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Exhibit 4.01
COMMON STOCK PURCHASE WARRANT AGREEMENT
THIS AGREEMENT, dated as of this ___ day of ________, 1997, is
between DYNAMIC INTERNATIONAL, LTD., a Nevada corporation (the "Company"),
XXXXXXXXX XXXXXX, INC. (the "Underwriter") and AMERICAN STOCK TRANSFER & TRUST
COMPANY, as Warrant Agent (the "Warrant Agent").
RECITALS
a. The Company is issuing, in connection with a public offering, up
to 1,200,000 Units ("Units"), each consisting of one share of the Company's
common stock, $.001 par value (the "Common Stock"), one Class A Common Stock
Purchase Warrant (the "Class A Warrants") and one Class B Common Stock Purchase
Warrants (the "Class B Warrants" and collectively with the Class A Warrants, the
"Public Warrants" or "Warrants"), not including, in both cases, over-allotments.
b. One Warrant entitles the registered holder to purchase one share
of Common Stock.
c. The Company desires to provide for the issuance of certificates
representing the Warrants.
d. The Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer and exchange of certificates representing the
Warrants and the exercise of the Warrants.
AGREEMENTS
In consideration of the recitals and the mutual agreements set forth
below, and for the purpose of defining the terms and provisions of the Warrants
and the certificates representing the Warrants and the respective rights and
obligations thereunder of the Company, the holders of certificates representing
the Warrants and the Warrant Agent, the parties agree as follows:
i. Definitions. As used herein, the following terms shall have the
following meanings, unless the context shall otherwise require.
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(1) "Common Stock" shall mean common stock of the Company of
any class, whether now or hereafter authorized, which has the right to
participate in the distribution of earnings and assets of the Company without
limit as to amount or percentage, which at the date hereof consists of 50
million shares of authorized Common Stock, $.001 par value per share, and as
further defined in section 8(e) below.
(2) "Warrant Expiration Date" shall mean 5:00 p.m. (New York
City time) on __________, 1999 [18 months from IPO] as to the Class A Warrants
and _________, 2000 [3 years from IPO] as to the Class B Warrants, or if such a
date shall in the State of New York be a holiday or a day on which banks are
authorized to close, then 5:00 p.m. (New York City time) on the next following
day which in the State of New York is not a holiday on which banks are
authorized to close. Unless exercised during the Warrant Exercise Period, the
Warrants will automatically expire. The Warrants may be called for redemption
and the expiration date therefor accelerated, on the terms and conditions set
forth in sections 4(b) and 4(c) of this Agreement. If so called for redemption,
Warrant Certificate holders shall have a period of at least thirty (30) days
after the date of the call notice within which to exercise the Warrants.
However, Warrant Certificate holders will receive the redemption price only if
such certificates are surrendered to the Corporate Office (defined below) within
the redemption period.
(3) "Warrant Exercise Period" shall mean from __________, 1997
[IPO Date] until the Warrant Expiration Date.
(4) "Corporate Office" shall mean the office of the Warrant
Agent (or its successor) at which at any particular time its principal business
is conducted, currently located at 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
(5) "Exercise Date" shall mean the date a certificate
representing a Warrant is surrendered for exercise. "Surrender" for purposes
hereof shall mean in the event of (i) personal delivery by a Registered Holder,
the date it is received by the Warrant Agent, (ii) mailing, the postmark date,
and (iii) delivery by a messenger or similar service the date of dispatch, as
reflected on the delivery receipt.
(6) "Purchase Price" shall mean $6.00 per share for the Class
A Warrants and $10.00 per share for the Class B Warrants, unless such purchase
price has been adjusted as hereinafter provided. Each Warrant is exercisable for
one share of Common Stock upon payment of the Purchase Price at any time during
the Warrant Exercise Period. The Warrants, which are being publicly offered
pursuant to a registration statement and prospectus filed by the Company with
the Securities and Exchange Commission, will trade, initially, on the Nasdaq
SmallCap Market under the symbol _____ after the effective date of such
registration statement.
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(7) "Registered Holder" shall mean the person or persons in
whose name or names any certificates representing the Warrants shall be
registered from time to time on the books maintained by the Warrant Agent
pursuant to section 6.
(8) "Subsidiary" or "Subsidiaries" shall mean any corporation
or corporations, as the case may be, of which stock having ordinary power to
elect a majority of the Board of Directors of such corporation (regardless of
whether or not at the time stock of any other class or classes of such
corporation shall have or may have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned by the Company or
by one or more Subsidiaries, or by the Company and one or more Subsidiaries.
(9) "Transfer Agent" shall mean American Stock Transfer &
Trust Company or its authorized successor.
(10) "Warrant Certificate" shall mean a certificate
representing Warrants.
ii. Warrants and Issuance of Warrant Certificates.
(1) Each Warrant shall entitle the Registered Holder thereof
to purchase one share of Common Stock upon its exercise. The Warrants will be
separately transferable once the Underwriter determines to separate the Units.
(2) Upon closing of the offering, Warrant Certificates
representing an aggregate of not more than 1,200,000 Class A Warrants and
1,200,000 Class B Warrants (or up to 1,380,000 of each class in the event the
Underwriter's over-allotment option is exercised) to purchase an aggregate of
not more than a like number of shares of Common Stock, shall be executed by the
Company and delivered to the Warrant Agent and shall be countersigned, issued
and delivered by the Warrant Agent upon written order of the Company signed by
its President or a Vice President and its Treasurer or an Assistant Treasurer or
its Secretary or Assistant Secretary.
(3) From time to time, up to the Warrant Expiration Date, plus
such additional time as may reasonably be required to perform, accomplish and
complete necessary administrative functions connected with the exercise of the
Warrants, the Warrant Agent, in its capacity as the Company's Transfer Agent,
shall countersign and deliver stock certificates representing an aggregate of
not more than 2,400,000 shares of Common Stock, or up to an aggregate of
2,760,000 in the event the Underwriters over-allotment option is exercised
(subject to adjustment pursuant to section 8 of this Agreement), upon the
exercise of the Warrants pursuant to the terms of this Agreement.
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(4) From time to time, up to the Warrant Expiration Date, the
Warrant Agent shall countersign and deliver Warrant Certificates in required
whole number denominations to the persons entitled thereto in connection with
any transfer or exchange permitted under this Agreement. Except as provided in
section 7 hereof, no Warrant Certificates shall be issued except (i) Warrant
Certificates initially issued hereunder, (ii) upon the exercise of any Warrants,
to evidence the unexercised Warrants held by the exercising Registered Holder
and (iii) upon any transfer or exchange of Warrants.
iii. Form and Execution of Warrant Certificates.
(1) The Warrant Certificates shall be substantially in the
form annexed hereto as Exhibit A (the provisions of which are hereby
incorporated herein) and may have such letters, numbers or other marks of
identification or designation and such legends, summaries or endorsements
printed, lithographed or engraved thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or automated
quotation system on which the Warrants may be listed, or to conform to usage.
The Warrant Certificates shall be dated the date of issuance thereof (whether
upon initial issuance, transfer, exchange or in lieu of mutilated, lost, stolen
or destroyed Warrant Certificates). Warrant Certificates shall be numbered
serially with the letters, "DIW" on Warrant Certificates of all denominations.
(2) Warrant Certificates shall be executed on behalf of the
Company by its President or any Vice President and its Treasurer or an Assistant
Treasurer or its Secretary or an Assistant Secretary, by manual signatures or by
facsimile signatures printed thereon. Warrant Certificates shall be manually
countersigned by the Warrant Agent and shall not be valid for any purpose unless
so countersigned. In case any officer of the Company who shall have signed any
of the Warrant Certificates shall cease to hold such position with the Company
before the date of issuance of the Warrant Certificates or before
countersignature by the Warrant Agent and issue and delivery thereof, such
Warrant Certificates, nevertheless, may be countersigned by the Warrant Agent,
issued and delivered with the same force and effect as though the person who
signed such Warrant Certificates had not ceased to be such officer of the
Company.
iv. Exercise; Redemption.
(1) Each Warrant represented by a Warrant Certificate may be
exercised during the Warrant Exercise Period, upon the terms and subject to the
conditions set forth herein and in the Warrant Certificate. A Warrant shall be
deemed to have been exercised immediately prior to the close of business on the
Exercise Date,
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provided that the Warrant Certificate representing such Warrant, with the
appropriate exercise form thereon duly executed by the Registered Holder thereof
or his or her attorney duly authorized in writing, together with payment in
cash, or by official bank or certified check made payable to the Company, of an
amount equal to the Purchase Price has been timely received by the Warrant
Agent. Payment must be made in United Sates funds. The person entitled to
receive the securities deliverable upon such exercise shall be treated for all
purposes as the holder of such securities as of the close of business on the
Exercise Date. The Company shall not be obligated to issue any fractional share
interests or fractional warrant interests upon the exercise of any Warrants.
Computations resulting in the issuance of fractional shares be rounded to the
nearest whole share. As soon as practicable on or after the Exercise Date and in
any event within 10 days after having received authorization from the Company,
the Warrant Agent, on behalf of the Company, shall cause to be issued to the
person or persons entitled to receive the same a certificate or certificates for
the shares of Common Stock, and the Warrant Agent shall deliver the same to the
person or persons entitled thereto. No adjustment shall be made in respect of
cash dividends on any shares delivered upon exercise of any Warrant. Upon the
exercise of any Warrants, the Warrant Agent shall promptly notify the Company in
writing of such fact and of the number of securities delivered upon such
exercise and shall cause all payments of an amount in cash or check made payable
to the order of the Company, equal to the Purchase Price, less any Warrant
solicitation fee, as hereinafter described.
(2) If at the time of exercise of any Warrant after
___________, 1998 [One Year After IPO] (i) the market price of the Company's
Common Stock is equal to or greater than the then Purchase Price of the Warrant,
(ii) the exercise of the Warrant is solicited by the underwriter at such time
while the Underwriter is a member of the National Association of Securities
Dealers, Inc. ("NASD"), (iii) the Warrant is not held in a discretionary
account, (iv) disclosure of the compensation arrangement is made in documents
provided to the holders of the Warrants; and (v) the solicitation of the
exercise of the Warrant is not in violation of Rule 10b-6 (as such rule or any
successor rule may be in effect as of such time of exercise) promulgated under
the Securities Exchange Act of 1934, then the Underwriter shall be entitled to
receive from the Company upon exercise of each of the Warrant(s) so exercised a
fee of eight percent (8%) of the aggregate price of the Warrants so exercised
(the "Exercise Fee"). The procedures for payment of the warrant solicitation fee
are set forth in subparagraph (c) below.
(3) (1) Within five (5) days of the last day of each month
commencing with ________ 1998 [one year anniversary of IPO month], the Warrant
Agent will notify the Underwriter of each Warrant Certificate which has been
properly completed for exercise by holders of Warrants during the last month.
The Company and Warrant Agent shall determine, in their sole and absolute
discretion, whether a Warrant Certificate has been properly completed. The
Warrant Agent will provide the Underwriter
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with such information, in connection with the exercise of each Warrant, as the
Underwriter shall reasonably request.
(2) The Company hereby authorizes and instructs the Warrant
Agent to deliver to the Underwriter the Exercise Fee promptly after receipt by
the Warrant Agent from the Company of a check payable to the order of the
Underwriter in the amount of the Exercise Fee. The Warrant Agent shall not issue
the shares of Common Stock issuable upon exercise of the Warrants until receipt
and forwarding of such check to the Underwriter. In the event that an Exercise
Fee is paid to the Underwriter with respect to a Warrant which the Company or
the Warrant Agent determines is not properly completed for exercise or in
respect of which the Underwriter is not entitled to an Exercise Fee, the
Underwriter will promptly return such Exercise Fee to the Warrant Agent which
shall forthwith return such fee to the Company.
The Underwriter and the Company may at any time, after __________,
1998 [one year anniversary of IPO month], and during business hours, examine the
records of the Warrant Agent, including its ledger of original Warrant
certificates returned to the Warrant Agent upon exercise of Warrants.
Notwithstanding any provision to the contrary, the provisions of this paragraph
and of subparagraph (b) above may not be modified, amended or deleted without
the prior written consent of the Underwriter.
(4) The Warrants may be redeemed at any time during the
exercise period by the Company, on not less than 30 or more than 60 days' prior
written notice to all Registered Holders of the Warrants, at a redemption price
of $.01 per Warrant, if the last reported sale price, or if not published, the
average closing bid price of the Common Stock as reported by the National
Association of Securities Dealers Automated Quotation System (NASDAQ) (or a
national securities exchange or the National Quotation Bureau or the OTC
Bulletin Board, as the case may be) is at least $9.00 for the Class A Warrants
and $15.00 for the Class B Warrants for any 10 trading days within a period of
30 consecutive trading days ending five (5) days prior to the date of the
written notice of redemption. All Warrants must be redeemed if any are redeemed.
(5) If the Company calls the Warrants for redemption, the
price at which such Warrants are to be redeemed shall not be paid to any Warrant
holder unless the certificates representing such Warrants are surrendered to the
Corporate Office within the redemption period specified in the Company's notice
to Registered Holders. At the end of any such redemption period respecting
Warrants called for redemption, any Warrants not exercised or tendered for
redemption shall expire and the certificate(s) therefor shall become void.
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v. Reservation of Shares; Listing; Payment of Taxes, Etc.
(1) The Company covenants that it will at all times reserve
and keep available out of its authorized Common Stock, solely for the purpose of
issue upon exercise of Warrants, such number of shares of Common Stock as shall
then be issuable upon the exercise of all outstanding Warrants. The Company
covenants that all shares of Common Stock which shall be issuable upon exercise
of Warrants shall be duly and validly issued any fully paid and nonassessable
and free from all taxes, liens and charges with respect to the issue thereof,
and that upon issuance such shares shall be listed on each national securities
exchange or automated quotation system, if any, on which the other shares of
outstanding Common Stock of the Company are then listed.
(2) If any Common Stock reserved for issuance upon exercise of
Warrants hereunder requires registration with or approval of any governmental
authority under any federal or state law, before such securities may be validly
issued or delivered upon such exercise, then the Company covenants that it will
in good faith and as expeditiously as possible endeavor to secure such
registration or approval, as the case may be; provided, however, that the
Company need not endeavor to seek such registration or approval in a state in
which the Warrants were not sold by the Company pursuant to the registration
statement unless an exemption from registration under such state's laws is
available; provided, further, that Warrants may not be exercised by, or shares
of Common Stock issued to, any Registered Holder in any state in which such
exercise would be unlawful.
(3) The Company shall pay all documentary, stamp or similar
taxes and other governmental charges that may be imposed with respect to the
issuance of Warrants, or the issuance or delivery of any shares upon exercise of
Warrants; provided, however, that if shares of Common Stock are to be delivered
in a name other than the name of the Registered Holder of the Warrant
Certificate representing any Warrant being exercised, then no such delivery
shall be made unless the person requesting the same has paid to the Warrant
Agent the amount of transfer taxes or charges incident thereto, if any.
(4) The Warrant Agent, unless it is acting as such, is hereby
irrevocably authorized to requisition the Company's Transfer Agent from time to
time for certificates representing shares of Common Stock required upon exercise
of the Warrants, and the Company will authorize its Transfer Agent to comply
with all such requisitions. The Company will file with the Warrant Agent a
statement setting forth the name and address of its Transfer Agent for shares of
Common Stock or other capital stock issuable upon exercise of the Warrants and
of each successor Transfer Agent.
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vi. Exchange and Registration of Transfer.
(1) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants or may be
transferred in whole or in part. Warrant Certificates to be so exchanged shall
be surrendered to the Warrant Agent at its Corporate Office, accompanied by an
Assignment, when necessary, and the Company shall execute and the Warrant Agent
shall countersign, issue and deliver in exchange therefor the Warrant
Certificate(s) which the Registered Holder shall be entitled to receive.
(2) The Warrant Agent shall keep at such office, books in
which, subject to such reasonable regulations as it may prescribe, it shall
register Warrant Certificates and the transfer thereof. Upon due presentment for
registration of transfer of any Warrant Certificate at such office, the Company
shall execute and the Warrant Agent shall issue and deliver to the transferee or
transferees a new Warrant Certificate or Certificates representing an equal
aggregate number of Warrants.
(3) With respect to all Warrant Certificates presented for
registration or transfer, or for exchange or exercise, the subscription form on
the reverse thereof shall be duly endorsed, or be accompanied by a written
instrument or instruments of transfer and subscription, in form satisfactory to
the Company and the Warrant Agent, duly executed by the Registered Holder
thereof or his or her attorney duly authorized in writing.
(4) The Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed upon any
exchange, registration or transfer of any Warrant Certificates.
(5) All Warrant Certificates surrendered for exercise or for
exchange in case of mutilated Warrant Certificates shall be promptly canceled by
the Warrant Agent and thereafter retained by the Warrant Agent until termination
of the agency.
(6) Prior to due presentment for registration of transfer
thereof the Company and the Warrant Agent may deem and treat the Registered
Holder of any Warrant Certificate as the absolute owner thereof and of each
Warrant represented thereby (notwithstanding any notations of ownership or
writing thereon made by anyone other than the Company or the Warrant Agent) for
all purposes and shall not be affected by any notice to the contrary.
vii. Loss or Mutilation. Upon receipt by the Company and the Warrant
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Agent of evidence satisfactory to them of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate and (in the case of loss,
theft or destruction) of indemnity satisfactory to them, and (in the case of
mutilation) upon surrender and cancellation thereof, the Company shall execute
and the Warrant Agent shall countersign and deliver a new Warrant Certificate
representing an equal aggregate number of Warrants. Applicants for a substitute
Warrant Certificate shall also comply with such other reasonable regulations and
pay such other reasonable charges as the Warrant Agent may prescribe.
viii. Adjustments to Exercise Price and Number of Securities.
(1) Computation of Adjusted Exercise Price. Except as
hereinafter provided, in case the Company shall at any time after the date
hereof issue or sell any shares of Common Stock (other than the issuances or
sales referred to in subparagraph (g) of this section 8), including shares held
in the Company's treasury and shares of Common Stock issued upon the exercise of
any options, rights or warrants to subscribe for shares of Common Stock and
shares of Common Stock issued upon the direct or indirect conversion or exchange
of securities for shares of Common Stock, for a consideration per share less
than the Purchase Price in effect immediately prior to the issuance or sale of
such shares, or without consideration, then forthwith upon such issuance or
sale, the Purchase Price shall (until another such issuance or sale) be reduced
to the price (calculated to the nearest full cent) equal to the quotient derived
by dividing (i) an amount equal to the sum of (a) the total number of shares of
Common Stock outstanding immediately prior to the issuance or sale of such
shares, multiplied by the Purchase Price in effect immediately prior to such
issuance or sale, and (b) the aggregate of the amount of all consideration, if
any, received by the Company upon such issuance or sale, by (ii) the total
number of shares of Common Stock outstanding immediately after such issuance or
sale; provided, however, that in no event shall the Purchase Price be adjusted
pursuant to this computation to an amount in excess of the Purchase Price in
effect immediately prior to such computation, except in the case of a
combination of outstanding shares of Common Stock, as provided by subparagraph
(c) of this section 8.
For the purposes of any computation to be made in accordance with
this subparagraph (a), the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common
Stock for a consideration part or all of which shall be cash, the amount of the
cash consideration therefor shall be deemed to be the amount of cash received by
the Company for such shares (or, if shares of Common Stock are offered by the
Company for subscription, the subscription price, or, if either of such
securities shall be sold to underwriters or dealers for public offering without
a subscription offering, the initial public offering price) before deducting
therefrom any compensation paid or discount allowed
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in the sale, underwriting or purchase thereof by underwriters or dealers or
others performing similar services, or any expenses incurred in connection
therewith.
(ii) In case of the issuance or sale (otherwise than as
a dividend or other distribution on any stock of the Company) of shares of
Common Stock for a consideration part or all of which shall be other than cash,
the amount of the consideration therefor other than cash shall be deemed to be
the value of such consideration as determined in good faith by the Board of
Directors of the Company and shall include any amounts payable to security
holders or any affiliates thereof, including without limitation, pursuant to any
employment agreement, royalty, consulting agreement, covenant not to compete,
earnout or contingent payment right or similar arrangement, agreement or
understanding, whether oral or written; all such amounts being valued for the
purposes hereof at the aggregate amount payable thereunder, whether such
payments are absolute or contingent, and irrespective of the period or
uncertainty of payment, the rate of interest, if any, or the contingent nature
thereof.
(iii) Shares of Common Stock issuable by way of dividend
or other distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the day following the record
date for the determination of shareholders entitled to receive such dividend or
other distribution and shall be deemed to have been issued without
consideration.
(iv) The reclassification of securities of the Company
other than shares of Common Stock into securities including shares of Common
Stock shall be deemed to involve the issuance of such shares of Common Stock for
a consideration other than cash immediately prior to the close of business on
the date fixed for the determination of security holders entitled to receive
such shares, and the value of the consideration allocable to such shares of
Common Stock shall be determined as provided in subparagraph (a) of this section
8.
(v) The number of shares of Common Stock at any one time
outstanding shall include the aggregate number of shares issued or issuable
(subject to readjustment upon the actual issuance thereof) upon the exercise of
options, rights, warrants and upon the conversion or exchange of convertible or
exchangeable securities.
(2) Options, Rights, Warrants and Convertible and Exchangeable
Securities. In case the Company shall at any time after the date hereof issue
options, rights or warrants to subscribe for shares of Common Stock, or issue
any securities convertible into or exchangeable for shares of Common Stock, for
a consideration per share less than the Purchase Price in effect immediately
prior to the issuance of such options, rights or warrants, or such convertible
or exchangeable securities, or without consideration, the Purchase Price in
effect immediately prior to the
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issuance of such options, rights or warrants, or such convertible or
exchangeable securities, as the case may be, shall be reduced to a price
determined by making a computation in accordance with the provisions of
subparagraph (a) of this section 8., provided that:
(i) The aggregate maximum number of shares of Common
Stock, as the case may be, issuable under such options, rights or warrants shall
be deemed to be issued and outstanding at the time such options, rights or
warrants were issued, and for a consideration equal to the minimum purchase
price per share provided for in such options, rights or warrants at the time of
issuance, plus the consideration (determined in the same manner as consideration
received on the issue or sale of shares in accordance with the terms of the
Warrants), if any, received by the Company for such options, rights or warrants.
(ii) The aggregate maximum number of shares of Common
Stock issuable upon conversion or exchange of any convertible or exchangeable
securities shall be deemed to be issued and outstanding at the time of issuance
of such securities, and for a consideration equal to the consideration
(determined in the same manner as consideration received on the issue or sale of
shares of Common Stock in accordance with the terms of the Warrants) received by
the Company for such securities, plus the minimum consideration, if any,
receivable by the Company upon the conversion or exchange thereof.
(iii) If any change shall occur in the price per share
provided for in any of the options, rights or warrants referred to in
subparagraph (i) of section 8(b), or in the price per share at which the
securities referred to in subparagraph (ii) of this section 8(b) are convertible
or exchangeable, such options, rights or warrants or conversion or exchange
rights, as the case may be, shall be deemed to have expired or terminated on the
date when such price change became effective in respect of shares not
theretofore issued pursuant to the exercise or conversion or exchange thereof,
and the Company shall be deemed to have issued upon such date new options,
rights or warrants or convertible or exchangeable securities at the new price in
respect of the number of shares issuable upon the exercise of such options,
rights or warrants or the conversion or exchange of such convertible or
exchangeable securities, provided, however, in no event shall the adjustment
provide the Holder with any greater rights arising from consecutive adjustments
than if the last adjustment occurred initially.
(3) Subdivision and Combination. In case the Company shall at
any time subdivide or combine the outstanding shares of Common Stock, the
Purchase Price shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination.
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(4) Adjustment in Number of Securities. Upon each adjustment
of the Purchase Price pursuant to the provisions of this section 8, the number
of securities issuable upon the exercise at the adjusted Purchase Price of each
Warrant shall be adjusted to the nearest full amount by multiplying a number
equal to the Purchase Price in effect immediately prior to such adjustment by
the number of securities issuable upon exercise of the Warrants immediately
prior to such adjustment and dividing the product so obtained by the adjusted
Purchase Price.
(5) 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 Certificate of Incorporation of the Company as may be
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. In the event that the Company shall after the date hereof issue
securities with greater or superior voting rights than the shares of Common
Stock outstanding as of the date hereof, the Registered Holder, at its option,
may receive upon exercise of any Warrant either shares of Common Stock or a like
number of such securities with greater or superior voting rights.
(6) Merger or Consolidation. In case of any consolidation of
the Company with, or merger 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 Registered Holder a supplemental warrant agreement providing that the holder
of each Warrant then outstanding or to be outstanding shall have the right
thereafter (until the expiration of such Warrant) to receive, upon exercise of
such 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 of the Company for which such Warrant might have been
exercised immediately prior to such consolidation, merger, sale or transfer.
Such supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in this section 8. The above provision of
this subsection shall similarly apply to successive consolidations or mergers.
(7) No Adjustment of Purchase Price in Certain Cases. No
adjustment of the Purchase Price shall be made:
(i) Upon the issuance or sale of the Warrants, the
shares issuable upon the exercise of the Warrants; the securities issuable upon
the exercise of the Representative's warrants, and the shares of Common Stock
issuable upon the exercise of any of them;
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(ii) If the amount of said adjustment shall be less than
two cents (2(cents)) per security, 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 (2(cents)) per security; or
(iii) Upon the issuance of shares of Common Stock
pursuant to a Bonus Agreement between the Company and Xxxxxx Xxxxxxxx.
(h) Dividends and Other Distributions. In the event that the
Company shall at any time prior to the exercise of all Warrants fix a record
date for the determination of stockholders entitled to receive (including any
such distribution made to the stockholders of the Company in connection with
consolidation or merger in which the Company is the continuing corporation in a
distribution to all holders of Common Stock) evidence of its indebtedness, cash,
or assets (other than distributions and dividends payable in shares of Common
Stock), or rights, options,or warrants to subscribe for or purchase shares of
Common Stock, or securities convertible into, or exchangeable for, shares of
Common Stock in a distribution to all holders of Common Stock, then, in each
case, the Purchase Price in effect at the time of such record date shall be
adjusted by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the market price per
share of Common Stock on such record date, less the fair market value (as
determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest error) of the portion of the
evidence of indebtedness or assets so to be distributed, or such rights,
options, or warrants, or convertible or exchangeable securities, or the amount
of cash, applicable to one share of Common Stock, and the denominator of which
shall be the market price per share of Common Stock on such record date. Such
adjustment shall be made successively whenever any event listed above shall
occur and become effective at the close of business on such record date.
ix. Concerning the Warrant Agent.
(1) The Warrant Agent acts hereunder as agent and in a
ministerial capacity for the Company, and its duties shall be determined solely
by the provisions hereof. The Warrant Agent shall not, by issuing and delivering
Warrant Certificates or by any other act hereunder, be deemed to make any
representations as to the validity or value or authorization of the Warrant
Certificates or the Warrants represented thereby or of any securities or other
property delivered upon exercise of any Warrant or whether any stock issued upon
exercise of any Warrant is fully paid and nonassessable.
(2) The Warrant Agent shall not at any time (i) be liable for
any recital or statement of fact contained herein or for any action taken,
suffered or omitted
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by it in reliance on any Warrant Certificate or other document or instrument
believed by it in good faith to be genuine and to have been signed or presented
by the proper party or parties, (ii) be responsible for any failure on the part
of the Company to comply with any of its covenants and obligations contained in
this Agreement or in any Warrant Certificate, or (iii) be liable for any act or
omission in connection with this Agreement except for its own negligence or
willful misconduct.
(3) The Warrant Agent may at any time consult with counsel for
the Company and shall incur no liability or responsibility for any action taken,
suffered or omitted by it in good faith in accordance with the opinion or advice
of such counsel.
(4) Any notice, statement, instruction, request, direction,
order or demand of the Company shall be sufficiently evidenced by an instrument
signed by its President, a Vice President, its Treasurer, an Assistant
Treasurer, its Secretary, or an Assistant Secretary (unless other evidence in
respect thereof is herein specifically prescribed). The Warrant Agent shall not
be liable for any action taken, suffered or omitted by it in accordance with
such notice, statement, instruction, request, direction, order or demand.
(5) The Company agrees to pay the Warrant Agent the usual and
customary compensation it normally receives for its services of this nature and
to reimburse it for its reasonable expenses hereunder; it further agrees to
indemnify the Warrant Agent and save it harmless against any and all losses,
expenses and liabilities, including judgments, costs and counsel fees, for
anything done or omitted by the Warrant Agent in the execution of its duties and
powers hereunder except those arising as a result of the Warrant Agent's
negligence or willful misconduct.
(6) The Warrant Agent may resign its duties and be discharged
from all further duties and liabilities hereunder (except liabilities arising as
a result of the Warrant Agent's own negligence or willful misconduct), after
giving 30 days' prior written notice to the Company. At least 15 days prior to
the date such resignation is to become effective, the Warrant Agent shall cause
a copy of such notice of resignation to be mailed to each Registered Holder at
the Company's expense. Upon such resignation the Company shall appoint in
writing a new warrant agent. If the Company shall fail to make such appointment
within a period of 30 days after it has been notified in writing of such
resignation by the resigning Warrant Agent, then any Registered Holder may apply
in any court of competent jurisdiction for the appointment of a new warrant
agent. After acceptance in writing of such appointment by the new warrant agent
is received by the Company, such new warrant agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
herein as the warrant agent, without any further assurance, conveyance, act or
deed; provided, however, that if for any reason it shall be necessary or
expedient to execute and deliver any further assurance, conveyance, act or deed,
the same shall be done at the expense of the
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Company and shall be legally and validly executed and delivered by the resigning
Warrant Agent. Not later than the effective date of any such appointment the
Company shall file notice thereof with the resigning Warrant Agent and shall
forthwith cause a copy of such notice to be mailed to each Registered Holder.
(7) Any corporation into which the Warrant Agent or any new
warrant agent may be converted or merged or any corporation resulting from any
consolidation to which the Warrant Agent or any new warrant agent shall be a
party or any corporation succeeding to the corporate trust business of the
Warrant Agent shall be a successor warrant agent under this Agreement without
any further act, provided that such corporation is eligible for appointment as
successor to the Warrant Agent under the provisions of the preceding paragraph.
Any such successor warrant agent shall promptly cause notice of its succession
as warrant agent to be mailed, at its expense, to the Company and to each
Registered Holder.
(8) The Warrant Agent, its subsidiaries and affiliates, and
any of its or their officers or directors, may buy and hold or sell Warrants or
other securities of the Company and otherwise deal with the Company in the same
manner and to the same extent and with like effect as though it were not the
Warrant Agent. Nothing herein shall preclude the Warrant Agent from acting in
any other capacity for the Company or for any other legal entity.
x. Modification of Agreement. The Warrant Agent and the Company may
by supplemental agreement make any changes or corrections in this Agreement (a)
that they shall deem appropriate to cure any ambiguity or to correct any
defective or inconsistent provision or manifest mistake or error herein
contained; or (b) that they may deem necessary or desirable and which shall not
adversely affect the interests of the holders of Warrant Certificates; provided,
however, that this Agreement shall not otherwise be modified, supplemented or
altered in any respect except with the consent in writing of the Registered
Holders representing not less than 50% of the Warrants then outstanding;
provided, further, that no change shall be made in the terms or provisions of
any Warrant which would adversely affect such registered Holders, other than
such changes as are expressly permitted by this Agreement as originally
executed, without the consent in writing of the Registered Holders of the
Warrants affected.
xi. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
made when mailed, first-class postage prepaid, when delivered to a telegraph
office for transmission, or when delivered to any commercial overnight air
courier service or other commercial messenger or delivery service which
regularly retains its receipts; if to a Registered Holder, at the address of
such holder as shown on the registry books maintained by the Warrant Agent; if
to the Company at 00 Xxxxxx Xxxxxx, Xxxxxxxx, Xxx Xxxx 00000, Attention:
President, or at such other address as may have been furnished to the Warrant
Agent
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in writing by the Company, with a copy to the Company's counsel, Xxxxxx,
Xxxxxxxx & Xxxx, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxx
X. Xxxxxxxxx, Esq.; and, if to the Warrant Agent, at the Corporate Office.
xii. Governing Law; Section Headings. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
Section headings in this Agreement appear for convenience of reference only and
shall not be used in any interpretation of this Agreement.
xiii. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Company, the Warrant Agent and their respective successors
and assigns, and the Registered Holders from time to time of Warrant
Certificates or any of them. Nothing in this Agreement shall be construed to
confer any right, remedy or claim upon any other person.
xiv. Counterparts. This Agreement may be executed in counterparts,
which taken together shall constitute a single document.
DYNAMIC INTERNATIONAL, LTD.
BY:
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AMERICAN STOCK TRANSFER & TRUST
COMPANY
BY:
-----------------------------
Authorized Officer
XXXXXXXXX XXXXXX, INC.
BY:
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