Contract
Exhibit
4.5
THIS
WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY
STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE
OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT OR
SUCH
SHARES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION
OF
COUNSEL REASONABLY SATISFACTORY TO MAGNETECH INTEGRATED SERVICES CORP. THAT
SUCH
REGISTRATION IS NOT REQUIRED.
Right
to
Purchase up to 7,352,941 Shares of Common Stock of
Magnetech
Integrated Service Corp.
(subject
to adjustment as provided herein)
COMMON
STOCK PURCHASE WARRANT
|
No.
LMF-1
|
Issue
Date: August 24, 2005
|
Magnetech
Integrated Services Corp., a corporation organized under the laws of the
State
of Indiana, hereby certifies that, for value received, LAURUS MASTER FUND,
LTD.,
or assigns (the “Holder”), is entitled, subject to the terms set forth below, to
purchase from the Company (as defined herein) from and after the Issue Date
of
this Warrant and at any time or from time to time before 5:00 p.m., New York
time, through the close of business August 24, 2012 (the “Expiration Date”), up
to 7,352,941 fully paid and nonassessable shares of Common Stock (as hereinafter
defined), $0.01 par value per share, at the applicable Exercise Price per
share
(as defined below). The number and character of such shares of Common Stock
and
the applicable Exercise Price per share are subject to adjustment as provided
herein.
As
used
herein the following terms, unless the context otherwise requires, have the
following respective meanings:
(a) The
term
“Company” shall include Magnetech Integrated Services Corp., an Indiana
corporation, and any person or entity which shall succeed, or assume the
obligations of, Magnetech Integrated Services Corp. hereunder.
(b) The
term
“Common Stock” includes (i) the Company’s Common Stock, par value $0.01 per
share; and (ii) any other securities into which or for which any of the
securities described in the preceding clause (i) may be converted or exchanged
pursuant to a plan of recapitalization, reorganization, merger, sale of assets
or otherwise.
(c) The
term
“Other Securities” refers to any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which
the
holder of the Warrant at any time shall be entitled to receive, or shall
have
received, on the exercise of the Warrant, in lieu of or in addition to Common
Stock, or
which
at
any time shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities pursuant to Section 4 or
otherwise.
(d) The
“Exercise Price” applicable under this Warrant shall be $0.34 per share of
Common Stock (subject to adjustment as provided herein) for all shares acquired
hereunder.
1. Exercise
of Warrant.
1.1 Number
of Shares Issuable upon Exercise.
Subject
to the terms and conditions of this Warrant, from and after the date hereof
through and including the Expiration Date, the Holder shall be entitled to
receive, upon exercise of this Warrant in whole or in part, by delivery in
the
manner provided herein of an original or fax copy of an exercise notice in
the
form attached hereto as Exhibit
A
(the
“Exercise Notice”), shares of Common Stock of the Company, subject to adjustment
pursuant to Section 4.
1.2 Fair
Market Value.
For
purposes hereof, the “Fair Market Value” of a share of Common Stock as of a
particular date (the “Determination Date”) shall mean:
(a) If
the
Company’s Common Stock is traded on the American Stock Exchange or another
national exchange or is quoted on the National or SmallCap Market of The
Nasdaq
Stock Market, Inc. (“Nasdaq”), then the average of the closing or last sale
price, respectively, reported for the five (5) trading days immediately
preceding the Determination Date.
(b) If
the
Company’s Common Stock is not traded on the American Stock Exchange or another
national exchange or on the Nasdaq but is traded on the NASD Over The Counter
Bulletin Board, then the mean of the average of the closing bid and asked
prices
reported for the five (5) trading days immediately preceding the Determination
Date.
(c) Except
as
provided in clause (d) below, if the Company’s Common Stock is not publicly
traded, then as the Holder and the Company agree or in the absence of agreement
by arbitration in accordance with the rules then in effect of the American
Arbitration Association, before a single arbitrator to be chosen from a panel
of
persons qualified by education and training to pass on the matter to be
decided.
(d) If
the
Determination Date is the date of a liquidation, dissolution or winding up,
or
any event deemed to be a liquidation, dissolution or winding up pursuant
to the
Company’s charter, then all amounts to be payable per share to holders of the
Common Stock pursuant to the charter in the event of such liquidation,
dissolution or winding up, plus all other amounts to be payable per share
in
respect of the Common Stock in liquidation under the charter, assuming for
the
purposes of this clause (d) that all of the shares of Common Stock then issuable
upon exercise of the Warrant are outstanding at the Determination
Date.
2
1.3 Company
Acknowledgment.
The
Company will, at the time of the exercise of this Warrant, upon the request
of
the Holder hereof acknowledge in writing its continuing obligation to afford
to
such holder any rights to which such holder shall continue to be entitled
after
such exercise in accordance with the provisions of this Warrant. If the holder
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford to such holder any such rights.
1.4 Trustee
for Warrant Holders.
In the
event that a bank or trust company shall have been appointed as trustee for
the
holders of this Warrant pursuant to Subsection 3.2, such bank or trust company
shall have all the powers and duties of a warrant agent (as hereinafter
described) and shall accept, in its own name for the account of the Company
or
such successor person as may be entitled thereto, all amounts otherwise payable
to the Company or such successor, as the case may be, on exercise of this
Warrant pursuant to this Section 1.
2. Procedure
for Exercise.
2.1 Delivery
of Stock Certificates, Etc., on Exercise.
The
Company agrees that the shares of Common Stock purchased upon exercise of
this
Warrant shall be deemed to be issued to the Holder as the record owner of
such
shares as of the close of business on the date on which this Warrant shall
have
been surrendered and payment made for such shares in accordance herewith.
As
soon as practicable after the exercise of this Warrant in full or in part,
and
in any event within three (3) business days thereafter, the Company at its
expense (including the payment by it of any applicable issue taxes) will
cause
to be issued in the name of and delivered to the Holder, or to another person
designated by the Holder in writing (provided that the Holder has paid any
applicable transfer taxes and that the Company has received such documentation
and information that the Company deems reasonably necessary to ensure compliance
with applicable securities laws), a certificate or certificates for the number
of duly and validly issued, fully paid and nonassessable shares of Common
Stock
(or Other Securities) to which such Holder shall be entitled on such exercise,
plus, in lieu of any fractional share to which such holder would otherwise
be
entitled, cash equal to such fraction multiplied by the then Fair Market
Value
of one full share, together with any other stock or other securities and
property (including cash, where applicable) to which such Holder is entitled
upon such exercise pursuant to Section 1.
2.2 Exercise.
(a) To
exercise this Warrant, the Holder must properly complete, execute and deliver
to
the Company the Exercise Notice. Any exercise may not be revoked unless (i)
an
Event of Default has occurred and is continuing or (ii) the Company has
consented to such a revocation. Payment may be made either (i) in cash or
by
certified or official bank check payable to the order of the Company equal
to
the applicable aggregate Exercise Price, (ii) by delivery of this Warrant,
or
shares of Common Stock and/or Common Stock receivable upon exercise of this
Warrant in accordance with the formula set forth in subsection (b) below,
or
(iii) by a combination of any of the foregoing methods, for the number of
Common
Shares specified in such Exercise Notice (as such exercise number shall be
adjusted to reflect any adjustment in the total number of shares of Common
Stock
issuable to the Holder per the terms of this Warrant). Within three (3) business
3
days
after receipt of the applicable Exercise Price and, in the event of a complete
exercise of this Warrant by the Holder, surrender of this Warrant to the
principal office of the Company, the Holder shall thereupon be entitled to
receive the number of duly authorized, validly issued, fully-paid and
non-assessable shares of Common Stock (or Other Securities) determined as
provided herein.
(b) Notwithstanding
any provisions herein to the contrary, if the Fair Market Value of one share
of
Common Stock is greater than the Exercise Price (at the date of calculation
as
set forth below), in lieu of exercising this Warrant for cash, the Holder
may
elect to receive shares equal to the value (as determined below) of this
Warrant
(or the portion thereof being exercised) by surrender of this Warrant at
the
principal office of the Company together with the properly endorsed Exercise
Notice in which event the Company shall issue to the Holder within three
(3)
business days a number of shares of Common Stock computed using the following
formula:
X= Y(A-B)
A
Where
X
= the
number of shares of Common Stock to be issued to the Holder
Y
= the
number of shares of Common Stock purchasable under this Warrant or, if only
a
portion of this Warrant is being exercised, the portion of this Warrant being
exercised (at the date of such calculation)
A
= the
Fair
Market Value of one share of the Company’s Common Stock (at the date of such
calculation)
B
= the
Exercise Price per share (as adjusted to the date of such
calculation)
3. Effect
of Reorganization, Etc.; Adjustment of Exercise Price.
3.1 Reorganization,
Consolidation, Merger, Etc.
In case
at any time or from time to time, the Company shall (a) effect a reorganization,
(b) consolidate with or merge into any other person, or (c) transfer all
or
substantially all of its properties or assets to any other person under any
plan
or arrangement contemplating the dissolution of the Company, then, in each
such
case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the Holder, on the
exercise hereof as provided in Section 1 at any time after the consummation
of
such reorganization, consolidation or merger or the effective date of such
dissolution, as the case may be, shall receive, in lieu of the Common Stock
(or
Other Securities) issuable on such exercise prior to such consummation or
such
effective date, the stock and other securities and property (including cash)
to
which such Holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such Holder had
so
exercised this Warrant, immediately prior thereto, all subject to further
adjustment thereafter as provided in Section 4.
3.2 Dissolution.
In the
event of any dissolution of the Company following the transfer of all or
substantially all of its properties or assets, the Company, concurrently
with
any
4
distributions
made to holders of its Common Stock, shall at its expense deliver or cause
to be
delivered to the Holder the stock and other securities and property (including
cash, where applicable) receivable by the Holder pursuant to Section 3.1,
or, if
the Holder shall so instruct the Company, to a bank or trust company specified
by the Holder and having its principal office in New York, NY as trustee
for the
Holder.
3.3 Continuation
of Terms.
Upon
any reorganization, consolidation, merger or transfer (and any dissolution
following any transfer) referred to in this Section 3, this Warrant shall
continue in full force and effect and the terms hereof shall be applicable
to
the shares of stock and other securities and property receivable on the exercise
of this Warrant after the consummation of such reorganization, consolidation
or
merger or the effective date of dissolution following any such transfer,
as the
case may be, and shall be binding upon the issuer of any such stock or other
securities, including, in the case of any such transfer, the person acquiring
all or substantially all of the properties or assets of the Company, whether
or
not such person shall have expressly assumed the terms of this Warrant as
provided in Section 4. In the event this Warrant does not continue in full
force
and effect after the consummation of the transactions described in this Section
3, then the Company’s securities and property (including cash, where applicable)
receivable by the Holder will be delivered to the Holder or the Trustee as
contemplated by Section 3.2.
4. Extraordinary
Events Regarding Common Stock.
In the
event that the Company shall (a) issue additional shares of the Common Stock
as
a dividend or other distribution on outstanding Common Stock or any preferred
stock issued by the Company, (b) subdivide its outstanding shares of Common
Stock, (c) combine its outstanding shares of the Common Stock into a smaller
number of shares of the Common Stock, then, in each such event, the Exercise
Price shall, simultaneously with the happening of such event, be adjusted
by
multiplying the then Exercise Price by a fraction, the numerator of which
shall
be the number of shares of Common Stock outstanding immediately prior to
such
event and the denominator of which shall be the number of shares of Common
Stock
outstanding immediately after such event, and the product so obtained shall
thereafter be the Exercise Price then in effect. The Exercise Price, as so
adjusted, shall be readjusted in the same manner upon the happening of any
successive event or events described herein in this Section 4. The number
of
shares of Common Stock that the holder shall thereafter, on the exercise
hereof
as provided in Section 1, be entitled to receive shall be adjusted to a number
determined by multiplying the number of shares of Common Stock that would
otherwise (but for the provisions of this Section 4) be issuable on such
exercise by a fraction of which (a) the numerator is the Exercise Price that
would otherwise (but for the provisions of this Section 4) be in effect,
and (b)
the denominator is the Exercise Price in effect on the date of such exercise
(taking into account the provisions of this Section 4).
5. Certificate
as to Adjustments.
In each
case of any adjustment or readjustment in the shares of Common Stock (or
Other
Securities) issuable on the exercise of this Warrant, the Company at its
expense
will promptly cause its Chief Financial Officer or other appropriate designee
to
compute such adjustment or readjustment in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment
is
based, including a statement of (a) the consideration received or receivable
by
the Company for any additional shares of Common
5
Stock
(or
Other Securities) issued or sold or deemed to have been issued or sold, (b)
the
number of shares of Common Stock (or Other Securities) outstanding or deemed
to
be outstanding, and (c) the Exercise Price and the number of shares of Common
Stock to be received upon exercise of this Warrant, in effect immediately
prior
to such adjustment or readjustment and as adjusted or readjusted as provided
in
this Warrant. The Company will promptly deliver a copy of each such certificate
to the holder and any Warrant agent of the Company (appointed pursuant to
Section 11 hereof).
6. Reservation
of Stock, Etc., Issuable on Exercise of Warrant.
The
Company will at all times reserve and keep available, solely for issuance
and
delivery on the exercise of this Warrant, shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of this
Warrant.
7. Assignment;
Exchange of Warrant.
Subject
to compliance with applicable securities laws, this Warrant, and the rights
evidenced hereby, may be transferred by any registered holder hereof (a
“Transferor”) in whole or in part. On the surrender for exchange of this
Warrant, with the Transferor’s endorsement in the form of Exhibit B attached
hereto (the “Transferor Endorsement Form”) and together with evidence reasonably
satisfactory to the Company demonstrating compliance with applicable securities
laws, which shall include, without limitation, a legal opinion from the
Company’s counsel (at the Transferor’s expense) that such transfer is exempt
from the registration requirements of applicable securities laws, the Company
at
its expense (but with payment by the Transferor of any applicable transfer
taxes) will issue and deliver to or on the order of the Transferor thereof
a new
Warrant of like tenor, in the name of the Transferor and/or the transferee(s)
specified in such Transferor Endorsement Form (each a “Transferee”), calling in
the aggregate on the face or faces thereof for the number of shares of Common
Stock called for on the face or faces of the Warrant so surrendered by the
Transferor.
8. Replacement
of Warrant.
On
receipt of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant and, in the case of any such loss,
theft or destruction of this Warrant, on delivery of an indemnity agreement
or
security reasonably satisfactory in form and amount to the Company or, in
the
case of any such mutilation, on surrender and cancellation of this Warrant,
the
Company at its expense will execute and deliver, in lieu thereof, a new Warrant
of like tenor.
9. Registration
Rights.
The
Holder has been granted certain registration rights by the Company. These
registration rights are set forth in a Registration Rights Agreement entered
into by the Company and Holder dated as of the date hereof, as the same may
be
amended, modified and/or supplemented from time to time.
10. Maximum
Exercise.
Notwithstanding anything contained herein to the contrary, the Holder shall
not
be entitled to exercise this Warrant in connection with that number of shares
of
Common Stock which would exceed the difference between (i) 9.99% of the issued
and outstanding shares of Common Stock and (ii) the number of shares of Common
Stock beneficially owned by the Holder. For purposes of the immediately
preceding sentence, beneficial ownership shall be determined in accordance
with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation
13d-3 thereunder. The limitation described
6
in
the
first sentence of this Section 10 shall automatically become null and void
following notice to the Company upon the occurrence and during the continuance
of an Event of Default (as defined in the Security Agreement dated as of
the
date hereof among the Holder, the Company and various subsidiaries of the
Company, as amended, modified, restated and/or supplemented from time to
time,
the “Security Agreement”)), or upon 75 days prior notice to the
Company.
11. Warrant
Agent.
The
Company may, by written notice to the each Holder of the Warrant, appoint
an
agent for the purpose of issuing Common Stock (or Other Securities) on the
exercise of this Warrant pursuant to Section 1, exchanging this Warrant pursuant
to Section 7, and replacing this Warrant pursuant to Section 8, or any of
the
foregoing, and thereafter any such issuance, exchange or replacement, as
the
case may be, shall be made at such office by such agent.
12. Transfer
on the Company’s Books.
Until
this Warrant is transferred on the books and records of the Company (or a
transfer agent appointed by the Company), the Company may treat the registered
holder hereof as the absolute owner hereof for all purposes, notwithstanding
any
notice to the contrary.
13. Notices,
Etc.
Any
notice herein required or permitted to be given shall be in writing and shall
be
deemed effectively given: (a) upon personal delivery to the party notified,
(b)
when sent by confirmed telex or facsimile if sent during normal business
hours
of the recipient, if not, then on the next business day, (c) five days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (d) one business day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All communications shall be sent to the respective
Company at the addresses provided for such Company in the Security Agreement
executed in connection herewith, and to the Holder at the address provided
in
the Security Agreement for such Holder, with a copy to Xxxx X. Xxxxxx, Esq.,
000
Xxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000, facsimile number (000) 000-0000, or at such other
address as the respective Company or the Holder may designate by ten days
advance written notice to the other party provided as set forth in this Section
13.
14. Miscellaneous.
This
Warrant and any term hereof may be changed, waived, discharged or terminated
only by an instrument in writing signed by the party against which enforcement
of such change, waiver, discharge or termination is sought. THIS WARRANT
SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW
YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION BROUGHT
CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS WARRANT SHALL BE BROUGHT
ONLY
IN STATE COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE
OF NEW
YORK; PROVIDED, HOWEVER, THAT THE HOLDER MAY CHOOSE TO WAIVE THIS PROVISION
AND
BRING AN ACTION OUTSIDE THE STATE OF NEW YORK. The individuals executing
this
Warrant on behalf of the Company agree to submit to the jurisdiction of such
courts and waive trial by jury. The prevailing party shall be entitled to
recover from the other party its reasonable attorneys’ fees and costs. In the
event that any provision of this Warrant is invalid or unenforceable under
any
applicable statute or rule of law, then such provision shall be deemed
inoperative to the extent that it may conflict therewith and shall be
7
deemed
modified to conform with such statute or rule of law. Any such provision
which
may prove invalid or unenforceable under any law shall not affect the validity
or enforceability of any other provision of this Warrant. The headings in
this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof. The Company acknowledges that legal counsel
participated in the preparation of this Warrant and, therefore, stipulates
that
the rule of construction that ambiguities are to be resolved against the
drafting party shall not be applied in the interpretation of this Warrant
to
favor any party against the other party.
[BALANCE
OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE
PAGE FOLLOWS]
8
IN
WITNESS WHEREOF, the Company has executed this Warrant as of the date first
written above.
|
MAGNETECH
INTEGRATED SERVICES CORP.
|
|||
|
WITNESS:
|
|||
|
By:
|
/s/ Xxxx X. Xxxxxxx | ||
| /s/ Xxxxx X. Xxxx |
Name:
|
Xxxx X. Xxxxxxx | |
|
Title:
|
President & CEO | ||
9
EXHIBIT
A
FORM
OF SUBSCRIPTION
(To
Be
Signed Only On Exercise Of Warrant)
|
TO:
|
Magnetech
Integrated Services Corp.
|
|
0000
X. Xxxxxx Xxxxxx
|
|
|
Xxxxx
Xxxx, Xxxxxxx 00000
|
|
|
Attention:
Chief Financial Officer
|
The
undersigned, pursuant to the provisions set forth in the attached Warrant
(No.
LMF-1), hereby irrevocably elects to purchase (check applicable
box):
|
________
|
________
shares of the Common Stock covered by such Warrant; or
|
|
|
________
|
the
maximum number of shares of Common Stock covered by such Warrant
pursuant
to the cashless exercise procedure set forth in Section
2.
|
The
undersigned herewith makes payment of the full Exercise Price for such shares
at
the price per share provided for in such Warrant, which is $___________.
Such
payment takes the form of (check applicable box or boxes):
|
________
|
$__________
in lawful money of the United States; and/or
|
|
|
________
|
the
cancellation of such number of shares of Common Stock as is necessary,
in
accordance with the formula set forth in Section 2.2, to exercise
this
Warrant with respect to the maximum number of shares of Common
Stock
purchasable pursuant to the cashless exercise procedure set forth
in
Section 2.
|
The
undersigned requests that the certificates for such shares be issued in the
name
of, and delivered to ______________________________________________ whose
address is
___________________________________________________________________________.
The
undersigned represents and warrants that all offers and sales by the undersigned
of the securities issuable upon exercise of the within Warrant shall be made
pursuant to registration of such securities under the Securities Act of 1933,
as
amended (the “Securities Act”) or pursuant to an exemption from registration
under the Securities Act. The undersigned agrees that it shall not offer
or sell
any such securities in a transaction purported to be exempt from registration
under the Securities Act unless such transaction is consummated in accordance
with the requirements of the Securities Act.
|
Dated:
|
___________________________
|
||
|
(Signature
must conform to name of holder as specified on the face of the
Warrant)
|
|||
|
Address:
|
|||
10
EXHIBIT
B
FORM
OF TRANSFEROR ENDORSEMENT
(To
Be
Signed Only On Transfer Of Warrant)
For
value
received, the undersigned hereby sells, assigns, and transfers unto the
person(s) named below under the heading “Transferees” the right represented by
the within Warrant to purchase the percentage and number of shares of Common
Stock of Magnetech Integrated Services Corp. into which the within Warrant
relates specified under the headings “Percentage Transferred” and “Number
Transferred,” respectively, opposite the name(s) of such person(s) and appoints
each such person Attorney to transfer its respective right on the books of
Magnetech Integrated Services Corp. with full power of substitution in the
premises.
|
Transferees
|
Address
|
Percentage
Transferred
|
Number
Transferred
|
|||
|
Dated:
|
__________________________
|
|||||
|
(Signature
must conform to name of holder as specified on the face of the
Warrant)
|
||||||
|
Address:
|
||||||
|
SIGNED
IN THE PRESENCE OF:
|
||||||
|
(Name)
|
||||||
ACCEPTED
AND AGREED:
[TRANSFEREE]
________________________________________________
(Name)
11
