EXHIBIT 10(ad)
THIS WARRANT AND THE OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS. THEY HAVE BEEN ACQUIRED SOLELY FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. THE WARRANT REPRESENTED BY THIS INSTRUMENT AND
THE OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, WITH RESPECT THERETO OR IN ACCORDANCE WITH AN OPINION
OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER THAN AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
No. W-2002 - __ WARRANT February __, 2002
To Purchase _______ Shares of Common Stock of
Universal Automotive Industries, Inc.
1. Number of Shares; Exercise Price; Term. This certifies that, in
consideration for $1.00 and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, _______ ("Holder") is
entitled, upon the terms and subject to the conditions hereinafter set forth, at
any time from one year from the date of the first closing (the "First Closing")
of the Company's offering (the "Offering") of units consisting of one share of
common stock, par value $0.01 per share ("Common Stock") and one warrant to
purchase one share of Common Stock, and until at or prior to 11:59 p.m. Central
Time, on a date which is four years from the date of the First Closing (the
"Expiration Time"), but not thereafter, to acquire from the Company, in whole or
in part, from time to time, up to _______ fully paid and nonassessable shares
(the "Shares") of common stock, $.01 par value, of the Company at a purchase
price of $4.00 per Share (the "Exercise Price"). Such number of Shares and
Exercise Price are subject to adjustment as provided herein, and all references
to "Common Stock" and "Exercise Price" herein shall be deemed to include any
such adjustment or series of adjustments.
2. Exercise of Warrant. The purchase rights represented by this Warrant
are exercisable by Holder, in whole or in part, at any time, or from time to
time, subsequent to the date hereof, by the surrender of this Warrant and the
Notice of Exercise annexed hereto, all duly completed and executed on behalf of
Holder, at the office of the Company in Alsip, Illinois (or such other office or
agency of the Company as it may designate by notice in writing to Holder at the
address of Holder appearing on the books of the Company). Payment of the
Exercise Price for the Shares thereby purchased shall be made by cash, certified
or cashier's check or wire transfer payable to the order of the Company, at
10:00 a.m., Central Time, on the day following surrender of this Warrant and the
Notice of Exercise, in an amount equal to the purchase price of the Shares
thereby purchased. Thereupon, Holder as the holder of this Warrant, shall be
entitled to receive from the Company a stock certificate in proper form
representing the number of Shares so purchased, and a new Warrant in
substantially identical form and dated as of such exercise for the purchase of
that number of Shares equal to the difference, if any, between the number of
Shares subject hereto and the number of Shares as to which this Warrant is so
exercised.
3. Issuance of Shares. Certificates for Shares purchased hereunder
shall be delivered to Holder promptly after the date on which this Warrant shall
have been exercised in accordance with the terms hereof. The Company hereby
represents and warrants that all Shares that may be issued upon the exercise of
this Warrant will, upon such exercise, be duly and validly authorized and
issued, fully paid and nonassessable and free from all taxes, liens and charges
in respect of the issuance thereof (other than
liens or charges created by or imposed upon Holder as the holder of the Warrant
or taxes in respect of any transfer occurring contemporaneously or otherwise
specified herein). The Company agrees that the Shares so issued shall be and
shall for all purposes be deemed to have been issued to Holder as the record
owner of such Shares as of the close of business on the date on which this
Warrant shall have been exercised or converted in accordance with the terms
hereof.
4. No Fractional Shares or Scrip. No fractional Shares or scrip
representing fractional Shares shall be issued upon the exercise of this
Warrant. In lieu of any fractional Share to which Holder as the holder would
otherwise be entitled, Holder shall be entitled, at its option, to receive
either (i) a cash payment equal to the excess of fair market value for such
fractional Share above the Exercise Price for such fractional share (as
determined in good faith by the Company) or (ii) a whole Share if Holder tenders
the Exercise Price for one whole share.
5. No Rights as Shareholder. This Warrant does not entitle Holder as a
holder hereof to any voting rights or other rights as a shareholder of the
Company prior to the exercise hereof.
6. Charges, Taxes and Expenses. Certificates for Shares issued upon
exercise of this Warrant shall be issued in the name of Holder as the holder of
this Warrant. Issuance of certificates for Shares upon the exercise of this
Warrant shall be made without charge to Holder for any issue or transfer tax or
other incidental expense in respect of the issuance of such certificates, all of
which taxes and expenses shall be paid by the Company.
7. No Transfer. This Warrant and any rights hereunder are not
transferable by Holder as the holder hereof, in whole or in part, without the
prior written consent of the Company.
8. Exchange and Registry of Warrant. This Warrant is exchangeable, upon
the surrender hereof by Holder as the registered holder at the above-mentioned
office or agency of the Company, for a new Warrant on substantially identical
form and dated as of such exchange. The Company shall maintain at the
above-mentioned office or agency a registry showing the name and address of
Holder as the registered holder of this Warrant. This Warrant may be surrendered
for exchange or exercise, in accordance with its terms, at the office of the
Company, and the Company shall be entitled to rely in all respects, prior to
written notice to the contrary, upon such registry.
9. Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Warrant, and in the case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of this Warrant, if mutilated, the Company will
make and deliver a new Warrant of like tenor and dated as of such cancellation
and reissuance, in lieu of this Warrant.
10. Reservation of Common Stock. The Company will at all times reserve
and keep available, solely for issuance, sale and delivery upon the exercise of
this Warrant, such number of Shares equal to the number of Shares purchasable
upon the exercise of this Warrant. All such Shares shall be duly authorized and,
when issued upon exercise of this Warrant in accordance with the terms hereof,
will be validly issued and fully paid and nonassessable, with no liability on
the part of Holder. Such Shares will not be subject to any preemptive rights.
11. Listing on Securities Exchanges, Etc. The Company will maintain the
listing of all Shares issuable or issued from time to time upon exercise of this
Warrant on each securities exchange or market or trading system on which any
shares of Common Stock are then or at any time thereafter listed or traded, but
only to the extent and for such period of time as such shares of Common Stock
are so
2
listed.
12. Saturdays, Sundays, Holidays, etc. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal
holiday, then such action may be taken or such right may be exercised on the
next succeeding day not a Saturday, Sunday or legal holiday.
13. Adjustments and Termination of Rights. The purchase price per Share
and the number of Shares purchasable hereunder are subject to adjustment from
time to time as follows:
(a) Merger or Consolidation. If at any time there shall be a
merger or a consolidation of the Company with or into another corporation when
the Company is not the surviving corporation, then, as part of such merger or
consolidation, lawful provision shall be made so that Holder as the holder of
this Warrant shall thereafter be entitled to receive upon exercise of this
Warrant, during the period specified herein and upon payment of the aggregate
Exercise Price then in effect, the number of shares of stock or other securities
or property (including cash) of the successor corporation resulting from such
merger or consolidation, to which Holder as the holder of the Shares deliverable
upon exercise of this Warrant would have been entitled in such merger or
consolidation if this Warrant had been exercised immediately before such merger
or consolidation. In any such case, appropriate adjustment shall be made in the
application of the provisions of this Warrant with respect to the rights and
interests of Holder as the holder of this Warrant after the merger or
consolidation. This provision shall apply to successive mergers or
consolidations.
(b) Reclassification, Recapitalization, etc. If the Company at
any time shall, by subdivision, combination or reclassification of securities,
recapitalization, automatic conversion, or other similar event affecting the
number or character of outstanding Shares, or otherwise, change any of the
securities as to which purchase rights under this Warrant exist into the same or
a different number of securities of any other class or classes, this Warrant
shall thereafter represent the right to acquire such number and kind of
securities as would have been issuable as the result of such change with respect
to the securities that were subject to the purchase rights under this Warrant
immediately prior to such subdivision, combination, reclassification or other
change.
(c) Split, Subdivision or Combination of Shares. If the
Company at any time while this Warrant remains outstanding and unexpired shall
split, subdivide or combine the securities as to which purchase rights under
this Warrant exist, the Exercise Price shall be proportionately decreased in the
case of a split or subdivision or proportionately increased in the case of a
combination.
(d) Common Stock Dividends. If the Company at any time while
this Warrant is outstanding and unexpired shall pay a dividend with respect to
Common Stock payable in Shares, or make any other distribution with respect to
Common Stock in Shares, then the Exercise Price shall be adjusted, from and
after the date of determination of the shareholders entitled to receive such
dividend or distribution, to that price determined by multiplying the Exercise
Price in effect immediately prior to such date of determination by a fraction
(i) the numerator of which shall be the total number of Shares outstanding
immediately prior to such dividend or distribution, and (ii) the denominator of
which shall be the total number of Shares outstanding immediately after such
dividend or distribution. This paragraph shall apply only if and to the extent
that, at the time of such event, this Warrant is then exercisable for Common
Stock.
(e) Issuance of Shares at Other Than Exercise Price. If the
Company should issue shares of its Common Stock other than in an Exempt Offering
(as defined below) at a price per share less than $1.39, then the Exercise Price
shall be adjusted to equal the result obtained by dividing (i) the sum
3
of (A) the total number of shares of Common Stock outstanding immediately prior
to such issuance multiplied by the then effective Exercise Price and (B) the
value of the consideration received by the Company upon such issuance of such
shares of Common Stock, by (ii) the total number of shares of Common Stock
outstanding immediately after such issuance. For the purposes of this Section
13(e), the issuance of securities convertible into or exercisable for Common
Stock shall be deemed the issuance of the number of shares of Common Stock into
which such securities are convertible or for which such securities are
exercisable, and the consideration received for such securities shall be deemed
to include the minimum aggregate amount payable upon conversion or exercise of
such securities. In the event the right to convert or exercise such securities
expires unexercised, the Exercise Price of Shares issuable upon the exercise
hereof shall be readjusted accordingly. The sale or other disposition of any
shares of Common Stock held in the treasury of the Company, or of any securities
resulting from any reclassification of such shares or other securities which
were effected while they were held in the treasury of the Company, shall be
deemed an issuance thereof. As used in this Section 13(e), each of the following
offerings shall be considered an "Exempt Offering": (i) the issuance of shares
of Common Stock upon conversion of shares of the Company's Series A or Series B
Preferred Stock; (ii) the issuance of an aggregate of 1,400,000 shares of Common
Stock to employees and consultants of the Company and its subsidiaries after the
date hereof pursuant to stock option plans and stock ownership plans approved by
the Company's board of directors (as such number of shares is proportionately
adjusted for subsequent stock splits, combinations, and dividends affecting the
Common Stock); and (iii) the issuance of Common Stock upon the exercise of
options and warrants issued by the Company and outstanding as of the date of the
Company's Confidential Private Placement Memorandum for the Offering (subject to
adjustment under the terms thereof).
(f) Adjustment of Number of Shares. Upon each adjustment in
the Exercise Price pursuant to Section 13(c), 13(d) or 13(e)hereof, the number
of Shares purchasable hereunder shall be adjusted, to the nearest whole Share,
to the product obtained by multiplying the number of Shares purchasable
immediately prior to such adjustment in the Exercise Price by a fraction (i) the
numerator of which shall be the Exercise Price immediately prior to such
adjustment, and (ii) the denominator of which shall be the Exercise Price
immediately after such adjustment.
14. Notice of Adjustments; Notices. Whenever the Exercise Price or
number or type of securities issuable hereunder shall be adjusted pursuant to
Section 13 hereof, the Company shall issue and provide to Holder as the holder
of this Warrant a certificate signed by an officer of the Company setting forth,
in reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated and the Exercise
Price and number of Shares purchasable hereunder after giving effect to such
adjustment.
15. Registration Rights. The Holder shall have the right to register
the Shares issuable upon exercise of this Warrant (in the event the Warrant is
exercised to purchase Shares), as set forth in the Registration Rights Agreement
of even date herewith, which provisions are incorporated herein and made a part
hereof.
16. Governing Law. This Warrant shall be binding upon any successors or
assigns of the Company. This Warrant shall constitute a contract under the laws
of Illinois and for all purposes shall be construed in accordance with and
governed by the laws of said state, without giving effect to conflict of laws
principles.
17. Amendments. This Warrant may be amended and the observance of any
term of this Warrant may be waived only with the written consent of the Company
and Holder as the holder hereof.
18. Notice. All notices hereunder shall be in writing and shall be
effective (a) on the day on
4
which delivered if delivered personally or transmitted by telex, telegram or
telecopier with evidence of receipt, (b) one (1) business day after the date on
which the same is delivered to a nationally recognized overnight courier service
with evidence of receipt, or (c) five (5) business days after the date on which
the same is deposited, postage prepaid, in the U.S. mail, sent by certified or
registered mail, return receipt requested, and addressed to the party to be
notified at the address indicated below for the Company, or at the address for
Holder as the holder set forth in the registry maintained by the Company
pursuant to Section 8, or at such other address and/or telecopy or telex number
and/or to the attention of such other person as the Company or Holder as the
holder may designate by ten (10) day advance written notice.
19. Entire Agreement. This Warrant and the forms attached hereto
contain the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior and contemporaneous arrangements or
undertakings with respect thereto.
IN WITNESS WHEREOF, Universal Automotive Industries, Inc. has caused
this Warrant to be executed by its duly authorized officer.
Dated: As of February __, 2002
UNIVERSAL AUTOMOTIVE INDUSTRIES, INC.
By:
Name:
Title:
Name of Holder:
Address:
5
NOTICE OF EXERCISE
To: Universal Automotive Industries, Inc.
1. The undersigned hereby elects to purchase ________________ shares
(the "Shares") of common stock $.01 par value of Universal Automotive
Industries, Inc. (the "Company") pursuant to the terms of the attached Warrant,
and tenders herewith payment of the purchase price and any transfer taxes
payable pursuant to the terms of the Warrant, together with an investment
Representation Statement in form and substance satisfactory to legal counsel to
the Company.
2. The Shares to be received by the undersigned upon exercise of the
Warrant are being acquired for his, her or its own account, not as a nominee or
agent, and not with a view to resale or distribution of any part thereof, and
the undersigned has no present intention of selling, granting any participation
in, or otherwise distributing the same, except in compliance with applicable
federal and state securities laws. The undersigned further represents that he,
she or it does not have any contract, undertaking, agreement or arrangement with
any person to sell, transfer or grant participation to such person or to any
third person, with respect to the Shares. The undersigned believes he, she or it
has received all the information he, she or it considers necessary or
appropriate for deciding whether to purchase the Shares.
3. The undersigned understands that the Shares are characterized as
"restricted securities" under the federal securities laws inasmuch as they are
being acquired from the Company in transactions not involving a public offering
and that under such laws and applicable regulations such securities may be
resold without registration under the Securities Act of 1933, as amended (the
"Act"), only in certain limited circumstances. In this connection, the
undersigned represents that he, she or it is familiar with Rule 144 of the Act,
as presently in effect, and understands the resale limitations imposed thereby
and by the Act.
4. The undersigned understands the certificates evidencing the Shares
may bear one or all of the following legends:
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY
HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE DISTRIBUTED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS."
(b) Any legend required by applicable state law.
5. Please issue a certificate or certificates representing said Shares
in the name of the undersigned.
6. Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned.
(Print Name)
By:
----------------------
Date Title:
2
