WARRANT AGREEMENT
AGREEMENT, dated as of this __ th day of _____, 1998, by and among
Central European Distribution Corporation, a Delaware corporation, having its
principal executive office at 000 Xxxxx Xxxxx Xxxxxx, #000, Xxxxxxxxxx, Xxxxxxxx
00000 (the "Company"), American Stock Transfer & Trust Company, as Warrant Agent
(the "Warrant Agent"), Fine Equities, Inc., having its principal executive
office at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Fine Equities"), and
SouthWall Capital Corp., having its principal executive office at 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("SouthWall" and together with Fine Equities,
the "Underwriters").
W I T N E S S E T H:
WHEREAS, in connection with (i) a public offering (the "Public
Offering") of up to 1,322,500 shares of the Company's common stock, par value
$.01 per share ("Common Stock"), and 1,322,500 redeemable warrants accompanying
the shares of Common Stock, pursuant to an underwriting agreement (the
"Underwriting Agreement") dated ______, 1998 among the Company, certain of the
Company's shareholders and the Underwriters, and (ii) the issuance to the
Underwriters or their designees of Unit Purchase Options to purchase an
aggregate of 115,000 additional shares of Common Stock and 115,000 additional
warrants, to be dated as of _______, 1998 (the "Unit Purchase Options"), the
Company may issue up to 1,437,500 warrants (collectively, the "Warrants"),
subject to the terms and conditions set forth herein; and
WHEREAS, each Warrant initially entitles the Registered Holder
thereof to purchase one share of Common Stock; 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, the
issuance of certificates representing the Warrants, the exercise of the Warrants
and the rights of the Registered 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 herein, the following terms shall have the
following meanings, unless the context shall otherwise require:
(a) "Common Stock" shall mean stock of the Company of any class,
whether now or hereafter authorized, which has the right to participate in
the distribution of earnings and assets of the Company without limit as to
amount or percentage, which at the date hereof consists of 20,000,000
shares of Common Stock, $.01 par value.
(b) "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 hereof at 00 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
(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 (the "Warrant Certificate"), 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 applicable Purchase Price.
(d) Subject to the provisions of paragraph 2(f) hereof, "Purchase
Price" shall mean the purchase price to be paid upon exercise of each
Warrant in accordance with the terms hereof and, which price shall be
$____, subject to adjustment from time to time pursuant to the provisions
of Section 9 hereof, and subject to the Company's right to reduce the
Purchase Price upon notice to all Registered Holders of Warrants.
(e) "Redemption Price" shall mean the price at which the Company may,
at its option in accordance with the terms hereof, redeem the Warrants,
which price shall be $.05 per Warrant.
(f) "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 Section 6.
(g) "Transfer Agent" shall mean American Stock Transfer & Trust
Company, as the Company's transfer agent, or its authorized successor, as
such.
(h) "Warrant Expiration Date" shall mean 5:00 P.M. (New York time) on
______, 2003 or, with respect to Warrants which are outstanding as of the
applicable Redemption Date (as defined in Section 8) and specifically
excluding Warrants issuable upon exercise of the Unit Purchase Options if
the Unit Purchase Options have not been exercised, the Redemption Date,
whichever is earlier; 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, then 5:00 P.M. (New York time) on 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. Upon notice to all Registered Holders,
the Company shall have the right to extend the Warrant Expiration Date.
2. WARRANTS AND ISSUANCE OF WARRANT CERTIFICATES.
(a) A Warrant initially shall entitle the Registered Holder of the
Warrant Certificate representing such Warrant to purchase one share of
Common Stock upon the exercise thereof, in accordance with the terms
hereof, subject to modification and adjustment as provided in Section 9.
(b) The Warrants will be immediately detachable and transferable
separately from the Common Stock.
(c) Upon execution of this Agreement, Warrant Certificates
representing the number of Warrants sold 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, the Warrant Certificates
shall be countersigned, issued and delivered by the Warrant Agent as part
of the Units.
(d) 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 up to an aggregate of 1,437,500 shares of
Common Stock, subject to adjustment as described herein, upon the exercise
of Warrants in accordance with this Agreement.
(e) 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, (ii) those issued 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 upon
any transfer or exchange pursuant to Section 6; (iv) those issued in
replacement of lost, stolen, destroyed or mutilated Warrant Certificates
pursuant to Section 7; (v) those issued pursuant to the Unit Purchase
Options; and (vi) those issued at the option of the Company, in such form
as may
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be approved by its Board of Directors, to reflect any adjustment or change
in the Purchase Price, the number of shares of Common Stock purchasable
upon exercise of the Warrants or the Target Price(s) therefor made pursuant
to Section 9 hereof.
(f) Pursuant to the terms of the Unit Purchase Options, the
Underwriters or their designees may purchase up to 115,000 Units, which
include up to 115,000 Warrants. Notwithstanding anything to the contrary
contained herein, the Warrants underlying the Unit Purchase Options shall
not be subject to redemption by the Company and the purchase price to be
paid upon exercise of each such warrant shall be as set forth in the Unit
Purchase Options.
3. FORM AND EXECUTION OF WARRANT CERTIFICATES
(a) The Warrant Certificates shall be substantially in the form
annexed hereto as Exhibit A (the provisions of which are hereby
incorporated herein) and may have such letters, numbers or other marks of
identification or designation and such legends, summaries or endorsements
printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which the Warrants may be listed, or to conform to usage
or to the requirements of Section 2. The Warrant Certificates shall be
dated the date of issuance thereof (whether upon initial issuance,
transfer, exchange or in lieu of mutilated, lost, stolen, or destroyed
Warrant Certificates) and issued in registered form. Warrant Certificates
shall be numbered serially with the letter W on Warrants of all
denominations.
(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, 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 such Warrant
Certificates had not ceased to be an officer of the Company or to hold such
office. After countersignature by the Warrant Agent, Warrant Certificates
shall be delivered by the Warrant Agent to the Registered Holder without
further action by the Company, except as otherwise provided by Section 4(a)
hereof.
4. EXERCISE
(a) Each Warrant may be exercised by the Registered Holder thereof at
any time on or after the date of issuance, but not after the Warrant
Expiration Date, upon the terms and subject to the conditions set forth
herein and in the applicable 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 Warrants. Promptly following, and in any within five 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 Warrant 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.
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Notwithstanding the foregoing, in the case of payment made in the form of a
check drawn on an account of either of the Underwriters or such other
investment banks and brokerage houses as the Company shall approve in
writing to the Warrant Agent, 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.
(b) If, at the Exercise Date in respect of the exercise of any Warrant
after ______, 1999, (i) the market price of the Common Stock is greater
than the then Purchase Price of the Warrant, (ii) the exercise of the
Warrant was solicited by a member of the National Association of Securities
Dealers, Inc. ("NASD") as designated in writing on the Warrant Certificate
Subscription Form, (iii) the Warrant was not held in a discretionary
account, (iv) disclosure of compensation arrangements was made both at the
time of the original offering and at the time of exercise and (v) the
solicitation of the exercise of the Warrant was not in violation of Rule
10b-6 (as such rule or any successor rule may be in effect as of such time
of exercise) promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), then the Warrant Agent, simultaneously with
the distribution of the Warrant Proceeds to the Company shall, on behalf of
the Company, pay from the Warrant Proceeds, a fee of four percent (4%) (the
"Solicitation Fee") of the Purchase Price to the Underwriters (of which a
portion may be reallocated by the Underwriters to the dealer who solicited
the exercise). In the event the Solicitation Fee is not received within
five days of the date on which the Company receives Warrant Proceeds, then
the Solicitation Fee shall begin accruing interest at an annual rate of
prime plus four percent (4%), payable by the Company to the Underwriters at
the time the Underwriters receive the Solicitation Fee. Within five days
after exercise the Warrant Agent shall send to each of the Underwriters a
copy of the reverse side of each Warrant exercised. The Underwriters shall
reimburse the Warrant Agent, upon request, for its reasonable expenses
relating to compliance with this Section 4(b). In addition, the
Underwriters and the Company may, at any time during business hours,
examine the records of the Warrant Agent, including its ledger of original
Warrant Certificates returned to the Warrant Agent upon exercise of the
Warrants. The provisions of this paragraph may not be modified, amended or
deleted without the prior written consent of each of the Underwriters.
(c) In order to enforce the provisions of Section 4(b) above, in the
event there is any dispute or question as to the amount or payment of the
Solicitation Fee, the Warrant Agent is hereby expressly authorized to
withhold payment to the Company of the Warrant Proceeds unless and until
the Company establishes an escrow account for the purpose of depositing the
entire amount of the Solicitation Fee, which amount will be deducted from
the net Warrant Proceeds to be paid to the Company. The funds placed in
the escrow account may not be released to the Company without a written
agreement from each of the Underwriters that the required Solicitation Fee
has been received by the Underwriters.
5. RESERVATION OF SHARES; LISTING; PAYMENT OF TAXES; ETC.
(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 shares of Common Stock which shall be issuable
upon exercise of the Warrants shall, at the time of delivery, be duly and
validly issued, fully paid, nonassessable and free from all taxes, liens
and charges with respect to the issue thereof, and that upon issuance such
shares shall be listed on each national securities exchange on which the
other shares of outstanding Common Stock of the Company are then listed or
shall be eligible for inclusion in the Nasdaq Stock Market if the other
shares of outstanding Common Stock of the Company are so included.
(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
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will in good faith and as expeditiously as reasonably possible, endeavor to
secure such registration or approval. The Company will use its best 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 or issuance 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 hereof, 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 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 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
therewith.
(e) All Warrant Certificates surrendered for exercise or for exchange
in case of mutilated Warrant Certificates shall be promptly cancelled 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 SouthWall, 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
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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.
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 (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) Subject to the provisions of paragraph 2(f) hereof, on not less
than thirty (30) days notice given at any time after _____, 1999 (the
"Redemption Notice") to Registered Holders of the Warrants, the Warrants
may be redeemed, at the option of the Company, at a redemption price of
$.05 per Warrant, provided that the Market Price of the Common Stock
receivable upon exercise of such Warrants shall exceed $____ per share with
respect to the Warrants (the "Target Price"), subject to adjustment as set
forth in Section 8(f), below. "Market Price" shall mean (i) the average
closing bid price of the Common Stock, for thirty (30) consecutive business
days ending on the Calculation Date, as reported by Nasdaq, if the Common
Stock is traded on the Nasdaq SmallCap Market, or (ii) the average last
reported sale price of the Common Stock, for thirty (30) consecutive
business days ending on the Calculation Date, as reported by the primary
exchange on which the Common Stock is traded, if the Common Stock is traded
on a national securities exchange, or by Nasdaq, if the Common Stock is
traded on the Nasdaq National Market. For purposes of this Section 8, the
"Calculation Date" shall mean the date of the mailing of the Redemption
Notice. The date fixed for redemption of the Warrants is referred to herein
as the "Redemption Date".
(b) If the conditions set forth in Section 8(a) are met, and the
Company desires to exercise its right to redeem the Warrants, it shall
request the Underwriters to mail a Redemption Notice to each of the
Registered Holders of the Warrants to be redeemed, first class, postage
prepaid, not later than the thirtieth day before the date fixed for
redemption, at their last address as shall appear on the records maintained
pursuant to Section 6(b). Any notice mailed in the manner provided herein
shall be conclusively presumed to have been duly given whether or not the
Registered Holder receives such notice.
(c) The Redemption Notice shall specify (i) the Redemption Price, (ii)
the Redemption Date, (iii) the place where the Warrant Certificates shall
be delivered and the redemption price paid, (iv) that the Underwriters will
assist each Registered Holder of a Warrant in connection with the exercise
thereof and (v) that the right to exercise the Warrant shall terminate at
5:00 P.M. (New York time) on the business day immediately preceding 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 to whom notice was not
mailed or whose notice was defective. An affidavit of the Warrant Agent or
of the Secretary of either of the Underwriters 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) Any right to exercise a Warrant shall terminate at 5:00 P.M. (New
York time) on the business day immediately preceding the Redemption Date.
On and after the Redemption Date, Registered Holders of the Warrants shall
have no further rights except to receive, upon surrender of the Warrant,
the Redemption Price.
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(e) From and after the Redemption Date, the Company shall, at the
place specified in the Redemption Notice, 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 Registered
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.
(f) If the shares of the Company's Common Stock are subdivided or
combined into a greater or smaller number of shares of Common Stock, the
Target Prices shall be proportionally adjusted by the ratio which the total
number of shares of Common Stock outstanding immediately prior to such
event bears to the total number of shares of Common Stock to be outstanding
immediately after such event.
9. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES OF COMMON STOCK OR
WARRANTS.
(a) Subject to the exceptions referred to in Section 9(g) below, in
the event the Company shall, at any time or from time to time after the
date hereof, sell any shares of Common Stock for a consideration per share
less than the Market Price of the Common Stock (as defined in Section 8,
except that for purposes of Section 9, the Calculation Date shall mean the
date of the sale or other transaction referred to in this Section 9) on the
date of the sale or issue any shares of Common Stock as a stock dividend to
the holders of Common Stock, or subdivide or combine the outstanding shares
of Common Stock into a greater or lesser number of shares (any such sale,
issuance, subdivision or combination being herein called a "Change of
Shares"), then, and thereafter upon each further Change of Shares, the
Purchase Price in effect immediately prior to such Change of Shares shall
be changed to a price (including any applicable fraction of a cent)
determined by multiplying the Purchase Price in effect immediately prior
thereto by a fraction, the numerator of which shall be the sum of the
number of shares of Common Stock outstanding immediately prior to the
issuance of such additional shares and the number of shares of Common Stock
which the aggregate consideration received (determined as provided in
subsection 9(f)(vi) below) for the issuance of such additional shares would
purchase at the Market Price and the denominator of which shall be the sum
of the number of shares of Common Stock outstanding immediately after the
issuance of such additional shares. Such adjustment shall be made
successively whenever such an issuance is made.
Upon each adjustment of the Purchase Price pursuant to this Section 9,
the total number of shares of Common Stock purchasable upon the exercise of
each Warrant, shall (subject to the provisions contained in Section 9(b)
hereof) be such number of shares (calculated to the nearest tenth)
purchasable at the Purchase Price in effect immediately prior to such
adjustment multiplied 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.
(b) 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 prior to such
adjustment of the number of Warrants shall become 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 Section 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 Section 10 hereof, 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
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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.
(c) 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 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 provision shall include provision for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 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 of the Company 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.
(d) 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 Section 2(e) hereof, continue to express the
Purchase Price per share, the number of shares purchasable thereunder and
the Redemption Price therefor as the Purchase Price per share, and the
number of shares purchasable and the Redemption Price therefor were
expressed in the Warrant Certificates when the same were originally issued.
(e) After each adjustment of the Purchase Price pursuant to this
Section 9, the Company will promptly prepare a certificate signed by the
Chairman or President, and by the Treasurer or the Secretary 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 the adjustment in Redemption Price
resulting therefrom, 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 ordinary
first class mail to SouthWall 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 except as to the holder
to whom the Company failed to mail such notice, or except as to the holder
whose notice was defective. The affidavit of an officer of the Warrant
Agent or the Secretary of the Company that such notice has been mailed
shall, in the absence of fraud, be prima facie evidence of the facts stated
therein.
(f) For purposes of Section 9(a) and 9(b) hereof, the following
provisions (i) to (vi) shall also be applicable:
8
(i) The number of shares of Common Stock outstanding at any given
time shall include shares of Common Stock owned or held by or for the
account of the Company and the sale or issuance of such treasury
shares or the distribution of any such treasury shares shall not be
considered a Change of Shares for purposes of said sections.
(ii) No adjustment of the Purchase Price shall be made unless
such adjustment would require an increase or decrease of at least $.05 in
the Purchase Price; provided that any adjustments which by reason of this
clause (ii) are not required to be made shall be carried forward and shall
be made at the time of and together with the next subsequent adjustment
which, together with any adjustment(s) so carried forward, shall require an
increase or decrease of at least $.05 in the Purchase Price then in effect
hereunder.
(iii) In case of (A) the sale by the Company for cash (or as
a component of a unit being sold for cash) of any rights or warrants to
subscribe for or purchase, or any options for the purchase of, Common Stock
or any securities convertible into or exchangeable for Common Stock without
the payment of any further consideration other than cash, if any (such
securities convertible, exercisable or exchangeable into Common Stock being
herein called "Convertible Securities"), or (B) the issuance by the
Company, without the receipt by the Company of any consideration therefor,
of any rights or warrants to subscribe for or purchase, or any options for
the purchase of, Common Stock or Convertible Securities, in each case, if
(and only if) the consideration payable to the Company upon the exercise of
such rights, warrants or options shall consist of cash, whether or not such
rights, warrants or options, or the right to convert or exchange such
Convertible Securities, are immediately exercisable, and the price per
share for which Common Stock is issuable upon the exercise of such rights,
warrants or options or upon the conversion or exchange of such Convertible
Securities (determined by dividing (x) the minimum aggregate consideration
payable to the Company upon the exercise of such rights, warrants or
options, plus the consideration, if any, received by the Company for the
issuance or sale of such rights, warrants or options, plus, in the case of
such Convertible Securities, the minimum aggregate amount of additional
consideration, other than such Convertible Securities, payable upon the
conversion or exchange thereof, by (y) the total maximum number of shares
of Common Stock issuable upon the exercise of such rights, warrants or
options or upon the conversion or exchange of such Convertible Securities
issuable upon the exercise of such rights, warrants or options) is less
than the Market Price of the Common Stock on the date of the issuance or
sale of such rights, warrants or options, then the total maximum number of
shares of Common Stock issuable upon the exercise of such rights, warrants
or options or upon the conversion or exchange of such Convertible
Securities (as of the date of the issuance or sale of such rights, warrants
or options) shall be deemed to be outstanding shares of Common Stock for
purposes of Sections 9(a) and 9(b) hereof and shall be deemed to have been
sold for cash in an amount equal to such price per share.
(iv) In case of the sale by the Company for cash of any
Convertible Securities, whether or not the right of conversion or exchange
thereunder is immediately exercisable, and the price per share for which
Common Stock is issuable upon the conversion or exchange of such
Convertible Securities (determined by dividing (x) the total amount of
consideration received by the Company for the sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration,
if any, other than such Convertible Securities, payable upon the conversion
or exchange thereof, by (y) the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of such Convertible
Securities) is less than the Market Price of the Common Stock on the date
of the sale of such Convertible Securities, then the total maximum number
of shares of Common Stock issuable upon the conversion or exchange of such
Convertible Securities (as of the date of the sale of such Convertible
Securities) shall be deemed to be outstanding shares of Common Stock for
purposes of Sections 9(a) and 9(b) hereof and shall be deemed to have been
sold for cash in an amount equal to such price per share.
9
(v) In case the Company shall modify the rights of conversion,
exchange or exercise of any of the securities referred to in (iii) or (iv)
above or any other securities of the Company convertible, exchangeable or
exercisable for shares of Common Stock, for any reason other than an event
that would require adjustment to prevent dilution, so that the
consideration per share received by the Company after such modification is
less than the Market Price on the date prior to such modification, the
Purchase Price to be in effect after such modification shall be determined
by multiplying the Purchase Price in effect immediately prior to such event
by a fraction, of which the numerator shall be the number of shares of
Common Stock outstanding on the date prior to the modification plus the
number of shares of Common Stock which the aggregate consideration
receivable by the Company for the securities affected by the modification
would purchase at the Market Price and of which the denominator shall be
the number of shares of Common Stock outstanding on such date plus the
number of shares of Common Stock to be issued upon conversion, exchange or
exercise of the modified securities at the modified rate. Such adjustment
shall become effective as of the date upon which such modification shall
take effect. On the expiration of any such right, warrant or option or the
termination of any such right to convert or exchange any such Convertible
Securities referred to in sub-paragraph (iii) or (iv) above, the Purchase
Price then in effect hereunder shall forthwith be readjusted to such
Purchase Price as would have obtained (A) had the adjustments made upon the
issuance or sale of such rights, warrants, options or Convertible
Securities been made upon the basis of the issuance of only the number of
shares of Common Stock theretofore actually delivered (and the total
consideration received therefor) upon the exercise of such rights, warrants
or options or upon the conversion or exchange of such Convertible
Securities and (B) had adjustments been made on the basis of the Purchase
Price as adjusted under clause (A) for all transactions (which would have
affected such adjusted Purchase Price) made after the issuance or sale of
such rights, warrants, options or Convertible Securities.
(vi) In case of the sale for cash of any shares of Common Stock,
any Convertible Securities, any rights or warrants to subscribe for or
purchase, or any options for the purchase of, Common Stock or Convertible
Securities, the consideration received by the Company therefore shall be
deemed to be the gross sales price therefor without deducting therefrom any
expense paid or incurred by the Company or any underwriting discounts or
commissions or concessions paid or allowed by the Company in connection
therewith.
(g) No adjustment to the Purchase Price of the Warrants or to the
number of shares of Common Stock purchasable upon the exercise of each
Warrant will be made, however,
(i) upon the exercise of any of the options presently outstanding
under the Company's 1997 Stock Option Plan (the "Plan") for officers,
directors and certain other key personnel of the Company; or
(ii) upon the issuance or exercise of any other securities which
may hereafter be granted or exercised under the Plan; or
(iii) upon the sale or exercise of the Warrants,
including without limitation the sale or exercise of any of the Warrants
comprising the Unit Purchase Options or upon any sale or exercise of the
Unit Purchase Options; or
(iv) upon the sale of any shares of Common Stock or Convertible
Securities in a firm commitment underwritten public offering, including,
without limitation, shares sold upon the exercise of any overallotment
option granted to the underwriters in connection with such offering; or
(v) upon the issuance or sale of Common Stock or Convertible
Securities upon the exercise of any rights or warrants to subscribe for or
purchase, or any options for the purchase of,
10
Common Stock or Convertible Securities, whether or not such rights,
warrants or options were outstanding on the date of the original sale of
the Warrants or were thereafter issued or sold; or
(vi) upon the issuance or sale of Common Stock upon conversion or
exchange of any Convertible Securities, whether or not any adjustment in
the Purchase Price was made or required to be made upon the issuance or
sale of such Convertible Securities and whether or not such Convertible
Securities were outstanding on the date of the original sale of the
Warrants or were thereafter issued or sold.
(h) As used in this Section 9, the term "Common Stock" shall mean and
include the Company's Common Stock authorized on the date of the original
issue of the Units 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 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 date of the Public Offering or (i),
in the case of any reclassification, change, consolidation, merger, sale or
conveyance of the character referred to in Section 9(c) hereof, the stock,
securities or property provided for in such section or (ii), 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.
(i) Any determination as to whether an adjustment in the Purchase
Price in effect hereunder is required pursuant to Section 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.
(j) If and whenever the Company shall grant to the holders of Common
Stock, as such, rights or warrants to subscribe for or to purchase, or any
options for the purchase of, Common Stock or securities convertible into or
exchangeable for or carrying a right, warrant or option to purchase Common
Stock, the Company shall concurrently therewith grant to each Registered
Holder as of the record date for such transaction of the Warrants then
outstanding, the rights, warrants or options to which each Registered
Holder would have been entitled if, on the record date used to determine
the stockholders entitled to the rights, warrants or options 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. Such grant by the Company to the holders of the Warrants shall be
in lieu of any adjustment which otherwise might be called for pursuant to
this Section 9.
10. FRACTIONAL WARRANTS AND FRACTIONAL SHARES.
(a) If the number of shares of Common Stock purchasable upon the
exercise of each Warrant is adjusted pursuant to Section 9 hereof, 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 the exercise of any Warrant, 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:
(i) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such exchange or is
traded on the Nasdaq National Market, the current market value shall be the
last reported sale price of the Common Stock on such exchange or market 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 of the closing bid and asked
prices for such day on such exchange or market; or
11
(ii) If the Common Stock is not listed or admitted to unlisted
trading privileges on a national securities exchange or is not traded on
the Nasdaq National Market, the current market value shall be the mean of
the last reported bid and asked prices reported by the Nasdaq SmallCap
Market or, if not traded thereon, by the National Quotation Bureau, Inc. on
the last business day prior to the date of the exercise of this Warrant; or
(iii) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so reported,
the current market 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.
Except as provided herein, 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 herein 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 provided in the Warrant Certificate and this Agreement.
13. AGREEMENT OF WARRANT HOLDERS.
Every holder of a Warrant, by his acceptance thereof, 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 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 Section 7 hereof.
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 cancelled by it and retired. The Warrant
Agent shall also cancel the Warrant Certificate or Warrant Certificates
following exercise of any or all of the Warrants represented thereby or
delivered to it for transfer or exchange.
12
15. CONCERNING THE WARRANT AGENT.
The Warrant Agent acts hereunder as agent and in a ministerial
capacity for the Company, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not, by issuing and delivering
Warrant Certificates or by any other act hereunder be deemed to make any
representations as to the validity, 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.
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 be (i) 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) 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) liable for any act or omission in connection with this
Agreement except for its own negligence or wilful misconduct.
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.
Any notice, statement, instruction, 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, or its Secretary
(unless other evidence in respect thereof is herein specifically prescribed).
The Warrant Agent shall not be liable for any action taken, suffered or omitted
by it in accordance with such notice, statement, instruction, request,
direction, order or demand believed by it to be genuine.
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 losses, expenses and liabilities, including judgments, costs
and counsel fees, for anything done or omitted by the Warrant Agent in the
execution of its duties and powers hereunder except losses, expenses and
liabilities arising as a result of the Warrant Agent's negligence or wilful
misconduct.
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 30
days' prior written notice to the Company. At least 15 days prior to the date
such resignation is to become effective, the Warrant Agent shall cause a copy of
such notice of resignation to be mailed to 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 hereunder, the Company shall appoint a new
warrant agent in writing. If the Company shall fail to make such appointment
within a period of 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 that is a registered
transfer agent under the Exchange Act. 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
13
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.
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.
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
Subject to the provisions of Section 4(b), the parties hereto 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; (ii) to reflect an increase in the number of Warrants which
are to be governed by this Agreement resulting from a subsequent public offering
of Company securities which includes Warrants having the same terms and
conditions as the Warrants, respectively, originally covered by or subsequently
added to this Agreement under this Section 16; or (iii) 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 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.
17. NOTICES.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made when delivered or
mailed first class registered or certified mail, postage prepaid as follows: if
to the Registered Holder of a Warrant Certificate, at the address of such holder
as shown on the registry books maintained by the Warrant Agent; if to the
Company, at 000 Xxxxx Xxxxx Xxxxxx, #000, Xxxxxxxxxx, Xxxxxxxx 00000, or at such
other address as may have been furnished to the Warrant Agent in writing by the
Company, with a copy to Xxxxx & Xxxxxxx LLP, Columbia Square, 000 00xx Xxxxxx,
XX, Xxxxxxxxxx, X.X. 00000, attention: Xxxxxx X. Xxxxxx, Esq.; if to the Warrant
Agent, at its Corporate Office; and if to Fine Equities, at Fine Equities, Inc.,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or if to SouthWall, at SouthWall
Capital Corp., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, with a copy in each
case to Xxxxx & XxXxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, attention:
Xxxxxxx X. Xxxx, Esq.
18. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without reference to principles of conflict
of laws.
14
19. BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of the
Company, the Warrant Agent and their respective successors and assigns, and the
Registered Holders from time to time of Warrant Certificates. 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 earlier
of the Warrant Expiration Date or the date upon which all Warrants (including
the Warrants issuable upon exercise of the UPOs) have been exercised, except
that the Warrant Agent shall account to the Company for cash held by it and the
provisions of Section 15 hereof shall survive such termination.
21. COUNTERPARTS.
This Agreement may be executed in several counterparts, which taken
together shall constitute a single document.
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
By:
-----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman of the Board, President and
Chief Executive Officer
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
-----------------------------------
Name:
Title:
FINE EQUITIES, INC.
By:
-----------------------------------
Name:
Title:
SOUTHWALL CAPITAL CORP.
By:
-----------------------------------
Name:
Title:
16
EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
No. W _____ Warrants
VOID AFTER _______, 2003
WARRANT CERTIFICATE FOR PURCHASE
OF COMMON STOCK
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
This certifies that FOR VALUE RECEIVED _____________ or registered
assigns (the "Registered Holder") is the owner of the number of Warrants
("Warrants") specified above. Each Warrant represented hereby initially
entitles the Registered Holder to purchase, subject to the terms and conditions
set forth in this Warrant Certificate and the Warrant Agreement (as hereinafter
defined), one fully paid and nonassessable share of common stock, par value $.01
per share ("Common Stock"), of Central European Distribution Corporation, a
Delaware corporation (the "Company") at any time prior to the Expiration Date
(as hereinafter defined), upon the presentation and surrender of this Warrant
Certificate 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 $____
(the "Purchase Price") in lawful money of the United States of America in cash
or by official bank or certified check made payable to Central European
Distribution Corporation.
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 _____, 1998,
by and among the Company, the Warrant Agent, Fine Equities, Inc. and SouthWall
Capital Corp.
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price and 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 Certificate 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 time) on
_____, 2003 or such earlier date as the Warrants shall be redeemed. If such date
shall in the State of New York be a holiday or a day on which banks are
authorized to close, then the Expiration Date shall mean 5:00 P.M. (New York
time) the next following day which in the State of New York is not a holiday or
a day on which banks are authorized to close.
The Company shall not be obligated to deliver any securities pursuant
to the exercise of the Warrants represented hereby 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 best efforts to cause the same to
become effective and to keep such registration statement current while any of
the Warrants are outstanding. The Warrants represented hereby shall not be
exercisable by a Registered Holder in any state where such exercise would be
unlawful.
17
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. At any time prior to the Expiration Date, upon due
presentment with a $___ transfer fee per certificate in addition to 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 Certificates 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.
The Warrants represented hereby may be redeemed at the option of the
Company, at a redemption price of $.05 per Warrant at any time after _____,
1999, provided that the Market Price (as defined in the Warrant Agreement) for
the Common Stock shall exceed $____ per share. Notice of redemption shall be
given not later than the thirtieth day before the date fixed for redemption, all
as provided in the Warrant Agreement. On and after the date fixed for
redemption, the Registered Holder shall have no rights with respect to the
Warrants represented hereby except to receive the $.05 per Warrant upon
surrender of this Warrant Certificate.
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.
The Company has agreed to pay a fee of four percent (4%) of the
Purchase Price upon certain conditions as specified in the Warrant Agreement
upon the exercise of the Warrants represented hereby.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York without reference to
principles of conflict of laws.
This Warrant Certificate is not valid unless countersigned by the
Warrant Agent.
18
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.
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
Dated: By:
-----------------------------------------
By:
-----------------------------------------
[seal]
Countersigned:
----------------------------------------
as Warrant Agent
By:
-------------------------------------
Authorized Officer
19
[FORM OF REVERSE OF WARRANT CERTIFICATE]
TRANSFER FEE: $___ PER CERTIFICATE ISSUED
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 Certificate, and 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 INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
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[please print or type name and address]
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.
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The undersigned represents that the exercise of the Warrants evidenced
hereby was solicited by a member of the National Association of Securities
Dealers, Inc. If not solicited by an NASD member, please write "unsolicited" in
the space below. Unless otherwise indicated by listing the name of another NASD
member firm, it will be assumed that the exercise was solicited by Fine
Equities, Inc.
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(Name of NASD Member)
Dated: X
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Address
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Taxpayer Identification Number
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Signature Guaranteed
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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 A MEMBER OF THE MEDALLION STAMP PROGRAM.
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ASSIGNMENT
To Be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, _____________________ hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
OF TRANSFEREE
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[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.
Dated: X
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Signature Guaranteed
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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 A MEMBER OF THE MEDALLION STAMP PROGRAM.
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