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Exhibit 4.1
CLASS B WARRANT AGREEMENT
AGREEMENT, dated as of this ____ day of March, 1998, by and
between TMCI ELECTRONICS, INC., a Delaware corporation ("Company"), and
American Stock Transfer & Trust Company, as Warrant Agent (the "Warrant
Agent").
WITNESSETH:
WHEREAS, in connection with a private offering (the "Offering")
of up to five (5) units, each unit (a "Unit") consisting of four (4)
convertible subordinated debentures (the "Debentures") each in the
principal amount of $275,000, the Company will issue up to 500,000 Class
B Warrants (the "Warrants"); and
WHEREAS, at the Company's option, up to an additional four (4)
Units may be issued in the Offering, which could result in the issuance
of up to an additional 400,000 Warrants; 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
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 the common stock of the
Company of which at the date hereof consists of 25,000,000 authorized
shares, $.001 par value per share, 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 to 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 (i) only shares of such class designated in
the Company's Certificate of Incorporation as Common Stock on the date
of the original issue of the Warrants; or (ii) in the case of any
reclassification, change, consolidation, merger, sale or conveyance of
the character referred to in Section 9(c) hereof, the
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stock, securities or property provided for in such section; or (iii) 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 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.
(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, XX 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, with the exercise form thereon
duly executed by the Registered Holder (as defined below) 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 (as defined below).
(d) "Initial Warrant Exercise Date" shall mean the date of
this Agreement.
(e) "Purchase Price" shall mean the purchase price per
share to be paid upon exercise of each Warrant in accordance with the
terms hereof, which price shall be $5.50 per share for each Warrant,
subject to adjustment from time to time pursuant to the provisions of
Section 9 hereof, and subject to the Company's right, in its sole
discretion, upon thirty (30) days' written notice, to reduce the
Purchase Price upon notice to all warrant holders.
(f) "Redemption Price" shall mean the price at which the
Company may, at its option, redeem the Warrants, in accordance with the
terms hereof, which price shall be $0.01 per Warrant.
(g) "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.
(h) "Transfer Agent" shall mean American Stock Transfer &
Trust Company, as the Company's transfer agent, or its authorized
successor, as such.
(i) "Warrant Certificate" shall mean a certificate
substantially in the form annexed to this Agreement evidencing one or
more Warrants.
(j) "Warrant Expiration Date" shall mean 5:00 P.M. (New
York time) on March 5, 2001, or the Redemption Date as defined in
Section 8, 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
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not a holiday or not a day on which banks are authorized or required to
close. Upon notice to all warrantholders, 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 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) Upon execution of this Agreement, Warrant Certificates
representing the number of Warrants sold pursuant to the Subscription
Agreements shall be executed by the Company and delivered to the Warrant
Agent. Upon written order of the Company signed by its President or a
Vice President and by its Secretary or an Assistant Secretary, the
Warrant Certificates shall be countersigned, issued, and delivered by
the Warrant Agent.
(c) 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
900,000 shares of Common Stock, subject to adjustment as described
herein, upon the exercise of Warrants in accordance with this Agreement.
(d) 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 on or after the Initial
Warrant Exercise Date, 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; and (v) those issued at the option
of the Company, in such form as may be approved by its Board of
Directors, to reflect any adjustment or change in the Purchase Price,
the number of shares of Common Stock issuable upon exercise of the
Warrants or the Redemption Price therefor made pursuant to Section 9
hereof.
3. Form and Execution of Warrant Certificates.
(a) The Class B Warrant Certificate 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
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Section 2(b). 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. Class B Warrant Certificates shall be
numbered serially with the letter WB. In the event that a registration
statement under the Securities Act of 1933 (the "Securities Act") is not
in effect at the time of the issuance of the Warrants, each Warrant
Certificate shall bear the following restrictive legend:
"The Warrants evidenced by this certificate and the securities issuable
upon exercise of such Warrants have not been registered under the
Securities Act of 1933 (the "Securities Act"). The Warrants may neither
be sold, assigned or transferred or exercised in the absence of an
effective registration statement under the Securities Act relating to
such securities or an opinion of counsel satisfactory to the issuer to
the effect that an exemption from registration is applicable."
(b) Warrant Certificates shall be executed on behalf of
the Company by its President, or any Vice President and by its Secretary
or an Assistant 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 hereof.
4. Exercise. Each Warrant may be exercised by the Registered
Holder thereof at any time on or after the Initial Warrant Exercise
Date, 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 event within five (5) business days after
the Exercise Date, 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 registered in the name of
such person (plus a certificate for any remaining unexercised Warrants
of the Registered Holder). Upon the exercise of any Warrant and
clearance of the funds received, the Warrant Agent shall promptly remit
the payment received upon exercise of the Warrant (the "Warrant
Proceeds") to the Company or as the Company may direct in writing.
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5. Reservation of Shares; Listing; Payment of Taxes, etc.
(a) The Company covenants that it will at all times
reserve and keep available free of preemptive rights out of its
authorized and unissued Common Stock, solely for the purpose of issuance
upon exercise of the rights to purchase shares of Common Stock issuable
upon exercise of the Warrants, the maximum number of shares of Common
Stock as shall from time to time be sufficient to provide for 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, free of all preemptive rights and free from
all taxes, liens and charges with respect to the issue thereof and that
upon issuance such shares shall be listed on a national securities
exchange or eligible for inclusion in an automated quotation system, if
any, on which the other shares of outstanding Common Stock of the
Company are then listed or eligible for inclusion.
(b) The Company covenants that if any of the 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, then the Company will, in good faith and as expeditiously as
reasonably possible, register such securities or obtain such approval
and it 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 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 for
such time as it is acting as such 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
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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) All Warrant Certificates surrendered for exercise or
for exchange in case of mutilated Warrant Certificates shall be promptly
canceled by the Warrant Agent and thereafter retained by the Warrant
Agent until termination of this Agreement or resignation as Warrant
Agent, or disposed of or destroyed, at the direction of the Company.
(e) 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 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 reasonably satisfactory to them of the 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 incidental to such
loss, theft, destruction or mutilation as the Warrant Agent may
prescribe.
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8. Redemption.
(a) Subject to the provisions of paragraph 2(e) hereof and
to the Company not being in default under this Agreement or the
Debentures, on not less than thirty (30) days' notice given at any time
after the effective date of a registration statement with respect to the
Warrants and the Common Stock underlying such Warrants, the Warrants may
be redeemed, at the option of the Company, at a redemption price of
$0.01 per Warrant, provided the Market Price of the Common Stock
issuable upon exercise of the Warrants shall equal or exceed $8.75 (the
"Target Price"). Market Price for the purpose of this Section 8 shall
mean (i) the average closing bid price for any twenty (20) consecutive
trading days within a period of thirty (30) consecutive trading days
ending within five (5) days prior to the date of the notice of
redemption, which notice shall be mailed no later than five (5) days
thereafter, of the Common Stock as reported by the National Association
of Securities Dealers, Inc. Automatic Quotation System or (ii) the last
reported sale price, for twenty (20) consecutive trading days within a
period of thirty (30) consecutive trading days ending within five (5)
days of the date of the notice of redemption, which notice shall be
mailed no later than five (5) days thereafter, on the primary exchange
on which the Common Stock is traded, if the Common Stock is traded on a
national securities exchange.
(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 mail a notice of redemption 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 notice of redemption shall specify (i) the
redemption price, (ii) the date fixed for redemption, (iii) the place
where the Warrant Certificates shall be delivered and the redemption
price paid, and (iv) that the right to exercise the Warrant shall
terminate at 5:00 P.M. (New York time) on the business day immediately
preceding the date fixed for redemption. The date fixed for the
redemption of the Warrant shall be 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 (a) to whom notice was not mailed or (b) whose
notice was defective and then only to the extent that the Registered
Holder is prejudiced thereby. An affidavit of the Warrant Agent or of
the Secretary or an Assistant Secretary of 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, 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 notice of redemption, 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 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.
9. Adjustment of Exercise Price and Number of Shares of Common
Stock or Warrants.
(a) Subject to the exceptions referred to in Section 9(e)
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) 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) below) for the issuance of such additional shares would
purchase at such current market price per share of Common Stock, 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 and no such adjustment shall be made which results in
an increase in the Purchase Price.
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 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) 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 the successor
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corporation to execute and deliver to the Holder an agreement providing
for each holder of a Warrant then outstanding to 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 agreement 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 under this Agreement. The foregoing provisions shall
similarly apply to successive reclassification, capital reorganizations
and other changes of outstanding shares of Common Stock and to
successive consolidations, mergers, sales or conveyances.
(c) After each adjustment of the Purchase Price pursuant
to this Section 9, the Company will promptly prepare a certificate
signed by the President or a Vice President, and by the Secretary or an
Assistant 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 certified
mail, postage pre-paid, 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 or an Assistant 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.
(d) For purposes of Section 9(a) and 9(b) hereof, the
following provisions (i) to (vii) shall also be applicable:
(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.
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(ii) No adjustment of the Purchase Price shall be
made unless such adjustment would require an increase or decrease of at
least $.05 in such price; provided that any adjustments which by reason
of this subsection (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 (1) the sale by the Company 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 convertible or exchangeable
securities being herein called "Convertible Securities"), or (2) 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 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, if any, other than such Convertible
Securities, payable upon the conversion or exchange thereof, by the
total maximum number of shares of Common Stock issuable upon (y) 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 fair market value 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 fair market value 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
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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.
(v) In case the Company shall modify the rights of
conversion, exchange or exercise of any of the securities referred to in
subsection (iii) 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
multiplied by the market price 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.
(vi) 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, 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.
(vii) 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 therefor 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.
(e) 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 sale or exercise of the Warrants, any
presently outstanding options or warrants and any warrants issuable upon
exercise of the unit purchase option issued to the underwriter in the
Company's March 1996 public offering; or
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(ii) upon issuance or sale of Common Stock or other
securities of the Company in proposed transactions disclosed in the
Schedules to the Securities Purchase Agreement relating to the Offering;
or
(iii) 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, 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
(iv) 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; or
(v) upon the issuance or sale of Common Stock or
Convertible Securities in an exempt transaction unless the issuance or
sale price is less than 85% of the fair market value of the Common Stock
on the date of issuance, in which case the adjustment shall only be for
the difference between 85% of the fair market value and the issue or
sale price; or
(vi) upon the issuance or sale of Common Stock or
Convertible Securities to shareholders of any corporation which merges
and/or consolidates into or is acquired by the Company or from which the
Company acquires assets and some or all of the consideration consists of
equity securities of the Company, in proportion to their stock holdings
of such corporation immediately prior to the acquisition but only if no
adjustment is required pursuant to any other provision of this Section
9; or
(vii) upon the issuance or exercise of options or
upon the issuance or grant of stock awards granted to the Company's
directors, employees or consultants under a plan or plans adopted by the
Company's Board of Directors and approved by its stockholders (but only
to the extent that the aggregate number of shares excluded hereby and
issued after the date hereof shall not exceed ten percent (10%) of the
Company's Common Stock at the time of issuance). For the purposes of
determining whether the consideration received by the Company is less
than the Market Price in connection with any issuance of stock to the
Company's directors, employees or consultants under plans adopted by the
Company's Board of Directors and approved by its stockholders, the
consideration received shall be deemed to be the amount of compensation
to the director, employee or consultant reported by the Company in
connection with such issuance.
(viii) upon the issuance of Common Stock to the
Company's directors, employees or consultants under a plan or plans
which are qualified under the Internal Revenue Code.
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(f) 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 original issue of the Units, 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 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.
(g) 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.
(h) 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 (assuming, for purposes of this
Section 9(j), that exercise of Warrants is permissible during periods
prior to the Initial Warrant Exercise Date) 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. In such event,
the Company may at its option elect to round up the number of shares to
which the Holder is entitled to the nearest whole share or to pay cash
in respect of fractional shares in accordance with the following: With
respect to any fraction of a share called for upon any exercise hereof,
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:
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(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 NASDAQ 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 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
(ii) If the Common Stock is not listed or admitted
to unlisted trading privileges, the current value shall be the mean of
the last reported bid and asked prices reported 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 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. 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
mutual discretion, together with payment of any applicable transfer
taxes; and
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(b) The Company and the Warrant Agent may deem and treat
the person in whose name the Warrant Certificate is registered as the
holder 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 canceled by it and retired. The Warrant Agent
shall also cancel Common Stock following exercise of any or all of the
Warrants represented thereby or delivered to it for transfer, split up,
combination or exchange.
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 (i) be 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) be
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) be 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 its President, any Vice President, its Secretary,
or Assistant 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
reasonably believed by it to be genuine.
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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 thirty (30) days' prior written notice to the
Company. At least fifteen (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 fifteen (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 in the State of New York
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. 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 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
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not the Warrant Agent. Nothing herein shall preclude the Warrant Agent
from acting in any other capacity for the Company if so authorized by
the Company or for any other legal entity.
16. Modification of Agreement. The Warrant Agent 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; or (ii) 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 fifty percent (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 made in person
or mailed first class registered or certified mail, postage prepaid, by
overnight delivery by a reputable courier company or by fax as follows:
if to the Company:
TMCI Electronics, Inc.
0000 Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Fax#: 000-000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
if to the Warrant Agent:
American Stock Transfer & Trust Company
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax#: 000-000-0000
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18. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without
regard to the principles of conflict of laws. Each party hereby
irrevocably submits to the non-exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan,
for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action
or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action
or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at
the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any
way any right to serve process in any manner permitted by law. If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
19. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company and the Warrant Agent, and their
respective successors and assigns, and the 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 Warrant Expiration Date of all the Warrants or such
earlier date upon which all Warrants 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
TMCI ELECTRONICS, INC.
By: ______________________________
Its
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By: ______________________________
Its
Authorized Officer
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