EXHIBIT A TO ENGAGEMENT LETTER
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THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR APPLICABLE STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR ANY
OF SUCH SHARES MAY BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED, OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER THE ACT OR SUCH LAWS OR AN OPINION OF COUNSEL, IN FORM,
SUBSTANCE AND SCOPE ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER THE ACT OR SUCH LAWS.
MICROLOG CORPORATION
THIS CERTIFIES that, for value received, BARRETTO PACIFIC CORPORATION,
a Nevada corporation ("Warrant Holder"), is entitled to purchase from Microlog
Corporation, a Virginia corporation (the "Company"), 50,000 shares (the
"Shares"), of common stock, par value $.001 per share of the Company (the
"Common Stock") at a price of $1.00 per Share (such price per share and the
number of shares of common stock so purchasable being subject to adjustment as
provided below) at any time on or before 5:00 PM (EST) on the Expiration Date
(as defined in Section 1.1 below), all in accordance with the terms hereof.
1. Exercise of Warrants and Holding of Underlying Stock
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1.1 Subject to the terms and conditions hereof, this warrant
certificate (this "Warrant") may be exercised prior to 5:00 PM (EST) on May 21,
2002 (the "Expiration Time"), in whole at any time or in part from time to time
(provided that any exercise of this Warrant shall not be for less than 5000
Shares) prior to the Expiration Time by the surrender of this Warrant, duly
executed by Warrant Holder, or by an attorney duly authorized in writing, at the
office of the Company, 00000 Xxxxxxxxx Xxxx, Xxxxxxxxxx, XX 00000, together with
payment in full in immediately available funds in United States Dollars, of the
Warrant exercise price payable at the time of such exercise in respect of the
Warrant or portion thereof being exercised. If less than all of the Shares
represented by this Warrant are being exercised, the Warrant Holder and Company
shall, upon and as a condition to such exercise, execute and deliver a statement
confirming the number of Shares subject to the remaining unexercised portion of
this Warrant.
1.2 Subject to the terms and conditions hereof, this Warrant
may only be exercised by the Warrant Holder (or permitted transferee hereof)
prior to the Expiration Time if (i) at the time of exercise in whole or in
permissible part, the minimum bid price of the Common Stock is at least $2.00
per share, as reported by the Nasdaq Stock Market, and (ii) the Common Stock is
quoted on the Nasdaq Stock Market; provided, that this Warrant shall not be
exercisable for more than 10,000 Shares per week. If shares of the Common Stock
cease to be quoted on the Nasdaq Stock Market, this Warrant will become void at
the Company's sole discretion.
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1.3 Certificates representing any Shares issued in a
transaction exempt from the registration requirements of the Securities Act of
1933, as amended (the "Securities Act") and applicable state securities laws, or
as to which the subsequent transfer or disposition of such Shares shall require
registration or qualification thereof under the Securities Act or applicable
state securities laws, shall bear a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR UNDER ANY APPLICABLE STATE SECURITIES
LAWS, OR ARE SUBJECT TO RESTRICTIONS ON TRANSFER UNDER THE
SECURITIES ACT OR SUCH LAWS. THE SHARES MAY NOT BE SOLD,
PLEDGED, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF EXCEPT
IN A TRANSACTION WHICH IS EXEMPT UNDER THE PROVISIONS OF THE
SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, OR
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN A
TRANSACTION OTHERWISE IN COMPLIANCE WITH APPLICABLE FEDERAL
AND STATE SECURITIES LAWS.
The legend set forth immediately above and any applicable stop
transfer orders shall be removed, and the Company shall issue certificates
without such legend, with respect to any of such Securities with respect to
which the Company has received an opinion from counsel to the Purchaser, in form
and substance and from counsel satisfactory to the Company (which opinion shall
be in addition to any opinion required to be provided pursuant to the other
provisions hereof), to the effect that the subsequent transfer or other
disposition of such Shares shall not require registration under the Securities
Act.
2. Reclassification, Consolidation or Merger
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2.1 In the event that the outstanding Shares are hereafter
changed by reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination or exchange of Shares and the
like, or dividends payable in Shares, an appropriate adjustment shall be made by
the Board of Directors of the Company in the number of Shares and price per
Share subject to this Warrant. If the Company shall be reorganized,
consolidated, or merged with another corporation, or if all or substantially all
of the assets of the Company shall be sold or exchanged, the Warrant Holder
shall at the time of issuance of the stock under such a corporate event, be
entitled to receive upon the exercise of the Warrants evidenced by this
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Warrant and the payment of the exercise price therefor the same number and kind
of shares of stock or the same amount of property, cash or securities as he
would have been entitled to receive upon the occurrence of any such corporate
event as if he had been, immediately prior to such event, the holder of the
number of Shares covered by this Warrant Certificate.
2.2 Any adjustment under this Paragraph 2 in the number of
Shares subject to this Warrant Certificate shall apply proportionately to only
the unexercised portion hereunder and shall not have any retroactive effect with
respect to Warrants theretofore exercised. If fractions of a Share would result
from any such adjustment, the adjustment shall be revised to the next lower
whole number of Shares.
2.3 No adjustment of the exercise price shall be made if the
amount of such adjustment shall be less than $.10 per Share, but in such case
any adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall amount
to no less than $.10 per Share.
2.4 No fractional shares of Common Stock shall be issued upon
the exercise of this Warrant, but in lieu thereof the Company shall pay to the
order of Warrant Holder an amount in cash equal to the same fraction of the
exercise price of one Share on the date of exercise.
2.5 When any adjustment is required to be made in the exercise
price or number of Shares subject to this Warrant, the Company shall within
sixty (60) days after the date when the circumstances giving rise to the
adjustment occurred mail to the Warrant Holder a statement describing in
reasonable detail any method used in calculating such adjustment.
3. Prior Notice as to Certain Events
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The Company shall mail to Warrant Holder not less than ten
(10) days prior to the date on which (a) a record will be taken for the purpose
of determining the holders of the capital stock of the Company entitled to
subscription rights or (b) a record will be taken (or in lieu thereof, the
transfer books will be closed) for the purpose of determining the holders of
such capital stock entitled to notice of and to vote at the meeting of
stockholders at which any consolidation, merger, dissolution, liquidation,
winding up or sale of the Company shall be considered and acted upon.
4. Reservation and Issuance of Shares
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4.1 The Company covenants and agrees that the Shares issued
upon exercise of this Warrant pursuant to the terms hereof will be duly
authorized, validly issued and, when paid for in accordance with the terms
hereof, fully paid and nonassessable, and free from all liens and charges with
respect to the issue thereof to the Warrant Holder.
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4.2 The Company will reserve at all times such number of
Shares as may be issuable pursuant to the exercise of this Warrant.
5. Investment Representations
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By accepting delivery of this Warrant and by
purchasing any Shares evidenced hereby (such Shares, together with this Warrant,
the "Securities"), the Warrant Holder represents and Warrants to the Company as
follows:
5.1. Acquisition for Investment. The Warrant Holder is
acquiring the Securities for its own account, for investment and not with a view
to, or for sale in connection with, the distribution thereof within the meaning
of the Securities Act of 1993, as amended (the "Securities Act").
3.2. Accredited Investor Status. The Warrant Holder is an
"accredited investor," as that term is as defined in Rule 501(a) of Regulation D
under the Securities Act. The Warrant Holder has sufficient knowledge and
experience in financial and business matters so as to be capable of evaluating
the merits and risks of its investment in the Securities and is capable of
bearing the economic risks of such investment. The Warrant Holder understands
that its investment in the Securities involves a significant degree of risk.
5.3. Information. The Warrant Holder and its advisers have
been furnished with all materials relating to the business, finances and
operations of the Company and materials relating to the offer and sale of the
Securities which have been requested by the Warrant Holder or its advisers. The
Warrant Holder and its advisers have been afforded the opportunity to ask
questions of the Company's management concerning the Company and the Securities.
5.4. Government Review. The Warrant Holder understands that no
governmental entity has passed upon or made any recommendation or endorsement of
the Securities.
5.5. Sale or Transfer. The Purchaser understands that (i)
except as provided in this Warrant or in that certain letter agreement, dated as
of February 27, 2001, the sale or re-sale of the Securities has not been and is
not being registered under the Securities Act or any applicable state securities
laws, and the Securities may not be sold or otherwise transferred unless (a) the
Securities are sold or transferred pursuant to an effective registration
statement under the Securities Act or (b) the Purchaser shall have delivered to
the Company an opinion of counsel (which opinion shall be in form, substance and
scope customary for opinions of counsel in comparable transactions) to the
effect that the Securities to be sold or transferred may be sold or transferred
pursuant to an exemption from such registration; and (ii) neither the Company
nor any other Person is
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under any obligation to register such Securities under the Securities Act or any
state securities laws or to comply with the terms and conditions of any
exemption thereunder.
5.6. Residency. The principal offices of the Warrant Holder
and the offices of the Warrant Holder in which it made its decision to purchase
the Securities are located in the State of Washington.
5.7. Organization. The Warrant Holder is an entity duly
organized, validly existing and in good standing under the laws of its
jurisdiction of formation and has the requisite power and authority to carry on
its business as it is now being conducted.
6. Miscellaneous
6.1 The Warrant Holder shall not be entitled to any rights
whatsoever as a stockholder of the Company by virtue of his ownership of this
Warrant Certificate.
6.2 Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF MARYLAND (WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS). THE HOLDER HEREOF IRREVOCABLY CONSENTS TO THE
EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS AND THE STATE COURTS
LOCATED IN MARYLAND WITH RESPECT TO ANY SUIT OR PROCEEDING BASED ON OR ARISING
UNDER THIS WARRANT, THE AGREEMENT ENTERED INTO IN CONNECTION HEREWITH OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY AND IRREVOCABLY AGREE THAT ALL
CLAIMS IN RESPECT OF SUCH SUIT OR PROCEEDING MAY BE DETERMINED IN SUCH COURTS.
THE HOLDER HEREOF IRREVOCABLY WAIVES THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH SUIT OR PROCEEDING. THE HOLDER HEREOF AND THE COMPANY
FURTHER AGREE THAT SERVICE OF PROCESS UPON SUCH PERSON MAILED BY FIRST CLASS
MAIL SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON SUCH
PERSON IN ANY SUCH SUIT OR PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER SUCH
PERSON'S RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. THE HOLDER
AGREES THAT A FINAL NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL
BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTION BY SUIT ON SUCH JUDGMENT
OR IN ANY OTHER LAWFUL MANNER.
6.3 This Warrant shall be void and of no effect as of the
Expiration Time.
6.4 The Warrant Holder is entitled to the benefits of such
registration rights in respect of the Shares (but not, for the avoidance of
doubt, this Warrant) as are set forth in the Letter Agreement. If, at the time
of the surrender of this Warrant in connection with any exercise or transfer of
this Warrant, this Warrant (or, in the case of any exercise, the Shares issuable
hereunder) shall not be registered under the Securities Act and under applicable
state securities or
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blue sky laws, the Company may require, as a condition of allowing such exercise
or transfer, (i) that the holder or transferee of this Warrant, as the case may
be, furnish to the Company a written opinion of counsel, which opinion and
counsel are acceptable to the Company, to the effect that such exercise or
transfer may be made without registration under the Securities Act and under
applicable state securities or blue sky laws, (ii) that the holder or transferee
execute and deliver to the Company an investment letter in form and substance
acceptable to the Company and (iii) that the transferee be an "accredited
investor" as defined in Rule 501(a) promulgated under the Securities Act. Any
holder or transferee of this Warrant, by taking and holding this Warrant,
represents to the Company that such holder is acquiring this Warrant for
investment and not with a present view to the distribution thereof.
IN WITNESS WHEREOF, the parties hereby acknowledge and agree to all of
the terms embodied herein.
Dated as of: February 27, 2001 MICROLOG CORPORATION
By:______________________________
Xxxx Xxxxx, President & CEO
ATTEST:
Witness:______________________
BARRETTO PACIFIC CORPORATION
By:_______________________________
Xxxxxx Xxxxxxxx, President
Witness:______________________
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SPECIMEN
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Notice of Exercise
I hereby irrevocably elect to exercise the Warrant we currently hold to
purchase ______ shares of common stock, $0.001 par value per share, of
____________ (the "Company") at an exercise price of $_____ per share. I have
instructed our broker at _________________ to deliver by wire transfer payment
of the aggregate exercise price of $_________________ for the Warrants exercised
hereunder.
All shares issuable upon exercise of the aforementioned Warrants should
be issued in our name. Our tax ID number is 00-0000000. Please have the stock
certificate transmitted via DTC to ____________, DTC NO. _______ for credit to
Barretto Pacific Corporation, account No._________.
Thank you.
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