EXHIBIT 4.3
WARRANT AGREEMENT BETWEEN COMPANY AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
WARRANT AGREEMENT
Agreement made as of December 5, 1997, between Ontro, Inc., a
California corporation with offices at 00000 Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxx,
Xxxxxxxxxx 00000 ("Company"), and ChaseMellon Shareholder Services, L.L.C., a
New Jersey limited liability company, with offices at 000 Xxxxx Xxxx Xxxxxx, 0xx
Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000 (herein called the "Warrant Agent").
WHEREAS, the Company has determined to issue and deliver up to
2,900,000 warrants ("Offering Warrants") evidencing the right of the holders
thereof to purchase an aggregate of 2,900,000 shares of common stock, no par
value, of the Company ("Common Stock") which warrants are to be issued and
delivered pursuant to an initial public offering of the securities of the
Company, such warrants to be issued as part of units ("Units") consisting of one
share of Common Stock and one Offering Warrant; and
WHEREAS, the Company has agreed pursuant to an agreement (the
"Underwriting Agreement") with Xxxxxx Xxxxxxx & Associates, Inc., as
representative of the various underwriters (the "Underwriters"), to issue
435,000 additional Units to the various Underwriters containing warrants (the
"Over-Allotment Warrants") with identical terms and conditions as the Offering
Warrants (the "Underwriters' Over-Allotment Option"); and
WHEREAS, the Company has also granted to Xxxxxx Xxxxxxx & Associates,
Inc. (the "Representative") a purchase option (the "Representative's Option") to
purchase 290,000 additional Units containing 290,000 warrants with identical
terms and conditions as the Offering Warrants, (the "Representative's
Warrants"); and
WHEREAS, unless otherwise noted, the Offering Warrants, Over-Allotment
Warrants and the Representative's Warrants are referred to herein as the
"Warrants" and each as a "Warrant"; 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 exercise of the Warrants; and
WHEREAS, the Company desires to provide for the form and provisions of
the Warrants, the terms upon which they shall be issued and exercised, and the
respective rights, limitation of rights, and immunities of the Company, the
Warrant Agent, and the holders of the Warrants; and
WHEREAS, all acts and things have been done and performed which are
necessary to make the Warrants, when executed on behalf of the Company and
countersigned by or on behalf
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of the Warrant Agent, as provided herein, the valid, binding and legal
obligations of the Company, and to authorize the execution and delivery of this
Agreement.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
1. APPOINTMENT OF WARRANT AGENT. The Company hereby appoints the Warrant
Agent to act as agent for the Company in connection with the Offering Warrants,
Over-Allotment Warrants and Representative's Warrants and the Warrant Agent
hereby accepts such appointment and agrees to perform as such in accordance with
the terms and conditions set forth in this Agreement.
2. WARRANTS.
2.1 FORM OF WARRANTS. Each Warrant shall be issued in registered form
only, shall be signed by, or bear the facsimile signature of, the Chairman or
Chief Executive Officer and Secretary or Assistant Secretary of the Company and
shall bear a facsimile of the Company's seal. In the event the person whose
facsimile signature has been placed upon any Warrant shall have ceased to serve
in his designated office of the Company before such Warrant is issued, it may be
issued with the same effect as if he had not ceased to serve in that capacity at
the date of issuance. No Warrant may be exercised until it has been
countersigned by the Warrant Agent as provided in Section 2.3 hereof. Warrant
Certificates shall be in substantially the form attached as Exhibit A hereto.
2.2 EFFECT OF COUNTERSIGNATURE. Unless and until countersigned by the
Warrant Agent pursuant to this Agreement, a Warrant shall be invalid and of no
effect.
2.3 EVENTS FOR COUNTERSIGNATURE. The Warrant Agent shall countersign a
Warrant only in either of the following circumstances:
(i) if the Warrant is to be issued in exchange or substitution for
one or more previously countersigned Warrants, as hereinafter provided; or
(ii) if the Company instructs the Warrant Agent to do so.
2.4 ISSUANCE.
2.4.1 OFFERING WARRANTS. Warrant Certificates representing the
Offering Warrants shall be executed by the proper officers of the Company and
delivered to the Warrant Agent for countersignature upon the closing of the
public offering. Certificates representing the Offering Warrants to be
delivered to the Warrant Agent shall be in direct relation to the number of
Units sold in the Company's public offering and shall be attached to the
certificates representing an equal number of shares of Common Stock. The
Offering Warrant Certificates will be issued and delivered on written order of
the Company signed by an authorized officer. The Warrant Agent shall deliver
Offering Warrant Certificates in required whole number denominations to the
persons entitled
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thereto in connection with any transfer or exchange permitted under this
Agreement.
2.4.2 OVER-ALLOTMENT WARRANTS. The Over-Allotment Warrants to be
issued, if any, will be executed by the proper officers of the Company and
delivered to the Warrant Agent for countersignature on exercise of the option to
purchase Units containing the Over-Allotment Warrants by the several
Underwriters in accordance with the Underwriting Agreement. Certificates
representing the Over-Allotment Warrants to be delivered to the Warrant Agent
shall be in direct relation to the number of Units sold to the Underwriters
pursuant to the exercise of the Over-Allotment Option and shall be attached to
the certificates representing an equal number of shares of Common Stock. The
Over-Allotment Warrant Certificates will be issued and delivered on written
order of the Company signed by an authorized officer.
2.4.3 REPRESENTATIVE'S WARRANTS. The Representative's Warrants to be
issued, if any, will be executed by the proper officers of the Company and
delivered to the Warrant Agent for countersignature on exercise of the
Representative's Option, which Option may not be exercised prior to one year
following the effective date of the registration statement relating to the
public offering. Certificates representing the Representative's Warrants to be
delivered to the Warrant Agent shall be in direct relation to the number of
Units sold in connection with the exercise by the Representative of the
Representatives's Option and shall be attached to the certificates representing
an equal number of shares of Common Stock. The Representative's Warrant
Certificates will be issued and delivered on written order of the Company signed
by an authorized officer.
2.5 REGISTER.
2.5.1 WARRANT REGISTER. The Warrant Agent shall maintain books (the
"Warrant Register"), for the registration of the original issuance and the
registration of any transfer of the Warrants. Upon the initial issuance of the
Warrants, the Warrant Agent shall issue and register the Warrants in the names
of the respective holders thereof in such denominations and otherwise in
accordance with instructions delivered to the Warrant Agent by the Company.
2.5.2 REGISTERED HOLDER. Prior to due presentment for registration
of transfer of any Warrant, the Company and the Warrant Agent may deem and treat
the person in whose name such Warrant shall be registered upon the Warrant
Register (the "registered holder"), as the absolute owner of such Warrant and of
each Warrant represented thereby (notwithstanding any notation of ownership or
other writing on the Warrant Certificate made by anyone other than the Company
or the Warrant Agent), for the purpose of any exercise thereof, and for all
other purposes, and neither the Company nor the Warrant Agent shall be affected
by any notice to the contrary.
2.6 DETACHABILITY OF WARRANTS. The Warrant Agent understands that the
Warrants are being issued as part of Units together with shares of the Company's
Common Stock. Each Warrant Certificate shall be initially issued only when
attached to a certificate representing the same number of shares of Common Stock
as Warrants and shall be separately transferable from the certificate
representing shares of Common Stock immediately upon issuance.
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3. TERMS AND EXERCISE OF WARRANTS.
3.1 WARRANT PRICE. Each Warrant, when countersigned by the Warrant Agent,
shall entitle the registered holder thereof, subject to the provisions of such
Warrant and of this Warrant Agreement, to purchase from the Company the number
of shares of Common Stock stated therein, at the price of 150% of the price of
the Units issued in the initial public offering of the Company's securities
("Offering price") per whole share, subject to the adjustments provided in
Section 4 hereof. The term "Warrant Price" as used in this Warrant Agreement
refers to the price per share at which Common Stock may be purchased at the time
a Warrant is exercised and applies to all Warrants governed hereby. The
Company, in its sole discretion, may reduce the Warrant Price relating to any
Warrant.
3.2 DURATION OF WARRANTS. A Warrant may be exercised only during the
period ("Exercise Period") commencing on the date of issuance, and terminating
at 5:00 p.m. Pacific Standard Time three years from the effective date of the
registration statement of the Company (the "Expiration Date"). Each Warrant not
exercised on or before the Expiration Date shall become void, and all rights
thereunder and all rights in respect thereof under this Agreement shall cease on
the Expiration Date. The Exercise Period for the Representative's Option shall
be the period commencing one year after the effective date of the registration
statement covering the initial public offering of the Units, and expiring at
5:00 p.m. Pacific Standard Time four years thereafter (Representative's
Expiration Date"). The Company in its sole discretion may extend the duration
of the Warrants by delaying the Expiration Date or the Representative's
Expiration Date.
3.3 EXERCISE OF WARRANTS.
3.3.1 PAYMENT. A Warrant, when countersigned by the Warrant Agent,
may be exercised by the registered holder thereof at any time during the
applicable Exercise Period and prior to redemption by surrendering it, at the
office of the Warrant Agent, or at the office of its successor as Warrant Agent
with the subscription form, as set forth on the reverse side of the Warrant,
duly executed, and by paying in full, in lawful money of the United States, in
cash, certified or bank check payable to the order of the Company, the Warrant
Price for each full share of Common Stock as to which the Warrant is exercised
and any and all applicable taxes due in connection with the exercise of the
Warrant, the exchange of the Warrant for the Common Stock, and the issuance of
the Common Stock.
3.3.2 ISSUANCE OF CERTIFICATES. As soon as practicable after the
exercise of any Warrant and in any event within thirty days after such exercise,
the Warrant Agent shall issue to the registered holder of such Warrant a
certificate or certificates for the number of full shares of Common Stock to
which he is entitled, registered in such name or names as may be directed by
him, and, if the Warrant shall not have been exercised in full, a new
countersigned Warrant for the number of shares as to which such Warrant shall
not have been exercised.
3.3.3 VALID ISSUANCE. All shares of Common Stock issued upon the
proper exercise
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of a Warrant in conformity with this Agreement shall be duly authorized, validly
issued and outstanding, fully paid and nonassessable.
3.3.4 DATE OF ISSUANCE. Each person in whose name any such
certificate for shares of Common Stock is issued shall for all purposes be
deemed to have become the holder of record of such shares on the date on which
the Warrant was surrendered and payment of the Warrant Price was made,
irrespective of the date of delivery of such certificate, except that, if the
date of such surrender and payment is a date when the stock transfer books of
the Company are closed, such person shall be deemed to have become the holder of
such shares at the opening of business on the next succeeding date on which the
stock transfer books are open.
3.3.5 NOTIFICATION AND PAYMENT. The Warrant Agent shall promptly
notify the Company in writing of any exercise and of the number of Warrant
Shares caused to be delivered and shall cause payment of an amount in cash equal
to the Exercise Price to be made promptly to the order of the Company. The
parties contemplate such payments will be made by the Warrant Agent to the
Company on a weekly basis and will consist of collected funds only. The Warrant
Agent shall hold any proceeds collected and not yet paid to the Company in a
federally insured escrow account at a commercial bank selected by agreement of
the Company and the Warrant Agent, at all times relevant hereto. Following a
determination by the Warrant Agent that collected funds have been received, the
Warrant Agent shall cause the issuance of share certificates representing the
number of Warrant Shares purchased by the registered owner of the exercised
Warrants.
3.3.6 ACCOUNTING. A detailed accounting statement setting forth the
number of Warrants exercised, the number of Warrant Shares issued and the names
and addresses of the holders of such Warrant Shares, the net amount of funds
from the exercise of the Warrants and all expenses incurred by the Warrant Agent
shall be transmitted to the Company on payment of each exercise amount. Such
accounting statement shall serve as an interim accounting issued, for the
Company during the Exercise Period. The Warrant Agent shall render to the
Company, at the completion of the Exercise Period, a complete accounting setting
forth the number of Warrants exercised, the identity of the persons exercising
such Warrants, the number of the Warrant Shares issued and the names and
addresses of the holders of such Warrant Shares, the amounts distributed to the
Company, and all expenses incurred by the Warrant Agent.
3.3.7 PROSPECTUS DELIVERY. Under certain circumstances, the Company
may be required to deliver a prospectus that satisfies the requirements of
Section 10 of the Securities Act of 1933, as amended (the "1933 Act") with
delivery of the Warrant Shares and must have a registration statement (or a
post-effective amendment to an existing registration statement) effective under
such Act in order for the Company to comply with any such prospectus delivery
requirements. The Company will advise the Warrant Agent of the status of any
such registration statement under the 1933 Act and of the effectiveness of the
Company's registration statement or lapse of effectiveness. No issuance of
Warrant Shares shall be made unless there is an effective registration statement
under the 1933 Act (or an exemption therefrom) and registration or qualification
of the Warrant Shares (or an exemption therefrom) has been obtained from state
or other regulatory authorities in the
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jurisdiction in which such Warrant Shares are sold. The company will provide to
the Warrant Agent written confirmation of all such registration or
qualification, or an exemption therefrom, when requested by the Warrant Agent.
4. ADJUSTMENTS. The Exercise Price and the number of shares of Common Stock
covered by each Warrant and the number of Warrants outstanding are subject to
adjustment from time to time upon the occurrence of the events enumerated in
this Section 4.
4.1 STOCK DIVIDENDS -- SPLIT-UPS. If, after the date hereof, prior to
redemption and subject to the provisions of Section 4.6 below, the number of
outstanding shares of Common Stock is increased by a stock dividend payable in
shares of Common Stock or by a split-up of shares of Common Stock or other
similar event, then, on the day following the date fixed for the determination
of holders of Common Stock entitled to receive such stock dividend or split-up,
the number of shares issuable on exercise of each Warrant shall be increased in
proportion to such increase in outstanding shares and the then applicable
Warrant Price shall be correspondingly decreased.
4.2 AGGREGATION OF SHARES. If, after the date hereof, prior to redemption
and subject to the provisions of Section 4.5, the number of outstanding shares
of Common Stock is decreased by a consolidation, combination or reclassification
of shares of Common Stock or other similar event, then, after the effective date
of such consolidation, combination or reclassification, the number of shares
issuable on exercise of each Warrant shall be decreased in proportion to such
decrease in outstanding shares and the then applicable Warrant Price shall be
correspondingly increased.
4.3 REORGANIZATION, ETC. If, after the date hereof, and prior to
redemption any capital reorganization or reclassification of the Common Stock of
the Company, or consolidation or merger of the Company with another corporation,
or the sale of all or substantially all of its assets to another corporation or
other similar event shall be effected, then, as a condition of such
reorganization, reclassification, consolidation, merger, or sale, lawful and
fair provision shall be made whereby the Warrant holders shall thereafter have
the right to purchase and receive, upon the basis and upon the terms and
conditions specified in the Warrants and in lieu of the shares of Common Stock
of the Company immediately theretofore purchasable and receivable upon the
exercise of the rights represented thereby, such shares of stock, securities, or
assets as may be issued or payable with respect to or in exchange for the number
of outstanding shares of such Common Stock equal to the number of shares of such
stock immediately theretofore purchasable and receivable upon the exercise of
the rights represented by the Warrants, had such reorganization,
reclassification, consolidation, merger, or sale not taken place and in such
event appropriate provision shall be made with respect to the rights and
interests of the Warrant holders to the end that the provisions hereof
(including, without limitation, provisions for adjustment of the Warrant Price
and of the number of shares purchasable upon the exercise of the Warrants) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities, or assets thereafter deliverable upon the exercise hereof.
The Company shall not effect any such consolidation, merger, or sale unless
prior to the consummation thereof the successor corporation (if other than the
Company) resulting from such consolidation or merger, or the corporation
purchasing such assets, shall assume by written
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instrument executed and delivered to the Warrant Agent the obligation to deliver
to the Warrant holders such shares of stock, securities, or assets as, in
accordance with the foregoing provisions, such holders may be entitled to
purchase.
4.4 RIGHTS ISSUE. In case the Company, prior to redemption, shall issue
rights, options, warrants or convertible securities to all holders of the Common
Stock entitling them to subscribe for or purchase Common Stock or securities
convertible into Common Stock at a price per share less than the current value
of the Common Stock (as determined in accordance with Section 4.6 below) on the
record date for the issuance of such securities, instruments or rights or the
granting of such securities, options or warrants, as the case may be, the
Warrant Price to be in effect after the record date for the issuance of such
rights or the granting of such options or warrants shall be determined by
multiplying the Warrant Price in effect immediately prior to such record date by
a fraction, the numerator of which shall be (i) the sum of (a) the number of
shares of Common Stock outstanding immediately prior to such sale and (b) the
number of shares of Common Stock which could be purchased at the current value
of the Common Stock (as determined in accordance with Section 4.6 below) with
the consideration received by the Company upon such sale, and the denominator of
which shall be the total number of shares of Common Stock that would be
outstanding immediately after such sale if the full amount of convertible
securities, options, rights, or warrants were exercised immediately after the
sale. Additionally, the number of shares of Common Stock purchasable upon
exercise of each Warrant shall simultaneously be adjusted by multiplying the
number of shares of Common Stock issuable upon exercise of each Warrant by the
Warrant Price in effect immediately prior to the adjustment made and under this
Section 4.4 and dividing the product so obtained by the Warrant Price in effect
immediately after the adjustment. In the event such securities, instruments or
rights shall change or expire, or such convertible securities shall not be
converted, any adjustment previously made hereunder shall be readjusted to such
as would have obtained on the basis of the rights as modified by such change or
expiration.
4.5 NOTICES OF CHANGES IN WARRANT. Upon every adjustment of the Warrant
Price or the number of shares issuable on exercise of a Warrant, the Company
shall give written notice thereof to the Warrant Agent, which notice shall state
the Warrant Price resulting from such adjustment and the increase or decrease,
if any, in the number of shares purchasable at such price upon the exercise of a
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. Upon the occurrence of any event
specified in Sections 4.1, 4.2, 4.3 or 4.4, then, in any such event, the Company
shall give written notice in the manner set forth above of the record date for
such dividend, distribution, or subscription rights, or the effective date of
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding up or issuance. Such notice shall also specify the date as
of which the holders of Common Stock of record shall participate in such
dividend, distribution, or subscription rights, or shall be entitled to exchange
their Common Stock for stock, securities, or other assets deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, winding up or issuance. Failure to give such notice, or any defect
therein, shall not affect the legality or validity of such event.
4.6 NO FRACTIONAL SHARES. Notwithstanding any provision contained in this
Warrant
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Agreement to the contrary, the Company shall not issue fractional shares upon
exercise of Warrants. If, by reason of any adjustment made pursuant to this
Section 4, the holder of any Warrant would be entitled, upon the exercise of
such Warrant, to receive a fractional interest in a share, the Company shall,
upon such exercise, purchase such fractional interest, at a price 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 listed for
trading on the National Association of Securities Dealers Automated Quotation
System, the current value shall be the last reported sale price of the Common
Stock on such exchange on the last business day prior to the date of exercise of
the Warrant or if no such sale is made or reported on such day, the average of
the highest closing bid and lowest asked prices for such day on such exchange or
system; or
(ii) If the Common Stock is not listed or admitted to unlisted trading
privileges, the current value shall be the average of the last reported highest
bid and lowest asked prices reported by the National Quotations 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
value shall be an amount determined in such good faith reasonable manner as may
be prescribed by the Board of Directors of the Company.
4.7 FORM OF WARRANT. The form of Warrant need not be changed because of
any adjustment pursuant to this Section 4, and Warrants issued after such
adjustment may state the same Warrant Price and the same number of shares as is
stated in the Warrants initially issued pursuant to this Agreement. However,
the Company may at any time in its sole discretion make any change in the form
of Warrant that the Company may deem appropriate and that does not affect the
substance thereof, and any Warrant thereafter issued or countersigned, whether
in exchange or substitution for an outstanding Warrant or otherwise, may be in
the form as so changed.
5. TRANSFER AND EXCHANGE OF WARRANTS.
5.1 REGISTRATION OF TRANSFER. The Warrant Agent shall register the
transfer, from time to time, of any outstanding Warrant upon the Warrant
Register, upon surrender of such Warrant for transfer, properly endorsed with
signatures properly guaranteed and accompanied by appropriate instructions for
transfer. Upon any such transfer, a new Warrant Certificate representing an
equal aggregate number of Warrants shall be issued to the transferee and the
Warrant Certificate surrendered shall be canceled by the Warrant Agent. The
Warrant Certificates so canceled shall be delivered by the Warrant Agent to the
Company from time to time upon request.
5.2 PROCEDURE FOR SURRENDER OF WARRANTS. Warrant Certificates may be
surrendered to the Warrant Agent, together with a written request for exchange,
and thereupon the Warrant Agent shall issue in exchange therefor one or more new
Warrant Certificates as requested by the registered holder of the Warrant
Certificates so surrendered, representing an equal aggregate number of
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Warrants; provided, however, in the event a Warrant Certificate surrendered for
transfer bears a restrictive legend, the Warrant Agent shall not cancel such
Warrant Certificate and issue new Warrant Certificates in exchange therefor
until the Warrant Agent has received an opinion of counsel for the Company
stating that such transfer may be made and indicating whether the new Warrant
Certificates must also bear a restrictive legend.
5.3 FRACTIONAL WARRANTS. The Warrant Agent shall not effect any
registration or transfer or exchange which will result in the issuance of a
Warrant Certificate for a fraction of a Warrant.
5.4 SERVICE CHARGES. No service charge shall be made for any exchange or
registration or transfer of Warrants.
5.5 WARRANT EXECUTION AND COUNTERSIGNATURE. The Warrant Agent is hereby
authorized to countersign and to deliver, in accordance with the terms of this
Agreement, the Warrants required to be issued pursuant to the provisions hereof,
and the Company, whenever required by the Warrant Agent, will supply the Warrant
Agent with Warrants duly executed on behalf of the Company for such purpose.
6. REDEMPTION BY COMPANY.
6.1 REDEMPTION. The Offering Warrants and the Over-Allotment Warrants are
redeemable at the option of the Company at $0.05 per Warrant following at least
30 days prior written notice to the registered owners thereof. The right to
redeem the Warrants may be exercised by the Company only in the event (a) the
closing price of the Common Stock equals or exceeds 200% of the Offering Price
for 20 consecutive trading days ending within the 30 days prior to the date the
notice of redemption is given, (b) the Company has a currently effective
registration statement (including a post-effective amendment to an existing
registration statement) covering the Common Shares underlying the Warrants, and
(c) the expiration of the 30 day notice period is within the Exercise Period.
6.2 DATE FIXED FOR, AND NOTICE OF, REDEMPTION. In the event the Company
shall elect to redeem the Offering Warrants and Over-Allotment Warrants, the
Company shall fix a date for the redemption date. Notice of redemption and of
the redemption date shall be mailed by first class mail, postage prepaid, by the
Company not less then 30 days prior to the redemption date to the registered
holders of the Offering Warrants and Over-Allotment Warrants at their last
address as it shall appear on the Warrant Register. Any notice mailed in the
manner herein provided shall be conclusively presumed to have been duly given
regardless whether the registered holder receives such notice.
6.3 EXERCISE AFTER NOTICE OF REDEMPTION. The Warrants may be exercised in
accordance with Section 3 of this Agreement at any time after notice of
acceleration shall have been given by the Company pursuant to Section 6.2 hereof
and prior to the redemption date fixed in the notice. If any Warrant called for
redemption is not exercised by such time, it will cease to be
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exercisable and the registered owner thereof will be entitled only to the
redemption price of $0.05 per Warrant.
7. OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF WARRANTS.
7.1 NO RIGHTS AS SHAREHOLDER. A Warrant does not entitle the registered
holder thereof to any of the rights of a shareholder of the Company, including,
without limitation, the right to receive dividends, or other distributions,
exercise any preemptive rights to vote or to consent or to receive notice as
shareholders in respect of the meetings of shareholders or the election of
directors of the Company or any other matter.
7.2 LOST, STOLEN, MUTILATED, OR DESTROYED WARRANTS. If any Warrant is
lost, stolen, mutilated, or destroyed, the Company and the Warrant Agent may, on
such terms as to indemnify each of them, or otherwise as they may in their
discretion impose (which shall, in the case of a mutilated Warrant, include the
surrender thereof), issue a new Warrant of like denomination, tenor, and date as
the Warrant so lost, stolen, mutilated, or destroyed. Any such new Warrant
shall constitute an original contractual obligation of the Company, regardless
of whether the allegedly lost, stolen, mutilated, or destroyed Warrant shall be
at any time enforceable by anyone.
7.3 RESERVATION OF COMMON STOCK. The Company shall at all times reserve
and keep available a number of its authorized but unissued shares of Common
Stock that will be sufficient to permit the exercise in full of all outstanding
Warrants issued pursuant to this Agreement. The Company will supply the Warrant
Agent with blank Warrant Certificates so as to maintain an inventory
satisfactory to the Warrant Agent.
7.4 REGISTRATION STATEMENT. The Company has filed with the Securities and
Exchange Commission Registration Statement No. 333-39253 (herein referred to as
the "Registration Statement") on Form SB-2 for the registration, under the
Securities Act of 1933, of the Warrants and the Common Stock issuable upon
exercise of the Warrants, among other securities.
7.5 REGISTRATION OF COMMON STOCK. The Company agrees it will use its best
efforts to cause the Registration Statement to become effective and to maintain
such Registration Statement as currently effective until the expiration of the
Warrants in accordance with the provisions of this Agreement, whether by filing
an appropriate post-effective amendment thereto or otherwise.
8. CONCERNING THE WARRANT AGENT AND OTHER MATTERS.
8.1 PAYMENT OF TAXES. The Company will from time to time promptly pay all
taxes and charges that may be imposed upon the Company or the Warrant Agent in
respect of the issuance or delivery of shares of Common Stock upon the exercise
of Warrants, but the Company shall not be obligated to pay any transfer taxes in
respect of the Warrants or such shares.
8.2 RESIGNATION, CONSOLIDATION, OR MERGER OF WARRANT AGENT.
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8.2.1 APPOINTMENT OF SUCCESSOR WARRANT AGENT. The Warrant Agent, or
any successor to it hereafter appointed, may resign its duties and be discharged
from all further duties and liabilities hereunder after giving sixty (60) days'
notice in writing to the Company. If the office of the Warrant Agent becomes
vacant by resignation or incapacity to act or otherwise, the Company shall
appoint in writing a successor Warrant Agent in place of the Warrant 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 Warrant
Agent or by the holder of a Warrant (who shall, with such notice, submit his
Warrant for inspection by the Company), then the holder of any Warrant may
petition any court of competent jurisdiction for the appointment of a successor
Warrant Agent. Any successor Warrant Agent, whether appointed by the Company or
by such court, shall be a corporation authorized under applicable law to
exercise corporate trust powers and subject to supervision or examination by
federal or state authority. After appointment, any successor Warrant Agent
shall be vested with all the authority, powers, rights, immunities, duties, and
obligations of its predecessor Warrant Agent with like effect as if originally
named as Warrant Agent hereunder, without any further act or deed; but if for
any reason it becomes necessary or appropriate, the predecessor Warrant Agent
shall execute and deliver, at the expense of the Company, an instrument
transferring to such successor Warrant Agent all the authority, powers, and
rights of such predecessor Warrant Agent hereunder; and upon request of any
successor Warrant Agent the Company shall make, execute, acknowledge, and
deliver any and all instruments in writing for more fully and effectually
vesting in and confirming to such successor Warrant Agent all such authority,
powers, rights, immunities, duties, and obligations.
8.2.2 NOTICE OF SUCCESSOR WARRANT AGENT. In the event a successor
Warrant Agent shall be appointed, the Company shall give notice thereof to the
predecessor Warrant Agent and the transfer agent for the Common Stock not later
than the effective date of any such appointment.
8.2.3 MERGER OR CONSOLIDATION OF WARRANT AGENT. Any corporation into
which the Warrant Agent may be merged or with which it may be consolidated or
any corporation resulting from any merger or consolidation to which the Warrant
Agent shall be a party shall be the successor Warrant Agent under this Agreement
without any further act.
8.3 FEES AND EXPENSES OF WARRANT AGENT.
8.3.1 REMUNERATION. The Company agrees to pay the Warrant Agent
reasonable remuneration for its services as such Warrant Agent hereunder and
will reimburse the Warrant Agent upon demand for all expenditures that the
Warrant Agent may reasonably incur in the execution of its duties hereunder.
8.3.2 FURTHER ASSURANCES. The Company agrees to perform, execute,
acknowledge, and deliver or cause to be performed, executed, acknowledged, and
delivered all such further and other acts, instruments, and assurances as may
reasonably be required by the Warrant Agent for the carrying out or performing
of the provisions of this Agreement.
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8.4 LIABILITY OF WARRANT AGENT.
8.4.1 RELIANCE ON COMPANY STATEMENT. Whenever in the performance of
its duties under this Warrant Agreement, the Warrant Agent shall deem it
necessary or desirable that any fact or matter be proved or established by the
Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a statement signed by the
Chief Executive Officer or Secretary of the Company and delivered to the Warrant
Agent. The Warrant Agent may rely upon such statement for any action taken or
suffered in good faith by it pursuant to the provisions of this Agreement.
8.4.2 INDEMNITY. The Warrant Agent shall be liable hereunder only for
its own negligence or willful misconduct. The Company agrees to indemnify the
Warrant Agent and save it harmless against any and all liabilities, including
judgments, costs and reasonable counsel fees, for anything done or omitted by
the Warrant Agent in the execution of this Agreement except as a result of the
Warrant Agent's negligence, willful misconduct, or bad faith.
8.4.3 EXCLUSIONS. The Warrant Agent shall have no responsibility with
respect to the validity of this Agreement or with respect to the validity or
execution of any Warrant (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Warrant; nor shall it be responsible to make any
adjustments required under the provisions of Section 4 hereof or responsible for
the manner, method, or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment; nor shall it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock to be issued pursuant
to this Agreement or any Warrant or as to whether any shares of Common Stock
will when issued be valid and fully paid and nonassessable.
8.5 ACCEPTANCE OF AGENCY. The Warrant Agent hereby accepts the agency
established by this Agreement and agrees to perform the same upon the terms and
conditions herein set forth and, among other things, shall account promptly to
the Company with respect to Warrants exercised and concurrently account for, and
pay to the Company, all moneys received by the Warrant Agent for the purchase of
shares of the Company's Common Stock through the exercise of Warrants.
9. MISCELLANEOUS PROVISIONS.
9.1 SUCCESSORS. All the covenants and provisions of this Agreement by or
for the benefit of the Company or the Warrant Agent shall bind and inure to the
benefit of their respective successors and assigns.
9.2 NOTICES. Any notice, statement or demand authorized by this Warrant
Agreement to be given or made by the Warrant Agent or by the holder of any
Warrant to or on the Company shall be sufficiently given or made if sent by
certified mail, or private courier service, postage prepaid,
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addressed (until another address is filed in writing by the Company with the
Warrant Agent), as follows:
Ontro, Inc.
00000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxx, XX 00000
Attention: Secretary
Any notice, statement or demand authorized by this Agreement to be given or made
by the holder of any Warrant or by the Company to or on the Warrant Agent shall
be sufficiently given or made if sent by certified mail, or private courier
service, postage prepaid, addressed (until another address is filed in writing
by the Warrant Agent with the Company), as follows:
ChaseMellon Shareholder Services, L.L.C.
000 Xxxxx Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, XX 00000
9.3 APPLICABLE LAW. The validity, interpretation, and performance of this
Agreement and of the Warrants shall be governed in all respects by the laws of
the State of California, without giving effect to conflict of laws.
9.4 PERSONS HAVING RIGHTS UNDER THIS AGREEMENT. Nothing in this Agreement
expressed and nothing that may be implied from any of the provisions hereof is
intended, or shall be construed, to confer upon, or give to, any person or
corporation other than the parties hereto and the registered holders of the
Warrants, any right, remedy, or claim under or by reason of this Warrant
Agreement or of any covenant, condition, stipulation, promise, or agreement
hereof. All covenants, conditions, stipulations, promises, and agreements
contained in this Warrant Agreement shall be for the sole and exclusive benefit
of the parties hereto and their successors and assigns and of the registered
holders of the Warrants.
9.5 EXAMINATION OF THE WARRANT AGREEMENT. A copy of this Agreement shall
be available at all reasonable times at the office of the Warrant Agent in the
State of California, for inspection by the registered holder of any Warrant.
The Warrant Agent may require any such holder to submit his Warrant for
inspection by it.
9.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and 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.
9.7 EFFECT OF HEADINGS. The Section headings herein are for convenience
only and are not part of this Warrant Agreement and shall not affect the
interpretation thereof.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties
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hereto under their respective corporate seals as of the day and year first above
written.
Attest: ONTRO, INC.
/s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxxx
-------------------------------- -------------------------------------
Xxxxx X. Xxxxxxx, President
Corporate Seal CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
Attest:
/s/ By: /s/ Xxx Xxxxxx
-------------------------------- -------------------------------------
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EXHIBIT A
Form of Warrant Certificate
