EXHIBIT 4.5
FORM OF
WARRANT AGREEMENT
BETWEEN
CONVERTED ORGANICS INC.
AND
____________________, INC.
DATED AS OF ___________ __, 2006
FORM OF
WARRANT AGREEMENT
This Agreement, dated as of ____________ __, 2006, is between Converted
Organics Inc., a Delaware corporation (the "Company") and ____________________,
a ______________ corporation, (the "Warrant Agent").
The Company, at or about the time that it is entering into this Agreement,
proposes to issue and sell to public investors up to ___________ Units (together
with the additional units issuable as provided herein, the "Units"). Each Unit
consists of one share of common stock, $0.0001 par value, of the Company, one
Class A Warrant and one Class B Warrant. The Class A Warrants and the Class B
Warrants are herein collectively referred to as the "Warrants." Each Warrant is
exercisable to purchase one share of Common Stock upon the terms and conditions
and subject to adjustment in certain circumstances, all as set forth in this
Agreement.
The Company proposes to issue to the Representative of the Underwriters in
the public offering of Units referred to above warrants to purchase up to
________ additional Units.
The Company wishes to retain the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, transfer, exchange and replacement of the certificates evidencing the
Warrants to be issued under this Agreement (the "Warrant Certificates") and the
exercise of the Warrants;
The Company and the Warrant Agent wish to enter into this Agreement to set
forth the terms and conditions of the Warrants and the rights of the holders
thereof ("Warrantholders") and to set forth the respective rights and
obligations of the Company and the Warrant Agent. Each Warrantholder is an
intended beneficiary of this Agreement with respect to the rights of
Warrantholders herein.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
1. Appointment of Warrant Agent. The Company appoints the Warrant Agent to
act as agent for the Company in accordance with the instructions in this
Agreement and the Warrant Agent accepts such appointment.
2. Date, Denomination and Execution of Warrant Certificates.
(a) The Warrant Certificates (and the Form of Election to Purchase and
the Form of Assignment to be printed on the reverse thereof) shall be in
registered form only and shall be substantially of the tenor and purport recited
in Exhibit A hereto with respect to the Class A Warrants and Exhibit B hereto
with respect to the Class B Warrants, 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 on
which the Common Stock or the Warrants may be listed or
1
any automated quotation system, or to conform to usage. Each Class A Warrant
Certificate shall entitle the registered holder thereof, subject to the
provisions of this Agreement and of the Warrant Certificate, to purchase, on or
after ____________, 2006 and on or before the close of business on _________,
2011 (the "Expiration Date"), one fully paid and non-assessable share of Common
Stock for each Warrant evidenced by such Warrant Certificate for $_____. Each
Class B Warrant Certificate shall entitle the registered holder thereof, subject
to the provisions of this Agreement and of the Warrant Certificate, to purchase,
on or after the Expiration Date, one fully paid and non-assessable share of
Common Stock for each Warrant evidenced by such Warrant Certificate for $_____.
The exercise price of the Warrants (the "Exercise Price") is subject to
adjustments as provided in Section 6 hereof. Each Warrant Certificate issued as
a part of a Unit offered to the public as described in the recitals, above,
shall be dated _____________, 2006; each other Warrant Certificate shall be
dated the date on which the Warrant Agent receives valid issuance instructions
from the Company or a transferring holder of a Warrant Certificate or, if such
instructions specify another date, such other date.
(b) For purposes of this Agreement, the term "close of business" on
any given date shall mean 5:00 p.m., Eastern time, on such date; provided,
however, that if such date is not a business day, it shall mean 5:00 p.m.,
Eastern time, on the next succeeding business day. For purposes of this
Agreement, the term "business day" shall mean any day other than a Saturday,
Sunday, or a day on which banking institutions in New York, New York or in the
State in which the Warrant Agent maintains the principal office in which it
conducts business related to the Warrants are authorized or obligated by law to
be closed.
(c) Each Warrant Certificate shall be executed on behalf of the
Company by the Chairman of the Board or its President or a Vice President,
either manually or by facsimile signature printed thereon, and have affixed
thereto the Company's seal or a facsimile thereof which shall be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. Each Warrant Certificate 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
Warrant Certificate shall cease to be such officer of the Company before
countersignature by the Warrant Agent and issue and delivery thereof by the
Company, such Warrant Certificate, 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 Certificate had not ceased to be such officer of
the Company.
3. Subsequent Issue of Warrant Certificates. Subsequent to their original
issuance, no Warrant Certificates shall be reissued except (i) Warrant
Certificates issued upon transfer thereof in accordance with Section 4 hereof,
(ii) Warrant Certificates issued upon any combination, split-up or exchange of
Warrant Certificates pursuant to Section 4 hereof, (iii) Warrant Certificates
issued in replacement of mutilated, destroyed, lost or stolen Warrant
Certificates pursuant to Section 5 hereof, (iv) Warrant Certificates issued upon
the partial exercise of Warrant Certificates pursuant to Section 7 hereof, and
(v) Warrant Certificates issued to reflect any adjustment or change in the
Exercise Price or the number or kind of shares purchasable thereunder pursuant
to Section 22 hereof. The Warrant Agent is hereby irrevocably authorized to
countersign and deliver, in accordance with the provisions of said Sections 4,
5, 7 and 22, the new Warrant Certificates required for purposes thereof, and the
Company, whenever
2
required by the Warrant Agent, will supply the Warrant Agent with Warrant
Certificates duly executed on behalf of the Company for such purposes.
4. Transfers and Exchanges of Warrant Certificates.
(a) The Warrant Agent will keep or cause to be kept books for
registration of ownership and transfer of the Warrant Certificates issued
hereunder. Such registers shall show the names and addresses of the respective
holders of the Warrant Certificates and the class and number of Warrants
evidenced by each such Warrant Certificate.
(b) The Warrant Agent shall, from time to time, register the transfer
of any outstanding Warrants upon the books to be maintained by the Warrant Agent
for that purpose, upon surrender of the Warrant Certificate evidencing such
Warrants, with the Form of Assignment duly filled in and executed with such
signature guaranteed by a banking institution or NASD member and such supporting
documentation as the Warrant Agent or the Company may reasonably require, to the
Warrant Agent at its stock transfer office in __________, ___________ at any
time on or before the Expiration Date of such Warrant, and upon payment to the
Warrant Agent for the account of the Company of an amount equal to any
applicable transfer tax. Payment of the amount of such tax may be made in cash,
or by certified or official bank check, payable in lawful money of the United
States of America to the order of the Company.
(c) Upon receipt of a Warrant Certificate, with the Form of Assignment
duly filled in and executed, accompanied by payment of an amount equal to any
applicable transfer tax, the Warrant Agent shall promptly cancel the surrendered
Warrant Certificate and countersign and deliver to the transferee a new Warrant
Certificate for the number of full Warrants of the same class transferred to
such transferee; provided, however, that in case the registered holder of any
Warrant Certificate shall elect to transfer fewer than all of the Warrants
evidenced by such Warrant Certificate, the Warrant Agent in addition shall
promptly countersign and deliver to such registered holder a new Warrant
Certificate or Certificates for the number of full Warrants not so transferred.
(d) Any Warrant Certificate or Certificates may be exchanged at the
option of the holder thereof for another Warrant Certificate or Certificates of
different denominations, of like tenor and representing in the aggregate the
same class and number of Warrants, upon surrender of such Warrant Certificate or
Certificates, with the Form of Assignment duly filled in and executed, to the
Warrant Agent, at any time or from time to time after the close of business on
the date hereof and prior to the close of business on the Expiration Date
relating to such Warrant. The Warrant Agent shall promptly cancel the
surrendered Warrant Certificate and deliver the new Warrant Certificate pursuant
to the provisions of this Section.
5. Mutilated, Destroyed, Lost or Stolen Warrant Certificates. Upon receipt
by the Company and the Warrant Agent of evidence reasonably satisfactory to them
of the loss, theft, destruction or mutilation of any Warrant Certificate, and in
the case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to them of all reasonable expenses
incidental thereto, and, in the case of mutilation, upon surrender and
3
cancellation of the Warrant Certificate, the Warrant Agent shall countersign and
deliver a new Warrant Certificate of like tenor for the same class and number of
Warrants.
6. Adjustments of Number and Kind of Shares Purchasable and Exercise Price.
The number and kind of securities or other property purchasable upon exercise of
a Warrant shall be subject to adjustment from time to time upon the occurrence,
after the date hereof, of any of the following events:
(a) In case the Company shall (1) pay a dividend in, or make a
distribution of, shares of capital stock on its outstanding Common Stock, (2)
subdivide its outstanding shares of Common Stock into a greater number of such
shares or (3) combine its outstanding shares of Common Stock into a smaller
number of such shares, the total number of shares of Common Stock purchasable
upon the exercise of each Warrant outstanding immediately prior thereto shall be
adjusted so that the holder of any Warrant Certificate thereafter surrendered
for exercise shall be entitled to receive at the same aggregate Exercise Price
the number of shares of capital stock (of one or more classes) which such holder
would have owned or have been entitled to receive immediately following the
happening of any of the events described above had such Warrant been exercised
in full immediately prior to the record date with respect to such event. Any
adjustment made pursuant to this Subsection shall, in the case of a stock
dividend or distribution, become effective as of the record date therefor and,
in the case of a subdivision or combination, be made as of the effective date
thereof. If, as a result of an adjustment made pursuant to this Subsection, the
holder of any Warrant Certificate thereafter surrendered for exercise shall
become entitled to receive shares of two or more classes of capital stock of the
Company, the Board of Directors of the Company (whose determination shall be
conclusive and shall be evidenced by a Board resolution filed with the Warrant
Agent) shall determine the allocation of the adjusted Exercise Price between or
among shares of such classes of capital stock.
(b) In the event of a capital reorganization or a reclassification of
the Common Stock (except as provided in Subsection (a) above or Subsection (d)
below), any Warrantholder, upon exercise of Warrants, shall be entitled to
receive, in substitution for the Common Stock to which he would have become
entitled upon exercise immediately prior to such reorganization or
reclassification, the shares (of any class or classes) or other securities or
property of the Company (or cash) that he would have been entitled to receive at
the same aggregate Exercise Price upon such reorganization or reclassification
if such Warrants had been exercised immediately prior to the record date with
respect to such event; and in any such case, appropriate provision (as
determined by the Board of Directors of the Company, whose determination shall
be conclusive and shall be evidenced by a certified Board resolution filed with
the Warrant Agent) shall be made for the application of this Section 6 with
respect to the rights and interests thereafter of the Warrantholders (including
but not limited to the allocation of the Exercise Price between or among shares
of classes of capital stock), to the end that this Section 6 (including the
adjustments of the number of shares of Common Stock or other securities
purchasable and the Exercise Price thereof) shall thereafter be reflected, as
nearly as reasonably practicable, in all subsequent exercises of the Warrants
for any shares or securities or other property (or cash) thereafter deliverable
upon the exercise of the Warrants.
(c) Whenever the number of shares of Common Stock or other securities
purchasable upon exercise of a Warrant is adjusted as provided in this Section
6, the Company
4
will promptly file with the Warrant Agent a certificate signed by a Chairman or
co-Chairman of the Board or the President or a Vice President of the Company and
by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Company setting forth the number and kind of securities or
other property purchasable upon exercise of a Warrant, as so adjusted, stating
that such adjustments in the number or kind of shares or other securities or
property conform to the requirements of this Section 6, and setting forth a
brief statement of the facts accounting for such adjustments. Promptly after
receipt of such certificate, the Company, or the Warrant Agent at the Company's
request, will deliver, by first-class, postage prepaid mail, a brief summary
thereof (to be supplied by the Company) to the registered holders of the
outstanding Warrant Certificates; provided, however, that failure to file or to
give any notice required under this Subsection, or any defect therein, shall not
affect the legality or validity of any such adjustments under this Section 6;
and provided, further, that, where appropriate, such notice may be given in
advance and included as part of the notice required to be given pursuant to
Section 12 hereof.
(d) In case of any consolidation of the Company with, or merger of the
Company into, another corporation (other than a consolidation or merger which
does not result in any reclassification or change of the outstanding Common
Stock), 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
corporation formed by such consolidation or merger or the corporation which
shall have acquired such assets, as the case may be, shall execute and deliver
to the Warrant Agent a supplemental warrant agreement providing that the holder
of each Warrant then outstanding shall have the right thereafter (until the
expiration of such Warrant) to receive, upon exercise of such Warrant, solely
the kind and amount of shares of stock and other securities and property (or
cash) receivable upon such consolidation, merger, sale or transfer 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 as nearly equivalent as may be practicable to the adjustments
provided in this Section. The above provision of this Subsection shall similarly
apply to successive consolidations, mergers, sales or transfers.
The Warrant Agent shall not be under any responsibility to determine the
correctness of any provision contained in any such supplemental warrant
agreement relating to either the kind or amount of shares of stock or securities
or property (or cash) purchasable by holders of Warrant Certificates upon the
exercise of their Warrants after any such consolidation, merger, sale or
transfer or of any adjustment to be made with respect thereto, but subject to
the provisions of Section 20 hereof, may accept as conclusive evidence of the
correctness of any such provisions, and shall be protected in relying upon, a
certificate of a firm of independent certified public accountants (who may be
the accountants regularly employed by the Company) with respect thereto.
(e) Irrespective of any adjustments in the number or kind of shares
issuable upon exercise of Warrants, Warrant Certificates theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the similar Warrant Certificates initially issuable
pursuant to this Warrant Agreement.
5
(f) The Company may retain a firm of independent public accountants of
recognized standing, which may be the firm regularly retained by the Company,
selected by the Board of Directors of the Company or the Executive Committee of
said Board, and not disapproved by the Warrant Agent, to make any computation
required under this Section, and a certificate signed by such firm shall, in the
absence of fraud or gross negligence, be conclusive evidence of the correctness
of any computation made under this Section.
(g) For the purpose of this Section, the term "Common Stock" shall
mean (i) the Common Stock 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, the holder of any Warrant thereafter surrendered for
exercise shall become entitled to receive any shares of capital stock of the
Company other than shares of Common Stock, thereafter the number of such other
shares so receivable upon exercise of any Warrant 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 Common Stock contained in this Section,
and all other provisions of this Agreement, with respect to the Common Stock,
shall apply on like terms to any such other shares.
(h) The Company may, from time to time and to the extent permitted by
law, reduce the Exercise Price of the Warrants by any amount for a period of not
less than 20 days. If the Company so reduces the Exercise Price of such
Warrants, it will give not less than 15 days' notice of such decrease, which
notice may be in the form of a press release, and shall take such other steps as
may be required under applicable law in connection with any offers or sales of
securities at the reduced price.
7. Exercise of Warrants; Redemption of Class A Warrants. Except with
respect to Class A Warrants that have been redeemed as provided in this Section
7, the registered holder of any Warrant Certificate may exercise the Warrants
evidenced thereby, in whole at any time or in part from time to time at or prior
to the close of business, on the Expiration Date, subject to the provisions of
Section 9, at which time the Warrant Certificates shall be and become wholly
void and of no value. Warrants may be exercised by their holders or redeemed by
the Company as follows:
(a) Exercise of Warrants shall be accomplished upon surrender of the
Warrant Certificate evidencing such Warrants, with the Form of Election to
Purchase on the reverse side thereof duly filled in and executed, to the Warrant
Agent at its stock transfer office in _________, ________, together with payment
to the Company of the Exercise Price (as of the date of such surrender) of the
Warrants then being exercised and an amount equal to any applicable transfer tax
and, if requested by the Company, any other taxes or governmental charges which
the Company may be required by law to collect in respect of such exercise.
Payment of the Exercise Price and other amounts may be made by wire transfer of
good funds, or by certified or bank cashier's check, payable in lawful money of
the United States of America to the order of the Company. No adjustment shall be
made for any cash dividends, whether paid or declared, on any securities
issuable upon exercise of a Warrant.
6
(b) Upon receipt of a Warrant Certificate, with the Form of Election
to Purchase duly filled in and executed, accompanied by payment of the Exercise
Price of the Warrants being exercised (and of an amount equal to any applicable
taxes or government charges as aforesaid), the Warrant Agent shall promptly
request from the Transfer Agent with respect to the securities to be issued and
deliver to or upon the order of the registered holder of such Warrant
Certificate, in such name or names as such registered holder may designate, a
certificate or certificates for the number of full shares of the securities to
be purchased, together with cash made available by the Company pursuant to
Section 8 hereof in respect of any fraction of a share of such securities
otherwise issuable upon such exercise. If the Warrant is then exercisable to
purchase property other than securities, the Warrant Agent shall take
appropriate steps to cause such property to be delivered to or upon the order of
the registered holder of such Warrant Certificate. In addition, if it is
required by law and upon instruction by the Company, the Warrant Agent will
deliver to each Warrantholder a prospectus which complies with the provisions of
Section 9 of the Securities Act of 1933, and the Company agrees to supply the
Warrant Agent with sufficient number of prospectuses to effectuate that purpose.
(c) In case the registered holder of any Warrant Certificate shall
exercise fewer than all of the Warrants evidenced by such Warrant Certificate,
the Warrant Agent shall promptly countersign and deliver to the registered
holder of such Warrant Certificate, or to his duly authorized assigns, a new
Warrant Certificate or Certificates evidencing the number and class of Warrants
that were not so exercised.
(d) Each person in whose name any certificate for securities is issued
upon the exercise of Warrants shall for all purposes be deemed to have become
the holder of record of the securities represented thereby as of, and such
certificate shall be dated, the date upon which the Warrant Certificate was duly
surrendered in proper form and payment of the Exercise Price (and of any
applicable taxes or other governmental charges) was made; provided, however,
that if the date of such surrender and payment is a date on which the stock
transfer books of the Company are closed, such person shall be deemed to have
become the record holder of such shares as of, and the certificate for such
shares shall be dated, the next succeeding business day on which the stock
transfer books of the Company are open (whether before, on or after the
Expiration Date relating to such Warrant) and the Warrant Agent shall be under
no duty to deliver the certificate for such shares until such date. The Company
covenants and agrees that it shall not cause its stock transfer books to be
closed for a period of more than 20 consecutive business days except upon
consolidation, merger, sale of all or substantially all of its assets,
dissolution or liquidation or as otherwise provided by law.
(e) The Class A Warrants (but not the Class B Warrants) outstanding at
the time of a redemption may be redeemed at the option of the Company, in whole
or in part on a pro-rata basis, by giving not less than 30 days prior notice as
provided in Section 7(f) below, which notice may not be give before, but may be
given at any time after, the later of ________________, 200_ and the date on
which closing price of the Common Stock on the principal exchange or trading
facility on which it is then traded has equaled or exceeded $______ per share on
each of five consecutive trading days. The price at which Class A Warrants may
be redeemed (the "Redemption Price") is $0.25 per Warrant. On and after the
redemption date the holders of record of redeemed Class A Warrants shall be
entitled to payment
7
of the Redemption Price upon surrender of such redeemed Class A Warrants to the
Company at the office of the Warrant Agent designated for that purpose.
(f) Notice of redemption of Class A Warrants shall be given at least
30 days prior to the redemption date by mailing, by registered or certified
mail, return receipt requested, a copy of such notice to the Warrant Agent and
to all of the holders of record of Class A Warrants at their respective
addresses appearing on the books or transfer records of the Company or such
other address designated in writing by the holder of record to the Warrant Agent
not less than 40 days prior to the redemption date.
(g) From and after the redemption date, all rights of the Class A
Warrantholders with respect to the redeemed Class A Warrants (except the right
to receive the Redemption Price) shall terminate, but only if (i) no later than
one day prior to the redemption date the Company shall have irrevocably
deposited with the Warrant Agent as paying agent a sufficient amount to pay on
the redemption date the Redemption Price for all Class A Warrants called for
redemption and (ii) the notice of redemption shall have stated the name and
address of the Warrant Agent and the intention of the Company to deposit such
amount with the Warrant Agent no later than one day prior to the redemption
date.
(h) On the Redemption Date, the Warrant Agent shall pay to the holders
of record of redeemed Class A Warrants all monies received by the Warrant Agent
for the redemption of Class A Warrants to which the holders of record of such
redeemed Class A Warrants who shall have surrendered their Warrants are
entitled. The Warrant Agent shall have no obligation to pay for the redemption
of Class A Warrants except to the extent that funds for such payment have been
provided to it by the Company.
(i) Any amounts deposited with the Warrant Agent that are not required
for redemption of Class A Warrants may be withdrawn by the Company. Any amounts
deposited with the Warrant Agent that shall be unclaimed after six months after
the redemption date shall be redelivered back to the Company, and thereafter the
holders of the Class A Warrants called for redemption for which such funds were
deposited shall look solely to the Company for payment. The Company shall be
entitled to the interest, if any, on funds deposited with the Warrant Agent and
the holders of redeemed Class A Warrants shall have no right to any such
interest. At the instruction of the Company, the Warrant agent shall deposit or
invest any and all funds deposited with it by the Company in connection with any
redemption in federally insured, interest bearing accounts with a financial
institution or institutions designated by the Company but shall have no
liability with respect to the performance of any such investments other than, in
the case of funds deposited in accounts maintained by the Warrant Agent, the
liability of the Warrant Agent to its depositors in such accounts, generally.
(j) If the Company fails to make a sufficient deposit with the Warrant
Agent as provided above, the holder of any Warrants called for redemption may at
the option of the holder (i) by notice to the Company declare the notice of
redemption a nullity as to such holder, or (ii) maintain an action against the
Company for the Redemption Price. If the holder brings such an action, the
Company will pay reasonable attorneys' fees of the holder. If the holder fails
to bring an action against the Company for the Redemption Price within 60 days
after the redemption date, the holder shall be deemed to have elected to declare
the notice of redemption
8
to be a nullity as to such holder and such notice shall be without any force or
effect as to such holder. Except as otherwise specifically provided in this
Paragraph 7(j), a notice of redemption, once mailed by the Company as provided
in Paragraph 7(f) shall be irrevocable.
(k) Notwithstanding anything to the contrary in this Section 7, the
Company may not provide notice of any redemption pursuant to this Section 7 at
any time at which the Warrants are not currently exercisable as a result of the
application of Section 9. If, during the period between notice of redemption and
the Redemption Date, the Warrants become not currently exercisable as a result
of the application of Section 9, the Redemption Date shall be extended to be the
tenth business day after such restriction on exercise lapses.
8. Fractional Interests. The Company shall not be required to issue any
Warrant Certificate evidencing a fraction of a Warrant or to issue fractions of
shares of securities on the exercise of the Warrants. If any fraction
(calculated to the nearest one-hundredth) of a Warrant or a share of securities
would, except for the provisions of this Section, be issuable on the exercise of
any Warrant, the Company shall purchase such fraction for an amount in cash
equal to the current value of such fraction computed on the basis of the closing
market price of a Warrant of the same class (as quoted on the principal exchange
or trading facility on which such class of Warrants is traded) on the trading
day immediately preceding the day upon which such Warrant Certificate was
surrendered for exercise in accordance with Section 7. By accepting a Warrant
Certificate, the holder thereof expressly waives any right to receive a Warrant
Certificate evidencing any fraction of a Warrant or to receive any fractional
share of securities upon exercise of a Warrant, except as expressly provided in
this Section 8.
9. Reservation of Equity Securities. The Company covenants that it will at
all times reserve and keep available, free from any pre-emptive rights, out of
its authorized and unissued equity securities, solely for the purpose of issue
upon exercise of the Warrants, such number of shares of equity securities of the
Company as shall then be issuable upon the exercise of all outstanding Warrants
("Equity Securities"). The Company covenants that all Equity Securities which
shall be so issuable shall, upon such issue, be duly authorized, validly issued,
fully paid and non-assessable.
The Company covenants that if any equity securities, required to be
reserved for the purpose of issue upon exercise of the Warrants hereunder,
require registration with or approval of any governmental authority under any
federal or state law before such shares may be issued upon exercise of Warrants,
the Company will use all commercially reasonable efforts to cause such
securities to be duly registered, or approved, as the case may be, and, to the
extent practicable, take all such action in anticipation of and prior to the
exercise of the Warrants, including, without limitation, filing any and all
post-effective amendments to the Company's Registration Statement on Form SB-2
(Registration No. 333-_____) necessary to permit a public offering of the
securities underlying the Warrants at any and all times during the term of this
Agreement; provided, however, that in no event shall such securities be issued,
and the Company is authorized to refuse to honor the exercise of any Warrant, if
such exercise would result in the opinion of the Company's Board of Directors,
upon advice of counsel, in the violation of any law; and provided further that,
in the case of a Warrant exercisable solely for securities listed on a
securities exchange or for which there are at least three independent market
makers, in lieu of obtaining such registration or approval, the Company may
elect to redeem Warrants submitted to
9
the Warrant Agent for exercise for a price equal to the difference between the
aggregate low asked price, or closing price, as the case may be, of the
securities for which such Warrant is exercisable on the date of such submission
and the Exercise Price of such Warrants; in the event of such redemption, the
Company will pay to the holder of such Warrants the above-described redemption
price in cash within 10 business days after receipt of notice from the Warrant
Agent that such Warrants have been submitted for exercise. If, at the Expiration
Date, the Warrants are not currently exercisable as a result of the provisions
of this paragraph, the Expiration Date shall be extended to a date that is 30
calendar days following notice to the holders of Warrants that the Warrants are
again exercisable and references to the Expiration Date herein shall thereafter
refer to such extended Expiration Date.
10. Reduction of Conversion Price Below Par Value. Before taking any action
that would cause an adjustment pursuant to Section 6 hereof reducing the portion
of the Exercise Price required to purchase one share of capital stock below the
then par value (if any) of a share of such capital stock, the Company will use
its best efforts to take any corporate action which, in the opinion of its
counsel, may be necessary in order that the Company may validly and legally
issue fully paid and non-assessable shares of such capital stock.
11. Payment of Taxes. The Company covenants and agrees that it will pay
when due and payable any and all federal and state documentary stamp and other
original issue taxes which may be payable in respect of the original issuance of
the Warrant Certificates, or any shares of Common Stock or other securities upon
the exercise of Warrants. The Company shall not, however, be required (a) to pay
any tax which may be payable in respect of any transfer involved in the transfer
and delivery of Warrant Certificates or the issuance or delivery of certificates
for Common Stock or other securities in a name other than that of the registered
holder of the Warrant Certificate surrendered for purchase or (b) to issue or
deliver any certificate for shares of Common Stock or other securities upon the
exercise of any Warrant Certificate until any such tax shall have been paid, all
such tax being payable by the holder of such Warrant Certificate at the time of
surrender.
12. Notice of Certain Corporate Action. In case the Company after the date
hereof shall propose (a) to offer to the holders of Common Stock, generally,
rights to subscribe to or purchase any additional shares of any class of its
capital stock, any evidences of its indebtedness or assets, or any other rights
or options or (b) to effect any reclassification of Common Stock (other than a
reclassification involving merely the subdivision or combination of outstanding
shares of Common Stock) or any capital reorganization, or any consolidation or
merger to which the Company is a party and for which approval of any
stockholders of the Company is required, or any sale, transfer or other
disposition of its property and assets substantially as an entirety, or the
liquidation, voluntary or involuntary dissolution or winding-up of the Company,
then, in each such case, the Company shall file with the Warrant Agent and the
Company, or the Warrant Agent on its behalf, shall mail (by first-class, postage
prepaid mail) to all registered holders of the Warrant Certificates notice of
such proposed action, which notice shall specify the date on which the books of
the Company shall close or a record be taken for such offer of rights or
options, or the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, other disposition, liquidation, voluntary
or involuntary dissolution or winding-up shall take place or commence, as the
case may be, and which shall also specify any record date for determination of
holders of Common Stock entitled to vote thereon or participate therein and
10
shall set forth such facts with respect thereto as shall be reasonably necessary
to indicate any adjustments in the Exercise Price and the number or kind of
shares or other securities purchasable upon exercise of Warrants which will be
required as a result of such action. Such notice shall be filed and mailed in
the case of any action covered by clause (a) above, at least ten days prior to
the record date for determining holders of the Common Stock for purposes of such
action or, if a record is not to be taken, the date as of which the holders of
shares of Common Stock of record are to be entitled to such offering; and, in
the case of any action covered by clause (b) above, at least 20 days prior to
the earlier of the date on which such reclassification, reorganization,
consolidation, merger, sale, transfer, other disposition, liquidation, voluntary
or involuntary dissolution or winding-up is expected to become effective and the
date on which it is expected that holders of shares of Common Stock of record on
such date shall be entitled to exchange their shares for securities or other
property deliverable upon such reclassification, reorganization, consolidation,
merger, sale, transfer, other disposition, liquidation, voluntary or involuntary
dissolution or winding-up.
Failure to give any such notice or any defect therein shall not affect the
legality or validity of any transaction listed in this Section 12.
13. Disposition of Proceeds on Exercise of Warrant Certificates, etc. The
Warrant Agent shall account promptly to the Company with respect to Warrants
exercised and concurrently pay to the Company all moneys received by the Warrant
Agent for the purchase of securities or other property through the exercise of
such Warrants.
The Warrant Agent shall keep copies of this Agreement available for
inspection by Warrantholders during normal business hours at its stock transfer
office. Copies of this Agreement shall be obtainable upon written request
addressed to the Warrant Agent at its stock transfer office in __________,
__________.
14. Warrantholder Not Deemed a Stockholder. No Warrantholder, as such,
shall be entitled to vote, receive dividends or be deemed the holder of Common
Stock or any other securities of the Company which may at any time be issuable
on the exercise of the Warrants represented thereby for any purpose whatever,
nor shall anything contained herein or in any Warrant Certificate be construed
to confer upon any Warrantholder, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action (whether upon any recapitalization, issuance of
stock, reclassification of stock, change of par value or change of stock to no
par value, consolidation, merger, conveyance or otherwise), or to receive notice
of meetings or other actions affecting stockholders (except as provided in
Section 12 hereof), or to receive dividend or subscription rights, or otherwise,
until such Warrant Certificate shall have been exercised in accordance with the
provisions hereof and the receipt of the Exercise Price and any other amounts
payable upon such exercise by the Warrant Agent.
15. Right of Action. All rights of action in respect of this Agreement are
vested in the respective registered holders of the Warrant Certificates; and any
registered holder of any Warrant Certificate, without the consent of the Warrant
Agent or of any other holder of a Warrant Certificate, may, in his own behalf
for his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company suitable to enforce, or otherwise in
11
respect of, his right to exercise the Warrants evidenced by such Warrant
Certificate, for the purchase of shares of the Common Stock in the manner
provided in the Warrant Certificate and in this Agreement.
16. Agreement of Holders of Warrant Certificates. Every holder of a Warrant
Certificate by accepting the same consents and agrees with the Company, the
Warrant Agent and with every other holder of a Warrant Certificate that:
(a) the Warrant Certificates are transferable on the registry books of
the Warrant Agent only upon the terms and conditions set forth in this
Agreement; and
(b) the Company and the Warrant Agent may deem and treat the person in
whose name the Warrant Certificate is registered as the absolute owner of the
Warrant (notwithstanding any notation of ownership or other writing thereon made
by anyone other than the Company or the Warrant Agent) for all purposes
whatsoever and neither the Company nor the Warrant Agent shall be affected by
any notice to the contrary.
17. Cancellation of Warrant Certificates. In the event that the Company
shall purchase or otherwise acquire any Warrant Certificate or Certificates
after the issuance thereof, such Warrant Certificate or Certificates shall
thereupon be delivered to the Warrant Agent and be canceled by it and retired.
The Warrant Agent shall also cancel any Warrant Certificate delivered to it for
exercise, in whole or in part, or delivered to it for transfer, split-up,
combination or exchange. Warrant Certificates so canceled shall be delivered by
the Warrant Agent to the Company from time to time, or disposed of in accordance
with the instructions of the Company.
18. Concerning the Warrant Agent. The Company agrees to pay to the Warrant
Agent from time to time, on demand of the Warrant Agent, reasonable compensation
for all services rendered by it hereunder and also its reasonable expenses,
including counsel fees, and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Warrant Agent for, and to
hold it harmless against, any loss, liability or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Warrant Agent,
arising out of or in connection with the acceptance and administration of this
Agreement.
19. Merger or Consolidation or Change of Name of Warrant Agent. Any
corporation into which the Warrant Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Warrant Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor warrant agent under
the provisions of Section 21 hereof. In case at the time such successor to the
Warrant Agent shall succeed to the agency created by this Agreement, any of the
Warrant Certificates shall have been countersigned but not delivered, any such
successor to the Warrant Agent may adopt the countersignature of the original
Warrant Agent and deliver such Warrant Certificates so countersigned; and in
case at that time any of the Warrant Certificates shall not have been
countersigned, any successor to the Warrant Agent may
12
countersign such Warrant Certificates either in the name of the predecessor
Warrant Agent or in the name of the successor Warrant Agent; and in all such
cases such Warrant Certificates shall have the full force provided in the
Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrant Certificates shall have been countersigned but not
delivered, the Warrant Agent may adopt the countersignature under its prior name
and deliver Warrant Certificates so countersigned; and in case at that time any
of the Warrant Certificates shall not have been countersigned, the Warrant Agent
may countersign such Warrant Certificates either in its prior name or in its
changed name; and in all such cases such Warrant Certificates shall have the
full force provided in the Warrant Certificates and in this Agreement.
20. Duties of Warrant Agent. The Warrant Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Warrant Certificates, by their
acceptance thereof, shall be bound:
(a) The Warrant Agent may consult with counsel satisfactory to it (who
may be counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Warrant Agent as to any action
taken, suffered or omitted by it in good faith and in accordance with such
opinion; provided, however, that the Warrant Agent shall have exercised
reasonable care in the selection of such counsel. Fees and expenses of such
counsel, to the extent reasonable, shall be paid by the Company.
(b) Whenever in the performance of its duties under this Agreement,
the Warrant Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by a Chairman or co-Chairman of the Board or
the President or a Vice President or the Secretary of the Company and delivered
to the Warrant Agent; and such certificate shall be full authorization to the
Warrant Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Warrant Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct.
(d) The Warrant Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the Warrant
Certificates (except its countersignature on the Warrant Certificates and such
statements or recitals as describe the Warrant Agent or action taken or to be
taken by it) or be required to verify the same, but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Warrant Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Warrant Agent) or in respect of the validity or
execution of any Warrant Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company
13
of any covenant or condition contained in this Agreement or in any Warrant
Certificate; nor shall it be responsible for the making of any change in the
number of shares of Common Stock for which a Warrant is exercisable required
under the provisions of Section 6 or responsible for the manner, method or
amount of any such change or the ascertaining of the existence of facts that
would require any such adjustment or change (except with respect to the exercise
of Warrant Certificates after actual notice of any adjustment of the Exercise
Price); nor shall it by any act hereunder be deemed to make any representation
or warranty as to the authorization or reservation of any shares of Common Stock
to be issued pursuant to this Agreement or any Warrant Certificate or as to
whether any shares of Common Stock will, when issued, be validly issued, fully
paid and non-assessable.
(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or take any other action likely to involve
expense unless the Company or one or more registered holders of Warrant
Certificates shall furnish the Warrant Agent with reasonable security and
indemnity for any costs and expenses which may be incurred. All rights of action
under this Agreement or under any of the Warrants may be enforced by the Warrant
Agent without the possession of any of the Warrants or the production thereof at
any trial or other proceeding relative thereto, and any such action, suit or
proceeding instituted by the Warrant Agent shall be brought in its name as
Warrant Agent, and any recovery of judgment shall be for the ratable benefit of
the registered holders of the Warrant Certificates, as their respective rights
or interests may appear.
(g) The Warrant Agent and any stockholder, director, officer or
employee of the Warrant Agent may buy, sell or deal in any of the Warrants or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to or otherwise act as fully and freely as though it were not Warrant
Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from
acting in any other capacity for the Company or for any other legal entity.
(h) The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from a
Chairman or co-Chairman of the Board or President or a Vice President or the
Secretary or the Controller of the Company, and to apply to such officers for
advice or instructions in connection with the Warrant Agent's duties, and it
shall not be liable for any action taken or suffered or omitted by it in good
faith in accordance with instructions of any such officer.
(i) The Warrant Agent will not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrant Certificates to be complied with by the Company.
(j) The Warrant Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys, agents or employees and the Warrant Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys, agents or employees or for any loss to the Company resulting
from such neglect or misconduct; provided, however, that reasonable care shall
have been exercised in the selection and continued employment of such attorneys,
agents and employees.
14
(k) The Warrant Agent will not incur any liability or responsibility
to the Company or to any holder of any Warrant Certificate for any action taken,
or any failure to take action, in reliance on any notice, resolution, waiver,
consent, order, certificate, or other paper, document or instrument reasonably
believed by the Warrant Agent to be genuine and to have been signed, sent or
presented by the proper party or parties.
(l) The Warrant Agent will act hereunder solely as agent of the
Company in a ministerial capacity, and its duties will be determined solely by
the provisions hereof. The Warrant Agent will not be liable for anything which
it may do or refrain from doing in connection with this Agreement except for its
own gross negligence, bad faith or willful conduct.
21. Change of Warrant Agent. The Warrant Agent may resign and be discharged
from its duties under this Agreement upon 30 days' prior notice in writing
mailed, by registered or certified mail, to the Company. The Company may remove
the Warrant Agent or any successor warrant agent upon 30 days' prior notice in
writing, mailed to the Warrant Agent or successor warrant agent, as the case may
be, by registered or certified mail. If the Warrant Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall appoint
a successor to the Warrant Agent and shall, within 15 days following such
appointment, give notice thereof in writing to each registered holder of the
Warrant Certificates. If the Company shall fail to make such appointment within
a period of 15 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Warrant Agent, then the Company agrees to perform the duties of
the Warrant Agent hereunder until a successor Warrant Agent is appointed. After
appointment and execution of a copy of this Agreement in effect at that time,
the successor Warrant Agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named as Warrant Agent without
further act or deed; but the former Warrant Agent shall deliver and transfer to
the successor Warrant Agent, within a reasonable time, any property at the time
held by it hereunder, and execute and deliver any further assurance, conveyance,
act or deed necessary for the purpose. Failure to give any notice provided for
in this Section, however, or any defect therein shall not affect the legality or
validity of the resignation or removal of the Warrant Agent or the appointment
of the successor warrant agent, as the case may be.
22. Issuance of New Warrant Certificates. Notwithstanding any of the
provisions of this Agreement or the several Warrant Certificates to the
contrary, the Company may, at its option, issue new Warrant Certificates in such
form as may be approved by its Board of Directors to reflect any adjustment or
change in the Exercise Price or the number or kind of shares purchasable under
the several Warrant Certificates made in accordance with the provisions of this
Agreement.
23. Notices. Notice or demand pursuant to this Agreement to be given or
made on the Company by the Warrant Agent or by the registered holder of any
Warrant Certificate shall be sufficiently given or made if sent by first-class
or registered mail, postage prepaid, addressed (until another address is filed
in writing by the Company with the Warrant Agent) as follows:
15
Converted Organics Inc.
0X Xxxxxxxxxx Xxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Chief Financial Officer
Subject to the provisions of Section 21, any notice pursuant to this
Agreement to be given or made by the Company or by the holder of any Warrant
Certificate to or on the Warrant Agent shall be sufficiently given or made if
sent by first-class or registered mail, postage prepaid, addressed (until
another address is filed in writing by the Warrant Agent with the Company) as
follows:
_____________________________
_____________________________
_____________________________
Attention: __________________
Any notice or demand authorized to be given or made to the registered
holder of any Warrant Certificate under this Agreement shall be sufficiently
given or made if sent by first-class or registered mail, postage prepaid, to the
last address of such holder as it shall appear on the registers maintained by
the Warrant Agent.
24. Modification of Agreement. The Warrant Agent may, without the consent
or concurrence of the Warrantholders, by supplemental agreement or otherwise,
concur with the Company in making any changes or corrections in this Agreement
that the Warrant Agent shall have been advised by counsel (who may be counsel
for the Company) are necessary or desirable to cure any ambiguity or to correct
any defective or inconsistent provision or clerical omission or mistake or
manifest error herein contained, or to make any other provisions in regard to
matters or questions arising hereunder and which shall not be inconsistent with
the provisions of the Warrant Certificates and which shall not adversely affect
the interests of the Warrantholders. As of the date hereof, this Agreement
contains the entire and only agreement, understanding, representation,
condition, warranty or covenant between the parties hereto with respect to the
matters herein, supersedes any and all other agreements between the parties
hereto relating to such matters, and may be modified or amended only by a
written agreement signed by both parties hereto pursuant to the authority
granted by the first sentence of this Section.
25. Successors. All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Warrant Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.
26. Delaware Contract. This Agreement and each Warrant Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be construed in accordance with the laws of
said State.
27. Termination. This Agreement shall terminate as of the close of business
on the Expiration Date, or such earlier date upon which all Warrants shall have
been exercised or redeemed, except that the Warrant Agent shall account to the
Company as to all Warrants outstanding and all cash held by it as of the close
of business on the Expiration Date.
16
28. Benefits of this Agreement. Nothing in this Agreement or in the Warrant
Certificates shall be construed to give to any person or corporation other than
the Company, the Warrant Agent, and their respective successors and assigns
hereunder and the registered holders of the Warrant Certificates any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Warrant Agent, their
respective successors and assigns hereunder and the registered holders of the
Warrant Certificates.
29. Descriptive Headings. The descriptive headings of the several Sections
of this Agreement are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.
30. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute one and the same instrument.
(Remainder of page intentionally left blank; signature page follows.)
17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
CONVERTED ORGANICS INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
18
EXHIBIT A
VOID AFTER 5 P.M. PACIFIC TIME ON _________________, 2011
CLASS A WARRANTS TO PURCHASE COMMON STOCK
WA_____ _________ Warrants
Converted Organics Inc.
CUSIP ___________
THIS CERTIFIES THAT
or registered assigns, is the registered holder of the number of Class A
Warrants ("Warrants") set forth above. Each Warrant, unless and until redeemed
by the Company as provided in the Warrant Agreement, hereinafter more fully
described (the "Warrant Agreement") entitles the holder thereof to purchase from
Converted Organics Inc., a corporation incorporated under the laws of the State
of Delaware the ("Company"), subject to the terms and conditions set forth
hereinafter and in the Warrant Agreement, at any time on or after ___________,
2006 and before the close of business on ________, 2011 ("Expiration Date"), one
fully paid and non-assessable share of Common Stock of the Company ("Common
Stock") upon presentation and surrender of this Warrant Certificate, with the
instructions for the registration and delivery of Common Stock filled in, at the
stock transfer office in __________, __________, of ____________________,
Warrant Agent of the Company ("Warrant Agent") or of its successor warrant agent
or, if there be no successor warrant agent, at the corporate offices of the
Company, and upon payment of the Exercise Price (as defined in the Warrant
Agreement) and any applicable taxes paid either in cash, or by certified or
official bank check, payable in lawful money of the United States of America to
the order of the Company. Each Warrant initially entitles the holder to purchase
one share of Common Stock for $____. The number and kind of securities or other
property for which the Warrants are exercisable are subject to adjustment in
certain events, such as mergers, splits, stock dividends, splits and the like,
to prevent dilution. The Company may redeem any or all outstanding and
unexercised Warrants by giving not less than 30 days prior notice at any time
after the later of _______________, 200_ and the date on which closing price of
the Common Stock on the principal exchange or trading facility on which it is
traded has equaled or exceeded $______ per share on each of five consecutive
trading days. The Redemption Price is $0.25 per Warrant. All Warrants not
theretofore exercised will expire on the Expiration Date.
1
This Warrant Certificate is subject to all of the terms, provisions and
conditions of the Warrant Agreement, dated as of ________________, 2006, between
the Company and the Warrant Agent, to all of which terms, provisions and
conditions the registered holder of this Warrant Certificate consents by
acceptance hereof. The Warrant Agreement is incorporated herein by reference and
made a part hereof and reference is made to the Warrant Agreement for a full
description of the rights, limitations of rights, obligations, duties and
immunities of the Warrant Agent, the Company and the holders of the Warrant
Certificates. Copies of the Warrant Agreement are available for inspection at
the stock transfer office of the Warrant Agent or may be obtained upon written
request addressed to the Company at Converted Organics Inc., 0X Xxxxxxxxxx Xxxxx
Xxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Chief Financial Officer.
The Company shall not be required upon the exercise of the Warrants
evidenced by this Warrant Certificate to issue fractions of Warrants, Common
Stock or other securities, but shall make adjustment therefor in cash on the
basis of the current market value of any fractional interest as provided in the
Warrant Agreement.
In certain cases, the sale of securities by the Company upon exercise of
Warrants may violate the securities laws of the United States, certain states
thereof or other jurisdictions. The Company has agreed to use all commercially
reasonable efforts to cause a registration statement to continue to be effective
during the term of the Warrants with respect to such sales under the Securities
Act of 1933, and to take such action under the laws of various states as may be
required to cause the sale of securities upon exercise to be lawful. However,
the Company will not be required to honor the exercise of Warrants if, in the
opinion of the Board of Directors, upon advice of counsel, the sale of
securities upon such exercise would be unlawful. In certain cases, the Company
may, but is not required to, purchase Warrants submitted for exercise for a cash
price equal to the difference between the market price of the securities
obtainable upon such exercise and the exercise price of such Warrants. If the
Warrants would otherwise expire while not exercisable as a result of any such
determination by the Board of Directors, their Expiration Date will be extended
to a date 30 days after the Warrants once again become exercisable.
This Warrant Certificate, with or without other Certificates, upon
surrender to the Warrant Agent, any successor warrant agent or, in the absence
of any successor warrant agent, at the corporate offices of the Company, may be
exchanged for another Warrant Certificate or Certificates evidencing in the
aggregate the same number of Warrants as the Warrant Certificate or Certificates
so surrendered. If the Warrants evidenced by this Warrant Certificate shall be
exercised in part, the holder hereof shall be entitled to receive upon surrender
hereof another Warrant Certificate or Certificates evidencing the number of
Warrants not so exercised.
No holder of this Warrant Certificate, as such, shall be entitled to vote,
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose whatever, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder of this Warrant
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof or give or withhold consent to any corporate
action (whether upon any matter submitted to stockholders at any meeting
thereof, or give or withhold consent to any merger, recapitalization, issuance
of stock, reclassification of stock, change of par value or change of
2
stock to no par value, consolidation, conveyance or otherwise) or to receive
notice of meetings or other actions affecting stockholders (except as provided
in the Warrant Agreement) or to receive dividends or subscription rights or
otherwise until the Warrants evidenced by this Warrant Certificate shall have
been exercised and the Common Stock purchasable upon the exercise thereof shall
have become deliverable as provided in the Warrant Agreement.
If this Warrant Certificate shall be surrendered for exercise within any
period during which the transfer books for the Company's Common Stock or other
class of stock purchasable upon the exercise of the Warrants evidenced by this
Warrant Certificate are closed for any purpose, the Company shall not be
required to make delivery of certificates for shares purchasable upon such
transfer until the date of the reopening of said transfer books.
Every holder of this Warrant Certificate by accepting the same consents and
agrees with the Company, the Warrant Agent, and with every other holder of a
Warrant Certificate that:
(a) this Warrant Certificate is transferable on the registry books of the
Warrant Agent only upon the terms and conditions set forth in the Warrant
Agreement, and
(b) the Company and the Warrant Agent may deem and treat the person in
whose name this Warrant Certificate is registered as the absolute owner hereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone other than the Company or the Warrant Agent) for all purposes whatsoever
and neither the Company nor the Warrant Agent shall be affected by any notice to
the contrary. The Company shall not be required to issue or deliver any
certificate for shares of Common Stock or other securities upon the exercise of
Warrants evidenced by this Warrant Certificate until any tax which may be
payable in respect thereof by the holder of this Warrant Certificate pursuant to
the Warrant Agreement shall have been paid, such tax being payable by the holder
of this Warrant Certificate at the time of surrender.
This Warrant Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Warrant Agent.
(Remainder of page intentionally left blank; signature page follows.)
3
WITNESS the facsimile signatures of the proper officers of the Company and
its corporate seal.
Dated:
---------------
CONVERTED ORGANICS INC.
By:
------------------------------------
Name:
----------------------------------
Title: Chief Executive Officer
Attest:
--------------------------------
Secretary
Countersigned:
By:
---------------------------------
Authorized Officer
4
EXHIBIT B
VOID AFTER 5 P.M. PACIFIC TIME ON _________________, 2011
CLASS B WARRANTS TO PURCHASE COMMON STOCK
WB_____ _________ Warrants
Converted Organics Inc.
CUSIP ___________
THIS CERTIFIES THAT
or registered assigns, is the registered holder of the number of Class B
Warrants ("Warrants") set forth above. Subject to the terms of the Warrant
Agreement, hereinafter more fully described (the "Warrant Agreement"), each
Warrant entitles the holder thereof to purchase from Converted Organics Inc., a
corporation incorporated under the laws of the State of Delaware the
("Company"), subject to the terms and conditions set forth hereinafter and in
the Warrant Agreement, at any time on or after ___________, 2006 and before the
close of business on ________, 2011 ("Expiration Date"), one fully paid and
non-assessable share of Common Stock of the Company ("Common Stock") upon
presentation and surrender of this Warrant Certificate, with the instructions
for the registration and delivery of Common Stock filled in, at the stock
transfer office in ____________, ____________, of ____________________ Company,
Inc., Warrant Agent of the Company ("Warrant Agent") or of its successor warrant
agent or, if there be no successor warrant agent, at the corporate offices of
the Company, and upon payment of the Exercise Price (as defined in the Warrant
Agreement) and any applicable taxes paid either in cash, or by certified or
official bank check, payable in lawful money of the United States of America to
the order of the Company. Each Warrant initially entitles the holder to purchase
one share of Common Stock for $____. The number and kind of securities or other
property for which the Warrants are exercisable are subject to adjustment in
certain events, such as mergers, splits, stock dividends, splits and the like,
to prevent dilution. All Warrants not theretofore exercised will expire on the
Expiration Date.
This Warrant Certificate is subject to all of the terms, provisions and
conditions of the Warrant Agreement, dated as of ________________, 2006, between
the Company and the Warrant Agent, to all of which terms, provisions and
conditions the registered holder of this Warrant Certificate consents by
acceptance hereof. The Warrant Agreement is incorporated herein by reference and
made a part hereof and reference is made to the Warrant Agreement for a
1
full description of the rights, limitations of rights, obligations, duties and
immunities of the Warrant Agent, the Company and the holders of the Warrant
Certificates. Copies of the Warrant Agreement are available for inspection at
the stock transfer office of the Warrant Agent or may be obtained upon written
request addressed to the Company at Converted Organics Inc., 0X Xxxxxxxxxx Xxxxx
Xxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, Attention: Chief Financial Officer.
The Company shall not be required upon the exercise of the Warrants
evidenced by this Warrant Certificate to issue fractions of Warrants, Common
Stock or other securities, but shall make adjustment therefor in cash on the
basis of the current market value of any fractional interest as provided in the
Warrant Agreement.
In certain cases, the sale of securities by the Company upon exercise of
Warrants may violate the securities laws of the United States, certain states
thereof or other jurisdictions. The Company has agreed to use all commercially
reasonable efforts to cause a registration statement to continue to be effective
during the term of the Warrants with respect to such sales under the Securities
Act of 1933, and to take such action under the laws of various states as may be
required to cause the sale of securities upon exercise to be lawful. However,
the Company will not be required to honor the exercise of Warrants if, in the
opinion of the Board of Directors, upon advice of counsel, the sale of
securities upon such exercise would be unlawful. In certain cases, the Company
may, but is not required to, purchase Warrants submitted for exercise for a cash
price equal to the difference between the market price of the securities
obtainable upon such exercise and the exercise price of such Warrants. If the
Warrants would otherwise expire while not exercisable as a result of any such
determination by the Board of Directors, their Expiration Date will be extended
to a date 30 days after the Warrants once again become exercisable.
This Warrant Certificate, with or without other Certificates, upon
surrender to the Warrant Agent, any successor warrant agent or, in the absence
of any successor warrant agent, at the corporate offices of the Company, may be
exchanged for another Warrant Certificate or Certificates evidencing in the
aggregate the same number of Warrants as the Warrant Certificate or Certificates
so surrendered. If the Warrants evidenced by this Warrant Certificate shall be
exercised in part, the holder hereof shall be entitled to receive upon surrender
hereof another Warrant Certificate or Certificates evidencing the number of
Warrants not so exercised.
No holder of this Warrant Certificate, as such, shall be entitled to vote,
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the exercise
hereof for any purpose whatever, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder of this Warrant
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof or give or withhold consent to any corporate
action (whether upon any matter submitted to stockholders at any meeting
thereof, or give or withhold consent to any merger, recapitalization, issuance
of stock, reclassification of stock, change of par value or change of stock to
no par value, consolidation, conveyance or otherwise) or to receive notice of
meetings or other actions affecting stockholders (except as provided in the
Warrant Agreement) or to receive dividends or subscription rights or otherwise
until the Warrants evidenced by this Warrant Certificate shall have been
exercised and the Common Stock purchasable upon the exercise thereof shall have
become deliverable as provided in the Warrant Agreement.
2
If this Warrant Certificate shall be surrendered for exercise within any
period during which the transfer books for the Company's Common Stock or other
class of stock purchasable upon the exercise of the Warrants evidenced by this
Warrant Certificate are closed for any purpose, the Company shall not be
required to make delivery of certificates for shares purchasable upon such
transfer until the date of the reopening of said transfer books.
Every holder of this Warrant Certificate by accepting the same consents and
agrees with the Company, the Warrant Agent, and with every other holder of a
Warrant Certificate that:
(a) this Warrant Certificate is transferable on the registry books of the
Warrant Agent only upon the terms and conditions set forth in the Warrant
Agreement, and
(b) the Company and the Warrant Agent may deem and treat the person in
whose name this Warrant Certificate is registered as the absolute owner hereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone other than the Company or the Warrant Agent) for all purposes whatsoever
and neither the Company nor the Warrant Agent shall be affected by any notice to
the contrary. The Company shall not be required to issue or deliver any
certificate for shares of Common Stock or other securities upon the exercise of
Warrants evidenced by this Warrant Certificate until any tax which may be
payable in respect thereof by the holder of this Warrant Certificate pursuant to
the Warrant Agreement shall have been paid, such tax being payable by the holder
of this Warrant Certificate at the time of surrender.
This Warrant Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Warrant Agent.
(Remainder of page intentionally left blank; signature page follows.)
3
WITNESS the facsimile signatures of the proper officers of the Company and
its corporate seal.
Dated:
---------------
CONVERTED ORGANICS INC.
By:
------------------------------------
Name:
----------------------------------
Title: Chief Executive Officer
Attest:
--------------------------------
Secretary
Countersigned:
By:
---------------------------------
Authorized Officer
4
