execution and delivery of this Agreement by the
Company nor the consummation of the transactions contemplated hereby
will (i) conflict with or result in any breach of any provision of the
Certificate of Incorporation or Bylaws of the Company, each as amended
to date; (ii) require any consent, approval, authorization or permit
from, or filing with or notification to, any United States or foreign
governmental or regulatory authority or other third party, except for
any such consents, approvals, authorizations, permits, filings or
notifications, the absence of which would not have a material adverse
effect on the Company or the Public Warrants; (iii) result in a breach
of the terms, conditions or provisions of, constitute a default (or an
event which, upon notice or lapse of time or both, would constitute a
default) under or cause, permit or give rise to any right of
termination, cancellation or acceleration under any of the terms,
conditions or provisions of any material agreement or other material
instrument or obligation to which the Company is a party or by which the
Company is bound; or (iv) conflict with or result
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in a violation of any provision of (A) any statute, rule, regulation or
ordinance which conflict or violation might have a material adverse
impact on the Company or the Public Warrants, or (B) any material order,
writ, injunction, judgment, award, decree, permit or license applicable
to the Company or any of the Company's properties or assets.
4. Representations and Warranties of Xxxxxxxx. Xxxxxxxx represents
and warrants as follows:
(a) Xxxxxxxx is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York and has
full power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. All proceedings on the
part of Xxxxxxxx necessary to authorize this Agreement and the
transactions contemplated hereby have been duly and validly taken. This
Agreement has been duly and validly authorized, executed and delivered
by Xxxxxxxx, constitutes the legal, valid and binding agreement and
obligation of Xxxxxxxx, enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights
generally, including, without limitation laws regarding fraudulent or
preferential transfers, or by the principles governing the availability
of equitable remedies.
(b) Neither the execution and delivery of this Agreement by
Xxxxxxxx nor the consummation of the transactions contemplated hereby
will (i) conflict with or result in any breach of any provision of the
governing instruments of Xxxxxxxx, each as amended to date; (ii) require
any consent, approval, authorization or permit from, or filing with or
notification to, any United States or foreign governmental or regulatory
authority or other third party, including the Securities and Exchange
Commission and the National Association of Securities Dealers by
Xxxxxxxx; (iii) result in a breach of the terms, conditions or
provisions of, constitute a default (or an event which, upon notice or
lapse of time or both, would constitute a default) under or cause,
permit or give rise to any right of termination, cancellation or
acceleration under any of the terms, conditions or provisions of any
material agreement or other material instrument or obligation to which
Xxxxxxxx is a party or by which Xxxxxxxx is bound; or (iv) conflict with
or result in a violation of any provision of (A) any statute, rule,
regulation or ordinance which conflict or violation might have a
material adverse impact on Xxxxxxxx, including the Rules of the National
Association of Securities Dealers and the Rules and Regulations of the
Commission or (B) any material order, writ, injunction, judgment, award,
decree, permit or license applicable to Xxxxxxxx or any of Xxxxxxxx'x
properties or assets. Notwithstanding the above, no breach will be
deemed to occur unless it materially adversely affects the transactions
contemplated by this Agreement.
(c) Xxxxxxxx is familiar with the terms of the Public Warrants as
set forth in the Company's public filings.
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5. Indemnification. Recognizing that transactions of the type
contemplated by this engagement sometimes result in litigation and that
Xxxxxxxx'x role is limited to acting as the Company's financial advisor, the
Company agrees to indemnify Xxxxxxxx (and its directors, officers, agents,
employees and controlling persons), whether currently employed or formerly
employed, to the fullest extent against any and all claims, losses and expenses
as incurred individually or as a group, however, no such indemnification shall
apply if the events giving rise to a claim for indemnification are adjudicated
to be the result of the gross negligence or willful misconduct of Xxxxxxxx.
Xxxxxxxx agrees to indemnify the Company (and its directors, officers, agents,
employees and controlling persons), whether currently employed or formerly
employed, to the fullest extent against any and all claims, losses, and
expenses, as incurred individually or as a group, if the events giving rise to a
claim for indemnification are adjudicated to be the result of the gross
negligence or willful misconduct of Xxxxxxxx. The indemnifying party is
obligated to advance to the indemnified party all counsel fees and reasonable
out-of-pocket expenses relating to the defense of any claim or lawsuit for which
the indemnifying party is providing indemnification. The foregoing agreement
shall be in addition to any rights that any indemnified party may have at common
law.
6. Termination. Notwithstanding anything in this Agreement to the
contrary, this Agreement may be terminated by the Company at any time and for
any reason effective ten (10) days after delivery of written notice of
termination to the other party. If this Agreement is terminated pursuant to this
Section 6, this Agreement shall thereafter have no effect except for (i) the
Company's obligation to pay the Solicitation Fee for exercises of Public
Warrants which result from Xxxxxxxx'x actions prior to the effectiveness of said
termination and (ii) both parties' indemnification obligations under Section 5
above, all of which shall survive the termination of this Agreement.
7. Miscellaneous.
(a) Survival of Representations and Warranties. The parties'
respective representations and warranties contained in this Agreement
shall survive until three years after the termination of this Agreement
at which time they shall expire and be deemed terminated and thereafter
neither party may claim any damage for breach thereof.
(b) Amendment and Waiver. Any term or provision of this Agreement
may be waived at any time by the party which is entitled to the benefits
thereof, but only in a writing signed by such party, and this Agreement
may be amended or supplemented at any time, but only by written
agreement of the Company and Xxxxxxxx. Any such waiver with respect to a
failure to observe any such provision shall not operate as a waiver of
any subsequent failure to observe such provision unless otherwise
expressly provided in such waiver.
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(c) Expenses. Except as otherwise provided in this Agreement, the
Company and Xxxxxxxx shall pay their respective fees, commissions,
costs, and other expenses, separately incurred in connection with the
preparation and execution of this Agreement and the consummation of the
transactions contemplated hereby.
(d) Entire Agreement. This Agreement contains the entire
agreement between the Company and Xxxxxxxx with respect to the
solicitation of the exercise of the Warrants and the related
transactions and supersedes all prior arrangements or understandings
with respect thereto, and there have been no oral representations or
warranties and neither party has relied on any representation not
contained herein.
(e) Notices. All notices, consents, requests, instructions,
approvals and other communications provided for herein shall be validly
given, made or served, if in writing and delivered personally or sent by
fax (except for legal process) or certified mail, postage prepaid, to:
Company:
JMAR Technologies, Inc.
0000 Xxxxxxxx Xxxxxx Xxxx.
Xxx Xxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx
Vice President and General Counsel
Fax No: (000) 000-0000
Xxxxxxxx:
Xxxxxxxx Xxxxxx & Xxxxxxxxxx, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxx
Executive Vice President
Fax No: (000) 000-0000
or to such other address or fax number as any party hereto may, from
time to time, designate in a written notice given in a like manner.
Notice given by fax shall be deemed delivered on the day the sender
receives confirmation that such notice was received at the fax number of
the addressee, provided that if the faxed notice is transmitted by the
sender after 3:00 p.m. (sender's time), it shall be deemed to have been
delivered the following day. Notice given by mail as set out above shall
be deemed delivered three calendar days after the date the same is
postmarked.
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(f) Assignment. Except as provided in the following sentence,
this Agreement may not be assigned, by operation of law or otherwise,
and any attempt to do so shall be void. This Agreement shall be binding
upon and inure to the benefit of successors and assigns of the parties
hereto.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one and the same instrument.
(h) Arbitration. Any controversy or claim arising out of or
relating to this Agreement or the breach thereof, shall be settled by
arbitration at the city of San Diego, California, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association,
and judgment upon the award of the arbitrator(s) shall be entered in any
court with appropriate jurisdiction as the final binding judgment. The
arbitrators shall not be permitted to award punitive or other exemplary
damages as a part of such award. In addition to any other relief as may
be granted, the prevailing party shall be entitled to reasonable
attorneys' fees in such arbitration, with the amount thereof to be
determined by the arbitrator or the court.
(i) Governing Law. This Agreement and the rights and obligations
of the parties hereunder shall be governed by and construed in
accordance with the internal laws of the State of California (without
regard to choice of law rules).
(j) Construction of Agreement. Each of the parties hereto
acknowledges and agrees that no provision in this Agreement is to be
interpreted for or against any party because that party or that party's
legal representative drafted the provision.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
JMAR TECHNOLOGIES, INC. XXXXXXXX, XXXXXX & XXXXXXXXXX, INC.
BY: /s/ XXXX X. XXXXXXXX BY: /s/ XXXXXXX X. XXXXXXXXX
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Xxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxxxxx
Chief Executive Officer Executive Vice President
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