1
EXHIBIT 10.44
UNIT AND WARRANT AGREEMENT
Implant Sciences Corporation, a Massachusetts corporation (the
"Company"), and American Securities Transfer & Trust, Inc. ("AST"), 0000
Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000, a Colorado corporation (the
"Agent"), agree as follows:
1. Purpose. The Company proposes to publicly offer and issue
1,150,000 units ("Units"), each Unit consisting of (i) one
share (a "Share") of the Company's common stock, $.10 par
value per share ("Common Stock"), and (ii) one Redeemable
Common Stock Purchase Warrant (a "Warrant") permitting the
purchase of one Share of Common Stock. The Agent has agreed to
serve as Transfer Agent for the Common Stock and the preferred
stock, $.10 par value per share, of the Company pursuant to
that certain Agreement Appointing Transfer Agent and
Registrar, dated October 19, 1998, between the Company and the
Agent (the "Transfer Agent Agreement"). The Company and the
Agent now wish to provide for the Agent to act as transfer
agent for the Units and warrant agent for the Warrants.
Subject to the terms and conditions of this Agreement and the
Transfer Agent Agreement, the Company hereby authorizes the
Agent to originally issue, register and countersign
certificates representing the Units and the Warrants covered
by this Agreement upon being furnished with an appropriate
written request signed by an officer of the Company, a
certified copy of the resolutions of the Board of Directors or
a copy of
2
the minutes of a meeting of the Board of Directors authorizing
such issuance and, if specifically requested by the Agent, an
opinion of counsel regarding the status of such securities
under the Securities Act of 1933, as amended (the "Securities
Act"), and any other applicable Federal or state statutes. The
Agent hereby agrees to serve as transfer agent for the Units
and warrant agent for the Warrants and to establish and
maintain such books and records as may be required for the
performance of its agency duties and responsibilities, and to
establish and maintain ledgers for the Company and to make
entries therein of all Certificates (as defined in Section 5)
issued, canceled and transferred.
2. Units. The Common Stock and the Warrants which comprise the
Units will trade only as Units until the earlier of (a)
thirteen months after ___ (the date of the Prospectus for the
initial public offering of the Units (the "Prospectus Date"))
or (b) such time as may be determined by ISG Solid Capital
Markets, LLC and Xxxxxxxxx Securities, Inc. (collectively, the
"Representatives"); but in any event for a period of not less
than 30 days from the Prospectus Date. Such time being
hereinafter referred to as the "Separation Date." In the event
that the Separation Date shall occur as a result of the
decision of the Representatives, the Company shall promptly so
notify the Agent in writing. After the occurrence of the
Separation Date, Units shall be treated as separate Shares and
Warrants on the books and ledgers maintained by the Agent.
After the Separation Date the Agent shall cease to issue
certificates representing Units
2
3
and shall issue certificates representing Shares and Warrants
and/or make other appropriate book entries upon the exchange,
split up, or transfer of a Unit.
3. Warrants. Subject to this Agreement including, without
limitation, Sections 4, 8, 12, and 13, each Warrant will
entitle the registered holder of a Warrant ("Warrant Holder")
to purchase from the Company one Share at 120% of the initial
public offering price per share of the Common Stock included
in the Units (the "Exercise Price"). A Warrant Holder may
exercise all or any number of Warrants resulting in the
purchase of a whole number of Shares.
4. Exercise Period. Subject to this Agreement including, without
limitation, Section 8, the Warrants may be exercised at any
time during the period commencing thirteen months after the
Prospectus Date (the "Commencement Date") and ending at 5:00
p.m., New York City time three years after the Commencement
Date (as such date may be extended in accordance with the
provisions of Section 8(h) hereof, the "Expiration Date").
After the Expiration Date, any unexercised Warrants will be
void and all rights of Warrant Holders shall cease.
5. Certificates. The Unit Certificates shall be in registered
form only and shall be substantially in the form set forth in
Exhibit A attached to this Agreement. Unit Certificates shall
be signed by, or shall bear the facsimile signature of, the
President or a Vice President of the Company and the Treasurer
or an Assistant Treasurer of
3
4
the Company and shall bear a facsimile of the Company's
corporate seal. If any person, whose facsimile signature has
been placed upon any Unit Certificate as the signature of an
officer of the Company, shall have ceased to be such officer
before such Unit Certificate is countersigned, issued and
delivered, such Unit Certificate shall be countersigned,
issued and delivered with the same effect as if such person
had not ceased to be such officer. Any Unit Certificate may be
signed by, or made to bear the facsimile signature of, any
person who at the actual date of the preparation of such Unit
Certificate shall be a proper officer of the Company to sign
such Unit Certificate even though such person was not such an
officer upon the date of the Agreement.
The Warrant Certificates shall be in registered form
only and shall be substantially in the form set forth in
Exhibit B attached to this Agreement. Warrant Certificates
shall be signed by, or shall bear the facsimile signature of,
the President or a Vice President of the Company and the
Treasurer or an Assistant Treasurer of the Company and shall
bear a facsimile of the Company's corporate seal. If any
person, whose facsimile signature has been placed upon any
Warrant Certificate as the signature of an officer of the
Company, shall have ceased to be such officer before such
Warrant Certificate is countersigned, issued and delivered,
such Warrant Certificate shall be countersigned, issued and
delivered with the same effect as if such person had not
ceased to be such officer. Any Warrant Certificate may be
signed by, or made to bear the facsimile signature of, any
person who at the actual date of the preparation of such
Warrant Certificate shall be a proper officer of the Company
to
4
5
sign such Warrant Certificate even though such person was not
such an officer upon the date of the Agreement.
The Company shall furnish the Agent with a sufficient
quantity of blank Certificates and from time to time will
renew such supply upon the reasonable request of the Agent.
Such blank Certificates shall be properly signed by officers
of the Company authorized by law and in accordance with the
Company's by-laws to sign such Certificates and, if requested
by the Agent, shall bear the corporate seal or a facsimile
thereof.
Unit Certificates and Warrant Certificates are
sometimes hereinafter referred to collectively as
"Certificates." The holder of a Certificate is referred to
herein as a "Holder".
6. Countersigning. Certificates shall be manually countersigned
by the Agent and shall not be valid for any purpose unless so
countersigned. The Agent hereby is authorized to countersign
and deliver to, or in accordance with the proper instructions
of, any Unit Holder or Warrant Holder any Certificate which is
properly issued.
7. Registration of Transfer and Exchanges. Subject to this
Agreement including, without limitation, Sections 1 and 2, the
Agent shall from time to time register the transfer of any
outstanding Certificate upon records maintained by the Agent
for such
5
6
purpose upon surrender of such Certificate to the Agent for
transfer, accompanied by appropriate instruments of transfer
in form satisfactory to the Company and the Agent and duly
executed by the Holder or a duly authorized attorney. Upon any
such registration of transfer, a new Certificate or
Certificates shall be issued in the name of and to the
transferee and the surrendered Certificate shall be canceled.
8. Exercise and Redemption of Warrants.
(a) Subject to this Agreement including, without
limitation, Sections 8(i), 12 and 13, any one Warrant
or any multiple of one Warrant evidenced by any
Warrant Certificate may be exercised upon any single
occasion on or after the Exercise Date, and on or
before the Expiration Date (as more particularly set
forth in Section 4). A Warrant shall be exercised by
the Warrant Holder by surrendering to the Agent the
Warrant Certificate evidencing such Warrant with the
exercise form on the reverse of such Warrant
Certificate duly completed and executed and
delivering to the Agent, by good check or bank draft
payable to the order of the Company, the Exercise
Price for each Share to be purchased.
(b) Upon receipt of a Warrant Certificate with the
exercise form thereon duly executed together with
payment in full of the Exercise Price for the Shares
for which Warrants are then being exercised, the
Agent shall requisition from any transfer agent for
the Shares, and upon receipt shall make delivery of,
certificates evidencing the total number of whole
Shares for which Warrants
6
7
are then being exercised in such names and
denominations as are required for delivery to, or in
accordance with the instructions of, the Warrant
Holder. Such certificates for the Shares shall be
deemed to be issued, and the person to whom such
Shares are issued of record shall be deemed to have
become a holder of record of such Shares, as of the
date of the surrender of such Warrant Certificate and
payment of the Exercise Price, whichever shall last
occur; provided that if the books of the Company with
respect to the Shares shall be deemed to be closed,
the person to whom such Shares are issued of record
shall be deemed to have become a record holder of
such Shares, as of the date on which such books shall
next be open (whether before, on or after the
Expiration Date), whichever shall have last occurred.
(c) If less than all the Warrants evidenced by a Warrant
Certificate are exercised upon a single occasion, a
new Warrant Certificate for the balance of the
Warrants not so exercised shall be issued and
delivered to, or in accordance with, transfer
instructions properly given by the Warrant Holder
until the Expiration Date.
(d) All Warrant Certificates surrendered upon exercise of
the Warrants shall be canceled and shall not be
reissued.
(e) Upon the exercise of any Warrant, the Agent shall
promptly deposit the payment into an escrow account
established by mutual agreement of the Company and
the Agent at a federally insured commercial bank. All
funds deposited in the escrow account will be
disbursed on a weekly basis to the
7
8
Company once they have been determined by the Warrant
Agent to be collected funds. Once the funds are
determined to be collected, the Warrant Agent shall
cause the share certificate(s) representing the
exercised Warrants to be issued.
(f) Usual and customary out-of-pocket expenses incurred
by American Securities Transfer & Trust, Inc. while
acting in the capacity as Agent will be paid by the
Company. These expenses, including costs of delivery
of Share certificates to the Warrant Holder upon
exercise of Warrants, will be deducted from the
exercise fee submitted prior to distribution of funds
to the Company. A detailed accounting statement
relating to the number of Shares exercised, names of
registered Warrant Holder(s) and the net amount of
exercised funds remitted will be given to the Company
with the payment of each exercise amount.
(g) Except as otherwise provided in Section 9 of this
Agreement, at the time of exercise of the Warrant(s),
the transfer fee is to be paid by the Company. In the
event the shareholder must pay the fee and fails to
remit same, the fee will be deducted from the
proceeds prior to distribution to the Company.
(h) The Company in its sole discretion, may extend the
Expiration Date. If the Company elects to do so, it
will give not less than 30 days prior written notice
of such extension, specifying the date to which the
Expiration Date has been extended, to the Agent, the
Warrant Holders and to any stock exchange or Self
Regulatory Organization on which the Warrants may be
listed.
8
9
(i) The Company may redeem the Warrants after the
Warrants become exercisable, by giving notice to the
Agent, if the Common Stock of the Company shall have
had a Closing Price (hereinafter defined) of not less
than 140% per share of the assumed initial public
offering price of the Common Stock included in the
Units for a period of 15 consecutive trading days
after the Warrants became exercisable. The Company
shall pay Warrant Holders $.20 per Warrant for each
Warrant not exercised prior to the close of business
on the date specified in the notice ("Redemption Call
Date"). Whenever the Exercise Price is adjusted
pursuant to Section 13, a similar and proportionate
adjustment will be made in the redemption price. Such
notice shall contain a certification by the Company
that the above condition to redemption of the
Warrants has been satisfied. Notice of redemption
shall be mailed by the Agent to all registered
holders of Warrants in accordance with the provisions
of Section 20, at least 30 days, but no more than 60
days, prior to the Redemption Call Date. The Agent
shall mail such notice to all registered holders of
Warrants on a date designated by the Company, but in
no event shall such designated date be earlier than
the fifth business day after the date on which the
Agent received notice of the redemption from the
Company. The right to exercise the Warrants shall
expire at the close of business on the Redemption
Call Date. At the time of any such notice or any time
after such notice or prior to the Redemption Call
Date, the Company may deposit, or cause its nominee
to deposit, the aggregate redemption price (the
calculation
9
10
of which shall be certified by the Company or its
agents) for disbursal of the monies so deposited upon
proper surrender of the Warrants. In the event the
Warrant Holder shall not, within three years after
the Redemption Call Date, claim the amount deposited
for the redemption of the Warrants, the depositary
shall upon demand pay over to the Company such
unclaimed amounts and shall thereafter be relieved
from all responsibility.
(j) As used in this Warrant Agreement, the term "Closing
Price" of the shares of Common Stock for a day or
days shall mean (i) if the shares of Common Stock are
not listed or admitted for trading on a national
securities exchange, (A) the closing bid price of the
shares of Common Stock in the Nasdaq Small Cap Market
(or on the Nasdaq Stock Market, if so quoted) or (B)
if the shares of Common Stock are not so quoted, in
the over-the-counter market, as reported by the
National Quotation Bureau, Inc., or an equivalent
generally accepted reporting service, or (ii) if the
shares of Common Stock are listed or admitted for
trading on a national securities exchange, the last
reported sale price regular way, or, in case no such
reported sale takes place on such day or days, the
reported closing bid price regular way, in either
case on the principal national securities exchange on
which the shares of Common Stock are listed or
admitted for trading.
9. Transfer Taxes and Fees. The Company will pay all transfer
taxes and fees attributable to the initial issuance of Shares
upon exercise of Warrants. The Company
10
11
shall not, however, be required to pay any transfer taxes and
fees which may be payable in respect to any transfer involved
in any issue of Unit Certificates or Warrant Certificates or
in the issue of any certificates of Shares in the name other
than that of the Warrant Holder upon the exercise of any
Warrant.
10. Mutilated or Missing Certificates. On receipt by the Company
and the Agent of evidence satisfactory as to the ownership of
and the loss, theft, destruction or mutilation of any
Certificate, the Company shall execute and the Agent shall
countersign and deliver in lieu thereof, a new Certificate
representing an equal aggregate number of Units or Warrants as
the case may be. In the case of loss, theft or destruction of
any Certificate, the Holder requesting issuance of a new
Certificate shall be required to secure an indemnity bond from
an approved surety bonding company. In the event a Certificate
is mutilated, such Certificate shall be surrendered and
canceled by the Agent prior to delivery of a new Certificate.
Applicants for a substitute Certificate shall also comply with
such other regulations and pay such other reasonable charges
as the Agent may prescribe.
11. Reservation of Shares. For the purpose of enabling the Company
to satisfy all obligations to issue Shares upon exercise of
Warrants, the Company will at all times reserve and keep
available free from preemptive rights, out of the aggregate of
its authorized but unissued shares, the full number of Shares
which may be issued upon the exercise of the Warrants and such
Shares will upon issue be fully paid and
11
12
nonassessable by the Company and free from all taxes, liens,
charges and security interests with respect to the issue
thereof.
12. Governmental Restrictions. If any Shares issuable upon the
exercise of Warrants require registration or approval of any
governmental authority, the Company will endeavor to secure
such registration or approval; provided that in no event shall
such Shares be issued, and the Company shall have the
authority to suspend the exercise of all Warrants, until such
registration or approval shall have been obtained. If any such
period of suspension continues past the Expiration Date, all
Warrants, the exercise of which have been requested on or
prior to the Expiration Date, shall be exercisable upon the
removal of such suspension until the close of business on the
business day immediately following the expiration of such
suspension.
Notwithstanding any other provision of this Agreement or of
the Warrants to the contrary, the Warrants shall not be
exercisable by the holder of any Warrant Certificate (a) if a
registration statement covering the issuance of the shares of
Common Stock subject to such Warrant is not effective at the
time of exercise or an exception from registration not
available or (b) if such holder is resident in a jurisdiction
under the securities or blue sky laws of which the shares of
Common Stock issuable upon exercise of such Warrant
Certificate are not registered or qualified or exempt from
registration or qualification or in which a current prospectus
12
13
meeting the requirements of the laws of such jurisdiction
cannot be lawfully delivered by or on behalf of the Company.
The Company covenants and agrees that it will file a
registration statement under the Securities Act, (which
registration statement may be the registration statement for
the Company's initial public offering), use its best efforts
to cause such registration statement to become effective, use
its best efforts to keep such registration statement current,
if required under the Securities Act, while any of the
Warrants are outstanding, and deliver a prospectus which
complies with Section 10(a) (3) of the Securities Act to any
Holder exercising a Warrant (if so required by the Securities
Act).
13. Adjustment of Exercise Price, Number of Shares, or Number of
Warrants. The Exercise Price, the number and kind of
securities purchasable upon the exercise of each Warrant, and
the number of Warrants outstanding shall be subject to
adjustment from time to time upon the happening of the events
enumerated in this Section 13.
(a) In case the Company shall at any time after the date
of this Warrant Agreement (i) pay a dividend in
shares of Common Stock or other stock of the Company
or make a distribution in shares of Common Stock or
such other stock to holders of all its outstanding
shares of Common Stock, (ii) subdivide the
outstanding shares of Common Stock, (iii) combine the
outstanding shares of Common Stock into a smaller
number of shares of Common Stock, or (iv)
13
14
issue by reclassification of its shares of Common
Stock other securities of the Company (including any
such reclassification in connection with a
consolidation or merger in which the Company is the
continuing corporation), the number and kind of
shares purchasable upon exercise of each Warrant
outstanding immediately prior thereto shall be
adjusted so that the holder of each Warrant shall be
entitled to receive at the same aggregate Warrant
Exercise Price the kind and number of shares of
Common Stock or other securities of the Company which
the holder would have owned or have been entitled to
receive after the happening of any of the events
described above had such Warrant been exercised in
full immediately prior to the earlier of the
happening of such event or any record date with
respect thereto. In the event of any adjustment of
the total number of shares of Common Stock
purchasable upon the exercise of the then outstanding
Warrants pursuant to this paragraph (a), the Exercise
Price shall be adjusted to be the amount resulting
from dividing the number of shares of Common Stock
(including fractional shares of Common Stock) covered
by such Warrant immediately after such adjustment
into the total amount payable upon exercise of such
Warrant in full immediately prior to such adjustment.
An adjustment made pursuant to this paragraph 13(a)
shall become effective immediately after the
effective date of such event retroactive to the
record date, if any, for such event. Such adjustment
shall be made successively whenever any event listed
above shall occur.
14
15
(b) In case the Company shall issue rights, options, or
warrants to all holders of its outstanding shares of
Common Stock, entitling them (for a period expiring
within 45 days after the record date for the
determination of stockholders entitled to receive
such rights, options, or warrants) to subscribe for
or purchase shares of Common Stock (or securities
exchangeable for or convertible into shares of Common
Stock) at a price per share of Common Stock (or
having an exchange or conversion price per share of
Common Stock, with respect to a security exchangeable
for or convertible into shares of Common Stock) which
is less than 95% of the current Market Price per
share of Common Stock (as defined in paragraph (d) of
Section 13) on such record date, then the Exercise
Price shall be adjusted by multiplying the Exercise
Price in effect immediately prior to such record date
by a fraction, of which the numerator shall be the
number of shares of Common Stock outstanding on such
record date plus the number of shares of Common Stock
which the aggregate offering price of the total
number of shares of Common Stock so to be offered (or
the aggregate initial exchange or conversion price of
the exchangeable or convertible securities to be
offered) would purchase at such Market Price 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 to be
offered for subscription or purchase (or into which
the exchangeable or convertible securities so to be
offered are initially exchangeable or convertible).
Such adjustment shall become effective at the
15
16
close of business on such record date; however, to
the extent that shares of Common Stock (or securities
exchangeable for or convertible into shares of Common
Stock) are not delivered after the expiration of such
rights, options, or warrants, the Exercise Price
shall be readjusted (but only with respect to
Warrants exercised after such expiration) to the
Exercise Price which would then be in effect had the
adjustments made upon the issuance of such rights,
options, or warrants been made upon the basis of
delivery of only the number of shares of Common Stock
(or securities exchangeable for or convertible into
shares of Common Stock) actually issued. In case any
subscription price may be paid in a consideration,
part or all of which shall be in a form other than
cash, the value of such consideration shall be as
determined by the Board of Directors of the Company
and shall be described in a statement filed with the
Warrant Agent. Shares of Common Stock owned by or
held for the account of the Company shall not be
deemed outstanding for the purpose of any such
computation.
(c) In case the Company shall distribute to all holders
of its shares of Common Stock (including any such
distribution made in connection with a consolidation
or merger in which the Company is the surviving
corporation) evidences of its indebtedness or assets
(other than cash dividends and distributions payable
out of consolidated net income in accordance with
Delaware law or earned surplus and dividends or
distributions payable in shares of stock described in
paragraph (a) above) or rights, options, or warrants
or
16
17
exchangeable or convertible securities containing the
right to subscribe for or purchase shares of Common
Stock (excluding those expiring within 45 days after
the record date mentioned in (b) above), then the
Exercise Price shall be adjusted by multiplying the
Exercise Price in effect immediately prior to the
record date for the determination of stockholders
entitled to receive such distribution by a fraction,
of which the numerator shall be the current Market
Price per share of Common Stock (as defined in
paragraph (d) of this Section 13) on such record
date, less the fair market value (as determined by
the Board of Directors of the Company, whose
determination shall be conclusive and described in a
statement filed with the Warrant Agent) of the
portion of the evidences of indebtedness or assets so
to be distributed or of such rights, options or
warrants applicable to one share of Common Stock and
of which the denominator shall be such current Market
Price per share of Common Stock. Such adjustment
shall be made whenever any such distribution is made
and shall become effective on the date of
distribution retroactive to the record date for the
determination of stockholders entitled to receive
such distribution.
(d) For the purpose of any computation under paragraphs
(b) and (c) of this Section 13, the current Market
Price per share of Common Stock at any date shall be
deemed to be the average daily Closing Prices of the
shares of Common Stock for the 15 consecutive trading
days commencing 20 trading days before the day in
question.
17
18
(e) No adjustment in the Exercise Price shall be required
unless such adjustment would require any increase or
decrease of at least one percent or more of the
Exercise Price; provided, however, that any
adjustments which by reason of this paragraph (e) are
not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this Section 13 shall be made to
the nearest cent or to the nearest one-hundredth of a
share, as the case may be
(f) Unless the Company shall have exercised its election
as provided in paragraph (g) of this Section 13, upon
each adjustment of the Exercise Price as a result of
the calculations made in paragraphs (b) or (c) of
this Section 13, each Warrant outstanding prior to
the making of the adjustment in the Exercise Price
shall thereafter evidence the right to purchase at
the adjusted Exercise Price, that number of shares of
Common Stock (calculated to the nearest hundredth)
obtained by (i) multiplying the number of shares of
Common Stock purchasable upon exercise of a Warrant
prior to adjustment of the number of shares of Common
Stock by the Exercise Price in effect prior to
adjustment of the Exercise Price and (ii) dividing
the product so obtained by the Exercise Price in
effect after such adjustment of the Exercise Price.
(g) The Company may elect on or after the date of any
adjustment of the Exercise Price to adjust the number
of Warrants in substitution for any adjustment in the
number of shares of Common Stock purchasable upon the
exercise of a Warrant as provided in paragraph (f) of
this Section 13. Each of the Warrants
18
19
outstanding after such adjustment of the number of
Warrants shall be exercisable for one share of Common
Stock. Each Warrant held of record prior to such
adjustment of the number of Warrants shall become
that number of Warrants (calculated to the nearest
hundredth) obtained by dividing the Exercise Price in
effect prior to adjustment of the Exercise Price by
the Exercise Price in effect after adjustment of the
Exercise Price. The Company shall cause the Agent to
send to each Warrant Holder an announcement of its
election to adjust the number of Warrants, indicating
the record date for the adjustment, and, if known at
the time, the amount of the adjustment to be made.
This record date may be the date on which the
Exercise Price is adjusted or any day thereafter, but
shall be at least ten days later than the date such
announcement is sent to the Warrant Holders. Upon
each adjustment of the number of Warrants pursuant to
this paragraph (g), the Company shall, as promptly as
practicable, cause to be distributed to holders of
record of Warrant Certificates on such record date
Warrant Certificates evidencing, the additional
Warrants to which such holders shall be entitled as a
result of such adjustment, or at the option of the
Company, shall cause to be distributed to such
holders of record in substitution and replacement for
the Warrant Certificates held by such holders prior
to the date of adjustment, and upon surrender thereof
if required by the Company, new Warrant Certificates
evidencing all the Warrants to which such holders
shall be entitled after such adjustment. Warrant
Certificates so to be distributed shall be issued,
19
20
executed, and countersigned in the manner specified
in this Agreement (but may bear, at the option of the
Company, the adjusted Exercise Price) and shall be
registered in the names of the holders of record of
Warrant Certificates on the record date specified in
the announcement sent to Warrant Holders.
(h) In case of any capital reorganization of the Company,
or of any reclassification of the shares of Common
Stock (other than a reclassification of the shares of
Common Stock referred to in paragraph (a) of this
Section 13, or in case of the consolidation of the
Company with, or other merger of the Company with, or
merger of the Company into, any other corporation
(other than a reclassification of the shares of
Common Stock referred to in paragraph (a) of this
Section 13 or a consolidation or merger which does
not result in any reclassification or change of the
outstanding shares of Common Stock) or of the sale of
the properties and assets of the Company as, or
substantially as, an entirety to any other
corporation or entity, each Warrant shall after such
capital reorganization, reclassification of shares of
Common Stock, consolidation, merger or sale, be
exercisable, upon the terms and conditions specified
in this Warrant Agreement, for the number of shares
or other securities, assets, or cash to which a
holder of the number of shares of Common Stock
purchasable (at the time of such capital
reorganization, reclassification of shares of Common
stock, consolidation, merger or sale) upon exercise
of such Warrant would have been entitled upon such
capital reorganization, reclassification of shares of
Common Stock,
20
21
consolidation, merger, or sale; and in any such case,
if necessary, the provisions set forth in this
Section 13 with respect to the rights and interests
thereafter of the holders of the Warrants shall be
appropriately adjusted so as to be applicable, as
nearly as may reasonably be, to any shares or other
securities, assets, or cash thereafter deliverable
on the exercise of the Warrants. The subdivision or
combination of shares of Common Stock at any time
outstanding into a greater or lesser number of shares
shall not-be deemed to be a reclassification of the
shares of Common Stock for the purposes of this
paragraph. The Company shall not effect any such
consolidation, merger, or sale, unless prior to or
simultaneously with the consummation thereof the
successor corporation or entity (if other than the
Company) resulting from such consolidation or merger
or the corporation or entity purchasing such assets
or other appropriate corporation or entity shall
assume, by written instrument executed and delivered
to, and in form reasonably acceptable to, the Warrant
Agent, the obligations to deliver to the holder of
each Warrant such shares, securities, assets, or cash
as, in accordance with the foregoing provisions, such
holders may be entitled to purchase and the other
obligations under this Warrant Agreement.
(i) In the event that at any time, as a result of an
adjustment made pursuant to this Section 13 the
holders of a Warrant or Warrants shall become
entitled to purchase any shares or securities of the
Company other than the shares of Common Stock,
thereafter the number of such other shares or
securities so
21
22
purchasable upon exercise of each Warrant and the
Exercise Price for such shares or securities 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 shares of Common
Stock contained in paragraphs (a) through (h) of
Section 13, inclusive, and the other provisions of
this Agreement, with respect to the shares of Common
Stock shall apply on like terms to any such other
shares.
(j) In any case in which this Section 13 shall require
that an adjustment in the Exercise Price be made
effective as of a record date for a specified event,
the Company may elect to defer until the occurrence
of such event issuing to the holder of any Warrant
exercised after such record date the shares of Common
Stock if any, issuable upon exercise over and above
the shares of Common Stock, if any, issuable upon
such exercise on the basis of the Exercise Price in
effect prior to such adjustment; provided, however,
that the Warrant Agent shall deliver as soon as
practicable to such holder a due xxxx or other
appropriate instrument provided by the Company and in
form acceptable to the Warrant Agent, evidencing such
holder's right to receive such additional shares of
Common Stock upon the occurrence of the event
requiring such adjustment.
14. Notice to Warrant Holders. Upon any adjustment as described in
Section 13, the Company within 20 business days thereafter
shall (i) cause to be filed with the Agent
22
23
a certificate signed by a Company officer setting forth the
details of such adjustment, the method of calculation and the
facts upon which such calculation is based, which certificate
shall be conclusive evidence of the correctness of the matters
set forth therein, and (ii) cause written notice of such
adjustments to be given to each Warrant Holder (or Unit
Holders, if prior to the Separation Date) as of the record
date applicable to such adjustment. Also, if the Company
proposes to enter into any reorganization, reclassification,
sale of substantially all of its assets, consolidation,
merger, dissolution, liquidation or winding up, the Company
shall give notice of such fact at least 20 days prior to the
consummation of such action to all Warrant Holders (or Unit
Holders, if prior to the Separation Date) which notice shall
set forth such facts as indicate the effect of such action (to
the extent such effect may be known at the date of such
notice) on the Exercise Price and the kind and amount of the
shares or other securities and property deliverable upon
exercise of the Warrants. Without limiting the obligation of
the Company hereunder to provide notice to each Warrant Holder
(or Unit Holder, if prior to the Separation Date), failure of
the Company to give notice shall not invalidate any corporate
action taken by the Company.
15. No Fractional Warrants or Shares. The Company shall not be
required to issue fractions of Warrants upon the reissue of
Warrants, any adjustments as described in Section 13 or
otherwise; but the Company in lieu of issuing any such
fractional interest, shall round up or down to the nearest
full Warrant. If the total Warrants surrendered by exercise
would result in the issuance of a fractional share, the
23
24
Company shall not be required to issue a fractional share but
rather the aggregate number of shares issuable will be rounded
up or down to the nearest full share.
16. Rights of Warrant Holders. No Warrant Holder, as such, shall
have any rights of a shareholder of the Company, either at law
or equity, and the rights of the Warrant Holders, as such, are
limited to those rights expressly provided in this Agreement
or in the Warrant Certificates. The Company and the Agent may
treat the registered Warrant Holder in respect of any Warrant
Certificates as the absolute owner thereof for all purposes
notwithstanding any notice to the contrary.
17. Agent. The Company hereby appoints the Agent to act as the
agent of the Company and the Agent hereby accepts such
appointment upon all of the terms and conditions set forth in
this Agreement including, without limitation, the following
terms and conditions by all of which the Company and every
Unit Holder and Warrant Holder, by acceptance of his Units or
Warrants, shall be bound:
(a) Statements contained in this Agreement and in the
Certificates shall be taken as statements of the
Company. The Agent assumes no responsibility for the
correctness of any of the same except such as
describes the Agent or for action taken or to be
taken by the Agent.
(b) The Agent shall not be responsible for any failure of
the Company to comply with any of the Company's
covenants contained in this Agreement or in the
Warrant Certificates.
24
25
(c) The Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the
Company) and the Agent shall incur no liability or
responsibility to the Company or to any Unit Holder
or Warrant Holder in respect of any action taken,
suffered or omitted by it hereunder in good faith and
in accordance with the opinion or the advice of such
counsel; provided the Agent shall have exercised
reasonable care in the selection and continued
employment of such counsel.
(d) The Agent shall incur no liability or responsibility
to the Company or to any Unit Holder or Warrant
Holder for any action taken in reliance upon any
notice, resolution, waiver, consent, order,
certificate or other paper, document or instrument
believed by it to be genuine and to have been signed,
sent or presented by the proper party or parties.
(e) The Company agrees to pay to the Agent compensation
for all services rendered by the Agent in the
execution of this Agreement in accordance with the
fee schedule attached in Exhibit C hereto, to
reimburse the Agent for all reasonable out-of-pocket
expenses, taxes and governmental charges and all
other charges of any kind or nature incurred by the
Agent in the execution of this Agreement and to
indemnify the Agent and save it harmless against any
and all liabilities, including judgments, costs and
reasonable counsel fees, for this Agreement except
those costs and fees arising as a result of the
Agent's negligence or bad faith.
25
26
(f) The Agent shall be under no obligation to institute
any action, suit or legal proceeding or to take any
other action likely to involve expense unless the
Company or one or more Unit Holders or Warrant
Holders shall furnish the Agent with reasonable
security and indemnity for any costs and expenses
which may be incurred in connection with such action,
suit or legal proceeding, but this provision shall
not affect the power of the Agent to take such action
as the Agent may consider proper, whether with or
without any such security or indemnity. All rights of
action under this Agreement or under any of the
Warrants may be enforced by the Agent without the
possession of any of the Warrant Certificates or the
production thereof at any trial or other proceeding
relative thereto, and any such action, suit or
proceeding instituted by the Agent shall be brought
in its name as Agent, and any recovery of judgement
shall be for the ratable benefit of the Unit Holders
or Warrant Holders, as the case may be, as their
respective rights or interest may appear.
(g) The Agent and any shareholder, director, officer or
employee of the Agent may buy, sell or deal in any of
the Units or Warrants or other securities of the
Company or become pecuniarily interested in any
transaction in which the Company may be interested,
or contract with or lend money to the Company or
otherwise act as fully and freely as though it were
not Agent under this Agreement. Nothing herein shall
preclude the Agent from acting in any other capacity
for the Company or for any other legal entity.
26
27
(h) At any time the Agent may apply to the Company or its
counsel for instructions or information, and may
consult with its own counsel, with respect to any
matter arising in connection with the agency created
hereby and the Agent shall not be liable for any
action taken or omitted in accordance with such
instructions, information or the advice or opinion of
such officer or counsel. The Agent shall not be
liable for acting upon any paper or document believed
by it to be genuine and to have been signed by the
proper person(s). The Agent shall also not be liable
for recognizing stock certificates which it
reasonably believes bear the proper manual or
facsimile signatures of the officers of the Company
and the proper counter-signature of a transfer agent
or registrar, or of a co-transfer agent or
co-registrar. The Agent, if it so elects, may rely
conclusively, for any and all purposes, upon any
advice or transfer or transfers made in the course of
transferring or registering original issuances,
retirements or cancellation of Units or Warrants;
upon advice of stop transfer orders placed, released
or in effect against outstanding Certificates; and
upon any certification or notification as to the
number of Certificates issued, the Certificates
representing such Units or Warrants and other
information which the Agent may receive from time to
time from any co-transfer agent or co-registrar. The
Agent shall further not be liable for relying upon
all information contained in Certification of
Corporate Secretary or otherwise supplied to the
Agent by the Company in accordance with the terms of
this Agreement. The Agent may deliver to the Company
from time
27
28
to time at its discretion, for safekeeping or
disposition by the Company in accordance with law,
such records, papers, stock certificates which have
been cancelled in transfer or exchanges and other
documents accumulated in the execution of its duties
hereunder as the Agent may deem expedient, other than
those which the Agent is itself required to maintain
pursuant to applicable laws and regulations. Upon
delivery of such records, the Company shall assume
all responsibility for any failure thereafter to
produce any record, paper, cancelled stock
certificate or other document so returned, if and
when required. The Agent will endeavor to notify the
Company of, and will follow instructions received
from the Company with respect to, any request or
demand for the inspection of the Company's books.
However, the Agent reserves the right to exhibit the
records to any person if it is advised by its counsel
that it may be held liable for the failure to exhibit
such records to such person.
18. Successor Agent. Any corporation into which the Agent may be
merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or
consolidation to which the Agent shall be a party, or any
corporation succeeding to the corporate trust business of the
Agent, shall be the successor to the Agent hereunder without
the execution or filing of any paper or any further act of a
party or the parties hereto. In any such event or if the name
of the Agent is changed, the Agent or such successor may adopt
the countersignature of the original Agent and
28
29
may countersign Certificates either in the name of the
predecessor Agent or in the name of the successor Agent.
19. Change of Agent. The Agent may resign or be discharged by the
Company from its duties under this Agreement, by the Agent or
the Company, as the case may be, giving notice in writing to
the other, and by giving a date when such resignation or
discharge shall take effect, which notice shall be sent at
least 30 days prior to the date so specified. If the Agent
shall resign, be discharged or shall otherwise become
incapable of acting, the Company shall appoint a successor to
the Agent. If the Company shall fail to make such appointment
within a period of 30 days after it has been notified in
writing of such resignation or incapacity by the Agent after
discharging the Agent, then any Unit Holder or Warrant Holder
may apply to the District Court for Denver County, Colorado,
for the appointment of a successor to the Agent. Pending
appointment of a successor to the Agent, either by the Company
or by such Court, the duties of the Agent shall be carried out
by the Company. Any successor Agent, whether appointed by the
Company or by such Court, shall be a bank or a trust company,
in good standing, organized under the laws of any State of the
United States of America, and having at the time of its
appointment as Agent, a combined capital and surplus of at
least four million dollars. After appointment, the successor
Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Agent
without further act or deed and the former Agent shall deliver
and transfer to the successor Agent any property at the time
held by it
29
30
thereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for effecting the delivery
or transfer. Failure to give any notice provided for in this
section, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the
Agent or the appointment of the successor Agent, as the case
may be.
20. Notices. Any notice or demand authorized by this Agreement to
be given or made by the Agent or by any Unit Holder or Warrant
Holder to or on the Company shall be sufficiently given or
made if sent by mail, first class, certified or registered,
postage prepaid, addressed (until another address is filed in
writing by the Company with the Agent), as follows:
Implant Sciences Corporation
000 Xxxxxxx Xxxx, #0
Xxxxxxxxx, XX 00000
Attn: President
With a copy to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx, Esq.
Any notice or demand authorized by this Agreement to be given
or made by any Unit Holder, Warrant Holder or by the Company
to or on the Agent shall be sufficiently given or made if sent
by mail, first class, certified or registered, postage
prepaid,
30
31
addressed (until another address is filed in writing by the
Agent with the Company), as follows:
American Securities Transfer & Trust, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000-0000
Any distribution, notice or demand required or authorized by
this Agreement to be given or made by the Company or the Agent
to or on the Unit Holders or Warrant Holders shall be
sufficiently given or made if sent by mail, first class,
certified or registered, postage prepaid, addressed to the
Unit Holders or Warrant Holders at their last known addresses
as they shall appear on the registration books for the
Certificates maintained by the Agent.
21. Supplements and Amendments. The Company and the Agent may make
such modifications to this Agreement and to the Warrants that
they deem necessary and desirable that do not materially
adversely affect the interests of the Unit Holders and Warrant
Holders. No other modifications may be made to the Units and
Warrants without the consent of the majority of the Unit
Holders and Warrant Holders, respectively. Reduction of the
number of securities purchasable upon the exercise of any
Warrant, increase in the exercise price and shortening of the
expiration date with respect to any Warrant requires the
consent of the holder of such Warrant unless such modification
occurs in connection with a stock split, stock dividend,
recapitalization, reclassification or similar event.
31
32
22. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Agent shall bind
and inure to the benefit of their respective successors and
assigns hereunder.
23. Termination. This Agreement shall terminate at the close of
business on the Expiration Date or such earlier date upon
which all Warrants have been exercised or redeemed; provided,
however, that if exercise of the Warrants is suspended
pursuant to Section 12 and such suspension continues past the
Expiration Date, this Agreement shall terminate at the close
of business on the business day immediately following
expiration of such suspension. The provisions of Section 17
shall survive such termination.
24. Governing Law. This Agreement and each Certificate issued
hereunder shall be deemed to be a contract made under the laws
of the State of New York and for all purposes shall be
construed in accordance with the laws of said State.
25. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give any person or corporation other than the
Company, the Agent and the Unit Holders and Warrant Holders
any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Agent and the Unit
Holders and Warrant Holders.
32
33
26. Counterparts. This Agreement may be executed in any number of
counterparts, each of such counterparts shall for all purposes
be deemed to be an original and all such counterparts shall
together constitute but one and the same instrument.
Date: April 9, 1999
------------------------
Implant Sciences Corporation,
a Massachusetts corporation
By: /s/ Xxxxxxx X. Xxxxxxx-Xxxxx
---------------------------------------
Vice President and
Chief Financial Officer
SEAL
ATTEST:
/s/ Xxxxxxx X. Xxxxxx
------------------------
Secretary:
American Securities Transfer & Trust, Inc.,
a Colorado corporation
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Vice President:
SEAL
ATTEST:
/s/ illegible
------------------------
Secretary:
33
