WARRANT AGREEMENT
AGREEMENT, dated as of this day of , 1998, by and
between Muse Technologies, Inc., a Delaware corporation (the "Company") and
American Stock Transfer & Trust Company, as Warrant Agent (the "Warrant Agent").
W I T N E S S E T H:
WHEREAS, in connection with a public offering of 1,200,000 units (the
"Units"), each Unit consisting of one share of common stock, par value $.015
per share ("Common Stock"), and a Class A Redeemable Common Stock Purchase
Warrant (collectively, the "Class A Warrants") to purchase one-half share of
Common Stock, pursuant to an underwriting agreement (the "Underwriting
Agreement") dated as of November , 1998, between the Company and HD ▇▇▇▇▇ &
Co., Inc. (the "Underwriter"), the Company may issue up to six hundred ninety
thousand (690,000) Warrants; and
WHEREAS, in connection with the issuance, pursuant to the
Underwriting Agreement, to the Underwriter or its designees of a unit purchase
option (the "Underwriter's Option"), the Company may issue up to sixty
thousand (60,000) Class B Redeemable Common Stock Purchase Warrants (the
"Class B Warrants"), the Class A Warrants and the Class B Warrants being
collectively referred to as the Warrants; and
WHEREAS, at the date of this Agreement there are outstanding four
hundred twenty three thousand eight hundred eighty one (423,881) Class A
Warrants held by certain selling securityholders; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of
the Company, and the Warrant Agent is willing to so act, in connection with
the issuance, registration, transfer, exchange and redemption of the Warrants,
as hereinafter defined, the issuance of certificates representing the
Warrants, the exercise of the Warrants, and the rights of the holders thereof;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Warrants and the certificates representing the Warrants and
the respective rights and obligations thereunder of the Company, the holders
of certificates representing the Warrants and the Warrant Agent, the parties
hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms
shall have the following meanings, unless the context shall otherwise require:
(a) "Corporate Office" shall mean the office of the Warrant
Agent (or its successor) at which at any particular time its principal
business shall be administered, which office is located at the date of this
Agreement at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
(b) "Effective Date" shall mean the date that the
Registration Statement is declared effective by the Securities and Exchange
Commission (the "Commission").
(c) "Exercise Date" shall mean, as to any Warrant, the date
on which the Warrant Agent shall have received both (a) the Warrant
Certificate representing such Warrant, with the exercise form thereon duly
executed by the Registered Holder thereof or his attorney duly authorized in
writing, and (b) payment in cash, or by official bank or certified check made
payable to the Company, of an amount in lawful money of the United States of
America equal to the Purchase Price; provided, however, that, subject to
Paragraph 4 of this Agreement, if payment shall be made by personal or
corporate check, the exercise of the Warrant shall not be effective until the
Warrant Agent shall be satisfied that the check shall have cleared; provided,
further, that if such payment is made prior to the Warrant Expiration Date or
the expiration of a period during which a reduced Purchase Price is in effect
pursuant to Paragraph 9(f) of this Agreement and the check shall not have
cleared until after the Warrant Expiration Date or such other date, then the
Warrant shall be deemed to have been exercised immediately prior to 5:00 P.M.
New York City time on the Warrant Expiration Date.
(d) "Purchase Price" shall mean the purchase price per share
to be paid upon exercise of each Warrant in accordance with the terms hereof,
which price shall be nine and 60/100 dollars ($9.60) per share for the Class A
Warrants and eleven and 52/100 dollars ($11.52) per share for the Class B
Warrants, subject to adjustment from time to time pursuant to the provisions
of Paragraph 9 of this Agreement.
(e) "Redemption Price" shall mean the price at which the
Company may, at its option, redeem the Warrants, in accordance with the terms
of this Agreement, which price shall be one cent ($.01) per Warrant. The
Redemption Price shall not be subject to adjustment pursuant to this
Agreement.
(f) "Registration Statement" shall mean the Company's
registration statement on Form SB-2, File No. 333-62495, which was declared
effective by the Commission on November , 1998.
(g) "Registered Holder" shall mean, as to any Warrant and as
of any particular date, the person in whose name the certificate representing
the Warrant shall be registered on that date on the books maintained by the
Warrant Agent pursuant to Paragraph 6 of this Agreement.
(h) "Transfer Agent" shall mean American Stock Transfer &
Trust Company, as the Company's transfer agent, or its authorized successor,
as such.
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(i) "Warrant Certificate" shall mean the certificates for
the Warrants in the forms attached as Exhibits A and B to this Agreement.
(j) "Warrant Expiration Date" shall mean 5:00 P.M. New York
City time on the first to occur of (i) November , 2003, or (ii) the business
day immediately preceding the Redemption Date, as defined in Paragraph 8(c) of
this Agreement; provided, that if such date shall in the State of New York be
a holiday or a day on which banks are authorized or required to close, the
Warrant Expiration Date shall be the next day which is not such a date. Upon
notice to all warrant holders the Company shall have the right to extend the
Warrant Expiration Date.
(k) "Warrant Shares" shall mean the shares of Common Stock
issuable upon exercise of the Warrants.
(l) "Warrants" shall mean the Class A Warrants and the Class
B Warrants.
2. Warrants and Issuance of Warrants Certificates.
(a) Each Warrant initially shall entitle the Registered
Holder of the Warrant Certificate representing such Warrant to purchase one
(1) share of Common Stock upon the exercise thereof, in accordance with the
terms of this Agreement, subject to modification and adjustment as provided in
Paragraph 9 of this Agreement.
(b) Upon execution of this Agreement, Warrant Certificates
representing the number of Warrants initially issuable pursuant to the
Underwriting Agreement shall be executed by the Company and delivered to the
Warrant Agent. Upon written order of the Company signed by its President or
Chairman or a Vice President and by its Secretary or an Assistant Secretary or
its Treasurer or an Assistant Treasurer, the Warrant Certificates shall be
countersigned, issued and delivered by the Warrant Agent.
(c) From time to time, up to the Warrant Expiration Date,
the Transfer Agent shall countersign and deliver stock certificates in
required whole number denominations representing the shares of Common Stock
issuable upon the exercise of Warrants in accordance with this Agreement.
(d) From time to time, up to the Warrant Expiration Date,
the Warrant Agent shall countersign and deliver Warrant Certificates in
required whole number denominations to the persons entitled thereto in
connection with any transfer or exchange permitted under this Agreement;
provided that no Warrant Certificates shall be issued except (i) those
initially issued hereunder or otherwise issuable pursuant to the Underwriting
Agreement, including those issuable in exchange for certain outstanding
warrants, (ii) those issued on or after the date of this Agreement, upon the
exercise of fewer than all Warrants represented by any Warrant Certificate, to
evidence any unexercised Warrants held by the exercising Registered Holder,
(iii) those issued
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upon any transfer or exchange pursuant to Paragraph 6 of this Agreement; (iv)
those issued in replacement of lost, stolen, destroyed or mutilated Warrant
Certificates pursuant to Paragraph 7 of this Agreement; (v) those issued
pursuant to the Underwriter's Option, and (vi) at the option of the Company,
in such form as may be approved by the Board of Directors, to reflect any
adjustment or change in the Purchase Price or the number of shares of Common
Stock purchasable upon exercise of the Warrants made pursuant to Paragraph 9
of this Agreement. In addition, at the discretion of the Company, the Company
may authorize the issuance of additional Warrants, which shall be subject to
the provisions of this Agreement.
3. Form and Execution of Warrant Certificates.
(a) The Warrant Certificates for the Class A Warrants and
the Class B Warrants shall be substantially in the form annexed as Exhibits A
and B, respectively, to this Agreement, (the provisions of which are hereby
incorporated herein) and may have such letters, numbers or other marks of
identification or designation and such legends, summaries or endorsements
printed, lithographed or engraved thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may
be required to comply with any law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
the Warrants may be listed, or to conform to usage or to the requirements of
Paragraph 2(b) of this Agreement. The Warrant Certificates shall be dated the
date of issuance thereof (whether upon initial issuance, transfer or exchange
in lieu of mutilated, lost, stolen, or destroyed Warrant Certificates) and
issued in registered form. Warrant Certificates shall be numbered serially
with the letter M or other letters acceptable to the Company and the Warrant
Agent.
(b) Warrant Certificates shall be executed on behalf of the
Company by its Chairman of the Board, President or any Vice President and by
its Secretary or an Assistant Secretary, by manual signatures or by facsimile
signatures printed thereon, and shall have imprinted thereon a facsimile of
the Company's seal. Warrant Certificates shall be manually countersigned by
the Warrant Agent and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed any of
the Warrant Certificates shall cease to be an officer of the Company or to
hold the particular office referenced in the Warrant Certificate before the
date of issuance of the Warrant Certificates or before countersignature by the
Warrant Agent and issue and delivery thereof, such Warrant Certificates may
nevertheless be countersigned by the Warrant Agent, issued and delivered with
the same force and effect as though the person who signed the Warrant
Certificates had not ceased to be an officer of the Company or to hold such
office. After countersignature by the Warrant Agent,
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Warrant Certificates shall be delivered by the Warrant Agent to the Registered
Holder without further action by the Company, except as otherwise provided by
Paragraph 4 of this Agreement.
4. Exercise. Each Warrant may be exercised by the Registered
Holder thereof at any time after the issuance thereof, but not after the
Warrant Expiration Date, upon the terms and subject to the conditions set
forth herein and in the Warrant Certificate. A Warrant shall be deemed to have
been exercised immediately prior to the close of business on the Exercise Date
and the person entitled to receive the securities deliverable upon such
exercise shall be treated for all purposes as the holder of those securities
upon the exercise of the Warrant as of the close of business on the Exercise
Date. As soon as practicable on or after the Exercise Date, the Warrant Agent
shall deposit the proceeds received from the exercise of a Warrant and shall
notify the Company in writing of the exercise of the Warrant. Promptly
following, and in any event within five (5) days after the date of such notice
from the Warrant Agent, the Warrant Agent, on behalf of the Company, shall
cause to be issued and delivered by the Transfer Agent, to the person or
persons entitled to receive the same, a certificate or certificates for the
securities deliverable upon such exercise, (plus a certificate for any
remaining unexercised Warrants of the Registered Holder) unless prior to the
date of issuance of such certificates the Company shall instruct the Warrant
Agent to refrain from causing such issuance of certificates pending clearance
of checks received in payment of the Purchase Price pursuant to such Warrants.
Notwithstanding the foregoing, in the case of payment made in the form of a
check drawn on an account of the Underwriter or such other investment banks
and brokerage houses as the Company shall approve in writing to the Warrant
Agent, by the Underwriter or such other investment bank or brokerage house,
certificates shall immediately be issued without prior notice to the Company
or any delay. Upon the exercise of any Warrant and clearance of the funds
received, the Warrant Agent shall promptly remit the payment received for the
Warrant (the "Warrant Proceeds") to the Company or as the Company may direct
in writing.
5. Reservation of Shares; Listing; Payment of Taxes.
(a) The Company covenants that it will at all times reserve
and keep available out of its authorized Common Stock, solely for the purpose
of issue upon exercise of Warrants, such number of shares of Common Stock as
shall then be issuable upon the exercise of all outstanding Warrants. The
Company covenants that all Warrant Shares shall, at the time of delivery in
accordance with this Agreement, be duly and validly issued, fully paid,
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof (other than those which the Company shall promptly pay or
discharge), and that upon issuance such shares shall be listed on each
national securities exchange or eligible for inclusion in each automated
quotation system,
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if any, on which the other shares of outstanding Common Stock of the Company
are then listed or eligible for inclusion.
(b) The Company covenants that if any securities to be
reserved for the purpose of exercise of Warrants hereunder require
registration with, or approval of, any governmental authority under any
Federal securities law before such securities may be validly issued or
delivered upon such exercise, then the Company will in good faith and as
expeditiously as reasonably possible, endeavor to secure such registration or
approval. The Company will use reasonable efforts to obtain appropriate
approvals or registrations under state "blue sky" securities laws. With
respect to any such securities, however, Warrants may not be exercised by, or
shares of Common Stock issued to, any Registered Holder in any state in which
such exercise would be unlawful.
(c) The Company shall pay all documentary, stamp or similar
taxes and other governmental charges that may be imposed with respect to the
issuance of Warrants, or the issuance, or delivery of any shares upon exercise
of the Warrants; provided, however, that if the shares of Common Stock are to
be delivered in a name other than the name of the Registered Holder of the
Warrant Certificate representing any Warrant being exercised, then no such
delivery shall be made unless the person requesting the same has paid to the
Warrant Agent the amount of transfer taxes or charges incident thereto, if
any.
(d) The Warrant Agent is hereby irrevocably authorized to
requisition the Company's Transfer Agent from time to time for certificates
representing shares of Common Stock issuable upon exercise of the Warrants,
and the Company will authorize the Transfer Agent to comply with all such
proper requisitions. The Company will file with the Warrant Agent a statement
setting forth the name and address of the Transfer Agent of the Company for
shares of Common Stock issuable upon exercise of the Warrants.
6. Exchange and Registration of Transfer.
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants of the same
class or may be transferred in whole or in part. Warrant Certificates to be
exchanged shall be surrendered to the Warrant Agent at its Corporate Office,
and upon satisfaction of the terms and provisions of this Agreement, the
Company shall execute and the Warrant Agent shall countersign, issue and
deliver in exchange therefor the Warrant Certificate or Certificates which the
Registered Holder making the exchange shall be entitled to receive.
(b) The Warrant Agent shall keep at its office books in
which, subject to such reasonable regulations as it may prescribe, it shall
register Warrant Certificates and the transfer
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thereof in accordance with its regular practice. Upon due presentment for
registration of transfer of any Warrant Certificate at such office, the
Company shall execute and the Warrant Agent shall issue and deliver to the
transferee or transferees a new Warrant Certificate or Certificates
representing an equal aggregate number of Warrants.
(c) With respect to all Warrant Certificates presented for
registration or transfer, or for exchange or exercise, the subscription form
on the reverse thereof shall be duly endorsed, or be accompanied by a written
instrument or instruments of transfer and subscription, in form satisfactory
to the Company and the Warrant Agent, duly executed by the Registered Holder
or his attorney-in-fact duly authorized in writing.
(d) A reasonable service charge may be imposed by the
Warrant Agent for any exchange or registration of transfer of Warrant
Certificates. In addition, the Company may require payment by such holder of a
sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any exchanges, registration or transfer of Warrant
Certificates.
(e) All Warrant Certificates surrendered for exercise or for
exchange in case of mutilated Warrant Certificates shall be promptly canceled
by the Warrant Agent and thereafter retained by the Warrant Agent until
termination of this Agreement or resignation as Warrant Agent, or, with the
prior written consent of the Underwriter, disposed of or destroyed, at the
direction of the Company.
(f) Prior to due presentment for registration of transfer
thereof, the Company and the Warrant Agent may deem and treat the Registered
Holder of any Warrant Certificate as the absolute owner thereof and of each
Warrant represented thereby (notwithstanding any notations of ownership or
writing thereon made by anyone other than a duly authorized officer of the
Company or the Warrant Agent) for all purposes and shall not be affected by
any notice to the contrary.
(g) Notwithstanding any other provisions of this Agreement,
no Warrants issued upon exercise of the Underwriter's Option and no shares of
Common Stock issuable upon exercise of such Warrants may be sold, transferred,
assigned or hypothecated for a period of one year from the Effective Date
except to the officers of the Underwriters or to selling group members or
officers or partners thereof, all of whom shall be bound by such restrictions.
Until the expiration of such one-year period, Warrant certificates and stock
certificates shall be marked with a legend referring to such restriction.
7. Loss or Mutilation. Upon receipt by the Company and the
Warrant Agent of evidence satisfactory to them of the ownership of and loss,
theft, destruction or mutilation of any Warrant Certificate and (in case of
loss, theft or destruction) of indemnity satisfactory to them, and
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(in the case of mutilation) upon surrender and cancellation thereof, the
Company shall execute and the Warrant Agent shall (in the absence of notice to
the Company and/or Warrant Agent that the Warrant Certificate has been
acquired by a bona fide purchaser) countersign and deliver to the Registered
Holder in lieu thereof a new Warrant Certificate of like tenor representing an
equal aggregate number of Warrants. Applicants for a substitute Warrant
Certificate shall comply with such other reasonable regulations and pay such
other reasonable charges as the Warrant Agent may prescribe.
8. Redemption.
(a) Commencing twelve (12) months from the Effective Date or
earlier with the consent of the Underwriter, the Company shall have the right,
on not less than thirty (30) nor more than sixty (60) days notice given prior
to the Redemption Date, as hereinafter defined, at any time to redeem the then
outstanding Class A Warrants and/or Class B Warrants at the Redemption Price,
provided that the Market Price of the Common Stock shall equal or exceed the
"Target Price" with respect to the class of Warrants as to which the Company
is exercising its right of redemption. The "Target Price" shall mean one
hundred twenty five percent (125%) of the Purchase Price with respect to the
applicable class of Warrants. Market Price for the purpose of this Paragraph 8
shall mean, if the Common Stock is listed on the Nasdaq Stock Market or the
New York or American Stock Exchange, the average last reported sales price
(or, if no sale is reported on any such trading day, the average of the
closing bid and asked prices) on the principal market for the Common Stock or,
if the Common Stock is not so listed or traded, the average the last reported
bid prices of the Common Stock, during the twenty (20) day period ending
within five (5) days of the date the Warrants are called for redemption.
Notice of redemption shall be mailed by first class mail, postage prepaid, not
later than five (5) business days (or such longer period to which the
Underwriter may consent) after the date the Warrants are called for
redemption. All Warrants of any class of Warrants must be redeemed if any
Warrants of such class are redeemed.
(b) If the conditions set forth in Paragraph 8(a) of this
Agreement are met, and the Company desires to exercise its right to redeem the
Warrants, it shall request the Underwriter or the Warrant Agent to mail the
notice of redemption referred to in said Paragraph 8(a) to each of the
Registered Holders of the Warrants to be redeemed, first class, postage
prepaid, not earlier than the sixtieth (60th) day nor later than the thirtieth
(30th) day before the date fixed for redemption, at their last addresses as
shall appear on the records maintained pursuant to Paragraph 6(b) of this
Agreement. Any notice mailed in the manner provided herein shall be
conclusively presumed to have been duly given whether or not the Registered
Holder receives
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such notice. The Warrant Agent agrees to mail such notice if requested by the
Company or the Underwriter.
(c) The notice of redemption shall specify (i) the
Redemption Price, (ii) the date fixed for redemption, (iii) the place where
the Warrant Certificates shall be delivered and the redemption price to be
paid, and (iv) that the right to exercise the Warrants shall terminate at 5:00
p.m. (New York City time) on the business day immediately preceding the date
fixed for redemption. The date fixed for the redemption of the Warrants shall
be the Redemption Date. No failure to mail such notice nor any defect therein
or in the mailing thereof shall affect the validity of the proceedings for
such redemption except as to a Registered Holder (A) to whom notice was not
mailed or (B) whose notice was defective. An affidavit of the Warrant Agent or
of the Secretary or an Assistant Secretary of the Representative or the
Company that notice of redemption has been mailed shall, in the absence of
fraud, be prima facie evidence of the facts stated therein.
(d) If either class of Warrant shall have been redeemed, any
right to exercise a Warrant of such class shall terminate at 5:00 p.m. (New
York City time) on the business day immediately preceding the Redemption Date.
After such time, Holders of the Warrants shall have no further rights except
to receive, upon surrender of the Warrant, the Redemption Price without
interest, subject to the provisions of applicable laws relating to the
treatment of abandoned property. In the event that the Warrants or the Warrant
Shares shall not be subject to a current and effective registration statement
under the Securities Act of 1933, as amended, at any time subsequent to the
date the Warrants are called for redemption, the notice of redemption shall
not be effective and shall be deemed for all purposes not to have been given.
Nothing in the preceding sentence shall be construed to prohibit or restrict
the Company from thereafter calling the Warrants for redemption in the manner
provided for, and subject to the provisions of, this Paragraph 8.
(e) From and after the Redemption Date with respect to the
Warrants, the Company shall, at the place specified in the notice of
redemption, upon presentation and surrender to the Company by or on behalf of
the Registered Holder thereof of one or more Warrant Certificates evidencing
Warrants to be redeemed, deliver or cause to be delivered to or upon the
written order of such Holder a sum in cash equal to the Redemption Price of
each such Warrant. From and after the Redemption Date and upon the deposit or
setting aside by the Company of a sum sufficient to redeem all the Warrants
called for redemption, such Warrants shall expire and become void and all
rights hereunder and under the Warrant Certificates, except the right to
receive payment of the Redemption Price, shall cease.
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(f) Notwithstanding any other provision of this Agreement,
the Company shall not call the Warrants for redemption unless there is, at the
time the Warrants are called for redemption, a current and effective
registration statement or a post-effective amendment to the registration
statement covering the issuance of the shares of Common Stock issuable upon
exercise of the Warrants.
(g) In the event that the Underwriter's Option is exercised
at a time subsequent to the redemption of the Warrants but prior to the
Warrant Expiration Date, as defined in Paragraph 1(j) of this Agreement, then,
notwithstanding any other provisions of this Agreement, the Warrants issued
upon such exercise may be redeemed by the Company at any time after issuance.
9. Adjustment of Exercise Price and Number of Securities Issuable
upon Exercise of Warrants.
(a) In case the Company shall, at any time or from time to
time after the date of this Agreement, pay a dividend or make a distribution
on its shares of Common Stock in shares of Common Stock, subdivide or
reclassify its outstanding Common Stock into a greater number of shares, or
combine or reclassify its outstanding Common Stock into a smaller number of
shares or otherwise effect a combination of shares or reverse split, the
Purchase Price in effect at the time of the record date for such dividend or
distribution or of the effective date of such subdivision, combination or
reclassification shall be proportionately adjusted so that the holder of any
Warrant exercised after such date shall be entitled to receive the aggregate
number and kind of shares which, if such Warrant had been exercised
immediately prior to such time, he would have owned upon such exercise and
been entitled to receive upon such dividend, subdivision, combination or
reclassification. Such adjustment shall be made successively whenever any
event listed in this Paragraph 9(a) shall occur.
(b) In case the Company shall, at any time or from time to
time after the date of this Agreement, issue rights or warrants to all holders
of its Common Stock entitling them to subscribe for or purchase shares of
Common Stock (or securities convertible into Common Stock) at a price (or
having a conversion price per share) less than the current market price of the
Common Stock (as defined in Paragraph 9(e) of this Agreement) on the record
date mentioned below, the Purchase Price shall be adjusted so that the same
shall equal the price determined by multiplying the Purchase Price in effect
immediately prior to the date of such issuance by a fraction, of which the
numerator shall be the number of shares of Common Stock outstanding on the
record date mentioned below plus the number of additional shares of Common
Stock which the aggregate offering price of the total number of shares of
Common Stock so offered (or the
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aggregate conversion price of the convertible securities so offered) would
purchase at such current market price per share of the Common Stock, and of
which the denominator shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of Common
Stock offered for subscription or purchase (or into which the convertible
securities so offered are convertible). Such adjustment shall be made
successively whenever such rights or warrants are issued and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants; and to the extent
that shares of Common Stock are not delivered (or securities convertible into
Common Stock are not delivered) after the expiration of such rights or
warrants, the Purchase Price shall be readjusted to the Purchase Price which
would then be in effect had the adjustments made upon the issuance of such
rights or warrants been made upon the basis of delivery of only the number of
shares of Common Stock (or securities convertible into Common Stock) actually
delivered.
(c) In case the Company shall, at any time or from time to
time after the date hereof, distribute to all holders of Common Stock
evidences of its indebtedness or assets (excluding cash dividends or
distributions paid out of current earnings and dividends or distributions
referred to in Paragraph 9(a) of this Agreement) or subscription rights or
warrants (excluding those referred to in Paragraph 9(b) of this Agreement),
then in each such case the Purchase Price in effect thereafter shall be
determined by multiplying the Purchase Price in effect immediately prior
thereto by a fraction, of which the numerator shall be the total number of
shares of Common Stock outstanding multiplied by the current market price per
share of Common Stock (as defined in Paragraph 9(e) of this Agreement), less
the fair market value (as determined by the Company's Board of Directors) of
said assets or evidences of indebtedness so distributed or of such rights or
warrants, and of which the denominator shall be the total number of shares or
Common Stock outstanding multiplied by such current market price per share of
Common Stock. Such adjustment shall be made whenever any such distribution is
made and shall become effective immediately after the record date for the
determination of stockholders entitled to receive such distribution.
(d) Whenever the Purchase Price payable upon exercise of
each Warrant is adjusted pursuant to Paragraphs 9(a), (b) or (c) of this
Agreement, the number of shares of Common Stock purchasable upon exercise of
each Warrant shall simultaneously be adjusted by multiplying the number of
shares issuable upon exercise of each Warrant in effect on the date thereof by
the Purchase Price in effect on the date thereof and dividing the product so
obtained by the Purchase Price, as adjusted.
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(e) For the purpose of any computation pursuant to
Paragraphs 9(b) and (c) of this Agreement, the current market price per share
of Common Stock at any date shall be deemed to be the average of the daily
closing prices for thirty (30) consecutive business days commencing forty-five
(45) business days before such date. The closing price for each day shall be
the reported last sale price regular way or, in case no such reported sale
takes place on such day, the average of the last reported high bid and low
asked prices regular way, in either case on the principal national securities
exchange on which the Common Stock is admitted to trading or listed, if the
Common Stock is admitted to trading or listing on the New York or American
Stock Exchange or on The Nasdaq Stock Market if included in such system or if
not listed or admitted to trading on such exchange or system, the average of
the highest bid and lowest asked prices as reported by Nasdaq, or the National
Quotation Bureau, Inc. or another similar organization if Nasdaq is no longer
reporting such information, or if not so available, the fair market price as
determined by the Board of Directors of the Company.
(f) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least two
cents ($0.02) in such price; provided, however, that any adjustments which by
reason of this Paragraph 9(f) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Paragraph 9 shall be made to the nearest cent or to the nearest
one-tenth of a share, as the case may be. Anything in this Paragraph 9 to the
contrary notwithstanding, the Company may, upon notice to the record holders
of the Warrants, in its sole discretion, reduce the Purchase Price of the
Warrants, and, if such reduction is not otherwise required by this Paragraph
9, such reduction (i) will not, unless the Board of Directors otherwise
determines, result in any change in the number or class of shares of Common
Stock issuable upon exercise of such Warrants, and (ii) may be of limited
duration, in which event the reduction in Purchase Price shall not apply to
any Warrants exercised after the expiration of the time during which the
reduced Purchase Price is in effect.
(g) The Company may retain a firm of independent public
accountants (who may be the regular accountants employed by the Company) of
recognized standing selected by the Board of Directors of the Company to make
any computation required by this Paragraph 9, and a certificate signed by such
firm shall be conclusive evidence of the correctness of such adjustment.
(h) In the event that at any time, as a result of an
adjustment made pursuant to Paragraph 9(a) of this Agreement, the holder of
any Warrant thereafter shall become entitled to receive any shares of the
Company, other than Common Stock, thereafter the number of such
- 12 -
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
Paragraphs 9(a) to (f), inclusive, of this Agreement.
(i) The Company may elect, upon any adjustment of the
Purchase Price hereunder, to adjust the number of Warrants outstanding, in
lieu of the adjustment in the number of shares of Common Stock purchasable
upon the exercise of each Warrant as hereinabove provided, so that each
Warrant outstanding after such adjustment shall represent the right to
purchase one share of Common Stock. Each Warrant held of record and each
Warrant issuable upon exercise of the Underwriter's Option prior to such
adjustment of the number of Warrants shall become that number of Warrants or
an Underwriter's Option to purchase that number of Warrants (calculated to the
nearest tenth) determined by multiplying the number one by a fraction, the
numerator of which shall be the Purchase Price in effect immediately prior to
such adjustment and the denominator of which shall be the Purchase Price in
effect immediately after such adjustment. Upon each adjustment of the number
of Warrants pursuant to this Paragraph 9, the Company shall, as promptly as
practicable, cause to be distributed to each Registered Holder of Warrant
Certificates on the date of such adjustment Warrant Certificates evidencing,
subject to Paragraph 10 of this Agreement, the number of additional Warrants
to which such Holder shall be entitled as a result of such adjustment or, at
the option of the Company, cause to be distributed to such Holder in
substitution and replacement for the Warrant Certificates held by him prior to
the date of adjustment (and upon surrender thereof, if required by the
Company) new Warrant Certificates evidencing the number of Warrants to which
such Holder shall be entitled after such adjustment. With respect to the
Representative's Option, the Company shall give the registered holders of the
Representative's Option notice as to the number of Warrants issuable in
respect of such Representative's Option reflecting such adjustment. Any
Warrants or notice to registered holders of Representative's Option may be
mailed by the Warrant Agent or by first class mail, postage prepaid.
(j) In case of any reclassification, capital reorganization
or other change of outstanding shares of Common Stock, or in case of any
consolidation or merger of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the continuing
corporation and which does not result in any reclassification, capital
reorganization or other change of outstanding shares of Common Stock), or in
case of any sale or conveyance to another corporation of the property of the
Company as, or substantially as, an entirety (other than a sale/leaseback,
mortgage or other financing transaction), the Company shall cause effective
provision to be made so that each holder of a Warrant then outstanding shall
have the
- 13 -
right thereafter, by exercising such Warrant, to purchase the kind and number
of shares of stock or other securities or property (including cash) receivable
upon such reclassification, capital reorganization or other change,
consolidation, merger, sale or conveyance by a holder of the number of shares
of Common Stock that might have been purchased upon exercise of such Warrant
immediately prior to such reclassification, capital reorganization or other
change, consolidation, merger, sale or conveyance. Any such provisions shall
include provision for adjustments that shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Paragraph 9. The Company
shall not effect any such consolidation, merger or sale unless, prior to or
simultaneously with the consummation thereof, the successor (if other than the
Company) resulting from such consolidation or merger or the corporation
purchasing assets or other appropriate corporation or entity shall assume, by
written instrument executed and delivered to the Warrant Agent, the obligation
to deliver to the holder of each Warrant such shares of stock, securities or
assets as, in accordance with the foregoing provisions, such holders may be
entitled to purchase and the other obligations under this Agreement. The
foregoing provisions shall similarly apply to successive reclassifications,
capital reorganizations and other changes of outstanding shares of Common
Stock and to successive consolidations, mergers, sales or conveyances. In the
event that, as a result of any merger, consolidation or similar transaction,
all of the holders of Common Stock receive and are entitled to receive no
consideration other than cash in respect of their shares of Common Stock,
then, at the effective time of the transaction, the rights to purchase Common
Stock pursuant to the Warrants shall terminate, and the holders of the
Warrants shall, notwithstanding any other provisions of this Agreement or the
Warrants, receive in respect of each Warrant to purchase one (1) share of
Common Stock, upon presentation of the Warrant Certificate, the amount by
which the consideration per share of Common Stock payable to the holders of
Common Stock at such effective time exceeds the Purchase Price in effect on
such effective date, without giving effect to the transaction. In the event
that, subsequent to the effective time, additional cash or other consideration
is payable to the holders of Common Stock of record as of the effective time,
the same consideration shall be payable to the holders of the Warrants to the
extent that the total cash then received by the holders of Common Stock
exceeds the Purchase Price in effect at such effective date, without giving
effect to the transaction, with the same effect as if the Warrants had been
exercised on and as of such effective time. In the event of any merger,
consolidation, sale or lease of substantially all of the Company's assets or
reorganization whereby the Company is not the surviving corporation, in lieu
of the foregoing provisions of this Paragraph 9(j), the Company may provide in
the agreement relating to the transaction that each Warrant shall become, be
converted into
- 14 -
or be exchanged for, such securities of the surviving or acquiring corporation
or other entity as has a value equal to the value of the Warrants (which shall
not exceed the amount by which the consideration to be received per share of
Common Stock (valued on such date as the Company's board of directors shall
determine) exceeds the exercise price of the Warrant), the value of the
Warrants and securities being issued in exchange therefor to be determined by
the Company's Board of Directors, such determination to be final, binding and
conclusive on the Company and the holders of the Warrants. In the event that,
in such a transaction, the value of the consideration to be received per share
of Common Stock is not greater than the exercise price of the Warrants, the
Warrants shall terminate and no consideration will be paid with respect
thereof.
(k) Irrespective of any adjustments or changes in the
Purchase Price or the number of shares of Common Stock purchasable upon
exercise of the Warrants, the Warrant Certificates theretofore and thereafter
issued shall, unless the Company shall exercise its option to issue new
Warrant Certificates pursuant to Paragraphs 2(e) and 9(i) of this Agreement,
continue to express the Purchase Price per share, the number of shares
purchasable thereunder and the Redemption Price therefor as to the Purchase
Price per share, and the number of shares purchasable and the Redemption Price
therefore were expressed in the Warrant Certificates when the same were
originally issued.
(l) After any adjustment of the Purchase Price pursuant to
this Paragraph 9, the Company will promptly prepare a certificate signed by
the Chairman, President, Vice President or Treasurer, of the Company setting
forth: (i) the Purchase Price as so adjusted, (ii) the number of shares of
Common Stock purchasable upon exercise of each Warrant after such adjustment,
and, if the Company shall have elected to adjust the number of Warrants, the
number of Warrants to which the registered holder of each Warrant shall then
be entitled, and (iii) a brief statement of the facts accounting for such
adjustment. The Company will promptly file such certificate with the Warrant
Agent and cause a brief summary thereof to be sent by first class mail to the
Representative and to each registered holder of Warrants at his last address
as it shall appear on the registry books of the Warrant Agent. No failure to
mail such notice nor any defect therein or in the mailing thereof shall affect
the validity thereof. The affidavit of an officer of the Warrant Agent or the
Secretary or an Assistant Secretary of the Company that such notice has been
mailed shall, in the absence of fraud, constitute prima facie evidence of the
facts stated therein.
(m) As used in this Paragraph 9, the term "Common Stock"
shall mean and include the Company's Common Stock authorized on the Effective
Date and shall also include any capital stock of any class of the Company
thereafter authorized which shall not be limited to a fixed sum or percentage
in respect of the rights of the holders thereof to participate in dividends
- 15 -
and in the distribution of assets upon the voluntary liquidation, dissolution
or winding up of the Company; provided, however, that the shares issuable upon
exercise of the Warrants shall include only shares of such class designated in
the Company's Certificate of Incorporation as Common Stock on the Effective
Date or, in the case of any reclassification, change, consolidation, merger,
sale or conveyance of the character referred to in Paragraph 9(j) of this
Agreement, the stock, securities or property provided for in such section or,
in the case of any reclassification or change in the outstanding shares of
Common Stock issuable upon exercise of the Warrants as a result of a
subdivision or combination or consisting of a change in par value, or from par
value to no par value, or from no par value to par value, such shares of
Common Stock as so reclassified or changed.
(n) Any determination as to whether an adjustment in the
Purchase Price in effect hereunder is required pursuant to this Paragraph 9,
or as to the amount of any such adjustment, if required, shall be binding upon
the holders of the warrants and the Company if made in good faith by the Board
of Directors of the Company.
(o) In lieu of an adjustment pursuant to Paragraph 9(b) of
this Agreement, if the Company shall grant to the holders of Common Stock, as
such, rights or warrants to subscribe for or to purchase Common Stock or
securities convertible into or exchangeable for or carrying a right or warrant
to purchase Common Stock, the Company may concurrently therewith grant to each
Registered Holder as of the record date for such transaction of the Warrants
then outstanding, the rights or warrants to which each Registered Holder would
have been entitled if, on the record date used to determine the stockholders
entitled to the rights or warrants being granted by the Company, the
Registered Holder were the holder of record of the number of whole shares of
Common Stock then issuable upon exercise of his Warrants. If the Company
exercises such right no adjustment which otherwise might be called for
pursuant to said Paragraph 9(b) shall be made.
10. Fractional Warrants and Fractional Shares. If the number of
shares of Common Stock purchasable upon the exercise of each Warrant is
adjusted pursuant to Paragraph 9 of this Agreement, the Company nevertheless
shall not be required to issue fractions of shares, upon exercise of the
Warrants or otherwise, or to distribute certificates that evidence fractional
shares. With respect to any fraction of a share called for upon any exercise
hereof, the Company shall pay to the Holder an amount in cash equal to such
fraction multiplied by the current market value of such fractional share,
determined as follows:
(a) If the Common Stock is listed on the New York or
American Stock Exchange or admitted to unlisted trading privileges on such
exchange or listed for trading on the Nasdaq
- 16 -
Stock Market, the current value shall be the reported last sale price of the
Common Stock on such exchange or system on the last business day prior to the
date of exercise of this Warrant, or if no such sale is made on such day, the
average closing bid and asked prices for such day on such exchange or system;
or
(b) If the Common Stock is not listed or admitted to
unlisted trading privileges, the current value shall be the last reported bid
price reported by the National Quotation Bureau, Inc. on the last business day
prior to the date of the exercise of this Warrant; or
(c) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid prices are not so reported, the current
value shall be an amount determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company.
11. Warrant Holders Not Deemed Stockholders. No holder of Warrants
shall, as such, be entitled to vote or to receive dividends or be deemed the
holder of Common Stock that may at any time be issuable upon exercise of such
Warrants for any purpose whatsoever, nor shall anything contained in this
Agreement be construed to confer upon the holder of Warrants, 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, issue or reclassification of stock, change
of par value or change of stock to no par value, consolidation, merger or
conveyance or otherwise), or to receive notice of meetings, or to receive
dividends or subscription rights, until such Holder shall have exercised such
Warrants and been issued shares of Common Stock in accordance with the
provisions hereof.
12. Rights of Action. All rights of action with respect to this
Agreement are vested in the respective Registered Holders of the Warrants, and
any Registered Holder of a Warrant, without consent of the Warrant Agent or of
the holder of any other Warrant, may, in his own behalf and for his own
benefit, enforce against the Company his right to exercise his Warrants for
the purchase of shares of Common Stock in the manner provide in the Warrant
Certificate and this Agreement.
13. Agreement of Warrant Holders. Every holder of a Warrant, by
his acceptance of the Warrants, consents and agrees with the Company, the
Warrant Agent and every other holder of a Warrant that:
(a) The warrants are transferable only on the registry books
of the Warrant Agent by the Registered Holder thereof in person or by his
attorney duly authorized in writing and only if the Warrant Certificates
representing such Warrants are surrendered at the office of the Warrant Agent,
duly endorsed or accompanied by a proper instrument of transfer satisfactory
to the
- 17 -
Warrant Agent and the Company in their sole discretion, together with payment
of any applicable transfer taxes; and
(b) The Company and the Warrant Agent may deem and treat the
person in whose name the Warrant Certificate is registered as the holder and
as the absolute, true and lawful owner of the Warrants represented thereby for
all purposes, and neither the Company nor the Warrant Agent shall be affected
by any notice or knowledge to the contrary, except as otherwise expressly
provided in Paragraph 6 of this Agreement.
14. Cancellation of Warrant Certificates. If the Company shall
purchase or acquire any Warrant or Warrants, the Warrant Certificate or
Warrant Certificates evidencing the same shall thereupon be delivered to the
Warrant Agent and canceled by it and retired.
15. Concerning the Warrant Agent.
(a) The Warrant Agent acts hereunder as agent and in a
ministerial capacity for the Company, and its duties shall be determined
solely by the provisions of this Agreement. The Warrant Agent shall not, by
issuing and delivering Warrant certificates or by any other act hereunder be
deemed to make any representations as to the validity, value or authorization
of the Warrant Certificates or the Warrants represented thereby or of any
securities or other property delivered upon exercise of any Warrant or whether
any stock issued upon exercise of any Warrant is fully paid and nonassessable.
(b) The Warrant Agent shall not at any time be under any
duty or responsibility to any holder of Warrant Certificates to make or cause
to be made any adjustment of the Purchase Price or the Redemption Price
provided in this Agreement, or to determine whether any fact exists which may
require any such adjustments, or with respect to the nature or extent of any
such adjustment, when made, or with respect to the method employed in making
the same. It shall not (i) be liable for any recital or statement of facts
contained herein or for any action taken, suffered or omitted by it in
reliance on any Warrant Certificate or other document or instrument believed
by it in good faith to be genuine and to have been signed or presented by the
proper party or parties, (ii) be responsible for any failure on the part of
the Company to comply with any of its covenants and obligations contained in
this Agreement or in any Warrant Certificate, or (iii) be liable for any act
or omission in connection with this Agreement except for its own negligence or
wilful misconduct.
(c) The Warrant Agent may at any time consult with counsel
satisfactory to it (who may be counsel for the Company) and shall incur no
liability or responsibility for any action taken, suffered or omitted by it in
good faith in accordance with the opinion or advice of such counsel.
- 18 -
(d) Any notice, statement, instrument, request, direction,
order or demand of the Company shall be sufficiently evidenced by an
instrument signed by the Chairman of the Board, President, any Vice President,
its Secretary, or Assistant Secretary, unless other evidence in respect
thereof is specifically prescribed in this Agreement. The Warrant Agent shall
not be liable for any action taken, suffered or omitted by it in accordance
with such notice, statement, instruction, request, direction, order or demand
believed by it to be genuine.
(e) The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse it for its reasonable
expenses hereunder; it further agrees to indemnify the Warrant Agent and save
it harmless against any and all costs and counsel fees, for anything done or
omitted by the Warrant Agent in the execution of its duties and powers
hereunder except losses, expenses and liabilities arising as a result of the
Warrant Agent's negligence or wilful misconduct.
(f) The Warrant Agent may resign its duties and be
discharged from all further duties and liabilities hereunder (except
liabilities arising as a result of the Warrant Agent's own negligence or
wilful misconduct), after giving thirty (30) days' prior written notice to the
Company. At least fifteen (15) days prior to the date such resignation is to
become effective, the Warrant Agent shall cause a copy of such notice of
resignation to be mailed to the Registered Holder of each Warrant Certificate
at the Company's expense. Upon such resignation, or any inability of the
Warrant Agent to act as such under this Agreement, the Company shall appoint a
new warrant agent in writing. If the Company shall fail to make such
appointment within a period of fifteen (15) days after it has been notified in
writing of such resignation by the resigning Warrant Agent, then the
Registered Holder of any Warrant Certificate may apply to any court of
competent jurisdiction for the appointment of a new warrant agent. Any new
warrant agent, whether appointed by the Company or by such a court, shall be a
bank or trust company having a capital and surplus, as shown by its last
published report to its stockholders, of not less than $10,000,000 or a stock
transfer company. After acceptance in writing of such appointment by the new
warrant agent is received by the Company, such new warrant agent shall be
vested with the same powers, rights, duties and responsibilities as if it had
been originally named herein as the Warrant Agent, without any further
assurance, conveyance, act or deed; but if for any reason, it shall be
necessary or expedient to execute and deliver any further assurance,
conveyance, act or deed, the same shall be done at the expense of the Company
and shall be legally and validly executed and delivered by the resigning
Warrant Agent. Not later than the effective date of any such appointment the
Company shall file notice thereof with the resigning Warrant Agent and shall
forthwith cause a copy of such notice to be mailed to the Registered Holder of
each Warrant Certificate.
- 19 -
(g) Any corporation into which the Warrant Agent or any new
warrant agent may be converted or merged or any corporation resulting from any
consolidation to which the Warrant Agent or any new warrant agent shall be a
party or any corporation succeeding to the trust business of the Warrant Agent
shall be a successor warrant agent under this Agreement without any further
act, provided that such corporation is eligible for appointment as successor
to the Warrant Agent under the provisions of the preceding paragraph. Any such
successor warrant agent shall promptly cause notice of its succession as
warrant agent to be mailed to the Company and to the Registered Holder of each
Warrant Certificate.
(h) The Warrant Agent, its subsidiaries and affiliates, and
any of its or their officers or directors, may buy and hold or sell Warrants
or other securities of the Company and otherwise deal with the Company in the
same manner and to the same extent and with like effects as though it were not
Warrant Agent. Nothing herein shall preclude the Warrant Agent from acting in
any other capacity for the Company or for any other legal entity.
16. Modification of Agreement. The Warrant Agent and the Company
may, by supplemental agreement, make any changes or corrections in this
Agreement (i) that they shall deem appropriate to cure any ambiguity or to
correct any defective or inconsistent provision or manifest mistake or error
herein contained; or (ii) that they may deem necessary or desirable and which
shall not adversely affect the interests of the holders of Warrant
Certificates; provided, however, that this Agreement shall not otherwise be
modified, supplemented or altered in any respect except with the consent in
writing of the Registered Holders of Warrant Certificates representing not
less than fifty percent (50%) of the Warrants then outstanding; and provided,
further, that no change in the number or nature of the securities purchasable
upon the exercise of any Warrant, or the Purchase Price therefor, or the
acceleration of the Warrant Expiration Date, shall be made without the consent
in writing of the Registered Holder of the Warrant Certificate representing
such Warrant, other than such changes as are specifically prescribed by this
Agreement as originally executed or are made in compliance with applicable
law; and provided, further, that Paragraphs 4(b) and 4(c) may not be modified
or amended without the consent of the Underwriter.
17. Notices. All notices provided for in this Agreement shall be
in writing signed by the party giving such notice, and, unless otherwise
expressly provided in this Agreement, delivered personally or sent by
overnight courier or messenger against receipt thereof or sent by registered
or certified mail (air mail if overseas), return receipt requested, or by
facsimile transmission or similar means of communication. Notices sent by
facsimile transmission or similar means of communication shall be confirmed by
acknowledged receipt or by registered or certified mail,
- 20 -
return receipt requested. Notices shall be deemed to have been received on the
date of personal delivery or telecopy or, if sent by certified or registered
mail, return receipt requested, shall be deemed to be delivered on the third
business day after the date of mailing. Notices shall be sent to the
Registered Holders at their respective addresses on the Warrant Agent's
warrant register, to the Company at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, telecopier (505) 766- 9123, Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
President and Chief Executive Officer, and to the Warrant Agent at its
Corporate Office, telecopier (▇▇▇) ▇▇▇-▇▇▇▇. Either party may, by like notice,
change the address, person or telecopier number to which notice should be
given.
18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements entered and to be performed wholly within such State, without
regard to principles of conflicts of laws. The parties hereby (a) irrevocably
consent and agree that any legal or equitable action or proceeding arising
under or in connection with this Agreement shall be brought exclusively in any
Federal or state court situated in New York County, New York, (b) irrevocably
submit to and accept, with respect to their respective properties and assets,
generally and unconditionally, the in personam jurisdiction of the aforesaid
courts and (c) agree that any process in any action commenced in such court
under this Agreement may be served upon such party personally, by certified or
registered mail, return receipt requested, or by overnight courier service
which obtains evidence of delivery, with the same full force and effect as if
personally served upon such party in New York City, in addition to any other
method of service permitted by law.
19. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the Company and, the Warrant Agent and their respective
successors and assigns, and the holders from time to time of Warrant
Certificates. Nothing in this Agreement is intended or shall be construed to
confer upon any other person any right, remedy or claim, in equity or at law,
or to impose upon any other person any duty, liability or obligation.
20. Termination. This Agreement shall terminate at the close of
business on the Expiration Date of all the Warrants or such earlier date upon
which all Warrants have been exercised, except that the Warrant Agent shall
account to the Company for cash held by it, and the provisions of Paragraph 15
of this Agreement shall survive any such termination.
21. Counterparts. This Agreement may be executed in several
counterparts, which taken together shall constitute a single document.
- 21 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
MUSE TECHNOLOGIES, INC
By:
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President and CEO
AMERICAN STOCK TRANSFER &
TRUST COMPANY
By:
------------------------------------
, Authorized Officer
- 22 -
EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
No. M- Warrant to Purchase
---------
Shares of Common Stock
Void after November __, 2003 (or earlier upon redemption).
MUSE TECHNOLOGIES, INC
CLASS A REDEEMABLE COMMON STOCK PURCHASE WARRANT
This certifies that FOR VALUE RECEIVED _______________________________
or registered assigns (the "Registered Holder") is the owner of the number of
Class A Redeemable Common Stock Purchase Warrants ("Warrants") specified
above. Each Warrant initially entitles the Registered Holder to purchase,
subject to the terms and conditions set forth in this Certificate and the
Warrant Agreement (as hereinafter defined), one (1) fully paid and
nonassessable share of Common Stock, par value $.015 per share ("Common
Stock"), of Muse Technologies, Inc., a Delaware corporation (the "Company"),
at any time during the period commencing with the issuance of this Warrant and
ending on the Expiration Date, as hereinafter defined, by delivery of this
Warrant, with the Subscription Form on the reverse hereof duly executed, at
the corporate office of American Stock Transfer & Trust Company, as Warrant
Agent, or its successor (the "Warrant Agent"), accompanied by payment of
$9.60, subject to adjustment as provided in the Warrant Agreement (the
"Purchase Price") in lawful money of the United States of America in cash or
by official bank or certified check made payable to the order of the Company.
This Warrant Certificate and each Warrant represented hereby are
issued pursuant to and are subject in all respects to the terms and conditions
set forth in the Warrant Agreement (the "Warrant Agreement"), dated as of
November__, 1998, by and between the Company and the Warrant Agent.
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price or the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject
to modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional shares of Common Stock will be issued. In
the case of the exercise of less than all the Warrants represented hereby, the
Company shall cancel this Warrant Certificate upon the surrender hereof and
shall execute and deliver a new Warrant Certificates or Warrant Certificates
of like tenor, which the Warrant Agent shall countersign, for the balance of
such Warrants.
The term "Expiration Date" shall mean 5:00 P.M. (New York City time)
on November __, 2003 or earlier upon redemption as hereinafter provided. If
such date shall in the State of New York be a holiday or a day on which the
banks are authorized or required to close, then the Expiration Date shall mean
5:00 P.M. (New York City time) the next following day which in the State of
New York is not a holiday or a day on which banks are authorized or required
to close. Under certain circumstances as provided in the Warrant Agreement,
the period during which the Warrant may be exercised may be extended.
The Company shall not be obligated to deliver any securities pursuant
to the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, as amended, with respect to such securities is
effective. The Company has covenanted and agreed that it will file a
registration statement and will use its commercially reasonably efforts to
cause the same to become effective and to keep such registration statement
current while any of the Warrants are outstanding. This Warrant shall not be
exercisable by a Registered Holder in any state where such exercise would be
unlawful.
This Warrant Certificate is exchangeable, upon the surrender hereof
by the Registered Holder at the corporate office of the Warrant Agent, for a
new Warrant Certificate or Warrant Certificates of like tenor representing an
equal aggregate number of Warrants, each of such new Warrant Certificates to
represent such number of Warrants as shall
- 23 -
be designated by such Registered Holder at the time of such surrender. Upon
payment by the Registered Holder of any tax or other governmental charge
imposed in connection therewith, for registration of transfer of this Warrant
Certificate at such office, a new Warrant Certificate or Warrant Certificate
representing an equal aggregate number of Warrants will be issued to the
transferee in exchange therefor, subject to the limitations provided in the
Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the
Registered Holder shall not be entitled to any rights of a stockholder of the
Company, including, without limitation, the right to vote or to receive
dividends or other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided in the Warrant
Agreement.
Commencing, November __, 1999, or earlier as provided in the
Warrant Agreement, this Warrant may be redeemed at the option of the Company,
at a redemption price of $.01 per Warrant at any time, provided the average
closing price for the Common Stock issuable upon exercise of such Warrant
shall equal or exceed $12.00 per share, subject to adjustment, for the twenty
day period prior to the date which is five days before the date the Warrants
are called for redemption. Notice of redemption shall be given not earlier
than the thirtieth (30th) day before the date fixed for redemption, all as
provided in the Warrant Agreement. On and after 5:00 P.M. (New York City time)
on the business day immediately preceding the date fixed for redemption, the
Registered Holder shall have no rights with respect to this Warrant except to
receive the $.01 per Warrant upon surrender of this Certificate. This Warrant
may only be called for redemption if, on the date the Warrant is called for
redemption, the issuance of the shares of Common Stock upon exercise of this
Warrant is subject to a current and effective registration statement.
Prior to due presentment for registration of transfer hereof, the
Company and the Warrant Agent may deem and treat the Registered Holder as the
absolute owner hereof and of each Warrant represented hereby (notwithstanding
any notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements
executed and to be performed wholly within such State, without regard to
principles of conflicts of laws.
This Warrant Certificate is not valid unless countersigned by the
Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be duly executed, manually or in facsimile by two of its officers thereunto
duly authorized and a facsimile of its corporate seal to be imprinted hereon.
MUSE TECHNOLOGIES, INC
Dated: By:
--------------------- --------------------------------
By:
--------------------------------
Countersigned:
AMERICAN STOCK TRANSFER & [Seal]
TRUST COMPANY
as Warrant Agent
By:
--------------------------------
Authorized Officer
- 24 -
MUSE TECHNOLOGIES, INC.
SUBSCRIPTION FORM
To Be Executed by the Registered Holder in Order to Exercise Warrants
THE UNDERSIGNED REGISTERED HOLDER hereby irrevocably elects to
exercise______________ Warrants represented by this Warrant Certificiate to
purchase the securities issuable upon the exercise of such Warrants, and
requests that certificates for such securities shall be issued in the name of
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(please print or type name and address)
Please insert Social Security
or other identifying number
------------------------------------
and be delivered to
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(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
Date: X
---------------------- ----------------------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
Address
-----------------------------------------
Taxpayer Identification Number
-----------------------------------------
Signature Medallion Guaranteed
- 25 -
ASSIGNMENT
To Be Executed by the Registered Holder in Order to Assign Warrants
FOR VALUE RECEIVED, __________________________________________________
hereby sells, assigns and transfers onto
Please insert social security
or other identifying number
------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
(please print or type name and address)
______________________________ of the Warrants represented by this Warrant
Certificate, and hereby irrevocably constitutes and appoints
_______________________________________________________________________Attorney
to transfer this Warrant Certificate on the books of the Company, with full
power of substitution in the premises.
Date: X
------------------- ---------------------------------------
Signature Medallion Guaranteed
----------------------------------------
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO
THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER. AND
MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION (AS DEFINED IN RULE 17Ad-15
UNDER THE SECURITIES AND EXCHANGE ACT OF 1934) WHICH MAY INCLUDE A COMMERCIAL
BANK OR TRUST COMPANY, SAVINGS ASSOCIATION, CREDIT UNION OR A MEMBER FIRM OF
THE AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE
OR MIDWEST STOCK EXCHANGE.
- 26 -
EXHIBIT B
[FORM OF FACE OF WARRANT CERTIFICATE]
No. MB- Warrant to Purchase
---------
Shares of Common Stock
Void after November __ , 2003 (or earlier upon redemption).
MUSE TECHNOLOGIES, INC
CLASS B REDEEMABLE COMMON STOCK PURCHASE WARRANT
This certifies that FOR VALUE RECEIVED _______________________________
or registered assigns (the "Registered Holder") is the owner of the number of
Class B Redeemable Common Stock Purchase Warrants ("Warrants") specified
above. Each Warrant initially entitles the Registered Holder to purchase,
subject to the terms and conditions set forth in this Certificate and the
Warrant Agreement (as hereinafter defined), one (1) fully paid and
nonassessable share of Common Stock, par value $.015 per share ("Common
Stock"), of Muse Technologies, Inc., a Delaware corporation (the "Company"),
at any time during the period commencing with the issuance of this Warrant and
ending on the Expiration Date, as hereinafter defined, by delivery of this
Warrant, with the Subscription Form on the reverse hereof duly executed, at
the corporate office of American Stock Transfer & Trust Company, as Warrant
Agent, or its successor (the "Warrant Agent"), accompanied by payment of
$11.52, subject to adjustment as provided in the Warrant Agreement (the
"Purchase Price") in lawful money of the United States of America in cash or
by official bank or certified check made payable to the order of the Company.
This Warrant Certificate and each Warrant represented hereby are
issued pursuant to and are subject in all respects to the terms and conditions
set forth in the Warrant Agreement (the "Warrant Agreement"), dated as of
November__, 1998, by and between the Company and the Warrant Agent.
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price or the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject
to modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional shares of Common Stock will be issued. In
the case of the exercise of less than all the Warrants represented hereby, the
Company shall cancel this Warrant Certificate upon the surrender hereof and
shall execute and deliver a new Warrant Certificates or Warrant Certificates
of like tenor, which the Warrant Agent shall countersign, for the balance of
such Warrants.
The term "Expiration Date" shall mean 5:00 P.M. (New York City time)
on November __, 2003 or earlier upon redemption as hereinafter provided. If
such date shall in the State of New York be a holiday or a day on which the
banks are authorized or required to close, then the Expiration Date shall mean
5:00 P.M. (New York City time) the next following day which in the State of
New York is not a holiday or a day on which banks are authorized or required
to close. Under certain circumstances as provided in the Warrant Agreement,
the period during which the Warrant may be exercised may be extended.
The Company shall not be obligated to deliver any securities pursuant
to the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, as amended, with respect to such securities is
effective. The Company has covenanted and agreed that it will file a
registration statement and will use its commercially reasonably efforts to
cause the same to become effective and to keep such registration statement
current while any of the Warrants are outstanding. This Warrant shall not be
exercisable by a Registered Holder in any state where such exercise would be
unlawful.
This Warrant Certificate is exchangeable, upon the surrender hereof
by the Registered Holder at the corporate office of the Warrant Agent, for a
new Warrant Certificate or Warrant Certificates of like tenor representing an
equal aggregate number of Warrants, each of such new Warrant Certificates to
represent such number of Warrants as shall be designated by such Registered
Holder at the time of such surrender. Upon payment by the Registered Holder of
- 27 -
any tax or other governmental charge imposed in connection therewith, for
registration of transfer of this Warrant Certificate at such office, a new
Warrant Certificate or Warrant Certificate representing an equal aggregate
number of Warrants will be issued to the transferee in exchange therefor,
subject to the limitations provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the
Registered Holder shall not be entitled to any rights of a stockholder of the
Company, including, without limitation, the right to vote or to receive
dividends or other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided in the Warrant
Agreement.
Commencing, November ____, 1999, or earlier as provided in the
Warrant Agreement, this Warrant may be redeemed at the option of the Company,
at a redemption price of $.01 per Warrant at any time, provided the average
closing price for the Common Stock issuable upon exercise of such Warrant
shall equal or exceed $14.40 per share, subject to adjustment, for the twenty
day period prior to the date which is five days before the date the Warrants
are called for redemption. Notice of redemption shall be given not earlier
than the thirtieth (30th) day before the date fixed for redemption, all as
provided in the Warrant Agreement. On and after 5:00 P.M. (New York City time)
on the business day immediately preceding the date fixed for redemption, the
Registered Holder shall have no rights with respect to this Warrant except to
receive the $.01 per Warrant upon surrender of this Certificate. This Warrant
may only be called for redemption if, on the date the Warrant is called for
redemption, the issuance of the shares of Common Stock upon exercise of this
Warrant is subject to a current and effective registration statement.
Prior to due presentment for registration of transfer hereof, the
Company and the Warrant Agent may deem and treat the Registered Holder as the
absolute owner hereof and of each Warrant represented hereby (notwithstanding
any notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements
executed and to be performed wholly within such State, without regard to
principles of conflicts of laws.
This Warrant Certificate is not valid unless countersigned by the
Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate
to be duly executed, manually or in facsimile by two of its officers thereunto
duly authorized and a facsimile of its corporate seal to be imprinted hereon.
MUSE TECHNOLOGIES, INC
Dated: By:
--------------------- --------------------------------
By:
--------------------------------
Countersigned:
AMERICAN STOCK TRANSFER & [Seal]
TRUST COMPANY
as Warrant Agent
By:
--------------------------------
Authorized Officer
- 28 -
MUSE TECHNOLOGIES, INC.
SUBSCRIPTION FORM
To Be Executed by the Registered Holder in Order to Exercise Warrants
THE UNDERSIGNED REGISTERED HOLDER hereby irrevocably elects to
exercise______________ Warrants represented by this Warrant Certificiate to
purchase the securities issuable upon the exercise of such Warrants, and
requests that certificates for such securities shall be issued in the name of
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
(please print or type name and address)
Please insert Social Security
or other identifying number
------------------------------------
and be delivered to
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
Date: X
---------------------- ----------------------------------------
-----------------------------------------
-----------------------------------------
-----------------------------------------
Address
-----------------------------------------
Taxpayer Identification Number
-----------------------------------------
Signature Medallion Guaranteed
- 29 -
ASSIGNMENT
To Be Executed by the Registered Holder in Order to Assign Warrants
FOR VALUE RECEIVED, __________________________________________________
hereby sells, assigns and transfers onto
Please insert social security
or other identifying number
------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
(please print or type name and address)
______________________________ of the Warrants represented by this Warrant
Certificate, and hereby irrevocably constitutes and appoints
_______________________________________________________________________Attorney
to transfer this Warrant Certificate on the books of the Company, with full
power of substitution in the premises.
Date: X
------------------- ---------------------------------------
Signature Medallion Guaranteed
----------------------------------------
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO
THE NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER. AND
MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION (AS DEFINED IN RULE 17Ad-15
UNDER THE SECURITIES AND EXCHANGE ACT OF 1934) WHICH MAY INCLUDE A COMMERCIAL
BANK OR TRUST COMPANY, SAVINGS ASSOCIATION, CREDIT UNION OR A MEMBER FIRM OF
THE AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE
OR MIDWEST STOCK EXCHANGE.
- 30 -
