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EXHIBIT 99.1
CLASS A WARRANT AGREEMENT
THIS CLASS A WARRANT AGREEMENT (this "Agreement") is made as of this
15th day of October, 1997, by and among WALNUT FINANCIAL SERVICES, INC. a Utah
corporation (the "Company"), and CORPORATE STOCK TRANSFER, INC., a Colorado
corporation, as Warrant Agent (the "Warrant Agent").
W I T N E S S E T H
WHEREAS, the Company is engaging in a private placement (the
"Offering") pursuant to a placement agent agreement (as amended, the "Placement
Agent Agreement") dated October 10, 1997 between the Company and Xxxxx Xxxxxxx
Securities, LLC, a New York limited liability company ("Xxxxx Xxxxxxx"), of
units ("Offering Units"), with each Offering Unit consisting of 50,000 shares
of Common Stock and 35,000 Class A Warrants (each as hereinafter defined); and
WHEREAS, as of the date hereof, the Company sold 1,000,000 Class A
Warrants (the "Xxxxx Xxxxxxx Warrants") to certain officers and employees of
Xxxxx Xxxxxxx and one unrelated individual (collectively, the "Initial Warrant
Purchasers") for aggregate consideration of $100,000 and, in connection
therewith, Xxxxx Xxxxxxx and the Company contemplated that such Class A
Warrants would be governed by and subject to this Agreement; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer exchange and redemption of the Class A
Warrants, the issuance of certificates representing the Class A Warrants, the
exercise of the Class A Warrants, and the rights of the Registered Holders (as
hereinafter defined);
NOW THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Class A Warrants and the certificates representing the Class
A Warrants and the respective rights and obligations thereunder of the Company,
the Registered Holders and the Warrant Agent, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS. As used herein, the following terms shall have
the following meanings, unless the context shall otherwise require:
(a) "Adjustment Certificate" shall have the meaning ascribed to it in
Section 9(f) hereof.
(b) "Class A Warrants" shall mean redeemable Common Stock purchase
warrants, each such Class A Warrant entitling the Registered Holder thereof to
purchase one share of Common Stock at the Exercise Price, all on the terms and
conditions set forth herein, including, without limitation, the Xxxxx Xxxxxxx
Warrants.
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(c) "Common Stock" shall mean stock of the Company of any class,
whether now or hereafter authorized, which has the right to participate in the
distribution of earnings and assets of the Company without limit as to amount
or percentage, which at the date hereof consists of 50,000,000 shares of Common
stock, $.01 par value.
(d) "Corporate Office" shall mean the office of the Warrant Agent (or
its successor) at which at any particular time its principal business shall be
administered, which office is located at the date hereof at Republic Plaza, 000
00xx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx, 00000-0000.
(e) "Exercise Date" shall mean the date on which the Warrant Agent
shall have received both (a) the certificate representing a Warrant, with the
exercise form thereon duly executed by the Registered Holder thereof or his
attorney duly authorized in writing, and (b) payment in cash, or by official
bank or certified check made payable to the Company, of an amount in lawful
money of the United States of America equal to the Exercise Price.
(f) "Exercise Price" with respect to all Class A Warrants shall mean
the purchase price per share of Common Stock to be paid upon exercise of each
Class A Warrant in accordance with the terms hereof, which price shall be
$1.50, subject to adjustment from time to time pursuant to the provisions of
Section 9 hereof.
(g) "Expiration Date" shall mean 5:00 P.M. (New York time) on October
15, 2002, or the Redemption Date, whichever is earlier; provided that if such
date shall in the State of New York or the State of Colorado be a holiday or a
day on which banks are authorized or required to close then 5:00 P.M. (New York
time) on the next following day which in the State of New York and the State of
Colorado is not a holiday or a day on which banks are authorized or required to
close. Upon notice to all Registered Holders, the Company shall have the right
to extend the Expiration Date.
(h) "Redemption Date" shall have the meaning ascribed to it in Section
8(a) hereof.
(i) "Redemption Notice" shall have the meaning ascribed to it in
Section 8(b) hereof.
(j) "Redemption Price" shall mean the price at which the Company may,
at its option, redeem the Class A Warrants in accordance with the terms hereof,
which price shall be $.10 per Warrant.
(k) "Registered Holder" shall mean as to any Class A Warrant and as of
any particular date, the person in whose name the certificate representing the
Class A Warrant shall be registered on that date on the books maintained by the
Warrant Agent pursuant to Section 6.
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(l) "Transfer Agent" shall mean Corporate Stock Transfer, Inc., as the
Company's transfer agent, or its authorized successor, as such.
(m) "Warrant Solicitation Fee" shall be five percent (5%) of the
aggregate exercise price of the Class A Warrants being exercised; provided,
however, that no Warrant Solicitation Fee shall be payable with respect to the
Xxxxx Xxxxxxx Warrants.
SECTION 2. CLASS A WARRANTS AND ISSUANCE OF CERTIFICATES REPRESENTING
CLASS A WARRANTS.
(a) A Warrant initially shall entitle the Registered Holder of the
certificate representing such Warrant to purchase one share of Common Stock at
the Exercise Price and in accordance with the terms hereof, subject to
modification and adjustment as provided in Section 9.
(b) Upon execution of this Agreement, certificates representing the
number of Class A Warrants sold by the Company as part of Offering Units in the
Offering and any other Class A Warrants sold by the Company shall be executed
by the Company and delivered to the Warrant Agent. Upon written order of the
Company signed by its President and by its Secretary, the certificates
representing Class A Warrants shall be countersigned, issued and delivered
promptly by the Warrant Agent to the investors in the Offering or, if
applicable, the Initial Warrant Purchasers.
(c) From time to time, up to the Expiration Date, the Transfer Agent
shall countersign and deliver stock certificates in required whole number
denominations representing up to an aggregate of 3,800,000 shares of Common
Stock upon the exercise and surrender of Class A Warrants in accordance with
this Agreement.
(d) From time to time, up to the Expiration Date, the Warrant Agent
shall countersign and deliver certificates representing Class A Warrants in
required whole number denominations to the persons entitled thereto in
connection with any transfer or exchange permitted under this Agreement;
provided that no certificates shall be issued except (i) those initially issued
hereunder, (ii) those issued upon any transfer or exchange pursuant to Section
6; (iii) those issued in replacement of lost, stolen, destroyed or mutilated
certificates pursuant to Section 7; and (iv) at the option of the Company, in
such form as may be approved by its Board of Directors, to reflect any
adjustment or change in the Exercise Price or the Redemption Price therefor
made pursuant to Sections 8 or 9 hereof.
SECTION 3. FORM AND EXECUTION OF WARRANT.
(a) The certificates representing Class A Warrants shall be
substantially in the form attached hereto as Exhibit A (the provisions of such
Exhibit are hereby incorporated herein) 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
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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
national or over-the-counter market on which the Class A Warrants may be
listed. The certificates shall be dated the date of issuance thereof (whether
upon initial issuance, transfer, exchange or in lieu of mutilated, lost,
stolen, or destroyed certificates) and issued in registered form.
(b) Certificates representing Class A Warrants shall be executed on
behalf of the Company by its President and by its Secretary, by manual
signatures or by facsimile signatures printed thereon, and shall have imprinted
thereon a facsimile of the Company's seal. Certificates representing Class A
Warrants shall be countersigned by the Warrant Agent, by manual signature or by
facsimile signature printed thereon, and shall not be valid for any purpose
unless so countersigned. In case any officer of the Company who shall have
signed any of the certificates representing Class A Warrants shall cease to be
an officer of the Company or to hold the particular office referenced in the
certificates before the date of issuance of the certificates or before
countersignature by the Warrant Agent and issue and delivery thereof, such
certificates may nevertheless be countersigned by the Warrant Agent, issued and
delivered with the same force and effect as though the person who signed such
warrant Certificates had not ceased to be an officer of the Company or to hold
such office. After countersignature by the Warrant Agent, certificates
representing Class A Warrants shall be delivered by the Warrant Agent to the
Registered Holder without further action by the Company.
SECTION 4. EXERCISE. Each Warrant may be exercised, in whole or in
part, by the Registered Holder thereof at any time prior to the Expiration
Date, upon the terms and subject to the conditions set forth herein and in the
applicable certificate representing the Warrant. A Warrant shall be deemed to
have been exercised immediately prior to the close of business on the Exercise
Date and the person entitled to receive the Common Stock deliverable upon such
exercise shall be treated for all purposes as the holder of such Common Stock
upon the exercise of the Warrant as of the close of business on the Exercise
Date. As soon as practicable on or after the Exercise Date, the Warrant Agent
shall deposit the proceeds received from the exercise of a Warrant and shall
notify the Company in writing of the exercise of such Warrant. Promptly
following, and in any event within five business days after the date of such
notice from the Warrant Agent, the Warrant Agent, on behalf of the Company,
shall cause to be issued and delivered by the Transfer Agent, to the person or
persons entitled to receive the following documents, unless prior to the date
of issuance of such documents, the Company shall instruct the Warrant Agent to
refrain from causing such issuance pending clearance of checks received in
payment of the Exercise Price pursuant to such Class A Warrants:
(1) a certificate or certificates representing the number of
shares of Common Stock issuable by reason of such exercise in such
name(s) and such denomination(s) as specified on the applicable
exercise form; and
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(2) a new certificate representing the applicable Class A
Warrants entitling the Registered Holder to purchase the number of
shares of Common Stock as to which the original certificate was not
exercised and reflecting any changes to the Exercise Price which have
theretofore been effectuated and which certificate shall otherwise be
in form and substance identical to that delivered by the Registered
Holder to the Company for said exercise.
Upon the exercise of any Warrant and clearance of the funds received, the
Warrant Agent shall promptly remit (i) the applicable Warrant Solicitation Fee,
if any, to Xxxxx Xxxxxxx, and (ii) the balance of the payment received for the
Warrant to the Company or as the Company may direct in writing.
SECTION 5. RESERVATION OF SHARES; LISTING; PAYMENT OF TAXES; ETC.
(a) The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of
issuance upon exercise of Class A Warrants, such number of shares of Common
Stock as shall then be issuable upon the exercise of all outstanding Class A
Warrants. The Company covenants that all shares of Common Stock which shall be
issuable upon exercise of the Class A Warrants and payment of the Exercise
Price therefor shall, at the time of delivery, be duly and validly issued,
fully paid, nonassessable and free from all taxes, liens and charges with
respect to the issue thereof (other than those which the Company shall promptly
pay or discharge), and that upon issuance such shares shall be listed on each
national securities exchange or eligible for inclusion in each automated
quotation system, if any, on which the other shares of outstanding Common Stock
of the Company are then listed and eligible for inclusion.
(b) The Company covenants that if any securities to be reserved for
the purpose of exercise of Class A Warrants hereunder require registration
with, or approval of, any governmental authority under any federal securities
law before such securities may be validly issued or delivered upon such
exercise or in order to comply with federal securities laws, then the Company
will endeavor to secure such registration or approval in accordance with the
terms of the Placement Agent Agreement. The Company will use reasonable efforts
to obtain appropriate approvals or registrations under state "blue sky"
securities laws. Notwithstanding the foregoing, Class A Warrants may not be
exercised by, or shares of Common Stock issued to, any Registered Holder in any
state in which such exercise would be unlawful.
(c) The Company shall pay all documentary stamp or similar taxes and
other governmental charges that may be imposed with respect to the issuance of
Class A Warrants, or the Issuance or delivery of any shares upon exercise of
the Class A Warrants; provided, however, that if the shares of Common Stock
issuable upon exercise of Class A Warrants are to be delivered in a name other
than the name of the Registered Holder of the certificate representing any
Warrant being exercised, then no such delivery shall be made unless the person
requesting the same has paid to the Warrant Agent the amount of transfer taxes
or charges incident thereto, if any.
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(d) The Warrant Agent is hereby irrevocably authorized to requisition the
Company's Transfer Agent from time to time for certificates representing shares
of Common Stock issuable upon exercise of the Class A Warrants, and the Company
will authorize the Transfer Agent to comply with all such proper requisitions.
Whenever the Warrant Agent and the Transfer Agent are not the same entity, the
Company will file with the Warrant Agent a statement setting forth the name and
address of the Transfer Agent of the Company for shares of Common Stock
issuable upon exercise of the Class A Warrants.
SECTION 6. EXCHANGE AND REGISTRATION OF TRANSFER.
(a) Certificates representing Class A Warrants may be exchanged for other
certificates representing an equal aggregate number of Class A Warrants of the
same class or may be transferred in whole or in part. Certificates representing
Class A Warrants to be exchanged shall be surrendered to the Warrant Agent at
its Corporate Office, and upon satisfaction of the terms and provisions hereof,
the Company shall execute and the Warrant Agent shall countersign, issue and
deliver in exchange therefor the certificate or certificates representing Class
A Warrants which the Registered Holder making the exchange shall be entitled to
receive.
(b) The Warrant Agent shall keep at its Corporate Office, subject to such
reasonable regulations as it may prescribe, books in which it shall register
certificates representing Class A Warrants and the transfer thereof in
accordance with its regular practice. Upon due presentment for registration of
transfer of a certificate representing Class A Warrants at its Corporate
Office, the Company shall execute promptly, and the Warrant Agent shall issue
and deliver promptly to the transferee or transferees, a new certificate or
certificates representing an equal aggregate number of Class A Warrants of the
same class.
(c) With respect to all certificates representing Class A Warrants
presented for registration of transfer, or for exchange or exercise, the
exercise form on the reverse thereof shall be duly endorsed, or be accompanied
by a written instrument or instruments of transfer and exercise, in form
satisfactory to the Company and the Warrant Agent, duly executed by the
Registered Holder or his attorney-in-fact duly authorized in writing.
(d) Any service charge imposed by the Warrant Agent for any exchange or
registration of transfer of certificates representing Class A Warrants shall
be borne by the Company; however, the Company may require payment by such
Registered Holder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.
(e) All certificates representing Class A Warrants surrendered for
exercise, registration or transfer or for exchange in case of mutilated
certificates shall be promptly cancelled by the Warrant Agent and thereafter
retained by the Warrant Agent until termination of this Agreement or
resignation as Warrant Agent, or, disposed of or destroyed at the direction of
the Company.
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(f) Prior to due presentment for registration of transfer thereof, the
Company and the Warrant Agent may deem and treat the Registered Holder of any
certificate representing Class A Warrants as the absolute owner thereof and of
each Warrant represented thereby (notwithstanding any notations of ownership
or writing thereon made by anyone other than a duly authorized officer of the
Company or the Warrant Agent) for all purposes and shall not be affected by
any notice to the contrary. Class A Warrants issuable as a part of an Offering
Unit will be immediately detachable from the Common Stock which, together with
said Class A Warrants, constitute Offering Units, and transferable separately
therefrom.
SECTION 7. LOSS OR MUTILATION. Upon receipt by the Company and the
Warrant Agent of evidence satisfactory to them of the ownership of and loss,
theft, destruction or mutilation of any certificate representing Class A
Warrants and (in case of loss, theft or destruction) of indemnity satisfactory
to them, and (in the case of mutilation) upon surrender and cancellation
thereof, the Company shall execute and the Warrant Agent shall (in the absence
of notice to the Company or Warrant Agent that the certificate has been
acquired by a bona fide purchaser) countersign and deliver to the Registered
Holder in lieu thereof a new certificate of like tenor representing an equal
aggregate number of Class A Warrants. Applicants for a substitute certificate
representing any Class A Warrants shall comply with such regulations and pay
such other reasonable charges as the Warrant Agent may prescribe.
SECTION 8. REDEMPTION OF CLASS A WARRANTS.
(a) Redemption. From and after October 15, 1998, all, but not less than
all, of the Class A Warrants may be redeemed, at the option of the Company, on
not less than thirty (30) days prior notice to the Registered Holders, at the
Redemption Price, provided that (i) the closing bid price for the Common Stock
for twenty (20) consecutive trading days prior to the date of the Redemption
Notice (as hereinafter defined), as quoted on any national stock exchange or
over-the-counter market, is at least $4.00 per share (the "Redemption Price
Requirement") and (ii) the notice and other requirements set forth in Section
8(b) through 8(e) below are satisfied. The Redemption Price Requirement shall
automatically adjust on a pro rata basis upon any adjustment of the Exercise
Price pursuant to Section 9 below. The date fixed for redemption of Class A
Warrants is referred to herein as the "Redemption Date."
(b) If the conditions set forth above in this Section 8 are satisfied and
the Company desires to exercise its right to redeem the Class A Warrants, the
Company shall mail a notice of redemption (the "Redemption Notice") to each
Registered Holder, certified mail, return receipt requested, not later than
the 30th day before the Redemption Date, at the Registered Holder's last
address as shall appear on the Warrant Agent's books maintained pursuant to
Section 6 hereof.
(c) The Redemption Notice shall specify (i) the Redemption Price, (ii)
the Redemption Date, (iii) the place where certificates representing the
applicable Class A Warrants shall be delivered and the Redemption Price is to
be paid, and (iv) that the right to exercise the applicable Class A Warrants
shall terminate at 5:00 p.m. (New York time) on the business
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day immediately preceding the Redemption Date. No failure to mail such notice
nor any defect therein or in the mailing thereof shall affect the validity of
the proceedings for such redemption unless the Redemption Notice was not mailed
in the manner prescribed in Section 8(b) or the Redemption Notice did not
contain the information required by this Section 8(c). An affidavit of the
Warrant Agent or of the Secretary or an Assistant Secretary of the Company that
the Redemption Notice has been mailed shall, in the absence of fraud, be prima
facie evidence of the facts stated therein.
(d) Any right to acquire Common Stock pursuant to the exercise of the
applicable Class A Warrants shall terminate at 5:00 p.m. (New York time) on the
business day immediately preceding the Redemption Date. On and after the
Redemption Date, the Registered Holder shall have no further rights except to
receive, upon surrender of the certificate(s) representing Class A Warrants,
the Redemption Price.
(e) From and after the Redemption Date, the Company shall, at the place
specified in the Redemption Notice, upon presentation and surrender to the
Company by or on behalf of the Registered Holder of certificate(s) representing
the applicable Class A Warrants deliver or cause to be delivered to or upon the
written order of the Registered Holder a sum in cash equal to the Redemption
Price for each such Warrant so presented and surrendered.
SECTION 9. ADJUSTMENT OF EXERCISE PRICE. The Exercise Price shall be
subject to adjustment from time to time as set forth below.
(a) Adjustment for Stock Splits and Combinations. If the Company shall at
any time or from time to time after the date hereof effect a subdivision of
the outstanding Common Stock, the Exercise Price then in effect immediately
before that subdivision shall be proportionately decreased; conversely, if the
Company shall at any time or from time to time after the date hereof reduce the
outstanding shares of Common Stock by combination or otherwise, the Exercise
Price then in effect immediately before the combination shall be
proportionately increased. Any adjustment under this Section 9 (a) shall become
effective at the close of business on the date the subdivision or combination
becomes effective.
(b) Adjustment for Certain Dividends and Distributions of Stock. In the
event the Company at any time or from time to time after the date hereof shall
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock, then and in each such event the Exercise
Price then in effect shall be decreased as of the time of such issuance or, in
the event such a record date shall have been fixed, as of the close of business
on such record date, by multiplying the Exercise Price then in effect by a
fraction:
(1) The numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, and
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(2) The denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of such
issuance or the close of business on such record date, plus the number of
shares of Common Stock issuable in payment of such dividend or
distribution; provided, however, if such record date shall have been fixed
and such dividend is not fully paid or if such distribution is not fully
made on the date fixed therefor, the Exercise Price shall be recomputed
accordingly as of the close of business on such record date and thereafter
the Exercise Price shall be adjusted pursuant to this Section 9 as of the
time of actual payment of such dividends or distributions.
(c) Adjustment for Other Dividends and Distributions. In the event the
Company at any time or from time to time after the date hereof shall make or
issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities of
the Company other than shares of Common Stock, then and in each such event
provision shall be made so that the Registered Holder shall receive upon
exercise of a Warrant in addition to the number of shares of Common Stock
receivable thereupon, the amount of such other securities of the Company that
it would have received had the Warrant been exercised on the date of such
event and had thereafter, during the period from the date of such event to and
including the exercise date, retained such securities receivable by it as
aforesaid during such period giving application to all adjustments called for
during such period under this Agreement with respect to the rights of the
Registered Holder.
(d) Adjustment for Reclassification, Exchange or Substitution. If the
Common Stock issuable upon the exercise of the Warrant shall be changed into
the same or a different number of shares of any class or classes of stock,
whether by reclassification, exchange, substitution or other change (other
than a reorganization, merger, consolidation or sale of assets provided for in
Section 9 (e) below), then and in each such event, the Registered Holder shall
have the right thereafter to exercise the Warrant into the kind and amounts of
shares of stock and other securities and property receivable upon such
reclassification, exchange, substitution or other change, by holders of the
number of shares of Common Stock into which the Warrant might have been
exercised immediately prior to such reclassification, exchange, substitution,
or other change, all subject to further adjustment as provided herein.
(e) Reorganization, Mergers, Consolidations or Sales of Assets. If at any
time or from time to time there shall be a reorganization of the Common Stock
(other than a reclassification, exchange or substitution of shares provided
for in Section 9 (d) above) or a merger or consolidation of the Company with
or into another corporation, or the sale of all or substantially all the
Company's properties and assets to any other person, then, as a part of such
reorganization, merger, consolidation or sale, provision shall be made so that
the Registered Holder shall thereafter be entitled to receive upon exercise of
the Warrant, the number of shares of stock or other securities or property of
the Company or of the successor corporation resulting from such
reorganization, merger, consolidation or sale, to which a holder of that
number of shares of Common Stock deliverable upon exercise of the Warrant
would have been entitled on such reorganization, merger, consolidation or
sale. In any such
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case, appropriate adjustment shall be made in the application of the
provisions of this Agreement with respect to the rights of the Registered
Holder after the reorganization, merger, consolidation or sale to the end that
the provisions of this Agreement (including adjustment of the number of shares
issuable upon exercise of the Warrant) shall be applicable after that event as
nearly equivalent as may be practicable.
(f) Certificate of Adjustment. In each case of an adjustment or
readjustment of the Exercise Price, the Company, at its expense, shall prepare
a certificate showing such adjustment or readjustment signed by the duly
elected Treasurer or Chief Financial Officer of the Company (the "Adjustment
Certificate") and shall mail the Adjustment Certificate, by first class mail,
postage prepaid, to each Registered Holder at such Registered Holder's address
as shown in the books of the Warrant Agent maintained pursuant to Section 6
hereof. The Adjustment Certificate shall set forth such adjustment or
readjustment, including a brief summary of the facts upon which such
adjustment or readjustment is based including a statement of the Exercise
Price, the Redemption Price Requirement, and the number of shares of Common
Stock or other securities issuable upon exercise of each Warrant immediately
before and after giving effect to the applicable adjustment or readjustment.
No failure to mail the Adjustment Certificate nor any defect therein or in the
mailing thereof shall affect the validity thereof except as to the Registered
Holder to whom the Company failed to mail such Adjustment Certificate, or
except as to the Registered Holder whose Adjustment Certificate was defective.
The affidavit of an officer of the Warrant Agent or the Secretary or an
Assistant Secretary of the Company that such Adjustment Certificate has been
mailed shall, m the absence of fraud, be prima facie evidence of the facts
stated therein.
(g) No adjustment of the Exercise Price shall be made unless such
adjustment would require an increase or decrease of at least $.10 in the
Exercise Price; provided that any adjustments which by reason of this Section
9(g) are not required to be made shall be carried forward and shall be made at
the time of and together with the next subsequent adjustment which, together
with any adjustment(s) so carried forward, shall require an increase or
decrease of at least $.10 in the Exercise Price then in effect hereunder.
(h) As used in this Section 9, the term "Common Stock" shall mean and
include the Company's Common Stock authorized on the date of the original
issue of the Offering Units and shall also include any capital stock of any
class of the Company thereafter authorized which shall not be limited to a
fixed sum or percentage in respect of the rights of the holders thereof to
participate in dividends and in the distribution of assets upon the voluntary
liquidation, dissolution or winding up of the Company; provided, however, that
the shares issuable upon exercise of the Class A Warrants shall include only
shares of such class designated in the Company's Articles of Incorporation as
Common Stock on the date of the original issue of the Offering Units or (i) in
the case of any reorganization, change, consolidation, merger, sale or
conveyance of the character referred to in Section 9(e) hereof, the stock,
securities or property provided for in Section 9 (e) hereof or (ii) in the
case of any reclassification or change in the outstanding shares of Common
Stock issuable upon exercise of the Warrant as a result of a subdivision or
combination or consisting of a change in par
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value, or from par value to no par value, or from no par value to par value,
such shares of Common Stock as so reclassified or changed.
(i) Any determination as to whether an adjustment in the Exercise Price
in effect hereunder is required pursuant to this Section 9, or as to the
amount of any such adjustment, if required, shall be binding upon all
Registered Holders and the Company if made in good faith by the Board of
Directors of the Company.
SECTION 10. REGISTERED HOLDERS OF CLASS A WARRANTS NOT DEEMED
STOCKHOLDERS. No holder of Class A Warrants shall, as such, be entitled to
vote or to receive dividends or be deemed the holder of Common Stock that may
at any time be issuable upon exercise of such Class A Warrants for any purpose
whatsoever, nor shall anything contained herein be construed to confer upon
the holder of Class A Warrants, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issue or reclassification of stock, change of par value or change of stock to
no par value, consolidation, merger or conveyance or otherwise), or to receive
notice of meetings, or to receive dividends or subscription rights, until such
holder shall have exercised such Class A Warrants and been issued shares of
Common Stock in accordance with the provisions hereof.
SECTION 11. RIGHTS OF ACTION. All rights of action with respect to this
Agreement are vested in the respective Registered Holders of the Class A
Warrants, and any Registered Holder of a Class A Warrant, without consent of
the Warrant Agent or of the holder of any other Class A Warrant, may, in his
own behalf and for his own benefit, enforce against the Company his right to
exercise his Class A Warrants for the purchase of shares of Common Stock in the
manner provided in the certificates representing Class A Warrants and this
Agreement.
SECTION 12. AGREEMENT OF REGISTERED HOLDER. Every Registered Holder, by
his acceptance thereof, consents and agrees with the Company, the Warrant
Agent and every other Registered Holder that:
(a) The Class A Warrants are transferable only on the registry books of
the Warrant Agent by the Registered Holder thereof in person or by his
attorney duly authorized in writing and only if the certificates representing
such Class A Warrants are surrendered at the Corporate Office of the Warrant
Agent, duly endorsed or accompanied by a proper instrument of transfer
satisfactory to the Warrant Agent and the Company in their sole discretion,
together with payment of any applicable transfer taxes and otherwise strictly
in accordance with Section 6 hereof; and
(b) The Company and the Warrant Agent may deem and treat the person in
whose name the certificate representing Class A Warrants is registered as the
holder and as the absolute, true and lawful owner of the Class A Warrants
represented thereby for all purposes,
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and neither the Company nor the Warrant Agent shall be affected by any notice
or knowledge to the contrary, except as otherwise expressly provided in Section
7 hereof.
SECTION 13. CANCELLATION OF CERTIFICATES. If the Company shall purchase
or acquire any Warrant or Class A Warrants, the certificates evidencing the
same shall thereupon be delivered to the Warrant Agent and cancelled by it and
retired. The Warrant Agent shall also cancel the certificates following
exercise of any or all of the Class A Warrants represented thereby or delivered
to it for transfer, split-up, combination or exchange.
SECTION 14. CONCERNING THE WARRANT AGENT. The Warrant Agent acts hereunder
as agent and in a ministerial capacity for the Company, and its duties shall
be determined solely by the provisions hereof. The Warrant Agent shall not, by
issuing and delivering certificates representing Class A Warrants or by any
other act hereunder be deemed to make any representations as to the validity,
value or authorization of the certificates or the Class A Warrants represented
thereby or of any securities or other property delivered upon exercise of any
Class A Warrant or whether any Common Stock issued upon exercise of any Class A
Warrant is fully paid and nonassessable.
The Warrant Agent shall not at any time be under any duty or
responsibility to any Registered Holder to make or cause to be made any
adjustment of the Exercise Price or the Redemption Price provided in this
Agreement, or to determine whether any fact exists which may require any such
adjustments, or with respect to the nature or extent of any such adjustment,
when made, or with respect to the method employed in making the same. It shall
not (i) be liable for any recital or statement of facts contained herein or
for any action taken, suffered or omitted by it in reliance on any certificate
representing Class A Warrants or other document or instrument believed by it
in good faith to be genuine and to have been signed or presented by the proper
party or parties, (ii) be responsible for any failure on the part of the
Company to comply with any of its covenants and obligations contained in this
Agreement or in any certificate, or (iii) be liable for any act or omission in
connection with this Agreement except for its own negligence or wilful
misconduct.
The Warrant Agent may at any time consult with counsel satisfactory to it
(who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken, suffered or omitted by it in good faith
in accordance with the opinion or advice of such counsel.
Any notice, statement, instruction, request, direction, order or demand
of the Company shall be sufficiently evidenced by an instrument signed by the
Chairman of the Board, President, any Vice President, its Secretary, or
Assistant Secretary (unless other evidence in respect thereof is herein
specifically prescribed). The Warrant Agent shall not be liable for any action
taken, suffered or omitted by it in accordance with such notice, statement,
instruction, request, direction, order or demand believed by it to be genuine.
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The Company agrees to pay the Warrant Agent reasonable compensation for
its services hereunder and to reimburse it for its reasonable expenses
hereunder. The Company further agrees to indemnify the Warrant Agent and save
it harmless against any and all losses, expenses and liabilities, including
judgments, costs and counsel fees, for anything done or omitted by the Warrant
Agent in the execution of its duties and powers hereunder except losses,
expenses and liabilities arising as a result of the Warrant Agent's negligence
or wilful misconduct.
The Warrant Agent may resign its duties and be discharged from all
further duties and liabilities hereunder (except liabilities arising as a
result of the Warrant Agent's own negligence or wilful misconduct), after
giving 30 days prior written notice to the Company. At least 15 days prior to
the date such resignation is to become effective, the Warrant Agent shall
cause a copy of such notice of resignation to be mailed to each Registered
Holder at the Company's expense. Upon such resignation, or any inability of
the Warrant Agent to act as such hereunder, the Company shall appoint a new
warrant agent in writing. If the Company shall fall to make such appointment
within a period of 15 days after it has been notified in writing of such
resignation by the resigning Warrant Agent, then the Registered Holder of any
certificate may apply to any court of competent jurisdiction for the
appointment of a new warrant agent. Any new warrant agent, whether appointed
by the Company or by such a court, shall be a bank or trust company having a
capital and surplus, as shown by its last published report to its
stockholders, of not less than $10,000,000 or a nationally recognized stock
transfer company. After acceptance in writing of such appointment by the new
warrant agent is received by the Company, such new warrant agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named herein as the Warrant Agent, without any further
assurance, conveyance, act or deed; but if for any reason it shall be necessary
or expedient to execute and deliver any further assurance, conveyance, act or
deed, the same shall be done at the expense of the Company and shall be
legally and validly executed and delivered by the resigning Warrant Agent. Not
later than the effective date of any such appointment the Company shall file
notice thereof with the resigning Warrant Agent and shall forthwith cause a
copy of such notice to be mailed to each Registered Holder.
Any corporation into which the Warrant Agent or any new warrant agent
may be converted or merged or a corporation resulting from any consolidation to
which the Warrant Agent or any new warrant agent shall be a party or any
corporation succeeding to the trust business of the Warrant Agent shall be a
successor warrant agent under this Agreement without any further act, provided
that such corporation is eligible for appointment as successor to the Warrant
Agent under the provisions of the preceding paragraph. Any such successor
warrant agent shall promptly cause notice of its succession as warrant agent
to be mailed to the Company and to each Registered Holder.
The Warrant Agent, its subsidiaries and affiliates, and any of its or
their officers or directors, may buy and hold or sell Class A Warrants or
other securities of the Company and otherwise deal with the Company in the
same manner and to the same extent and with like effects as though it were not
Warrant Agent. Nothing herein shall preclude the Warrant Agent from acting in
any other capacity for the Company or for any other legal entity.
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SECTION 15. MODIFICATION OF AGREEMENT. The Warrant Agent and the Company
may by supplemental agreement make any changes or corrections in this
Agreement (i) that they shall deem appropriate to cure any ambiguity or to
correct a defective or inconsistent provision or manifest mistake or error
herein contained; (ii) to the extent approved by a majority of the Board of
Directors of the Company to reduce the Exercise Price, or (iii) that they may
deem necessary or desirable and which shall not adversely affect the interests
of the Registered Holders; provided, however, that this Agreement shall not
otherwise be modified, supplemented or altered in any respect except with the
consent in writing of the Registered Holders representing not less than 50% of
the Class A Warrants then outstanding.
SECTION 16. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
made when delivered or mailed first class registered or certified mail,
postage repaid as follows: if to the Registered Holder of a certificate, at
the address of such holder as shown on the registry books maintained by the
Warrant Agent; if to the Company at 0000 Xxxxxx Xxxxxxxx Xxxxx, Xxxxx 0000,
Xxxxxx, Xxxxxxxx 00000, Attn: President, or at such other address as may have
been furnished to the Warrant Agent in writing by the Company; and if to the
Warrant Agent, at its Corporate Office.
SECTION 17. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
reference to its principles of conflict of laws.
SECTION 18. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the Company and, the Warrant Agent and their
respective successors and assigns, and the Registered Holders from time to
time. Nothing in this Agreement is intended or shall be construed to confer
upon any other person any right, remedy or claim, in equity or at law, or to
impose upon any other person any duty, liability or obligation.
SECTION 19. TERMINATION. This Agreement shall terminate at the close of
business on the Expiration Date or such earlier date upon which all Class A
Warrants have been exercised, except that the Warrant Agent shall account to
the Company for cash held by it and the provisions of Section 14 hereof shall
survive such termination.
SECTION 20. COUNTERPARTS. This Agreement may be executed in several
counterparts, which taken together shall constitute a single document.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
WALNUT FINANCIAL SERVICES, INC.
By: /s/ Xxxx X. Xxxxxx
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CORPORATE STOCK TRANSFER, INC.
By: /s/ Xxxxxxx Xxxx
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Authorized Officer
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