NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
THE TRANSFERABILITY OF THIS WARRANT IS
RESTRICTED AS PROVIDED IN SECTION 2
Warrant No. ___ ________, l999
THE WIDECOM GROUP, INC.
COMMON STOCK PURCHASE WARRANT
For good and valuable consideration, the receipt of which is hereby
acknowledged by THE WIDECOM GROUP, INC., an Ontario corporation (the
"Company"),____________________________________ is hereby granted the right
to purchase, at any time from the date hereof until 5:00 P.M., New York City
time, on ________, 2004 (the "Warrant Exercise Term"), up to Twenty Thousand
(20,000) paid and non-assessable shares of the Company's Common Stock, $.00l
par value per share ("Common Stock").
This Warrant is exercisable at a per share price of $1.20 (the
"Exercise Price"), subject to adjustment as provided in Section l hereof,
payable in cash or by certified or official bank check in New York Clearing
House funds, or by cashless exercise as provided in paragraph 1.6. Upon
surrender of this warrant certificate with the annexed Subscription Form
duly executed, together with payment of the Exercise Price for the shares of
Common Stock purchased at the Company's principal executive offices
(presently located at 00 Xxxxx Xxxx, Xxxxxxxx, Xxxxxxx X0X 0X0 Xxxxxx), the
registered Holder of the Warrant ("Holder") shall be entitled to receive a
certificate or certificates for the shares of Common Stock so purchased (the
"Warrant Shares").
l. Exercise of Warrant
l.l The purchase rights represented by this Warrant are exercisable
at the option of the Holder hereof, in whole or in part (but not as to
fractional shares of the Common Stock) during any period in which this
Warrant may be exercised as set forth above. In the case of the purchase of
less than all the shares of Common Stock purchasable under this Warrant, the
Company shall cancel this Warrant upon the surrender thereof and shall
execute and deliver a new Warrant of like tenor for the balance of the
shares of Common Stock purchasable hereunder.
l.2 The issuance of certificates for shares of Common Stock upon the
exercise of this Warrant shall be made without charge to the Holder hereof
including, without limitation, any tax which may be payable in respect of
the issuance thereof, and such certificates shall be issued in the name of,
or in such names as may be directed by, the Holder hereof; 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
such certificate 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.
l.3 In case at any time or from time to time the Company shall
subdivide as a whole, split its Common Stock or issue a dividend payable in
shares or otherwise, the number of shares of Common Stock then outstanding
into a greater or lesser number of shares, the Warrant Price then in effect
shall be increased or reduced proportionately, and the number of shares
issuable upon exercise of this Warrant shall accordingly be increased or
reduced proportionately.
l.4 In case of any reclassification or change of outstanding shares
of Common Stock issuable upon exercise of this Warrant (other than change in
par value, or from par value to no par value, or from no par value to par
value, or as a result or a subdivision or combination), or in case of any
consolidation or merger of the Company with or into another corporation
(other than a merger in which the Company is the continuing corporation and
which does not result in any reclassification or change of outstanding
shares of Common Stock, other than a change in number of the shares issuable
upon exercise of the Warrant) or in case of any sale or conveyance to
another corporation of the property of the Company as an entirety or
substantially as an entirety, the Holder of this Warrant shall have the
right thereafter to exercise this Warrant into the kind and amount of shares
of stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a
Holder of the number of shares of Common Stock of the Company for which the
Warrant might have been exercised immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance. The
above provisions of this Section l.4 shall similarly apply to successive
reclassifications and changes of shares of Common Stock and to successive
consolidations, mergers, sales or conveyances.
l.5 The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of
issuance upon exercise of this Warrant as herein provided, such number of
shares of Common Stock as shall then be issuable upon the exercise of this
Warrant. The Company covenants that all shares of Common Stock which shall
be so issuable shall be duly and validly issued and fully-paid and non-
assessable.
1.6 Cashless Exercise. At any time during the Warrant Exercise
Term, the Holder may, at its option, exchange the Warrants represented by
such Holder's Warrant Certificate, in whole or in part (a "Warrant
Exchange"), into the number of fully paid and non-assessable Warrant Shares
determined in accordance with this Section 1.6, by surrendering such Warrant
Certificate at the principal office of the Company or at the office of its
transfer agent, accompanied by a notice stating such Holder's intent to
effect such exchange, the number of Warrants (the "Total Share Number") to
be exchanged and the date on which the Holder requests that such Warrant
Exchange occur (the "Notice of Exchange"). The Warrant Exchange shall take
place on the date specified in the Notice of Exchange, or, if later, the
date the Notice of Exchange is received by the Company (the "Exchange
Date"). Certificates for the Warrant Shares issuable upon such Warrant
Exchange and, if applicable, a new Warrant Certificate of like tenor
evidencing the balance of the Warrant Shares remaining subject to the
Holder's Warrant certificate, shall be issued as of the Exchange Date and
delivered to the Holder within three (3) days following the Exchange Date.
In connection with any Warrant Exchange, the Holder's Warrant certificate
shall represent the right to subscribe for and acquire (I) the number of
Warrant Shares (rounded to the next highest integer) equal to (A) the Total
Share Number less (B) the number of Warrant Shares equal to the quotient
obtained by dividing (i) the product of the Total Share Number and the then
current Exercise Price per Warrant Share by (ii) the current Market Price
(as hereafter defined) of a share of Common Stock.
As used herein, the phrase "Market Price" at any date shall be deemed
to be the last reported sale price, or, in case no such reported sale takes
place on such day, the average of the last reported sale prices for the
preceding three 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 as reported in the Nasdaq National Market System, or,
if the Common Stock is not listed or admitted to trading on any national
securities exchange or quoted on the Nasdaq National Market System, the last
reported sale price as furnished by the National Association of Securities
Dealers, Inc. through Nasdaq or similar organization if Nasdaq is no longer
reporting such information, or if the Common Stock is not quoted on Nasdaq,
as determined in good faith by resolution of the Board of Directors of the
Company, based on the best information available to it for the two days
immediately preceding the Exchange Date.
2. Restrictions on Transfer
The Holder acknowledges that he has been advised by the Company that
this Warrant and the shares of Common Stock (the "Warrant Shares") issuable
upon exercise thereof (collectively the "Securities") have not been
registered under the Securities Act of l933, as amended (the "Securities
Act"), that the Warrant is being issued, and the shares issuable upon
exercise of the Warrant will be issued, on the basis of the statutory
exemption provided by section 4(2) of the Securities Act relating to
transactions by an issuer not involving any public offering, and that the
Company's reliance upon this statutory exemption is based in part upon the
representations made by the Holder contained herein. The Holder
acknowledges that he has been informed by the Company of, or is otherwise
familiar with, the nature of the limitations imposed by the Securities Act
and the rules and regulations thereunder on the transfer of securities. In
particular, the Holder agrees that no sale, assignment or transfer of the
Securities shall be valid or effective, and the Company shall not be
required to give any effect to any such sale, assignment or transfer, unless
(i) the sale, assignment or transfer of the Securities is registered under
the Securities Act, and the Company has no obligations or intention to so
register the Securities except as may otherwise be provided herein, or (ii)
the Securities are sold, assigned or transferred in accordance with all the
requirements and limitations of Rule l44 under the Securities Act or such
sale, assignment, or transfer is otherwise exempt from registration under
the Securities Act. The Holder represents and warrants that he has acquired
this Warrant and will acquire the Securities for his own account for
investment and not with a view to the sale or distribution thereof or the
granting of any participation therein, and that he has no present intention
of distributing or selling to others any of such interest or granting any
participation therein. The Holder acknowledges that the securities shall
bear the following legend:
"These securities have not been registered under the Securities
Act of l933. Such securities may not be sold or offered for
sale, transferred, hypothecated or otherwise assigned in the
absence of an effective registration statement with respect
thereto under such Act or an opinion of counsel to the Company
that an exemption from registration for such sale, offer,
transfer, hypothecation or other assignment is available under
such Act."
3. Registration Rights
3.1 The Company shall advise the Holder of this Warrant or of the
Warrant Shares or any then Holder of Warrants or Warrant Shares (such
persons being collectively referred to herein as "Holders") by written
notice at least 30 days prior to the filing by the Company with the
Securities and Exchange Commission of any registration statement under the
Securities Act of l933 (the "Act") covering securities of the Company,
except on Forms S-4 or S-8 (or similar successor form), and upon the request
of any such Holder within ten days after the date of such invoice, include
in any such registration statement such information as may be required to
permit a public offering of the Warrant Shares. The Company shall supply
such number of prospectuses and other documents as the Holder may reasonably
request in order to facilitate the public sale or other disposition of the
Warrant Shares, qualify the Warrant Shares for sale in such states as any
such Holder reasonably designates and do any and all other acts and things
which may be necessary or desirable to enable such Holders to consummate the
public sale or other disposition of the Warrant Shares, and furnish
indemnification in the manner as set forth in Subsection 3.2 of this Section
3. Such Holders shall furnish information and indemnification as set forth
in Subsection 3.2 of this Section 3. For the purpose of the foregoing,
inclusion of the Warrant Shares by the Holder in a Registration Statement
pursuant to this sub-paragraph 3.l under a condition that the offer and/or
sale of such Warrant Shares not commence until a date not to exceed 90 days
from the effective date of such registration statement shall be deemed to be
in compliance with this sub-paragraph 3.l.
3.2 The following provisions of this Section 3 shall also be
applicable to the exercise of the registration rights granted under this
Section 3.l:
(A) The foregoing registration rights shall be contingent on
the Holders furnishing the Company with such appropriate information
(relating to the intentions of such Holders) as the Company shall
reasonably request in writing. Following the effective date of such
registration, the Company shall upon the request of any owner of
Warrants and/or Warrant Shares forthwith supply such number of
prospectuses meeting the requirements of the Act as shall be requested
by such owner to permit such Holder to make a public offering of all
Warrant Shares from time to time offered or sold to such Holder,
provided that such Holder shall from time to time furnish the Company
with such appropriate information (relating to the intentions of such
Holder) as the Company shall request in writing. The Company shall
also use its best efforts to qualify the Warrant Shares for sale in
such states as such Holder shall reasonably designate.
(B) The Company shall bear the entire cost and expense of any
registration of securities initiated by it under Subsection 3.l of
this Section 3 notwithstanding that Warrant Shares subject to this
Warrant may be included in any such registration. Any Holder whose
Warrant Shares are included in any such registration statement
pursuant to this Section 3 shall, however, bear the fees of his own
counsel and any registration fees, transfer taxes or underwriting
discounts or commissions applicable to the Warrant Shares sold by him
pursuant thereto.
(C) The Company shall indemnify and hold harmless each such
Holder and each underwriter, if any, within the meaning of the Act,
who may purchase from or sell for any such Holder any Warrant Shares
from and against any and all losses, claims, damages and liabilities
caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any post-
effective amendment thereto or any registration statement under the
Act or any prospectus included therein required to be filed or
furnished by reason of this Section 3 or caused by any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or alleged untrue
statement or omission or alleged omission based upon information
furnished or required to be furnished in writing to the Company by
such Holder or underwriter expressly for use therein, which
indemnification shall include each person, if any, who controls any
such underwriter within the meaning of such Act; provided, however,
that the Company shall not be obliged so to indemnify any such Holder
or underwriter or controlling person unless such Holder or underwriter
shall at the same time agree to indemnify the Company, its directors,
each officer signing the related registration statement and each
person, if any, who controls the Company within the meaning of such
Act, from and against any and all losses, claims, damages and
liabilities caused by any untrue statement or alleged untrue statement
of a material fact contained in any registration statement or any
prospectus required to be filed or furnished by reason of this Section
3 or caused by any omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading insofar as such losses, claims, damages or liabilities are
caused by any untrue statement or alleged untrue statement or omission
based upon information furnished in writing to the Company by any such
Holder or underwriter expressly for use therein.
(D) The Company may withdraw the registration at any time.
4. Miscellaneous.
4.l All the covenants and agreements made by the Company in this
Warrant shall bind its successors and assigns.
4.2 No recourse shall be had for any claim based hereon or otherwise
in any manner in respect hereof, against any incorporator, stockholder,
officer or director, past, present or future, of the Company or of any
predecessor corporation, whether by virtue of any constitutional provision
or statute or rule of law, or by the enforcement of any assessment or
penalty or in any other manner, all such liability being expressly waived
and released by the acceptance hereof and as part of the consideration for
the issue hereof.
4.3 No course of dealing between the Company and the Holder hereof
shall operate as a waiver of any right of any Holder hereof, and no delay on
the part of the Holder in exercising any right hereunder shall so operate.
4.4 This Warrant may be amended only by a written instrument
executed by the Company and the Holder hereof. Any amendment shall be
endorsed upon this Warrant, and all future Holders shall be bound thereby.
4.5 All communications provided for herein shall be sent, except as
may be otherwise specifically provided, by registered or certified mail: if
to the Holder of this Warrant, to the address shown on the books of the
Company; and if to the Company, to 00 Xxxxx Xxxx, Xxxxxxxx, Xxxxxxx X0X 0X0
Canada, Attention: Office of the President, or to such other address as the
Company may advise the Holder of this Warrant in writing. Notices shall be
deemed given when mailed.
4.6 The provisions of this Warrant shall in all respects be
constructed according to, and the rights and liabilities of the parties
hereto shall in all respects be governed by, the laws of the Province of
Ontario. This Warrant shall be deemed a contract made under the laws of the
Province of Ontario and the validity of this Warrant and all rights and
liabilities hereunder shall be determined under the laws of said Province.
4.7 The headings of the Sections of this Warrant are inserted for
convenience only and shall not be deemed to constitute a part of this
Warrant.
IN WITNESS WHEREOF, THE WIDECOM GROUP, INC. has caused this Warrant to
be executed in its corporate name by its officer, and its seal to be affixed
hereto.
Dated: , 0000
Xxxxxxx, Xxxxxx
THE WIDECOM GROUP, INC.
By:_____________________________
Xxxx Xxxx
President
SUBSCRIPTION FORM
TO: THE WIDECOM GROUP, INC.
00 Xxxxx Xxxx
Xxxxxxxx Xxxx
Xxxxxxx X0X 0X0 XXXXXX
The undersigned Holder hereby irrevocably elects to exercise the right
to purchase shares of Common Stock covered by this Warrant
according to the conditions hereof and herewith makes full payment of the
Exercise Price of such shares.
Kindly deliver to the undersigned a certificate representing the
Shares.
INSTRUCTIONS FOR DELIVERY
Name: _____________________________________________________________
(please typewrite or print in block letters)
Address: __________________________________________________________
Dated: _________________________
Signature _________________________________________________________
