WARRANT AGREEMENT
BETWEEN
TRAINING DEVICES, INC.
AND
BATHGATE XXXXXXXX CAPITAL GROUP, LLC.
Dated as of ___,1999
WARRANT AGREEMENT
THIS WARRANT AGREEMENT (the "Agreement"), dated as of ____, 1999, is
made and entered into by and between Training Devices, Inc., a Colorado
corporation (the "Company"), and Bathgate XxXxxxxx Capital Group, LLC
("Placement Agent").
The Company agrees to issue and sell, and the Placement Agent has the
right to purchase, for the price of $100, warrants to purchase up to an
aggregate of ____ shares ("Shares") of the Company's Common Stock, subject to
the terms and conditions set forth below.
In consideration of the foregoing and for the purpose of defining the
terms and provisions of the Warrants and the respective rights and
obligations thereunder, the Company and the Placement Agent, for value
received, hereby agree as follows:
SECTION 1. DEFINITIONS.
The following terms used in this agreement shall have the following
meanings (unless otherwise expressly provided herein):
1.1. THE "ACT." The Securities Act of 1933, as amended.
1.2. THE "COMMISSION." The Securities and Exchange Commission.
1.3. THE "COMPANY." Training Devices, Inc..
1.4. "COMMON STOCK." The Company's Common Stock.
1.5. "CURRENT MARKET PRICE." The Current Market Price shall be
determined as follows:
(a) if the security at issue is listed on a national
securities exchange or admitted to unlisted trading privileges on such an
exchange or quoted on either the National Market System or the Small Cap
Market of the automated quotation service operated by Nasdaq, Inc.
("NASDAQ"), the current value shall be the last reported sale price of that
security on such exchange or system on the day for which the Current Market
Price is to be determined or, if no such sale is made on such day, the
average of the highest closing bid and lowest asked price for such day on
such exchange or system; or
(b) if the security at issue is not so listed or quoted or
admitted to unlisted trading privileges, the Current Market Value shall be
the average of the last reported highest bid and lowest asked prices quoted
on the NASDAQ Electronic Bulletin Board, or, if not so quoted, then by the
National Quotation Bureau, Inc. on the last business day prior to the day for
which the Current Market Price is to be determined; or
(c) if the security at issue is not so listed or quoted or
admitted to unlisted trading privileges and bid and asked prices are not
reported, the current market value shall be determined in such reasonable
manner as may be prescribed from time to time by the Board of Directors of
the Company, subject to the objection and arbitration procedure as described
in Section (6) below.
1.6. "EXERCISE DATE." ____________, 1999.
1.7. "EXERCISE PRICE." $1.00 per Share, as modified in accordance
with Section (4), below.
1.8. "EXPIRATION DATE." ____________, 2004.
1.9. "HOLDER " OR "WARRANTHOLDER." Bathgate XxXxxxxx Capital Group,
LLC, and any valid transferee thereof pursuant to Section (3.1) below.
1.10. "NASD." The National Association of Securities Dealers, Inc.
1.11. "NASDAQ." The automated quotation system operated by The Nasdaq
Stock Market, Inc.
1.12. "TERMINATION OF BUSINESS." Any sale, lease or exchange of all,
or substantially all, of the Company's
assets or business or any dissolution, liquidation or winding up of the
Company.
1.13. "WARRANT CERTIFICATES." The certificates that are issued to a
Holder of a Warrant, in the form attached hereto as Exhibit "A" and
incorporated by reference herein.
1.14. "WARRANTS." The warrants issued in accordance with the terms
of this Agreement and any Warrants issued in substitution for or replacement
of such warrants, including those evidenced by a certificate or certificates
originally issued or issued upon division, exchange, substitution or transfer
pursuant to this Agreement.
1.15. "WARRANT SECURITIES." The Common Stock purchasable upon
exercise of a Warrant including the Common Stock underlying unexercised
portions of a Warrant.
SECTION 2. TERM OF WARRANTS; EXERCISE OF WARRANT.
2.1. EXERCISE OF WARRANT. Subject to the terms of this Agreement,
the Holder shall have the right, at any time prior to 5:00 p.m., Denver Time,
on the Expiration Date, to purchase from the Company up to the number of
fully paid and nonassessable Shares to which the Holder may at the time be
entitled to purchase pursuant to this Agreement, upon surrender to the
Company, at its principal office, of the Warrant Certificate evidencing the
Warrants to be exercised, together with the purchase form on the reverse
thereof, or the Warrant Conversion Exercise Form in the case of a warrant
conversion pursuant to Section (2.3) herein, duly filled in and signed, and
upon payment to the Company of the Exercise Price for the number of Shares in
respect of which such Warrants are then exercised, but in no event for less
than 100 Shares (unless fewer than an aggregate of 100 shares are then
purchasable under all outstanding Warrants held by a Holder).
2.2. PAYMENT OF EXERCISE PRICE. Payment of the aggregate Exercise
Price shall be made in cash or by check, or any combination thereof.
2.3. ISSUANCE OF SHARES. Upon such surrender of the Warrants and
payment of such Exercise Price as aforesaid, the Company shall issue and
cause to be delivered with all reasonable dispatch to or upon the written
order of the Holder and in such name or names as the Holder may designate, a
certificate or certificates for the number of full Shares so purchased upon
the exercise of the Warrant, together with cash, as provided in Section (12)
hereof, in respect of any fractional Shares otherwise issuable upon such
surrender.
2.4. CONVERSION RIGHT. In addition to and without limiting the
rights of the Warrantholder under the terms of the Warrant Agreement, the
Holder shall have the right (the "Conversion Right") to convert the Warrant
evidenced by this certificate or any portion thereof into Shares as provided
in this Section 2.4 at any time or from time to time prior to its expiration.
a. Upon exercise of the Conversion Right with respect to a
particular number of Shares (the "Conversion Shares"), the Company shall
deliver to the Holder, without payment by the Holder of any Exercise Price or
any cash or other consideration, that number of Shares equal to the quotient
obtained by dividing the Net Value (as hereinafter defined in this paragraph
2.4(a)) of the Converted Shares by the Current Market Price of a single
Share, determined in each case as of the close of business on the Conversion
Date (as hereinafter defined). The "Net Value" of the Converted Shares shall
be determined by subtracting the aggregate Exercise Price of the Converted
Shares from the aggregate Current Market Price of the Converted Shares. No
fractional securities shall be issuable upon exercise of the Conversion
Right, and if the number of securities to be issued in accordance with the
foregoing formula is other than a whole number, the Company shall pay to the
Holder an amount in cash equal to the Current Market Price of the resulting
fractional Share.
b. The Conversion Right may be exercised by the Holder by
the surrender of the Warrant Certificate at the principal office of the
Company or at the office of the Company's stock transfer agent, if any,
together with a written statement specifying that the Holder thereby intends
to exercise the Conversion Right and indicating the number of Shares subject
to the Warrant Certificate which are being surrendered (referred to in
subparagraph 2.3(a) above as the Converted Shares), on the reverse side of
the Warrant Certificate, in exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Company of the Warrant
Certificate, or on such later date as is specified therein (the "Conversion
Date"), but not later than the Expiration Date. Certificates for the
Converted Shares issuable upon exercise of the Conversion Right, together
with a check in payment of any fractional Warrant Share and, in the case of a
partial exercise a new Warrant Certificate evidencing the Warrant Shares
remaining subject to the Warrant, shall be issued as of the Conversion Date
and shall be delivered to the Holder within seven (7) days following the
Conversion Date.
2.5. Upon receipt of the Warrant Certificate by the company as
described in Sections 2.1 or 2.4 above, the
Holder shall be deemed to be the holder of record of the Shares issuable upon
such exercise, notwithstanding that the transfer books of the Company may
then be closed or that certificates representing such Shares may not have
been prepared or actually delivered to the Holder.
SECTION 3. TRANSFERABILITY AND FORM OF WARRANT
3.1. LIMITATION ON TRANSFER. Any assignment or transfer of a
Warrant shall be made by the presentation and surrender of the Warrant
Certificate to the Company at its principal office or the office of its
transfer agent, if any, accompanied by a duly executed Assignment Form. Upon
the presentation and surrender of these items to the Company, the Company, at
its sole expense, shall execute and deliver to the new Holder or Holders a
new Warrant Certificate or Warrant Certificates, in the name of the new
Holder or Holders as named in the Assignment Form, and the Warrant
Certificate presented or surrendered shall at that time be canceled.
3.2. EXCHANGE OF CERTIFICATE. Any Warrant Certificate may be
exchanged for another certificate or certificates entitling the Warrantholder
to purchase a like aggregate number of Shares as the certificate or
certificates surrendered then entitled such Warrantholder to purchase. Any
Warrantholder desiring to exchange a Warrant Certificate shall make such
request in writing delivered to the Company, and shall surrender, properly
endorsed, with signatures guaranteed, the certificate evidencing the Warrant
to be so exchanged. Thereupon, the Company shall execute and deliver to the
person entitled thereto a new Warrant Certificate as so requested.
3.3. MUTILATED, LOST, STOLEN, OR DESTROYED CERTIFICATE. In case the
certificate or certificates evidencing the Warrants shall be mutilated, lost,
stolen or destroyed, the Company shall, at the request of the Warrantholder,
issue and deliver in exchange and substitution for and upon cancellation of
the mutilated certificate or certificates, or in lieu of and substitution for
the certificate or certificates lost, stolen or destroyed, a new Warrant
certificate or certificates of like tenor and representing an equivalent
right or interest, but only upon receipt of evidence satisfactory to the
Company of such loss, theft or destruction of such Warrant and a bond of
indemnity, if requested, also satisfactory in form and amount, at the
applicant's cost. Applicants for such substitute Warrant certificate shall
also comply with such other reasonable regulations and pay such other
reasonable charges as the Company may prescribe.
3.4. FORM OF CERTIFICATE. The text of the Warrant Certificate and
of the form of election to purchase Shares shall be substantially as set
forth in Exhibit A attached hereto. The number of Shares issuable upon
exercise of the Warrants is subject to adjustment upon the occurrence of
certain events, all as hereinafter provided. The Warrant Certificates shall
be executed on behalf of the Company by its President or by a Vice President
and attested to by its Secretary or an Assistant Secretary. A Warrant
Certificate bearing the signature of an individual who was at any time the
proper officer of the Company shall bind the Company, notwithstanding that
such individual shall have ceased to hold such officer prior to the delivery
of such Warrant Certificate or did not hold such office on the date of this
Agreement.
The Warrant Certificates shall be dated as of the date of
signature thereof by the Company either upon initial issuance or upon
division, exchange, substitution or transfer.
SECTION 4. ADJUSTMENT OF NUMBER OF SHARES.
The number and kind of securities purchasable upon the exercise of the
Warrants and the Warrant Price shall be subject to adjustment from time to
time upon the happening of certain events, as follows:
4.1. ADJUSTMENTS. The number of Shares purchasable upon the exercise
of the Warrants shall be subject to adjustments as follows:
(a) In case the Company shall (i) pay a dividend in Common
Stock or make a distribution to its stockholders in Common Stock, (ii)
subdivide its outstanding Common Stock, (iii) combine its outstanding Common
Stock into a smaller number of shares of Common Stock, or (iv) issue by
classification of its Common Stock other securities of the Company, the
number of Shares purchasable upon exercise of the Warrants immediately prior
thereto shall be adjusted so that the Warrantholder shall be entitled to
receive the kind and number of Shares or other securities of the Company
which it would have owned or would have been entitled to receive immediately
after the happening of any of the events described above, had the Warrants
been exercised immediately prior to the happening of such event or any record
date with respect thereto. Any adjustment made pursuant to this subsection
(4.1.(a)) shall become effective immediately after the effective date of such
event retroactive to the record date, if any, for such event.
(b) In case the Company shall issue rights, options, warrants,
or convertible securities to all or substantially all holders of its Common
Stock, without any charge to such holders, entitling them to subscribe for or
purchase Common Stock at a price per share which is lower at the record date
mentioned below than the then Current Market Price, the number of Shares
thereafter purchasable upon the exercise of each Warrant shall be determined
by multiplying the
number of Shares theretofore purchasable upon exercise of the Warrants by a
fraction, of which the numerator shall be the number of shares of Common
Stock outstanding immediately prior to the issuance of such rights, options,
warrants or convertible securities plus the number of additional shares of
Common Stock offered for subscription or purchase, and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately prior to the issuance of such rights, options, warrants, or
convertible securities plus the number of shares which the aggregate offering
price of the total number of shares offered would purchase at such Current
Market Price. Such adjustment shall be made whenever such rights, options,
warrants, or convertible securities are issued, and shall become effective
immediately and retroactively to the record date for the determination of
stockholders entitled to receive such rights, options, warrants, or
convertible securities.
(c) In case the Company shall distribute to all or
substantially all holders of its Common Stock evidences of its indebtedness
or assets (excluding cash dividends or distributions out of earnings) or
rights, options, warrants, or convertible securities containing the right to
subscribe for or purchase Common Stock (excluding those referred to in
subsection (4.1(b)) above), then in each case the number of Shares thereafter
purchasable upon the exercise of the Warrants shall be determined by
multiplying the number of Shares theretofore purchasable upon exercise of the
Warrants by a fraction, of which the numerator shall be the then Current
Market Price on the date of such distribution, and of which the denominator
shall be such Current Market Price on such date minus the then fair value
(determined as provided in subparagraph (e) below of the portion of the
assets or evidences of indebtedness so distributed or of such subscription
rights, options, warrants, or convertible securities applicable to one share.
Such adjustment shall be made whenever any such distribution is made and
shall become effective on the date of distribution retroactive to the record
date for the determination of stockholders entitled to receive such
distribution.
(d) No adjustment in the number of Shares purchasable pursuant
to the Warrants shall be required unless such adjustment would require an
increase or decrease of at least one percent in the number of Shares then
purchasable upon the exercise of the Warrants or, if the Warrants are not
then exercisable, the number of Shares purchasable upon the exercise of the
Warrants on the first date thereafter that the Warrants become exercisable;
provided, however, that any adjustments which by reason of this subsection
(4.1(d)) are not required to be made immediately shall be carried forward and
taken into account in any subsequent adjustment.
(e) Whenever the number of Shares purchasable upon the
exercise of the Warrant is adjusted, as herein provided, the Exercise Price
payable upon exercise of the Warrant shall be adjusted by multiplying such
Exercise Price immediately prior to such adjustment by a fraction, of which
the numerator shall be the number of Warrant Shares purchasable upon the
exercise of the Warrant immediately prior to such adjustment, and of which
the denominator shall be the number of Warrant Shares so purchasable
immediately thereafter.
(f) Whenever the number of Shares purchasable upon exercise of
the Warrants is adjusted as herein provided, the Company shall cause to be
promptly mailed to the Warrantholder by first class mail, postage prepaid,
notice of such adjustment and a certificate of the chief financial officer of
the Company setting forth the number of Shares purchasable upon the exercise
of the Warrants after such adjustment, a brief statement of the facts
requiring such adjustment and the computation by which such adjustment was
made.
(g) For the purpose of this Section (4.1), the term "Common
Stock" shall mean (i) the class of stock designated as the Common Stock of
the Company at the date of this Agreement, 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. In the event that at any time, as a
result of an adjustment made pursuant to this Section (4), the Warrantholder
shall become entitled to purchase any securities of the Company other than
Common Stock, (y) if the Warrantholder's right to purchase is on any other
basis than that available to all holders of the Company's Common Stock, the
Company shall obtain an opinion of an independent investment banking firm
valuing such other securities and (z) thereafter the number of such other
securities so purchasable upon exercise of the Warrants shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Shares contained in this
Section (4).
(h) Upon the expiration of any rights, options, warrants, or
conversion privileges, if such shall have not been exercised, the number of
Shares purchasable upon exercise of the Warrants, to the extent the Warrants
have not then been exercised, shall, upon such expiration, be readjusted and
shall thereafter be such as they would have been had they been originally
adjusted (or had the original adjustment not been required, as the case may
be) on the basis of (i) the fact that the only shares of Common Stock so
issued were the shares of Common Stock, if any, actually issued or sold upon
the exercise of such rights, options, warrants, or conversion privileges, and
(ii) the fact that such shares of Common Stock, if any, were issued or sold
for the consideration actually received by the Company upon such exercise
plus the consideration, if any, actually received by the Company for the
issuance, sale or grant of all such rights, options, warrants, or conversion
privileges whether or not exercised; provided, however, that no such
readjustment shall have the effect of decreasing the number of Shares
purchasable upon exercise of the Warrants by an amount in excess of the
amount of the adjustment initially made in respect of the issuance, sale, or
grant of such rights, options, warrants, or conversion rights.
4.2. NO ADJUSTMENT FOR DIVIDENDS. Except as provided in Section
(4.1), no adjustment in respect of any dividends or distributions out of
earnings shall be made during the term of the Warrants or upon the exercise
of the Warrants.
4.3. NO ADJUSTMENT IN CERTAIN CASES. No adjustments shall be made
pursuant to Section (4) hereof in connection with the issuance of the Common
Stock upon exercise of the Warrants. No adjustments shall be made pursuant
to Section (4) hereof in connection with grant or exercise of presently
authorized or outstanding options to purchase, or the issuance of shares of
Common Stock under the Company's director or employee benefit plan.
4.4. PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION,
CONSOLIDATION, ETC. In case of any consolidation of the Company with or
merger of the Company into another corporation, or in case of any sale or
conveyance to another corporation of the property, assets, or business of the
Company as an entirety or substantially as an entirety, the Company or such
successor or purchasing corporation, as the case may be, shall execute with
the Warrantholder an agreement that the Warrantholder shall have the right
thereafter upon payment of the Exercise Price in effect immediately prior to
such action to purchase, upon exercise of the Warrants, the kind and amount
of shares and other securities and property which it would have owned or have
been entitled to receive after the happening of such consolidation, merger,
sale, or conveyance had the Warrants been exercised immediately prior to such
action. In the event of a merger described in Section 368(a)(2)(E) of the
Internal Revenue Code of 1986, in which the Company is the surviving
corporation, the right to purchase Shares under the Warrants shall terminate
on the date of such merger and thereupon the Warrants shall become null and
void, but only if the controlling corporation shall agree to substitute for
the Warrants, its warrants which entitle the holder thereof to purchase upon
their exercise the kind and amount of shares and other securities and
property which it would have owned or been entitled to receive had the
Warrants been exercised immediately prior to such merger. Any such
agreements referred to in this Section (4.4) shall provide for adjustments,
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in Section (4) hereof. The provisions of this Section (4.4)
shall similarly apply to successive consolidations, mergers, sales, or
conveyances.
4.5. PAR VALUE OF SHARES OF COMMON STOCK. Before taking any action
which would cause an adjustment effectively reducing the portion of the
Exercise Price allocable to each Share below the par value per share of the
Common Stock issuable upon exercise of the Warrants, the Company will take
any corporate action which may, in the opinion of its counsel, be necessary
in order that the Company may validly and legally issue fully paid and
nonassessable Common Stock upon exercise of the Warrants.
4.6. INDEPENDENT PUBLIC ACCOUNTANTS. The Company may retain a firm
of independent public accountants of recognized national standing (which may
be any such firm regularly employed by the Company) to make any computation
required under this Section (4), and a certificate signed by such firm shall
be conclusive evidence of the correctness of any computation made under this
Section (4).
4.7. STATEMENT ON WARRANT CERTIFICATES. Irrespective of any
adjustments in the number of securities issuable upon exercise of the
Warrants, Warrant certificates theretofore or thereafter issued may continue
to express the same number of securities as are stated in the similar Warrant
certificates initially issuable pursuant to this Agreement. However, the
Company may, at any time in its sole discretion (which shall be conclusive),
make any change in the form of Warrant certificate that it may deem
appropriate and that does not affect the substance thereof; and any Warrant
certificate thereafter issued, whether upon registration of transfer of, or
in exchange or substitution for, an outstanding Warrant certificate, may be
in the form so changed.
4.8. TREASURY STOCK. For purposes of this Section (4), shares of
Common Stock owned or held at any relevant time by, or for the account of,
the Company, in its treasury or otherwise, shall not be deemed to be
outstanding for purposes of the calculations and adjustments described.
SECTION 5. NOTICE TO HOLDERS.
If, prior to the expiration of this Warrant either by its terms or by
its exercise in full, any of the following shall occur:
(a) the Company shall declare a dividend or authorize any
other distribution on its Common Stock; or
(b) the Company shall authorize the granting to the
shareholders of its Common Stock of rights to subscribe for or purchase any
securities or any other similar rights; or
(c) any reclassification, reorganization or similar change
of the Common Stock, or any consolidation or merger to which the Company is a
party, or the sale, lease, or exchange of any significant portion of the
assets of the Company; or
(d) the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) any purchase, retirement or redemption by the Company of
its Common Stock;
then, and in any such case, the Company shall deliver to the Holder or
Holders written notice thereof at least 30 days prior to the earliest
applicable date specified below with respect to which notice is to be given,
which notice shall state the following:
(x) the date on which a record is to be taken for the
purpose of such dividend, distribution or rights, or, if a record is not to
be taken, the date as of which the shareholders of Common Stock of record to
be entitled to such dividend, distribution or rights are to be determined;
(y) the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, dissolution, liquidation, winding up
or purchase, retirement or redemption is expected to become effective, and
the date, if any, as of which the Company's shareholders of Common Stock of
record shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such reclassification, reorganization,
consolidation, merger, sale, transfer, dissolution, liquidation, winding up,
purchase, retirement or redemption; and
(z) if any matters referred to in the foregoing clauses (x)
and (y) are to be voted upon by shareholders of Common Stock, the date as of
which those shareholders to be entitled to vote are to be determined.
SECTION 6. OFFICERS' CERTIFICATE.
Whenever the Exercise Price or the aggregate number of Warrant
Securities purchasable pursuant to this Warrant shall be adjusted as required
by the provisions of Section (4) above, the Company shall promptly file with
its Secretary or an Assistant Secretary at its principal office, and with its
transfer agent, if any, an officers' certificate executed by the Company's
President and Secretary or Assistant Secretary, describing the adjustment and
setting forth, in reasonable detail, the facts requiring such adjustment and
the basis for and calculation of such adjustment in accordance with the
provisions of this Warrant. Each such officers' certificate shall be made
available to the Holder or Holders of this Warrant for inspection at all
reasonable times, and the Company, after each such adjustment, shall promptly
deliver a copy of the officers' certificate relating to that adjustment to
the Holder or Holders of this Warrant. The officers' certificate described
in this Section (6) shall be deemed to be conclusive as to the correctness of
the adjustment reflected therein if, and only if, no Holder of this Warrant
delivers written notice to the Company of an objection to the adjustment
within 30 days after the officers' certificate is delivered to the Holder or
Holders of this Warrant. The Company will make its books and records
available for inspection and copying during normal business hours by the
Holder so as to permit a determination as to the correctness of the
adjustment. If written notice of an objection is delivered by a Holder to
the Company and the parties cannot reconcile the dispute, the Holder and the
Company shall submit the dispute to arbitration pursuant to the provisions of
Section 19 below. Failure to prepare or provide the officers' certificate
shall not modify the parties' rights hereunder.
SECTION 7. RESERVATION OF WARRANT SECURITIES.
There has been reserved, and the Company shall at all times keep
reserved so long as the Warrants remain outstanding, out of its authorized
and unissued Common Stock, such number of shares of Common Stock as shall be
subject to purchase under the Warrants. Every transfer agent for the Common
Stock and other securities of the Company issuable upon the exercise of the
Warrants will be irrevocably authorized and directed at all times to reserve
such number of authorized shares 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 Warrants. The Company will supply every
such transfer agent with duly executed stock and other certificates, as
appropriate, for such purpose and will provide or otherwise make available
any cash which may be payable as provided in Section 12 hereof.
SECTION 8. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS.
8.1. RESTRICTIONS ON TRANSFER. The Warrantholder agrees that prior
to making any disposition of the Warrants or the Shares, other than to
officers of Placement Agent, the Warrantholder shall give written notice to
the Company describing briefly the manner in which any such proposed
disposition is to be made; and no such disposition shall be made if the
Company has notified the Warrantholder that in the opinion of counsel
reasonably satisfactory to the Warrantholder a registration statement or
other notification or post-effective amendment thereto (hereinafter
collectively a "Registration Statement") under the Act is required with
respect to such disposition and no such Registration Statement has been filed
by the Company with, and declared effective, if necessary, by, the Commission.
8.2. PIGGY-BACK REGISTRATION RIGHT. If at any time prior to the
Expiration Date the Company files a registration statement with the
Commission pursuant to the Act, or pursuant to any other act passed after the
date of this Agreement, which filing provides for the sale of securities by
the Company to the public, or files a Regulation A offering statement under
the Act, the Company shall offer to the Holder or Holders of this Warrant and
the holders of any Warrant Securities the opportunity to register or qualify
the Warrant Securities at the Company's sole expense, regardless of whether
the Holder or Holders of this Warrant or the holders of Warrant Securities or
both may have previously availed themselves of any of the registration rights
described in this Section (8); provided, however, that in the case of a
Regulation A offering, the opportunity to qualify shall be limited to the
amount of the available exemption after taking into account the securities
that the Company wishes to qualify. Notwithstanding anything to the
contrary, this Section (8.2) shall not be applicable to a registration
statement registering securities issued pursuant to an employee benefit plan
or as to a transaction subject to Rule 145 promulgated under the Act or which
a form S-4 registration statement could be used; nor shall it be applicable
to the first underwritten registered public offering of the Company.
The Company shall deliver written notice to the Holder or Holders of
this Warrant and to any holders of the Warrant Securities of its intention to
file a registration statement or Regulation A offering statement under the
Act at least 60 days prior to the filing of such registration statement or
offering statement, and the Holder or Holders and holders of Warrant
Securities shall have 30 days thereafter to request in writing that the
Company register or qualify the Warrant Securities or the Warrant Securities
underlying the unexercised portion of this Warrant in accordance with this
Section (8.2). Upon the delivery of such a written request within the
specified time, the Company shall be obligated to include in its contemplated
registration statement or offering statement all information necessary or
advisable to register or qualify the Warrant Securities or Warrant Securities
underlying the unexercised portion of this Warrant for a public offering, if
the Company does file the contemplated registration statement or offering
statement; provided, however, that neither the delivery of the notice by the
Company nor the delivery of a request by a Holder or by a holder of Warrant
Securities shall in any way obligate the Company to file a registration
statement or offering statement. Furthermore, notwithstanding the filing of
a registration statement or offering statement, the Company may, at any time
prior to the effective date thereof, determine not to offer the securities to
which the registration statement or offering statement relates, other than
the Warrant, Warrant Securities and Warrant Securities underlying the
unexercised portion of this Warrant. Notwithstanding the foregoing, if, as a
qualification of any offering in any state or jurisdiction in which the
Company (by vote of its Board of Directors) or any underwriter determines in
good faith that it wishes to offer securities registered in the offering, it
is required that offering expenses be allocated in a manner different from
that provided above, then the offering expenses shall be allocated in
whatever manner is most nearly in compliance with the provisions set out
above.
If the registration for which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise as part of the written notice given pursuant to this Section. In such
event, the right of any Warrantholder or holder of Shares to registration
pursuant to this Section (8.2) shall be conditioned upon such holder's
participation in such underwriting, and the inclusion of Shares in the
underwriting shall be limited to the extent provided herein. All holders
proposing to distribute their Shares through such underwriting shall
(together with the Company and the other holders distributing their Shares
through such underwriting) enter into an underwriting agreement in customary
form with the managing underwriter selected for such underwriting by the
Company. Notwithstanding any other provision of this Section, if the managing
underwriter determines that marketing factors require a limitation of the
number of shares to be underwritten, such underwriter may limit the amount of
securities to be included in the registration and underwriting by the holders
of Company securities exercising "piggyback" registration rights (including
the Warrantholder and each holder of Warrants and Shares). The Company shall
so advise all such holders, and the number of shares of such securities that
may be included in the registration and underwriting shall be allocated among
all of such holders, in proportion, as nearly as practicable, to the
respective amounts of securities requested to be included in such
registration held by such holders at the time of filing the registration
statement, PROVIDED, HOWEVER, that no security holder other than one
exercising a demand registration right shall have superior rights with
respect to inclusion in a registration than those of the Warrantholder and
each holder of Warrants and Shares and if any party is granted such superior
rights hereafter the Warrantholder and each holder of Warrants and Shares
shall be deemed to be automatically granted similar rights. The Company
shall advise all such holders of any such limitations and of the number or
securities that may be included in the registration. Any securities excluded
or withdrawn from such underwriting shall not be transferred prior to one
hundred twenty (120) days after the effective date of the registration
statement relating thereto, or such shorter period of time as the
underwriters may require.
The Company shall comply with the requirements of this Section (8.2)
and the related requirements of Section (8.6) at its own expense. That
expense shall include, but not be limited to, legal, accounting, consulting,
printing, federal
and state filing fees, NASD fees, out-of-pocket expenses incurred by counsel,
accountants and consultants retained by the Company, and miscellaneous
expenses directly related to the registration statement or offering statement
and the offering. However, this expense shall not include the portion of any
underwriting commissions, transfer taxes and the underwriter's accountable
and nonaccountable expense allowances attributable to the offer and sale of
the Warrant, Warrant Securities and the Warrant Securities underlying the
unexercised portion of this Warrant, all of which expenses shall be borne by
the Holder or Holders of this Warrant and the holders of the Warrant
Securities registered or qualified.
8.3. INCLUSION OF INFORMATION. In the event that the Company
registers or qualifies the Warrant Securities pursuant to Section (8.2)
above, the Company shall include in the registration statement or
qualification, and the prospectus included therein, all information and
materials necessary or advisable to comply with the applicable statutes and
regulations so as to permit the public sale of the Warrant Securities or the
Warrant Securities underlying the unexercised portion of this Warrant. As
used in Section (8.2), reference to the Company's securities shall include,
but not be limited to, any class or type of the Company's securities or the
securities of any of the Company's subsidiaries or affiliates.
8.4. REGISTRATION STATEMENT FILED BY HOLDER. In addition to the
registration rights described in Sections (8.1) and (8.2) above, upon the
written request of any Holder of this Warrant or any holder of Warrant
Securities, the Company, as promptly as possible after delivery of such
request, shall cooperate with the requesting Holder or holder in preparing
and signing any registration statement or offering statement that the Holder
or holder may desire to file in order to sell or transfer the Warrant and
Warrant Securities. Within 10 days after the delivery of the written request
described above, the Company shall deliver written notice to all other
Holders of this Warrant and holders of Warrant Securities, if any, advising
them that the Company is proceeding with a registration statement or offering
statement and that their Warrant and Warrant Securities will be included
therein if they so desire and agree to pay their pro rata share of the cost
of registration or qualification and provided that the Holder or holder
delivers written notice to the Company of their desire to be included and
their agreement to pay their pro rata share of the cost within 30 days after
the delivery of the Company's notice to them. The Company will supply all
information necessary or advisable for any such registration statements or
offering statements; provided, however, that all the costs and expenses of
such registration statements or offering statements shall be borne, in a
manner proportionate to the number of securities for which they indicate a
desire to register, by the Holders of this Warrant and the holders of Warrant
Securities who seek the registration or qualification of their Warrant,
Warrant Securities or Warrant Securities underlying the unexercised portion
of their Warrant. In determining the amount of costs and expenses to be
borne by those Holders or holders, the only costs and expenses of the Company
to be included are the additional costs and expenses that would not have
otherwise been incurred by the Company if those Holders or holders had not
desired to file a registration statement or offering statement. As an
example, and without limitation, audit fees would not be charged to those
Holders or holders if or to the extent that the Company would have incurred
the same audit fees for its year-end or other use in the absence of the
registration statement or offering statement. The Holders or holders
responsible for the costs and expenses shall reimburse the Company for those
reimbursable costs and expenses reasonably incurred by the Company within 30
days after the initial effective date of the registration statement or
qualification at issue.
No other securities of the Company of any type shall be included in,
be the subject of, or be publicly offered pursuant to any registration
statement or offering statement filed within 180 days following the latest
effective date of any registration statement or offering statement filed
pursuant to this Section (8.4) unless (a) the Company obtains the prior
written consent of Cohig upon such terms and conditions as Cohig in its sole
discretion may deem desirable, and (b) the owners or holders of those other
securities, including, without limitation, the Company, agree to bear an
equitable portion, reasonably acceptable to Cohig of the costs and expenses
of the registration statement or offering statement filed pursuant to this
Section (8.4).
8.5. PAYMENT OF EXERCISE PRICE FROM PROCEEDS. In the event that any
such Registration Statement is utilized for a public offering of any of the
Shares to be received upon exercise of the Warrants pursuant to this Section
(8), the Warrantholder may elect to pay the exercise price of the Warrants to
the Company out of the proceeds of the sale of the Shares pursuant to the
Registration Statement concurrently with the closing of such sale of the
Shares; provided that if such sale is not closed within 90 days of the
effective date of such Registration Statement, then the Warrantholder shall
be obligated to pay the exercise price of the Warrants to the Company on such
90 day.
8.6. CONDITION OF COMPANY'S OBLIGATIONS. As to each registration
statement or offering statement, the Company's obligations contained in this
Section (8) shall be conditioned upon a timely receipt by the Company in
writing of the following:
(a) Information as to the terms of the contemplated public
offering furnished by and on behalf of each Holder or holder intending to
make a public distribution of the Warrant Securities or Warrant Securities
underlying the unexercised portion of the Warrant; and
(b) Such other information as the Company may reasonably
require from such Holders or holders, or any underwriter for any of them, for
inclusion in the registration statement or offering statement.
8.7. ADDITIONAL REQUIREMENTS. In each instance in which the Company
shall take any action to register or qualify the Warrant Securities or the
Warrant Securities underlying the unexercised portion of this Warrant, if
any, pursuant to this Section (8), the Company shall do the following:
(a) supply to Placement Agent, as the representative of the
Holders of the Warrant and the holders of Warrant Securities whose Warrant
Securities are being registered or qualified, two (2) manually signed copies
of each registration statement or offering statement, and all amendments
thereto, and a reasonable number of copies of the preliminary, final or other
prospectus or offering circular, all prepared in conformity with the
requirements of the Act and the rules and regulations promulgated thereunder,
and such other documents as Placement Agent shall reasonably request;
(b) cooperate with respect to (i) all necessary or advisable
actions relating to the preparation and the filing of any registration
statements or offering statements, and all amendments thereto, arising from
the provisions of this Section (8), (ii) all reasonable efforts to establish
an exemption from the provisions of the Act or any other federal or state
securities statutes, (iii) all necessary or advisable actions to register or
qualify the public offering at issue pursuant to federal securities statutes
and the state "blue sky" securities statutes of each jurisdiction that the
Holders of the Warrant or holders of Warrant Securities shall reasonably
request, and (iv) all other necessary or advisable actions to enable the
Holders of the Warrant Securities to complete the contemplated disposition of
their securities in each reasonably requested jurisdiction; and
(c) keep all registration statements or offering statements to
which this Section (8) applies, and all amendments thereto, effective under
the Act for a period of at least 9 months after their initial effective date
and cooperate with respect to all necessary or advisable actions to permit
the completion of the public sale or other disposition of the securities
subject to a registration statement or offering statement.
8.8. RECIPROCAL INDEMNIFICATION. In each instance in which pursuant
to this Section (8) the Company shall take any action to register or qualify
the Securities or the Warrant Securities underlying the unexercised portion
of this Warrant, prior to the effective date of any registration statement or
offering statement, the Company and each Holder or holder of Warrants or
Warrant Securities being registered or qualified shall enter into reciprocal
indemnification agreements, in the form customarily used by reputable
investment bankers with respect to public offerings of securities, containing
substantially the same terms as described in Section (10) . These
indemnification agreements also shall contain an agreement by the Holder or
shareholder at issue to indemnify and hold harmless the Company, its officers
and directors from and against any and all losses, claims, damages and
liabilities, including, but not limited to, all expenses reasonably incurred
in investigating, preparing, defending or settling any claim, directly
resulting from any untrue statements of material facts, or omissions to state
a material fact necessary to make a statement not misleading, contained in a
registration statement or offering statement to which this Section (8)
applies, if, and only if, the untrue statement or omission directly resulted
from information provided in writing to the Company by the indemnifying
Holder or shareholder expressly for use in the registration statement or
offering statement at issue.
8.9. PLACEMENT AGENT AS REPRESENTATIVE. For purposes of subsection
(8.7(a)) above, by the receipt of this Warrant or any Warrant Securities, all
Holders and all holders of Warrant Securities acknowledge and agree that
Placement Agent is and shall be their representative.
8.10. SURVIVAL. The Company's obligations described in this
Section (8) shall continue in full force and effect regardless of the
exercise, surrender, cancellation or expiration of this Warrant.
SECTION 9. PAYMENT OF TAXES.
The Company will pay all documentary stamp taxes, if any,
attributable to the initial issuance of the Warrants or the securities
comprising the Shares; provided, however, the Company shall not be required
to pay any tax which may be payable in respect of any transfer of the
Warrants or the securities comprising the Shares.
SECTION 10. INDEMNIFICATION AND CONTRIBUTION
10.1. INDEMNIFICATION BY COMPANY. In the event of the filing of any
Registration Statement with respect to the Warrant Shares pursuant to Section
(8) hereof, the Company agrees to indemnify and hold harmless the
Warrantholder or any holder of Warrant Shares and each person, if any, who
controls the Warrantholder or any holder of Warrant Shares within the meaning
of the Act, against any and all loss, claim, damage or liability, joint or
several (which shall, for all purposes of this Agreement include, but not be
limited to, all costs of defense and investigation and all attorneys'
fees), to which such Warrantholder or any holder of Warrant Shares may become
subject, under the Act or otherwise, insofar as such loss, claim, damage, or
liability (or action with respect thereto) arises out of or is based upon (a)
any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement, any Preliminary Prospectus, the Effective
Prospectus, or the Final Prospectus or any amendment or supplement thereto;
or (b) the omission or alleged omission to state in the Registration
Statement, any Preliminary Prospectus, the Effective Prospectus or the Final
Prospectus or any amendment or supplement thereto a material fact required to
be stated therein or necessary to make the statements therein not misleading;
except that the Company shall not be liable in any such case to the extent,
but only to the extent, that any such loss, claim, damage, or liability
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in reliance upon and in
conformity with written information furnished to the Company by such
Warrantholder or the holder of such Warrant Shares specifically for use in
the preparation of the Registration Statement, any Preliminary Prospectus,
the Effective Prospectus and the Final Prospectus or any amendment or
supplement thereto. This indemnity will be in addition to any liability
which the Company may otherwise have.
10.2. INDEMNIFICATION BY WARRANTHOLDERS. The Warrantholders and the
holders of Warrant Shares agree that they, severally, but not jointly, shall
indemnify and hold harmless the Company, each other person referred to in
subparts (1), (2) and (3) of Section 11(a) of the Act in respect of the
Registration Statement and each person, if any, who controls the Company
within the meaning of the Act, against any and all loss, claim, damage or
liability, joint or several (which shall, for all purposes of this Agreement
include, but not be limited to, all costs of defense and investigation and
all attorneys' fees), to which the Company may become subject under the Act
or otherwise, insofar as such loss, claim, damage, liability (or action in
respect thereto) arises out of or are based upon (a) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, any Preliminary Prospectus, the Effective Prospectus or the Final
Prospectus or any amendment or supplement thereto; or (b) the omission or
alleged omission to state in the Registration Statement, any Preliminary
Prospectus, the Effective Prospectus or the Final Prospectus or any amendment
or supplement thereto a material fact required to be stated therein or
necessary to make the statements therein not misleading; except that such
indemnification shall be available in each such case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon information and in
conformity with written information furnished to the Company by the
Warrantholder or the holder of Warrant Shares specifically for use in the
preparation thereof. This indemnity will be in addition to any liability
which such Warrantholder or holder of Warrant Shares may otherwise have.
10.3. RIGHT TO PROVIDE DEFENSE. Promptly after receipt by an
indemnified party under Section (10.1) or (10.2) above of written notice of
the commencement of any action, the indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party under such
section, notify the indemnifying party in writing of the claim or the
commencement of that action; the failure to notify the indemnifying party
shall not relieve it of any liability which it may have to an indemnified
party, except to the extent that the indemnifying party did not otherwise
have knowledge of the commencement of the action and the indemnifying party's
ability to defend against the action was prejudiced by such failure. Such
failure shall not relieve the indemnifying party from any other liability
which it may have to the indemnified party. If any such claim or action
shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable
to the indemnified party under such section for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; except that Cohig shall
have the right to employ counsel to represent it and the other Warrantholders
of holders of Shares who may be subject to liability arising out of any claim
in respect of which indemnity may be sought by such persons against the
Company under such section if, in Cohig's reasonable judgment, it is
advisable for Cohig and those Warrantholders or holders of Shares to be
represented by separate counsel, and in that event the fees and expenses of
such separate counsel shall be paid by the Company.
10.4. CONTRIBUTION. If the indemnification provided for in Sections
(10.1) and (10.2) of this Agreement is unavailable or insufficient to hold
harmless an indemnified party, then each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of the
losses, claims, damages, or liabilities referred to in Sections (10.1) or
(10.2) above (a) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the
Warrantholders on the other; or (b) if the allocation provided by clause (a)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect the relative benefits referred to in clause (a) above
but also the relative fault of the Company on the one hand and the
Warrantholders on the other in connection with the statements or omissions
which resulted in such losses, claims, damages, or liabilities, as well as
any other relevant equitable considerations. The relative benefits received
by the Company and the Warrantholders shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts
and un-itemized expenses received by the Underwriters, in each case as set
forth in the table on the cover page of the Final Prospectus. Relative fault
shall be determined by reference
to, among other things, whether the untrue statement of a material fact or
the omission to state a material fact relates to information supplied by the
Company or the Underwriter and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such untrue
statement or omission. For purposes of this Section (10.4), the term
"damages" shall include any counsel fees or other expenses reasonably
incurred by the Company or the Underwriters in connection with investigating
or defending any action or claim which is the subject of the contribution
provisions of this Section (10.4). No person adjudged guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
Each party entitled to contribution agrees that upon the service of a
summons or other initial legal process upon it in any action instituted
against it in respect of which contribution may be sought, it shall promptly
give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or
parties of any such service shall not relieve the party from whom
contribution may be sought from any obligation it may have hereunder or
otherwise (except as specifically provided in Section (10.4) hereof).
SECTION 11. TRANSFER TO COMPLY WITH THE SECURITIES ACT OF 1933
This Warrant, the Warrant Securities, and all other securities issued
or issuable upon exercise of this Warrant, may not be offered, sold or
transferred, in whole or in part, except in compliance with the Act, and
except in compliance with all applicable state securities laws. The Company
may cause substantially the following legends, or their equivalents, to be
set forth on each certificate representing the Warrant Securities, or any
other security issued or issuable upon exercise of this Warrant, not
theretofore distributed to the public or sold to underwriters, as defined by
the Act, for distribution to the public pursuant to Section 8 above:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND
MAY NOT BE SOLD, EXCHANGED, HYPOTHECATED OR TRANSFERRED IN ANY MANNER EXCEPT
IN COMPLIANCE WITH THE AGREEMENT PURSUANT TO WHICH THEY WERE ISSUED."
(b) Any legend required by applicable state securities laws.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legends (except a new certificate issued upon
completion of a public distribution pursuant to a registration statement
under the Securities Act of 1933, as amended (the "Act"), or the securities
represented thereby) shall also bear the above legends unless, in the opinion
of the Company's counsel, the securities represented thereby need no longer
be subject to such restrictions.
SECTION 12. FRACTIONAL SHARES
No fractional shares or scrip representing fractional shares shall be
issued upon the exercise of all or any part of this Warrant. With respect to
any fraction of a share of any security called for upon any exercise of this
Warrant, the Company shall pay to the Holder an amount in money equal to that
fraction multiplied by the Current Market Price of that share.
SECTION 13. NO RIGHTS AS STOCKHOLDER; NOTICES TO WARRANTHOLDER.
Nothing contained in this Agreement or in the Warrants shall be
construed as conferring upon the Warrantholder or its transferees any rights
as a stockholder of the Company, including the right to vote, receive
dividends, consent or receive notices as a stockholder in respect to any
meeting of stockholders for the election of directors of the Company or any
other matter. The Company covenants, however, that for so long as this
Warrant is at least partially unexercised, it will furnish any Holder of this
Warrant with copies of all reports and communications furnished to the
shareholders of the Company. In addition, if at any time prior to the
expiration of the Warrants and prior to their exercise, any one or more of
the following events shall occur:
(a) any action which would require an adjustment pursuant to Section
(4.1) (except subsections (4.1(e)) and (4.1(h)) or (4.4); or
(b) a dissolution, liquidation, or winding up of the Company (other
than in connection with a consolidation, merger, or sale of its property,
assets, and business as an entirety or substantially as an entirety) shall be
proposed:
then the Company shall give notice in writing of such event to the
Warrantholder, as provided in Section (16) hereof, at
least 20 days prior to the date fixed as a record date or the date of closing
the transfer books for the determination of the stockholders entitled to any
relevant dividend, distribution, subscription rights or other rights or for
the determination of stockholders entitled to vote on such proposed
dissolution, liquidation, or winding up. Such notice shall specify such
record date or the date of closing the transfer books, as the case may be.
Failure to mail or receive notice or any defect therein shall not affect the
validity of any action taken with respect thereto.
SECTION 14. CHARGES DUE UPON EXERCISE.
The Company shall pay any and all issue or transfer taxes, including,
but not limited to, all federal or state taxes, that may be payable with
respect to the transfer of this Warrant or the issue or delivery of Warrant
Securities upon the exercise of this Warrant.
SECTION 15. WARRANT SECURITIES TO BE FULLY PAID
The Company covenants that all Warrant Securities that may be issued
and delivered to a Holder of this Warrant upon the exercise of this Warrant
and payment of the Exercise Price will be, upon such delivery, validly and
duly issued, fully paid and nonassessable.
SECTION 16. NOTICES
Any notice pursuant to this Agreement by the Company or by a
Warrantholder or a holder of Shares shall be in writing and shall be deemed
to have been duly given if delivered or mailed by certified mail, return
receipt requested:
(i) If to a Warrantholder or a holder of Shares, addressed to
Bathgate XxXxxxxx Capital Group, LLC, 0000 X. Xxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Finance Department; or
(ii) If to the Company addressed to it at 0000 X. Xxxxxx Xxxxxxx,
Xxxx. #0X, Xxxxxxxxx, Xxxxxxxx 00000, Attention: President.
Each party may from time to time change the address to which notices
to it are to be delivered or mailed hereunder by notice in accordance
herewith to the other party.
SECTION 17. MERGER OR CONSOLIDATION OF THE COMPANY.
The Company will not merge or consolidate with or into any other
corporation or sell all or substantially all of its property to another
corporation, unless the provisions of Section (4.4) are complied with.
SECTION 18. APPLICABLE LAW
This Warrant shall be governed by and construed in accordance with the
laws of the State of Colorado, and courts located in Colorado shall have
exclusive jurisdiction over all disputes arising hereunder.
SECTION 19. ARBITRATION.
The Company and the Holder, and by receipt of this Warrant or any
Warrant Securities, all subsequent Holders or holders of Warrant Securities,
agree to submit all controversies, claims, disputes and matters of difference
with respect to this Warrant, including, without limitation, the application
of this Section (19) to arbitration in Denver, Colorado, according to the
rules and practices of the American Arbitration Association from time to time
in force; provided, however, that if such rules and practices conflict with
the applicable procedures of Colorado courts of general jurisdiction or any
other provisions of Colorado law then in force, those Colorado rules and
provisions shall govern. This agreement to arbitrate shall be specifically
enforceable. Arbitration may proceed in the absence of any party if notice
of the proceeding has been given to that party. The parties agree to abide
by all awards rendered in any such proceeding. These awards shall be final
and binding on all parties to the extent and in the manner provided by the
rules of civil procedure enacted in Colorado. All awards may be filed, as a
basis of judgment and of the issuance of execution for its collection, with
the clerk of one or more courts, state or federal, having jurisdiction over
either the party against whom that award is rendered or its property. No
party shall be considered in default hereunder during the pendency of
arbitration proceedings relating to that default.
SECTION 20. MISCELLANEOUS PROVISIONS
(a) Subject to the terms and conditions contained herein, this
Warrant shall be binding on the Company and its successors and shall inure to
the benefit of the original Holder, its successors and assigns and all
holders of Warrant
Securities and the exercise of this Warrant in full shall not terminate the
provisions of this Warrant as it relates to holders of Warrant Securities.
(b) If the Company fails to perform any of its obligations
hereunder, it shall be liable to the Holder for all damages, costs and
expenses resulting from the failure, including, but not limited to, all
reasonable attorney's fees and disbursements.
(c) This Warrant cannot be changed or terminated or any performance
or condition waived in whole or in part except by an agreement in writing
signed by the party against whom enforcement of the change, termination or
waiver is sought; provided, however, that any provisions hereof may be
amended, waived, discharged or terminated upon the written consent of the
Company and Cohig.
(d) If any provision of this Warrant shall be held to be invalid,
illegal or unenforceable, such provision shall be severed, enforced to the
extent possible, or modified in such a way as to make it enforceable, and the
invalidity, illegality or unenforceability shall not affect the remainder of
this Warrant.
(e) The Company agrees to execute such further agreements,
conveyances, certificates and other documents as may be reasonably requested
by the Holder to effectuate the intent and provisions of this Warrant.
(f) Paragraph headings used in this Warrant are for convenience
only and shall not be taken or construed to define or limit any of the terms
or provisions of this Warrant. Unless otherwise provided, or unless the
context shall otherwise require, the use of the singular shall include the
plural and the use of any gender shall include all genders.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, all as of the day and year first above written.
TRAINING DEVICES, INC..
By:
---------------------------
Xxxxxx X. Xxxxxxxxx, CEO
BATHGATE XXXXXXXX CAPITAL GROUP, LLC
By:
---------------------------
EXHIBIT A
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT"), AND ARE "RESTRICTED SECURITIES" AS
THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION UNDER THE ACT, OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO
THE SATISFACTION OF THE COMPANY.
Warrant Certificate No. PAW-1999-__
TRAINING DEVICES, INC.
WARRANTS TO PURCHASE
____ SHARES OF COMMON STOCK
INCORPORATED UNDER THE LAWS
OF THE STATE OF Colorado
This certifies that, for value received, , the
registered holder hereof or assigns (the "Warrantholder"), is entitled to
purchase from Training Devices, Inc. (the "Company"), at any time during the
period commencing at 9:00 a.m., Colorado time, on ____, and expiring at 5:00
pm, Colorado time, on ____, at the purchase price per Share of $1.00 (the
"Exercise Price"), the number of shares of Common Stock of the Company set
forth above (the "Shares"). The number of shares of Common Stock of the
Company purchasable upon exercise of the Warrants evidenced hereby shall be
subject to adjustment from time to time as set forth in the Warrant Agreement
dated ____, 1999 (the "Warrant Agreement").
The Warrants evidenced hereby may be exercised in whole or in part by
presentation of this Warrant Certificate with the Purchase Form attached
hereto duly executed and simultaneous payment of the Warrant Price at the
principal office of the Company. Payment of such price shall be made at the
option of the Warrantholder in cash or by check or by Cashless Exercise
subject to the provisions of Section 3 of the Warrant Agreement (as that term
is defined therein).
The Warrants evidenced hereby represent the right to purchase an
aggregate of up to _____ Shares and are issued under and in accordance with
Warrant Agreement between the Company and Bathgate XxXxxxxx Capital Group,
LLC, and are subject to the terms and provisions contained in the Warrant
Agreement, to all of which the Warrantholder by acceptance hereof consents.
Upon any partial exercise of the Warrants evidenced hereby, there
shall be signed and issued to the Warrantholder a new Warrant Certificate in
respect of the Shares as to which the Warrants evidenced hereby shall not
have been exercised. These Warrants may be exchanged at the office of the
Company by surrender of this Warrant Certificate properly endorsed for one or
more new Warrants of the same aggregate number of Shares as here evidenced by
the Warrant or Warrants exchanged. No fractional shares of Common Stock will
be issued upon the exercise of rights to purchase hereunder, but the Company
shall pay the cash value of any fraction upon the exercise of one or more
Warrants. These Warrants are transferable at the office of the Company in
the manner and subject to the limitations set forth in the Warrant Agreement.
This Warrant Certificate does not entitle any Warrantholder to any of
the rights of a stockholder of the Company.
TRAINING DEVICES, INC.
By:
---------------------------
Dated:
[Seal]
Attest:
Secretary
