MEDICAL TECHNOLOGY SYSTEMS, INC.
AND
WESTMINSTER SECURITIES CORPORATION
PLACEMENT AGENT'S
WARRANT AGREEMENT
DATED AS OF JUNE 25, 2002
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PLACEMENT AGENT'S WARRANT AGREEMENT dated as of June 25, 2002, ("Engagement
Date") between MEDICAL TECHNOLOGY SYSTEMS, INC., a Delaware corporation (the
"Company"), and WESTMINSTER SECURITIES CORPORATION, a New York corporation and
its assignees or designees (hereinafter referred to variously as a "Holder" or
"Placement Agent").
W I T N E S S E T H:
WHEREAS, the Placement Agent has agreed pursuant to the engagement
agreement dated as of June 25, 2002 (the "Engagement Agreement"), between the
Placement Agent and the Company, to act as placement agent to the Company.
WHEREAS, pursuant to the Engagement Agreement, the Company agreed to issue
warrants to the Placement Agent to purchase up to an aggregate of 125,000 shares
of Common Stock (the "Placement Agent's Warrants"); and
WHEREAS, the Placement Agent's Warrants to be issued pursuant to this
Agreement will be issued to the Placement Agent in consideration for, and as
part of the compensation in connection with, the Placement Agent's services
pursuant to the Engagement Agreement.
NOW, THEREFORE, in consideration of the premises, the agreements herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. GRANT. The Placement Agent is hereby granted the right to purchase, at
any time from the Engagement Date until 5:00 p.m., New York time, on June 25,
2007 (5 years from the Engagement Agreement), at which time the Placement
Agent's Warrants expire, an aggregate of 125,000 shares of Common Stock, subject
to adjustment as provided in Section 11 hereof (the "Placement Agent's
Securities"). Each Placement Agent's Warrant shall entitle the holder thereof to
purchase one (1) share of common stock, no par value per share, of the Company
(the "Common Stock"), at an initial exercise price of $1.50 (as defined in
Section 9.3(e)) (the "Common Stock Exercise Price").
2. PLACEMENT AGENT'S WARRANT CERTIFICATES. The Placement Agent's warrant
certificates (the "Warrant Certificates") delivered and to be delivered pursuant
to this Agreement shall be in the form set forth in Exhibit A, attached hereto
and made a part hereof, with such appropriate insertions, omissions,
substitutions, and other variations as required or permitted by this Agreement.
3. REGISTRATION OF WARRANT. The Placement Agent's Warrants shall be
numbered and shall be registered on the books of the Company when issued.
4. EXERCISE OF PLACEMENT AGENT'S WARRANT.
4.1 METHOD OF EXERCISE. The Placement Agent's Warrants initially are
exercisable at the Common Stock Exercise Price (subject to adjustment as
provided in Section 11 hereof) per Placement Agent's Warrant set forth in
Section 8 hereof payable by certified or official bank check in New York
Clearing House funds. Upon surrender of a Placement Agent's Warrant Certificate
with the annexed Form of Election to Purchase duly executed, together with
payment of the Common Stock Exercise Price for shares of Common Stock purchased
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at the Company's principal offices presently located at 00000 Xxxxxxxxxx
Xxxxxxxxx, Xxxxxxxxxx, Xxxxxxx 00000 the registered holder of a Placement
Agent's Warrant Certificate ("Holder" or "Holders") shall be entitled to receive
a certificate or certificates for the shares of Common Stock so purchased. The
purchase rights represented by each Placement Agent's Warrant Certificate are
exercisable at the option of the Holder thereof, in whole or in part (but not as
to fractional shares underlying the Placement Agent's Warrants). In the case of
the purchase of less than all of the shares purchasable under any Placement
Agent's Warrant Certificate, the Company shall cancel said Placement Agent's
Warrant Certificate upon the surrender thereof and shall execute and deliver a
new Placement Agent's Warrant Certificate of like tenor for the balance of the
shares purchasable thereunder.
4.2 RIGHT TO CONVERT WARRANT. In addition to the right to exercise the
Placement Agent's Warrant for cash pursuant to Section 4.1, Placement Agent
shall have the right to convert the Placement Agent's Warrant (in whole but not
in part) by the surrender of the Placement Agent's Warrant (with the annexed
Form of Election to Convert) at the office of the Company at any time during the
term of the Placement Agent's Warrant, into shares of Common Stock as provided
for in this Section 4.2. Upon exercise of this conversion right, Placement Agent
shall be entitled to receive that number of shares of Common Stock of the
Company equal to the quotient obtained by dividing [(A - B)(X)] by (A), where:
(A) = the Market Price (as defined in Section 9.3(e)) of one share of
Common Stock on the date of conversion of the Placement Agent's Warrant.
(B) = the Common Stock Exercise Price for one share of Common Stock
under the Placement Agent's Warrant.
(X) = the number of Shares issuable upon exercise of the Placement
Agent's Warrant.
If the above calculation results in a negative number, then no shares of
Common Stock shall be issued or issuable upon conversion of the Placement
Agent's Warrant.
Upon conversion of the Placement Agent's Warrant, the Placement Agent shall
be entitled to receive a certificate for the number of shares of Common Stock
determined under this Section 4.2.
5. ISSUANCE OF CERTIFICATES. Upon the exercise of the Placement Agent's
Warrant, the issuance of certificates for securities, properties or rights
underlying such Placement Agent's Warrant shall be made forthwith (and in any
event within five (5) business days thereafter) without charge to the Holder
thereof including, without limitation, any tax which may be payable in respect
of the issuance thereof, and such certificates shall (subject to the provisions
of Sections 7 and 9 hereof) be issued in the name of, or in such names as may be
directed by, the Holder thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificates in a name other
than that of the Holder and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
The Placement Agent's Warrant Certificates and the certificates
representing the securities, property or rights issued upon exercise of the
Placement Agent's Warrant shall be executed on behalf of the Company by the
manual or facsimile signature of the then present President or any Vice
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President of the Company under its corporate seal reproduced thereon, attested
to by the manual or facsimile signature of the then present Secretary or any
Assistant Secretary of the Company. Placement Agent's Warrant Certificates shall
be dated the date of execution by the Company upon initial issuance, division,
exchange, substitution or transfer.
6. TRANSFER OF PLACEMENT AGENT'S WARRANT. The Placement Agent's Warrant
shall be transferable only on the books of the Company maintained at its
principal office, where its principal office may then be located, upon delivery
thereof duly endorsed by the Holder or by its duly authorized attorney or
Placement Agent accompanied by proper evidence of succession, assignment or
authority to transfer. Upon any registration of transfer, the Company shall
execute and deliver the new Placement Agent's Warrant to the person entitled
thereto.
7. RESTRICTION ON TRANSFER OF PLACEMENT AGENT'S WARRANT. The Holder of a
Placement Agent's Warrant Certificate, by its acceptance thereof, covenants and
agrees that the Placement Agent's Warrant is being acquired as an investment and
not with a view to the distribution thereof, and that the Placement Agent's
Warrant may not be sold, transferred, assigned, hypothecated or otherwise
disposed of, in whole or in part, for the term of the Placement Agent's Warrant,
except to officers or affiliates of the Placement Agent or by operation of law.
8. EXERCISE PRICE AND NUMBER OF SECURITIES. Except as otherwise provided in
Section 11 hereof, each Placement Agent's Warrant is exercisable to purchase one
share of Common Stock at an initial exercise price equal to the Common Stock
Exercise Price. The Common Stock Exercise Price, and the number of shares for
which the Placement Agent's Warrant may be exercised shall be the price and the
number of shares which shall result from time to time from any and all
adjustments in accordance with the provisions of Section 11 hereof.
9. REGISTRATION RIGHTS.
9.1 REGISTRATION UNDER THE SECURITIES ACT OF 1933. Each Placement
Agent's Warrant Certificate and each certificate representing securities
issuable upon exercise of the Placement Agent's Warrant (collectively, the
"Warrant Shares") shall bear the following legend unless (i) such Placement
Agent's Warrant or Warrant Shares are distributed to the public pursuant to a
registration statement filed under the Securities Act of 1933, as amended (the
"Act"), or (ii) the Company has received an opinion of counsel, in form and
substance reasonably satisfactory to counsel for the Company, that such legend
is unnecessary for any such certificate:
THE PLACEMENT AGENT'S WARRANT REPRESENTED BY THIS
CERTIFICATE AND THE OTHER SECURITIES ISSUABLE UPON EXERCISE
THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (I) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933 (THE "ACT"), (II) TO THE EXTENT APPLICABLE, RULE 144
UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (III) AN OPINION OF
COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT IS AVAILABLE.
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THE TRANSFER OR EXCHANGE OF THE PLACEMENT AGENT'S WARRANT
REPRESENTED BY THE CERTIFICATE IS RESTRICTED IN ACCORDANCE
WITH THE PLACEMENT AGENT'S WARRANT AGREEMENT REFERRED TO
HEREIN.
9.2 PIGGYBACK REGISTRATION. If, at any time the Company proposes to
register any of its securities under the Act (other than in connection with a
merger or pursuant to Form S-4 or Form S-8), it will give written notice by
registered mail, at least thirty (30) days prior to the filing of each such
registration statement, to the Holders of the Placement Agent's Warrants and/or
the Warrant Shares of its intention to do so. If any of the Holders of the
Placement Agent's Warrants and/or Warrant Shares notify the Company within
twenty (20) days after mailing of any such notice of its or their desire to
include any such securities in such proposed registration statement, the Company
shall afford such Holders of the Placement Agent's Warrants and/or Warrant
Shares the opportunity to have any such Placement Agent's Warrants and/or
Warrant Shares registered under such registration statement. In the event that
the managing underwriter for said offering advises the Company in writing that
in its opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
causing a diminution in the offering price or otherwise adversely affecting the
offering, the Company will include in such registration (a) FIRST, the
securities the Company and the entities that made the demand for registration
pursuant to any agreements between the Company and such entities, (b) SECOND,
the Placement Agent's Warrants and/or Warrant Shares requested to be included in
such registration which in the opinion of such underwriter can be sold, PRO RATA
among the Holders of Placement Agent's Warrants and/or Warrant Shares on the
basis of the number of Placement Agent's Warrants and/or Warrant Shares
requested to be registered by such Holders, and (c) THIRD, other securities
requested to be included in such registration.
Notwithstanding the provisions of this Section 9.2, the Company shall have
the right at any time after it shall have given written notice pursuant to this
Section 9.2 (irrespective of whether a written request for inclusion of any such
securities shall have been made) to elect not to file any such proposed
registration statement or to withdraw the same after the filing but prior to the
effective date thereof.
9.3 DEMAND REGISTRATION.
(a) At any time after the Engagement Date and expiring five (5) years
after the Engagement Date, the Holders of the Placement Agent's Warrants
and/or Warrant Shares representing a "Majority" (as hereinafter defined in
Section 9.4(k) hereof) of the Placement Agent's Warrants and/or Warrant
Shares shall have the right (which right is in addition to the registration
rights under Section 9.2 hereof), exercisable by written notice to the
Company, to have the Company prepare and file with the Securities and
Exchange Commission (the "Commission"), on one occasion, a registration
statement (including, but not limited to, a registration statement on Form
S-3) and such other documents, including a prospectus, as may be necessary
in the opinion of both counsel for the Company and counsel for the Holders,
in order to comply with the provisions of the Act, so as to permit a public
offering and sale by such Holders and any other Holders of the Placement
Agent's Warrant and/or Warrant Shares who notify the Company within fifteen
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(15) days after the Company mails notice of such request pursuant to
Section 9.3(b) hereof (collectively, the "Requesting Holders") of their
respective Warrant Shares for the earlier of (i) six (6) consecutive months
or (ii) until the sale of all of the Warrant Shares requested to be
registered by the Requesting Holders.
(b) The Company covenants and agrees to give written notice of any
registration request under this Section 9.3 by any Holder or Holders
representing a Majority of the Placement Agent's Warrants and/or Warrant
Shares to all other registered Holders of the Placement Agent's Warrants
and the Warrant Shares within ten (10) days from the date of the receipt of
any such registration request.
(c) In addition to the registration rights under Section 9.2 and
subsection (a) of this Section 9.3, at any time commencing one (1) year
after the Closing Date and expiring five (5) years after the Closing Date,
the Holders of a Majority of the Placement Agent's Warrants and/or Warrant
Shares shall have the right on one occasion, exercisable by written request
to the Company, to have the Company prepare and file with the Commission a
registration statement so as to permit a public offering and sale by such
Holders of their respective Warrant Shares for the earlier of (i) six (6)
consecutive months or (ii) until the sale of all of the Warrant Shares
requested to be registered by such Holders; provided, however, that the
provisions of Section 9.4(b) hereof shall not apply to any such
registration request and registration and all costs incident thereto shall
be at the expense of the Holder or Holders making such request. If the
Holders have exercised their rights under Section 9.3(a) then the Holders
may not exercise their rights under Section 9.3(c) for a period of six (6)
months following the effective date of any registration statement filed
pursuant to Section 9.3(a).
(d) Notwithstanding anything to the contrary contained herein, if the
Company shall not have filed a registration statement for the Warrant
Shares within the time period specified in Section 9.4(a) hereof pursuant
to the written notice specified in Section 9.3(a) of the Holders of a
Majority of the Placement Agent's Warrants and/or Warrant Shares, the
Company, at its option, may repurchase (i) any and all Warrant Shares at
the higher of the Market Price (as defined in Section 9.3(e)) per share of
Common Stock on (x) the date of the notice sent pursuant to Section 9.3(a)
or (y) the expiration of the period specified in Section 9.4(a) and (ii)
any and all Placement Agent's Warrant at such Market Price less the
exercise price of such Placement Agent's Warrant. Such repurchase shall be
in immediately available funds and shall close within two (2) days after
the later of (i) the expiration of the period specified in Section 9.4(a)
or (ii) the delivery of the written notice of election specified in this
Section 9.3(d).
(e) DEFINITION OF MARKET PRICE. As used herein, the phrase "Market
Price" at any date shall mean the fair value as determined in good faith by
the Company's Board of Directors; provided, however, that where there
exists a public market for the Company's Common Stock at the time of
Placement Agent's exercise of this conversion right, the Market Price per
share of Common Stock shall be deemed to be the last reported sale price of
the Common Stock on the trading day before the Placement Agent's Warrant,
with attached Notice of Conversion, are duly surrendered to the Company for
conversion thereof or, in case no such reported sale takes place on such
day, the average of the last reported closing sale prices for the last
three (3) trading days, in either case as officially reported by the
principal securities exchange on which the Common Stock is listed or
admitted to trading, or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, the average closing sale price
as furnished by the NASD through The NASDAQ Stock Market, Inc. ("NASDAQ")
or similar organization if NASDAQ is no longer-reporting such information,
or if the Common Stock is not quoted on NASDAQ, the OTC Electronic Bulletin
Board, or as determined in good faith by resolution of the Board of
Directors of the Company, based on the best information available to it.
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9.4 COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. In connection
with any registration under Sections 9.2 or 9.3 hereof, the Company covenants
and agrees as follows:
(a) The Company shall use its best efforts to file a registration
statement within sixty (60) days of receipt of any demand therefor, and to
have any registration statements declared effective at the earliest
possible time, and shall furnish each Holder desiring to sell Warrant
Shares such number of prospectuses as shall reasonably be requested.
(b) The Company shall pay all costs (excluding fees and expenses of
Holder(s) counsel and any underwriting or selling commissions), fees and
expenses in connection with all registration statements filed pursuant to
Sections 9.2 and 9.3(a) hereof including, without limitation, the Company's
legal and accounting fees, printing expenses, blue sky fees and expenses.
The Holder(s) will pay all costs, fees and expenses (including those of the
Company) in connection with the registration statement filed pursuant to
Section 9.3(c).
(c) The Company will take all necessary action which may be required
in qualifying or registering the Warrant Shares included in a registration
statement for offering and sale under the securities or blue sky laws of
such states as reasonably are requested by the Holder(s), provided that the
Company shall not be obligated to execute or file any general consent to
service of process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the Warrant Shares to
be sold pursuant to any registration statement and each person, if any, who
controls such Holders within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), against all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending
against any claim whatsoever) to which any of them may become subject under
the Act, the Exchange Act or otherwise, arising from such registration
statement but only to the same extent and with the same effect as the
provisions pursuant to which the Company has agreed to indemnify each of
the Underwriters contained in Section 7 of the Engagement Agreement.
(e) The Holder(s) of the Warrant Shares to be sold pursuant to a
registration statement, and their successors and assigns, shall severally,
and not jointly, indemnify the Company, its officers and directors and each
person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act, against all loss, claim,
damage or expense or liability (including all expenses reasonably incurred
in investigating, preparing or defending against any claim whatsoever) to
which they may become subject under the Act, the Exchange Act or otherwise,
arising from information furnished by or on behalf of such Holders, or
their successors or assigns, for specific inclusion in such registration
statement to the same extent and with the same effect as the provisions
contained in Section 7 of the Engagement Agreement pursuant to which the
Underwriters have agreed to indemnify the Company.
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(f) Nothing contained in this Agreement shall be construed as
requiring the Holder(s) to exercise their Placement Agent's Warrant prior
to the initial filing of any registration statement or the effectiveness
thereof.
(g) The Company shall not permit the inclusion of any securities other
than the Warrant Shares to be included in any registration statement filed
pursuant to Section 9.3 hereof, or permit any other registration statement
to be or remain effective during the effectiveness of a registration
statement filed pursuant to Section 9.3 hereof, without the prior written
consent of Westminster Securities Corporation or as otherwise required by
the terms of any existing registration rights granted on or prior to the
date of this Agreement by the Company to the holders of any of the
Company's securities.
(h) The Company shall furnish to each Holder participating in the
offering and to each underwriter, if any, a signed counterpart, addressed
to such Holder or underwriter, of (i) an opinion of counsel to the Company,
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, an opinion dated the
date of the closing under the Engagement Agreement), and (ii) a "cold
comfort" letter dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, a
letter dated the date of the closing under the Engagement Agreement) signed
by the independent public accountants who have issued a report on the
Company's financial statements included in such registration statement, in
each case covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in the
case of such accountants' letter, with respect to events subsequent to the
date of such financial statements, as are customarily covered in opinions
of issuer's counsel and in accountants' letters delivered to underwriters
in underwritten public offerings of securities.
(i) The Company shall as soon as practicable after the effective date
of the registration statement, and in any event within 15 months
thereafter, make generally available to its security holders (within the
meaning of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the Act and covering a period of
at least 12 consecutive months beginning after the effective date of the
registration statement.
(j) The Company shall enter into an underwriting agreement with the
managing underwriters selected for such underwriting by Holders holding a
Majority of the Warrant Shares requested to be included in such
underwriting, which may be the Placement Agent. Such agreement shall be
satisfactory in form and substance to the Company, each Holder and such
managing underwriters, and shall contain such representations, warranties
and covenants by the Company and such other terms as are customarily
contained in agreements of that type used by the managing underwriter. The
Holders shall be parties to any underwriting agreement relating to an
underwritten sale of their Warrant Shares and may, at their option, require
that any or all the representations, warranties and covenants of the
Company to or for the benefit of such underwriters shall also be made to
and for the benefit of such Holders. Such Holders shall not be required to
make any representations or warranties to or agreements with the Company or
the underwriters except as they may relate to such Holders and their
intended methods of distribution.
(k) For purposes of this Agreement, the term "Majority" in reference
to the Placement Agent's Warrants or Warrant Shares, shall mean in excess
of fifty percent (50%) of the then outstanding Placement Agent's Warrants
or Warrant Shares that (i) are not held by the Company, an affiliate,
officer, creditor, employee or agent thereof or any of their respective
affiliates, members of their family, persons acting as nominees or in
conjunction therewith or (ii) have not been resold to the public pursuant
to a registration statement filed with the Commission under the Act.
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10. OBLIGATIONS OF HOLDERS. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to SECTION 9 hereof that
each of the selling Holders shall:
(a) Furnish to the Company such information regarding themselves, the
Warrant Shares held by them, the intended method of sale or other
disposition of such securities, the identity of and compensation to be paid
to any underwriters proposed to be employed in connection with such sale or
other disposition, and such other information as may reasonably be required
to effect the registration of their Warrant Shares.
(b) Notify the Company, at any time when a prospectus relating to the
Warrant Shares covered by a registration statement is required to be
delivered under the Act, of the happening of any event with respect to such
selling Holder as a result of which the prospectus included in such
registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing.
11. ADJUSTMENTS TO COMMON STOCK EXERCISE PRICE AND NUMBER OF SECURITIES.
The Common Stock Exercise Price in effect at any time and the number and kind of
securities purchased upon the exercise of the Placement Agent's Warrant shall be
subject to adjustment from time to time only upon the happening of the following
events:
11.1 STOCK DIVIDEND, SUBDIVISION AND COMBINATION. In case the Company shall
(i) declare a dividend or make a distribution on its outstanding shares of
Common Stock in shares of Common Stock, (ii) subdivide or reclassify its
outstanding shares of Common Stock into a greater number of shares, or (iii)
combine or reclassify its outstanding shares of Common Stock into a smaller
number of shares, the Common Stock Exercise Price in effect at the time of the
record date for such dividend or distribution or of the effective date of such
subdivision, combination or reclassification shall be adjusted so that it shall
equal the price determined by multiplying the Common Stock Exercise Price by a
fraction, the denominator of which shall be the number of shares of Common Stock
outstanding after giving effect to such action, and the numerator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
action. Such adjustment shall be made successively whenever any event listed
above shall occur.
11.2 ADJUSTMENT IN NUMBER OF SECURITIES. Upon each adjustment of the Common
Stock Exercise Price pursuant to the provisions of this Section 11, the number
of Warrant Shares issuable upon the exercise at the adjusted Common Stock
Exercise Price of each Placement Agent's Warrant shall be adjusted to the
nearest number of whole shares of Common Stock by multiplying a number equal to
the Common Stock Exercise Price in effect immediately prior to such adjustment
by the number of Warrant Shares issuable upon exercise of the Placement Agent's
Warrant immediately prior to such adjustment and dividing the product so
obtained by the adjusted Common Stock Exercise Price.
11.3 DEFINITION OF COMMON STOCK. For the purpose of this Agreement, 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 as of the date
hereof, or (ii) any other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
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11.4 MERGER OR CONSOLIDATION. 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), the corporation formed by such consolidation
or merger shall execute and deliver to the Holder a supplemental warrant
agreement providing that the Holder of each Placement Agent's Warrant then
outstanding or to be outstanding shall have the right thereafter (until the
expiration of such Placement Agent's Warrant) to receive, upon exercise of such
Placement Agent's Warrant, the kind and amount of shares of stock and other
securities and property receivable upon such consolidation or merger by a holder
of the number of shares of Common Stock for which such Placement Agent's Warrant
might have been exercised immediately prior to such consolidation or merger.
Such supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in this Section 11. The above provision of
this subsection shall similarly apply to successive consolidations or mergers.
11.5 NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No adjustment of the
Common Stock Exercise Price shall be made:
(a) Upon the issuance or sale of the Placement Agent's Warrant or the
Warrant Shares;
(b) Upon the issuance or sale of Common Stock (or any other security
convertible, exercisable, or exchangeable into shares of Common Stock) upon
the direct or indirect conversion, exercise, or exchange of any options,
rights, warrants, or other securities or indebtedness of the Company
outstanding as of the date of this Agreement or granted pursuant to any
stock option plan of the Company in existence as of the date of this
Agreement, pursuant to the terms thereof; or
(c) If the amount of said adjustment shall be less than two cents
($0.02) per share, provided, however, that in such case any adjustment that
would otherwise be required then to be made shall be carried forward and
shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall
amount to at least two cents ($0.02) per Placement Agent's Warrant.
12. EXCHANGE AND REPLACEMENT OF PLACEMENT AGENT'S WARRANT CERTIFICATES.
Each Placement Agent's Warrant Certificate is exchangeable, without expense,
upon the surrender thereof by the registered Holder at the principal executive
office of the Company for a new Placement Agent's Warrant Certificate of like
tenor and date representing in the aggregate the right to purchase the same
number of Warrant Shares in such denominations as shall be designated by the
Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Placement Agent's Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Placement Agent's Warrant, if mutilated, the Company will make and deliver a
new Warrant Certificate of like tenor, in lieu thereof.
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13. ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not be required
to issue certificates representing fractions of shares of Common Stock upon the
exercise of the Placement Agent's Warrant, nor shall it be required to issue
scrip or pay cash in lieu of fractional interests, it being the intent of the
parties that all fractional interests shall be eliminated by rounding any
fraction up to the nearest whole number of shares of Common Stock or other
securities, properties or rights.
14. RESERVATION AND LISTING OF SECURITIES. The Company shall at all times
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of the Placement Agent's Warrant,
such number of shares of Common Stock or other securities, properties or rights
as shall be issuable upon the exercise thereof. Every transfer agent ("Transfer
Agent") for the Common Stock and other securities of the Company issuable upon
the exercise of the Placement Agent's Warrant will be irrevocably authorized and
directed at all times to reserve such number of authorized shares of Common
Stock and other securities as shall be requisite for such purpose. The Company
will keep a copy of this Agreement on file with every Transfer Agent for the
Common Stock and other securities of the Company issuable upon the exercise of
the Placement Agent's Warrant. The Company will supply every such Transfer Agent
with duly executed stock and other certificates, as appropriate, for such
purpose. The Company covenants and agrees that, upon exercise of the Placement
Agent's Warrant and payment of the Common Stock Exercise Price therefor, all
shares of Common Stock and other securities issuable upon such exercise shall be
duly and validly issued, fully paid, non-assessable and not subject to the
preemptive rights of any stockholder. As long as the Placement Agent's Warrant
shall be outstanding, the Company shall use its best efforts to cause all shares
of Common Stock issuable upon the exercise of the Placement Agent's Warrant to
be listed (subject to official notice of issuance) on all securities exchanges
on which the Common Stock issued to the public in connection herewith may then
be listed and/or quoted on Nasdaq or the OTC Electronic Bulletin Board.
15. NOTICES TO PLACEMENT AGENT'S WARRANT HOLDERS. Nothing contained in this
Agreement shall be construed as conferring upon the Holders the right to vote or
to consent or to receive notice as a stockholder in respect of any meetings of
stockholders for the election of directors or any other matter, or as having any
rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Placement Agent's Warrants and their exercise,
any of the following event shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on
the books of the Company; or
(b) the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible
into or exchangeable for shares of capital stock of the Company, or any
option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall
be proposed;
11
then in any one or more of said events, the Company shall give written notice of
such event at least fifteen (15) days prior to the date fixed as a record date
or the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
16. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made and
sent when delivered, mailed by registered or certified mail, return receipt
requested, or received via facsimile:
(a) if to the registered Holder of the Placement Agent's Warrant, to
the address of such Holder as shown on the books of the Company; or
(b) if to the Company, to the address set forth in SECTION 4 hereof or
to such other address as the Company may designate by notice to the Holders.
17. SUPPLEMENTS; AMENDMENTS; ENTIRE AGREEMENT. This Agreement (including
the Engagement Agreement to the extent portions thereof are referred to herein)
contains the entire understanding between the parties hereto with respect to the
subject matter hereof and may not be modified or amended except by a writing
duly signed by the party against whom enforcement of the modification or
amendment is sought. The Company and the Placement Agent may from time to time
supplement or amend this Agreement without the approval of any holders of
Placement Agent's Warrant Certificates (other than the Placement Agent) in order
to cure any ambiguity, to correct or supplement any provision contained herein
which may be defective or inconsistent with any provisions herein, or to make
any other provisions in regard to matters or questions arising hereunder which
the Company and the Placement Agent may deem necessary or desirable and which
the Company and the Placement Agent deem shall not adversely affect the
interests of the Holders of Placement Agent's Warrant Certificates.
18. SUCCESSORS. All of the covenants and provisions of this Agreement shall
be binding upon and inure to the benefit of the Company, the Holders and their
respective successors and assigns hereunder.
19. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All statements in any
schedule, exhibit or certificate or other instrument delivered by or on behalf
of the parties hereto, or in connection with the transactions contemplated by
this Agreement, shall be deemed to be representations and warranties hereunder.
Notwithstanding any investigations made by or on behalf of the parties to this
Agreement, all representations, warranties and agreements made by the parties to
this Agreement or pursuant hereto shall survive.
20. GOVERNING LAW. This Agreement and each Placement Agent's Warrant
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws.
12
21. SEVERABILITY. If any provision of this Agreement shall be held to be
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
22. CAPTIONS. The caption headings of the Sections of this Agreement are
for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
23. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Placement Agent and any other registered Holder(s) of the Placement Agent's
Warrant Certificates or Warrant Shares any legal or equitable right, remedy or
claim under this Agreement; and this Agreement shall be for the sole and
exclusive benefit of the Company and the Underwriters and any other Holder(s) of
the Placement Agent's Warrant Certificates or Warrant Shares.
24. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
ATTEST: MEDICAL TECHNOLOGY SYSTEMS, INC.
By:___________________________ By:_______________________________
Name: Name: Xxxxxxx Xxxxxx
Title: Title: Vice President and CFO
WESTMINSTER SECURITIES CORPORATION
By:_______________________________
Name: Xxxx X'Xxxx
Title: President
EXHIBIT A
[FORM OF PLACEMENT AGENT'S WARRANT CERTIFICATE]
THE PLACEMENT AGENT'S WARRANT REPRESENTED BY THIS CERTIFICATE AND THE OTHER
SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933 (THE "ACT"), (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY
SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii)
AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE PLACEMENT AGENT'S WARRANT REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE PLACEMENT AGENT'S WARRANT
AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK TIME JUNE 25, 2007
Placement Agent's Warrant No.
Issuable for
125,000 Shares of Common Stock
WARRANT CERTIFICATE
This Warrant Certificate certifies that Westminster Securities Corporation,
a New York corporation, is the registered holder of Warrants to purchase
initially at any time from June 25, 2002 until 5:00 p.m., New York time on, June
25, 2007 ("Expiration Date"), up to 125,000 shares of Common Stock, no par value
per share, of the Company (the "Common Stock"), at an exercise price of $1.50
per share (the "Common Stock Exercise Price"), upon surrender of this Placement
Agent's Warrant Certificate and payment of the Common Stock Exercise Price at an
office or agency of the Company, but subject to the conditions set forth herein
and in the Placement Agent's Warrant Agreement dated as of November 8, 2000
among the Company and Westminster Securities Corporation (the "Warrant
Agreement"). Payment of the Exercise Price shall be made either by certified or
official bank check in New York Clearing House funds payable to the order of the
Company or by surrender of the Placement Agent's Warrant as provided in the
Warrant Agreement.
No Warrant may be exercised after 5:00 p.m., New York time, on the
Expiration Date, at which time all Placement Agent's Warrant evidenced hereby,
unless exercised prior thereto, shall thereafter be void.
The Placement Agent's Warrant evidenced by this Warrant Certificate is part
of a duly authorized issue of Placement Agent's Warrants issued pursuant to the
Warrant Agreement, which Warrant Agreement is hereby incorporated by reference
in and made a part of this instrument and is hereby referred to for a
description of the rights, limitation of rights, obligations, duties and
immunities thereunder of the Company and the holders (the words "holders" or
"holder" meaning the registered holders or registered holder) of the Placement
Agent's Warrant.
2
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Placement Agent's
Warrant; provided, however, that the failure of the Company to issue such new
Warrant Certificates shall not in any way change, alter or otherwise impair, the
rights of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Placement Agent's Warrant shall be issued to the transferees in exchange for
this Warrant Certificate, subject to the limitations provided herein and in the
Warrant Agreement, without any charge except for any tax or other governmental
charge imposed in connection with such transfer.
Upon the exercise of less than all of the Placement Agent's Warrant
evidenced by this Certificate, the Company shall forthwith issue to the holder
hereof a new Warrant Certificate representing such unexercised Placement Agent's
Warrant.
In addition to the right of exercise, the holder shall have the right to
convert this Warrant Certificate (in whole but not in part) by the surrender of
this Warrant Certificate (with the attached Form of Election to Convert) at the
office of the Company at any time during the duration of this Warrant, into
shares of Common Stock, as provided in the Warrant Agreement.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
This Warrant Certificate does not entitle any holder thereof to any of the
rights of a shareholder of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed.
Dated as of June 25, 2002.
ATTEST: MEDICAL TECHNOLGOGY SYSTEMS, INC.
By:___________________________ By:_______________________________
Name: Name: Xxxxxxx Xxxxxx
Title: Title: Vice President and CFO
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 4.1]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ______ shares of Common
Stock, and herewith tenders in payment for such securities a certified or
official bank check payable in New York Clearing House Funds to the order of
Medical Technology Systems, Inc. (the "Company") in the amount of $_________,
all in accordance with the terms of Section 4.1 of the Placement Agent's Warrant
Agreement dated as of June 25, 2002 among the Company and Westminster Securities
Corporation. The undersigned requests that a certificate for such securities be
registered in the name of ____________________, whose address is
__________________ and that such certificate to be delivered
to____________________ whose address is _______________________, and if said
number of shares shall not be all the shares purchasable hereunder, that a new
Warrant Certificate for the balance of the shares purchasable under the within
Warrant Certificate be registered in the name of the undersigned warrant holder
or his assignee as below indicated and delivered to the address stated below.
Dated:_____________________________
Signature:_________________________________________
(Signature must conform in all
respects to name of holder as specified
on the face of the Warrant Certificate.)
Address: ______________________________
______________________________
______________________________________________
(Insert Social Security or Other Identifying
Number of Holder)
Signature Guaranteed:________________________________________________________
(Signature must be guaranteed by a bank savings and loan association,
stockbroker, or credit union with membership in an approved signature guaranty
Medallion Program pursuant to Securities Exchange Act Rule 17Ad-15.)
[FORM OF ASSIGNMENT]
(TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH HOLDER
DESIRES TO TRANSFER THE WARRANT CERTIFICATE.)
FOR VALUE RECEIVED ________________ hereby sells, assigns and transfers unto
[NAME OF TRANSFEREE) this Warrant Certificate, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint
________________, attorney, to transfer the within Warrant Certificate on the
books of the within-named Company, with full power of substitution.
Dated:_____________________
Signature:____________________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate.)
Address: ______________________________
______________________________________________
(Insert Social Security or Other Identifying
Number of Holder)
Signature Guaranteed:________________________________________________________
(Signature must be guaranteed by a bank savings and loan association,
stockbroker, or credit union with membership in an approved signature guaranty
Medallion Program pursuant to Securities Exchange Act Rule 17Ad-15.)
[FORM OF ELECTION TO CONVERT PURSUANT TO SECTION 4.2]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to convert this Warrant Certificate
into ________ shares of Common Stock (assuming a Market Price calculated on the
basis of the last sale price for Common Stock on _________________, (the trading
day immediately preceding surrender of the Warrant Certificate and this Form of
Election to Convert) of $_________), all in accordance with Section 4.2 of the
Placement Agent's Warrant Agreement dated as of June 25, 2002 between the
Company and Westminster Securities Corporation. The undersigned requests that a
certificate for such securities be registered in the name of
________________________, whose address is ________________________ and
________________________(attach separate sheet if necessary).
Dated:________________________
Signature:_____________________________________________
(Signature must conform in all
respects to name of holder as specified
on the face of the Warrant Certificate.)
Address:_______________________________
_______________________________
______________________________________________
(Insert Social Security or Other Identifying
Number of Holder)
Signature Guaranteed:__________________________________________________________
(Signature must be guaranteed by a bank savings and loan association,
stockbroker, or credit union with membership in an approved signature guaranty
Medallion Program pursuant to Securities Exchange Act Rule 17Ad-15.)
