INTEGRATED TECHNOLOGY USA, INC.
AND
NATIONAL SECURITIES CORPORATION
REPRESENTATIVE'S
WARRANT AGREEMENT
Dated as of October 1, 1996
REPRESENTATIVE'S WARRANT AGREEMENT dated as of October 1,
1996, between INTEGRATED TECHNOLOGY USA, INC., a Delaware corporation (the
"Company"), and NATIONAL SECURITIES CORPORATION and its assignees or designees
(each hereinafter referred to variously as a "Holder" or "Representative").
W I T N E S S E T H :
WHEREAS, the Representative has agreed pursuant to the
underwriting agreement (the "Underwriting Agreement") dated as of the date
hereof and entered into between the Company and the Representative, to act as
the representative of the several underwriters listed therein (the
"Underwriters") in connection with the Company's proposed public offering of
3,000,000 shares of Common Stock (as hereinafter defined) at a public offering
price of $6.00 per share and 3,000,000 redeemable warrants (the "Redeemable
Warrants") to purchase one (1) share of Common Stock at an exercise price of
$9.00, per share (the "Public Offering").
WHEREAS, pursuant to the Underwriting Agreement, the Company
proposes to issue warrants (the "Representative's Warrants") to the
Representative to purchase up to an aggregate of 300,000 shares of Common Stock
of the Company and/or 300,000 warrants at an exercise price equal to 165% of
the initial public offering price (the "Warrants").
WHEREAS, the Representative's Warrants to be issued pursuant
to this Agreement will be issued on the Closing Date (as such term is defined
in the Underwriting Agreement) by the Company to the Representative in
consideration for, and as part of the Underwriters' compensation in connection
with, the Representative acting as the representative pursuant to the
Underwriting Agreement.
NOW, THEREFORE, in consideration of the premises, the payment
by the Representative to the Company of an aggregate of three hundred dollars
($300), the agreements herein set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
1. Grant. The Representative is hereby collectively granted
the right to purchase, at any time from October 1, 1997 until 5:30 p.m., New
York time, on October 1, 2001, at which time the Representative's Warrants
expire, up to an aggregate of 300,000 shares of Common Stock, $0.01 par value
per share (the "Common Stock"), and/or 300,000 Warrants at the Exercise Price
(as defined in Section 8 hereof). One Warrant is exercisable to purchase one
additional share of Common Stock at an initial exercise price of $14.85 per
share from October 1, 1997 until 5:30 p.m. New York time on October 1, 2001, at
which time the Redeemable Warrants shall expire. Except otherwise as set forth
herein, the shares of Common Stock and the Warrants issuable upon exercise of
the Representative's Warrants are in all respects identical to the shares of
Common Stock and the Redeemable Warrants being purchased by the Underwriters
for resale to the public pursuant to the terms and provisions of the
Underwriting Agreement. The shares of Common Stock and the Warrants issuable
upon exercise of the Representative's Warrants are sometimes hereinafter
referred to collectively as the "Securities."
2. Representative's Warrant Certificates. The
Representative's warrant certificates (the "Warrant Certificates") delivered and
to be delivered pursuant to this Agreement shall be in the form set forth in
Exhibit A, attached hereto and made a part hereof, with such
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appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
3. Registration of Warrant. The Representative's Warrants
shall be numbered and shall be registered on the books of the Company when
issued.
4. Exercise of Representative's Warrant. The
Representative's Warrants initially are exercisable at an aggregate Exercise
Price (subject to adjustment as provided in Section 11 hereof) per share of
Common Stock and Warrant as set forth in Section 8 hereof payable by certified
or official bank check in New York Clearing House funds. Upon surrender of a
Representative's Warrant Certificate with the annexed Form of Election to
Purchase duly executed, together with payment of the Exercise Price for the
Securities purchased at the Company's principal offices in the United States
(presently located at 000 Xxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000), the registered
holder of a Representative's Warrant Certificate ("Holder" or "Holders") shall
be entitled to receive a certificate or certificates for the shares of Common
Stock and/or Warrants so purchased. The purchase rights represented by each
Representative's Warrant Certificate are exercisable at the option of the Holder
thereof, in whole or in part (but not as to fractional shares of Common Stock
and/or Warrants underlying the Representative's Warrants). Representative's
Warrants may be exercised to purchase all or part of the shares of Common Stock
together with an equal or unequal number of the Warrants represented thereby. If
the Company redeems all of the Warrants sold in the Public Offering, then
thereafter the Representative's Warrants may not be exercised to
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purchase any Warrants unless such exercise is accompanied by the simultaneous
exercise of all such Warrants being purchased. In the case of the purchase of
less than all of the shares of Common Stock and/or Warrants purchasable under
any Representative's Warrant Certificate, the Company shall cancel said
Representative's Warrant Certificate upon the surrender thereof and shall
execute and deliver a new Representative's Warrant Certificate of like tenor for
the balance of the shares of Common Stock and/or Warrants purchasable
thereunder.
5. Issuance of Certificates. Upon the exercise of the
Representative's Warrant, the issuance of certificates for shares of Common
Stock and/or Warrants or other securities, properties or rights underlying such
Representative's Warrant shall be made forthwith (and in any event within five
(5) business days thereafter) without charge to the Holder thereof including,
without limitation, any tax which may be payable in respect of the issuance
thereof, and such certificates shall (subject to the provisions of Sections 7
and 9 hereof) be issued in the name of, or in such names as may be directed by,
the Holder thereof; provided, however, that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any such certificates in a name other than that of the
Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
The Representative's Warrant Certificates and the certificates
representing the shares of Common Stock and/or Warrants or other securities,
property or rights issued upon
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exercise of the Representative's Warrant shall be executed on behalf of the
Company by the manual or facsimile signature of the then present President or
any Vice President of the Company under its corporate seal reproduced thereon,
attested to by the manual or facsimile signature of the then present Secretary
or any Assistant Secretary of the Company. Representative's Warrant Certificates
shall be dated the date of execution by the Company upon initial issuance,
division, exchange, substitution or transfer.
6. Transfer of Representative's Warrant. The Representative's
Warrant shall be transferable only on the books of the Company maintained at
its principal office, where its principal office may then be located, upon
delivery thereof accompanied by a Form of Assignment (the form of which is
included in Exhibit A hereto) duly endorsed by the Holder or by its duly
authorized attorney or representative accompanied by proper evidence of
succession, assignment or authority to transfer. Upon any registration of
transfer, the Company shall execute and deliver the new Representative's
Warrant to the person entitled thereto.
7. Restriction On Transfer of Representative's Warrant. The
Holder of a Representative's Warrant Certificate, by its acceptance thereof,
covenants and agrees that the Representative's Warrant is being acquired as an
investment and not with a view to the distribution thereof, and that the
Representative's Warrant may not be sold, transferred, assigned, hypothecated
or otherwise disposed of, in whole or in part, for one year from the date
hereof, except to officers or partners of the Underwriters or members of the
selling group, or by operation of law.
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8. Exercise Price.
8.1 Initial and Adjusted Exercise Price. Except as
otherwise provided in Section 11 hereof, the initial exercise price of each
Representative's Warrant shall be $9.90 per share of Common Stock and $.165 per
Warrant. The adjusted exercise price shall be the price which shall result from
time to time from any and all adjustments of the initial exercise price in
accordance with the provisions of Section 11 hereof. Any transfer of a
Representative's Warrant shall constitute an automatic transfer and assignment
of the registration rights set forth in Section 9 hereof with respect to the
Securities or other securities, properties or rights underlying the
Representative's Warrants.
8.2 Exercise Price. The term "Exercise Price" herein shall
mean the initial exercise price or the adjusted exercise price, depending upon
the context or unless otherwise specified.
9. Registration Rights.
9.1 Registration Under the Securities Act of 1933. Each
Representative's Warrant Certificate and each certificate representing shares of
Common Stock and/or Warrants and any of the other securities issuable upon
exercise of the Representative's Warrant (collectively, the "Warrant Shares")
shall bear the following legend unless (i) such Representative's Warrant or
Warrant Shares are distributed to the public or sold to the underwriters for
distribution to the public pursuant to Section 9 hereof or otherwise pursuant to
a registration statement filed under the Securities Act of 1933, as amended (the
"Act"), or (ii) the
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Company has received an opinion of counsel, in form and substance reasonably
satisfactory to counsel for the Company, that such legend is unnecessary for any
such certificate:
THE REPRESENTATIVE'S WARRANT REPRESENTED BY THIS CERTIFICATE
AND THE OTHER SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY
NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933,
(ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY
SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF
SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION
SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER,
THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE REPRESENTATIVE'S
WARRANT REPRESENTED BY THE CERTIFICATE IS RESTRICTED
IN ACCORDANCE WITH THE REPRESENTATIVE'S WARRANT AGREEMENT
REFERRED TO HEREIN.
9.2 Piggyback Registration. If, at any time commencing
after the effective date of the Registration Statement relating to the Public
Offering and expiring five (5) years thereafter, the Company proposes to
register any of its securities under the Act (other than in connection with a
merger, or the offering of debt, or pursuant to Form S-4 or Form S-8, or
pursuant to any form that does not permit the registration of the Warrants
and/or the Warrant Shares) it will give written notice by registered mail, at
least twenty (20) days prior to the filing
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of each such registration statement, to the Holders of the Representative's
Warrants and/or the Warrant Shares of its intention to do so (except that the
foregoing shall not apply with respect to the registration statement relating
solely to the resale of shares underlying Bridge Warrants that the Company
proposes to file as described in the Registration Statement relating to the
Public Offering). If any of the Holders of the Representative's Warrants and/or
Warrant Shares notify the Company within ten (10) days after mailing of any
such notice of its or their desire to include any such securities in such
proposed registration statement, the Company shall afford such Holders of the
Representative's Warrants and/or Warrant Shares the opportunity to have any
such Representative's Warrants and/or Warrant Shares registered under such
registration statement. In the event that the managing underwriter for said
offering advises the Company in writing that in its opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering without causing a diminution in the offering
price or otherwise adversely affecting the offering, the Company will include
in such registration (a) first, the securities the Company proposes to sell,
(b) second, the securities held by the entities, if any, that made the demand
for registration, (c) third, the Representative's Warrants and/or Warrant
Shares requested to be included in such registration which in the opinion of
such underwriter can be sold, pro rata among all proposed selling shareholders.
Notwithstanding the provisions of this Section 9.2, the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 9.2 (irrespective of whether a written request
for inclusion of any such securities shall have been made) to elect not
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to file any such proposed registration statement or to withdraw the same
after the filing but prior to the effective date thereof.
9.3 Demand Registration.
(a) At any time commencing one (1) year after the
effective date of the Registration Statement relating to the Public Offering
(the "Registration Statement") and expiring five (5) years from the effective
date of the Registration Statement, the Holders of the Representative's Warrants
and/or Warrant Shares representing a "Majority" (as hereinafter defined) of the
Representative's Warrants and/or Warrant Shares shall have the right (which
right is in addition to the registration rights under Section 9.2 hereof),
exercisable by written notice to the Company, to have the Company prepare and
file with the Securities and Exchange Commission (the "Commission"), on one
occasion, a registration statement and such other documents, including a
prospectus, as may be necessary in the opinion of both counsel for the Company
and counsel for the Holders, in order to comply with the provisions of the Act,
so as to permit a public offering and sale by such Holders and any other Holders
of the Representative's Warrant and/or Warrant Shares who notify the Company
within fifteen (15) days after the Company mails notice of such request pursuant
to Section 9.3(b) hereof (collectively, the "Requesting Holders") of their
respective Warrant Shares for the earlier of (i) nine (9) consecutive months
(subject to the following three sentences), or (ii) until the sale of all of the
Warrant Shares requested to be registered by the Requesting Holders. If the
Company determines that any such registration statement that the Company has
filed pursuant to the preceding sentence may no
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longer be used under applicable law unless it is supplemented or amended, the
Company shall notify the Holders that have securities covered by such
registration statement and shall use its reasonable best efforts to effect the
required amendment or supplement reasonably expeditiously and thereafter shall
promptly notify such Holders that such action has been taken. Any Holder that
receives such a notice shall cease making any sales pursuant to such
registration statement until the Company notifies such Holder that the required
supplement or amendment has been duly effected. The nine-month period provided
for in the second preceding sentence shall be extended by the number of days, if
any, that sales under the registration statement may not be made pursuant to the
preceding sentence.
(b) The Company covenants and agrees to give written
notice of any registration request under this Section 9.3 by any Holder or
Holders representing a Majority of the Representative's Warrants and/or Warrant
Shares to all other registered Holders of the Representative's Warrants and the
Warrant Shares within ten (10) days from the date of the receipt of any such
registration request.
(c) Intentionally omitted.
(d) Notwithstanding anything to the contrary contained
herein, if the Company shall not have filed a registration statement for the
Warrant Shares within the time period specified in Section 9.4(a) hereof
pursuant to the written notice specified in Section 9.3(a) of the Holders of a
Majority of the Representative's Warrants and/or Warrant Shares, the
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Company, at its option, may repurchase (i) any and all Warrant Shares at the
higher of the Market Price (as defined in Section 9.3(e)) per share of Common
Stock or per Warrant, as the case may be, on (x) the date of the notice sent
pursuant to Section 9.3(a) or (y) the expiration of the period specified in
Section 9.4(a) and (ii) any and all Representative's Warrants at the Market
Price of the Common Stock and Warrants purchasable upon exercise thereof less
the aggregate exercise price payable upon such exercise. Such repurchase shall
be in immediately available funds and shall close within two (2) days after the
expiration of the period specified in Section 9.4(a).
(e) Definition of Market Price. As used herein, the
phrase "Market Price" at any date shall be deemed to be the last reported sale
price, or, in case no such reported sale takes place on such day, the average of
the last reported sale prices for the last three (3) trading days, in either
case as officially reported by the principal securities exchange on which the
shares of Common Stock and/or Warrants is listed or admitted to trading, or, if
the shares of Common Stock and/or Warrants is not listed or admitted to trading
on any national securities exchange, the average closing sale price as furnished
by the NASD through The Nasdaq Stock Market, Inc. ("Nasdaq") or similar
organization if Nasdaq is no longer reporting such information, or if the shares
of Common Stock and/or Warrants or Common Stock is not quoted on Nasdaq, as
determined in good faith by resolution of the Board of Directors of the Company,
based on the best information available to it.
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9.4 Covenants of the Company With Respect to Registration.
In connection with any registration under Sections 9.2 or 9.3 hereof, the
Company covenants and agrees as follows:
(a) In connection with any registration under Section
9.3 hereof, the Company shall use its reasonable best efforts to file a
registration statement within one hundred and twenty (120) days of receipt of
any demand therefor, and to have any registration statements declared effective
at the earliest possible time, and shall furnish each Holder desiring to sell
Warrant Shares such number of prospectuses as shall reasonably be requested.
(b) The Company shall pay all costs (excluding fees and
expenses of any Holder's counsel and any underwriting or selling commissions),
fees and expenses in connection with all registration statements filed pursuant
to Sections 9.2 and 9.3(a) hereof including, without limitation, the Company's
legal and accounting fees, printing expenses and blue sky fees and expenses.
(c) The Company will use its commercially reasonable
efforts to take all necessary action which may be required in qualifying or
registering the Warrant Shares included in a registration statement for offering
and sale under the securities or blue sky laws of such states as reasonably are
requested by the Holder(s), provided that the Company shall not be obligated to
execute or file any general consent to service of process or to qualify as a
foreign corporation to do business under the laws of any such jurisdiction.
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(d) The Company shall indemnify the Holder(s) of the
Warrant Shares to be sold pursuant to any registration statement and each
person, if any, who controls such Holders within the meaning of Section 15 of
the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended
("Exchange Act"), against all loss, claim, damage, expense or liability
(including all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may become subject
under the Act, the Exchange Act or otherwise, arising from such registration
statement but only to the same extent and with the same effect and subject to
the same procedures as are provided by the provisions pursuant to which the
Company has agreed to indemnify each of the Underwriters contained in Section 7
of the Underwriting Agreement.
(e) The Holder(s) of the Warrant Shares to be sold
pursuant to a registration statement, and their successors and assigns, shall
severally, and not jointly, indemnify the Company, its officers and directors
and each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, against all loss, claim,
damage or expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from information furnished by or on behalf of such Holders, or their successors
or assigns, for specific inclusion in such registration statement to the same
extent and with the same effect as the provisions contained in Section 7 of the
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Underwriting Agreement pursuant to which the Underwriters have agreed to
indemnify the Company.
(f) Nothing contained in this Agreement shall be
construed as requiring the Holder(s) to exercise their Representative's Warrant
prior to the initial filing of any registration statement or the effectiveness
thereof.
(g) The Company shall not permit the inclusion of any
securities other than the Warrant Shares to be included in any registration
statement filed pursuant to Section 9.3 hereof, without the prior written
consent of National Securities Corporation or as otherwise required by the terms
of any existing registration rights granted prior to the date of this Agreement
by the Company to the holders of any of the Company's securities.
(h) The Company shall furnish to each Holder
participating in the offering and to each underwriter, if any, a signed
counterpart, addressed to such Holder or underwriter, of (i) an opinion of
counsel to the Company, dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, an opinion
dated the date of the closing under the underwriting agreement), and (ii) a
"cold comfort" letter dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, a letter
dated the date of the closing under the underwriting agreement) signed by the
independent public accountants who have issued a report on the Company's
financial statements included in such registration statement, in each case
covering
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substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities.
(i) The Company shall as soon as practicable after the
effective date of the registration statement, and in any event within 15 months
thereafter, make "generally available to its security holders" (within the
meaning of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the Act and covering a period of at
least 12 consecutive months beginning after the effective date of the
registration statement.
(j) In connection with any registration under Section
9.3 hereof, the Company shall enter into an underwriting agreement with the
managing underwriters selected for such underwriting by Holders holding a
Majority of the Warrant Shares requested to be included in such underwriting,
which may be the Representative. Such agreement shall be satisfactory in form
and substance to the Company, each Holder and such managing underwriters, and
shall contain such representations, warranties and covenants by the Company and
such other terms as are customarily contained in agreements of that type used by
the managing underwriter. The Holders shall be parties to any underwriting
agreement relating to an underwritten sale of their Warrant Shares and may, at
their option, require that any or all the representations, warranties and
covenants of the Company to or for the benefit of such underwriters shall also
be made to and for the benefit of such Holders. Such Holders shall not be
required to make any representations or
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warranties to or agreements with the Company or the underwriters except as they
may relate to such Holders and their intended methods of distribution.
(k) For purposes of this Agreement, the term "Majority"
in reference to the Representative's Warrants or Warrant Shares, shall mean in
excess of fifty percent (50%) of the then outstanding Warrant Shares (calculated
as provided in the following sentence) that (i) are not held by the Company, an
affiliate, officer, creditor, employee or agent thereof or any of their
respective affiliates, members of their family, persons acting as nominees or in
conjunction therewith and (ii) have not been resold to the public pursuant to a
registration statement filed with the Commission under the Act. For purposes of
the preceding sentence, the Holder of a Representative's Warrant shall be deemed
the holder of the aggregate number of Warrant Shares that are acquirable upon
exercise thereof.
10. Obligations of Holders. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to
Section 9 hereof that each of the selling Holders shall:
(a) Furnish to the Company such information regarding
themselves, the Warrant Shares held by them, the intended method of sale or
other disposition of such securities, the identity of and compensation to be
paid to any underwriters proposed to be employed in connection with such sale or
other disposition, and such other information as may reasonably be required to
effect the registration of their Warrant Shares.
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(b) Notify the Company, at any time when a
prospectus relating to the Warrant Shares covered by a registration statement is
required to be delivered under the Act, of the happening of any event with
respect to such selling Holder as a result of which the prospectus included
in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing.
11. Adjustments to Exercise Price and Number of Securities.
The Exercise Price in effect at any time and the number and kind of securities
purchased upon the exercise of the Representative's Warrant shall be subject to
adjustment from time to time only upon the happening of the following events:
11.1 Stock Dividend, Subdivision and Combination. In
case the Company shall (i) declare a dividend or make a distribution on its
outstanding shares of Common Stock in shares of Common Stock, (ii) subdivide or
reclassify its outstanding shares of Common Stock into a greater number of
shares, or (iii) combine or reclassify its outstanding shares of Common Stock
into a smaller number of shares, the Exercise Price in effect at the time of the
record date for such dividend or distribution or of the effective date of such
subdivision, combination or reclassification shall be adjusted so that it shall
equal the price determined by multiplying the Exercise Price by a fraction, the
denominator of which shall be the number of shares of Common Stock outstanding
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after giving effect to such action, and the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such action.
Such adjustment shall be made successively whenever any event listed above shall
occur.
11.2 Adjustment in Number of Securities. Upon each
adjustment of the Exercise Price pursuant to the provisions of this Section 11,
the number of Warrant Shares issuable upon the exercise at the adjusted Exercise
Price of each Representative's Warrant shall be adjusted to the nearest number
of whole shares of Common Stock by multiplying a number equal to the Exercise
Price in effect immediately prior to such adjustment by the number of Warrant
Shares issuable upon exercise of the Representative's Warrant immediately prior
to such adjustment and dividing the product so obtained by the adjusted Exercise
Price.
11.3 Definition of Common Stock. For the purpose of
this Agreement, the term "Common Stock" shall mean (i) the class of stock
designated as Common Stock in the Articles of Incorporation of the Company as
amended as of the date hereof, or (ii) any other class of stock resulting from
successive changes or reclassifications of such Common Stock consisting solely
of changes in par value, or from par value to no par value, or from no par value
to par value.
11.4 Merger or Consolidation. In case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger which does not result in any
reclassification or change of the outstanding Common Stock), the
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corporation formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental warrant agreement providing that the Holder of each
Representative's Warrant then outstanding or to be outstanding shall have the
right thereafter (until the expiration of such Representative's Warrant) to
receive, upon exercise of such Representative's Warrant, the kind and amount of
shares of stock and other securities and property receivable upon such
consolidation or merger by a holder of the number of shares of Common Stock for
which such Representative's Warrant might have been exercised immediately prior
to such consolidation, merger, sale or transfer. Such supplemental warrant
agreement shall provide for adjustments which shall be identical to the
adjustments provided in Section 11. The above provision of this subsection shall
similarly apply to successive consolidations or mergers.
11.5 No Adjustment of Exercise Price in Certain
Cases. No adjustment of the Exercise Price shall be made if the amount of said
adjustment shall be less than two cents ($.02) per share, provided, however,
that 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 of and together with
the next subsequent adjustment which, together with any adjustment so carried
forward, shall amount to at least two cents ($.02) per Representative's Warrant.
12. Exchange and Replacement of Representative's Warrant
Certificates. Each Representative's Warrant Certificate is exchangeable, without
expense, upon the surrender thereof by the registered Holder at the principal
executive office of the Company for a new Representative's Warrant Certificate
of like tenor and date representing in the aggregate the right
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to purchase the same number of Warrant Shares in such denominations as shall be
designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any
Representative's Warrant Certificate, and, in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it and
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of the Representative's Warrant, if mutilated,
the Company will make and deliver a new Warrant Certificate of like tenor, in
lieu thereof.
13. Elimination of Fractional Interests. The Company shall
not be required to issue certificates representing fractions of shares of
Common Stock upon the exercise of the Representative's Warrant, nor shall it be
required to issue scrip or pay cash in lieu of fractional interests, it being
the intent of the parties that all fractional interests shall be eliminated by
rounding any fraction up to the nearest whole number of shares of Common Stock
or other securities, properties or rights.
14. Reservation and Listing of Securities. The Company shall
at all times reserve and keep available out of its authorized shares of Common
Stock, solely for the purpose of issuance upon the exercise of the
Representative's Warrant and the Warrants issuable upon exercise thereof, such
number of shares of Common Stock or other securities, properties or rights as
shall be issuable upon the exercise thereof. Every transfer agent ("Transfer
Agent") for the
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Common Stock and other securities of the Company issuable upon
the exercise of the Representative's Warrant will be irrevocably authorized and
directed at all times to reserve such number of authorized shares of Common
Stock and other securities as shall be requisite for such purpose. The Company
will keep a copy of this Agreement on file with every Transfer Agent for the
Common Stock and other securities of the Company issuable upon the exercise of
the Representative's Warrant. The Company will supply every such Transfer Agent
with duly executed stock and other certificates, as appropriate, for such
purpose. The Company covenants and agrees that, upon exercise of the
Representative's Warrant and payment of the Exercise Price therefor, all shares
of Common Stock and other securities issuable upon such exercise shall be duly
and validly issued, fully paid, non-assessable and not subject to the preemptive
rights of any stockholder. As long as the Representative's Warrant shall be
outstanding, the Company shall use its best efforts to cause all shares of
Common Stock issuable upon the exercise of the Representative's Warrant to be
listed (subject to official notice of issuance) on all securities exchanges on
which the Common Stock issued to the public in connection herewith may then be
listed and/or quoted on Nasdaq SmallCap Market.
15. Notices to Representative's Warrant Holders. Nothing
contained in this Agreement shall be construed as conferring upon the Holders
the right to vote or to consent or to receive notice as a stockholder in
respect of any meetings of stockholders for the election of directors or any
other matter, or as having any rights whatsoever as a stockholder of the
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Company. If, however, at any time prior to the
expiration of the Representative's Warrants and their exercise, any of the
following events shall occur:
(a) the Company shall take a record of the
holders of its shares of Common Stock for the purpose of entitling them to
receive a dividend or distribution payable otherwise than in cash, or a cash
dividend or distribution payable otherwise than out of current or retained
earnings, as indicated by the accounting treatment of such dividend or
distribution on the books of the Company; or
(b) the Company shall offer to all the holders
of its Common Stock any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of capital stock of the
Company, or any option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of
the Company (other than in connection with a consolidation or merger) or a sale
of all or substantially all of its property, assets and business as an entirety
shall be proposed;
then in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution,
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liquidation, winding up or sale. Such notice shall specify such record date or
the date of closing the transfer books, as the case may be. Failure to give such
notice or any defect therein shall not affect the validity of any action taken
in connection with the declaration or payment of any such dividend, or the
issuance of any convertible or exchangeable securities, or subscription rights,
options or warrants, or any proposed dissolution, liquidation, winding up or
sale.
16. Warrants.
The form of the certificate representing the Warrants (and
the form of election to purchase shares of Common Stock upon the exercise of
the Warrants and the form of assignment printed on the reverse thereof) shall
be substantially as set forth in Exhibit "A" to the Warrant Agreement dated as
of the date hereof by and among the Company, the Representative and American
Stock Transfer & Trust Company, as warrant agent (the "Warrant Agreement") with
such changes as are appropriate to reflect the fact that the Warrants have a
different exercise price than the Redeemable Warrants. The exercise price of
the Warrants and the number of shares of Common Stock issuable upon the
exercise of the Warrants are subject to adjustment, whether or not the
Representative's Warrants have been exercised and the Warrants have been
issued, in the manner and upon the occurrence of the events set forth in
Section 8 of the Warrant Agreement, which is hereby incorporated by reference
and made a part hereof as if set forth in its entirety herein. The Company
covenants to, and agrees with, the Holder(s) that without the prior written
consent of the Holder(s), which will not be unreasonably withheld, the Warrant
Agreement will not be modified, amended, canceled, altered or superseded, and
that the Company will send to
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each Holder, irrespective of whether or not the Representative's Warrants have
been exercised, any and all notices required by the Warrant Agreement to be sent
to holders of the Warrants.
17. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
duly made and sent when delivered, or mailed by registered or certified mail,
return receipt requested:
(a) if to the registered Holder of the
Representative's Warrant, to the address of such Holder as shown on the books
of the Company; or
(b) if to the Company, to the address set
forth in Section 4 hereof or to such other address as the Company may
designate by notice to the Holders.
18. Supplements; Amendments; Entire Agreement. This
Agreement (including the Underwriting Agreement to the extent portions thereof
are referred to herein) contains the entire understanding between the parties
hereto with respect to the subject matter hereof and may not be modified or
amended except by a writing duly signed by the party against whom enforcement of
the modification or amendment is sought. The Company and the Representative may
from time to time supplement or amend this Agreement without the approval of any
holders of Representative's Warrant Certificates (other than the Representative)
in order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any provisions herein, or to
make any other provisions in regard to matters or questions arising hereunder
which the Company and the Representative may deem necessary or
-24-
desirable and which the Company and the Representative deem shall not adversely
affect the interests of the Holders of Representative's Warrant Certificates.
19. Successors. All of the covenants and provisions of
this Agreement shall be binding upon and inure to the benefit of the Company,
the Holders and their respective successors and assigns hereunder.
20. Survival of Representations and Warranties.
Notwithstanding any investigations made by or on behalf of the parties to this
Agreement, all representations, warranties and agreements made by the parties to
this Agreement herein shall survive.
21. Governing Law. This Agreement and each
Representative's Warrant Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of Delaware and for all purposes shall
be construed in accordance with the laws of said State without giving effect to
the rules of said State governing the conflicts of laws.
22. Severability. If any provision of this Agreement shall
be held to be invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provision of this Agreement.
23. Captions. The caption headings of the Sections of this
Agreement are for convenience of reference only and are not intended, nor should
they be construed as, a part of this Agreement and shall be given no substantive
effect.
-25-
24. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company
and the Representative and any other registered Holder(s) of the
Representative's Warrant Certificates or Warrant Shares any legal or equitable
right, remedy or claim under this Agreement; and this Agreement shall be for the
sole and exclusive benefit of the Company and the Representative and any other
Holder(s) of the Representative's Warrant Certificates or Warrant Shares.
25. 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 such counterparts shall together constitute but
one and the same instrument.
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IN WITNESS OF, the parties hereto have caused this Agreement
to be duly executed, as of the day and year first above written.
ATTEST: INTEGRATED TECHNOLOGY USA, INC.
_______________________________
By:_____________________________
Secretary Name:
Title:
NATIONAL SECURITIES CORPORATION
By:_____________________________
Name: Xxxxxx X. Xxxxxxxxx
Title: Chairman
-27-
EXHIBIT A
[FORM OF REPRESENTATIVE'S WARRANT CERTIFICATE]
THE REPRESENTATIVE'S WARRANT REPRESENTED BY THIS CERTIFICATE AND THE OTHER
SECURITIES ISSUABLE UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR
RULE UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN
OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL
FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE REPRESENTATIVE'S WARRANT
REPRESENTED BY THIS CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE
WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME, OCTOBER 1, 2001
Representative's Warrant No. ______
____ Shares of Common Stock and/or ____ Redeemable Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that ___________________,
or registered assigns, is the registered holder of Warrants to purchase
initially, at any time from October 1, 1997 until 5:30 p.m., New York time on
October 1, 2001 ("Expiration Date"), up to ____ shares of Common Stock and/or
____ Warrants at the initial exercise price, subject to adjustment in certain
events, of $9.90 per share of Common Stock and $.165 per Redeemable Warrant (the
"Exercise Price") upon surrender of this Representative's Warrant Certificate
and payment of the Exercise Price at an office or agency of the Company, but
subject to the conditions set forth herein and in the Representative's Warrant
Agreement dated as of October 1, 1996 between the Company and National
Securities Corporation (the "Warrant Agreement"). Payment of the Exercise Price
shall be made by certified or official bank check in New York Clearing House
funds payable to the order of the Company.
EXH. A-1
No Warrant may be exercised after 5:30 p.m., New York time,
on the Expiration Date, at which time all Representative's Warrant evidenced
hereby, unless exercised prior thereto, shall thereafter be void.
The Representative's Warrant evidenced by this Warrant
Certificate are part of a duly authorized issue of Representative's Warrants
issued pursuant to the Warrant Agreement, which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to for a description of the rights, limitation of rights, obligations,
duties and immunities thereunder of the Company and the holders (the words
"holders" or "holder" meaning the registered holders or registered holder) of
the Representative's Warrant.
The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the type and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the
Representative's Warrant; provided, however, that the failure of the Company to
issue such new Warrant Certificates shall not in any way change, alter, or
otherwise impair, the rights of the holder as set forth in the Warrant
Agreement.
Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Representative's Warrant shall be issued to the
transferee(s) in exchange for this Warrant Certificate, subject to the
limitations provided herein and in the Warrant Agreement, without any charge
except for any tax or other governmental charge imposed in connection with such
transfer.
Upon the exercise of less than all of the Representative's
Warrant evidenced by this Certificate, the Company shall forthwith issue to the
holder hereof a new Warrant Certificate representing such numbered unexercised
Representative's Warrant.
The Company may deem and treat the registered holder(s)
hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone), for the
purpose of any exercise hereof, and of any distribution to the holder(s)
hereof, and for all other purposes, and the Company shall not be affected by
any notice to the contrary.
All terms used in this Warrant Certificate which are defined
in the Warrant Agreement shall have the meanings assigned to them in the
Warrant Agreement.
EXH. A-2
This Warrant Certificate does not entitle any holder thereof
to any of the rights of a shareholder of the Company.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.
Dated as of October 1, 1996.
ATTEST: INTEGRATED TECHNOLOGY USA, INC.
___________________________
By: _____________________________
Secretary Name:
Title:
EXH. A-3
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to purchase ____ shares of
Common Stock and/or ____ Warrants and herewith tenders in payment for such
securities a certified or official bank check payable in New York Clearing
House Funds to the order of Integrated Technology USA, Inc. (the "Company") in
the amount of $_____, all in accordance with the terms of Section 4 of the
Representative's Warrant Agreement dated as of October 1, 1996 between the
Company and National Securities Corporation. The undersigned requests that a
certificate for such securities be registered in the name of
______________________________, whose address is
_______________________________________________________________________________
and that such certificate be delivered to ___________________, whose address is
_____________________, and if said number of shares shall not be all the shares
purchasable hereunder, that a new Warrant Certificate for the balance of the
shares purchasable under the within Warrant Certificate be registered in the
name of the undesigned warrantholder or his assignee as below indicated and
delivered to the address stated below.
Dated: ________________
Signature: _____________________________________________
(Signature must conform in all respects to name
of holder as specified on the face of the Warrant
Certificate.)
Address: ________________________________________
________________________________________
_________________________________________________
(Insert Social Security or Other Identifying
Number of Holder)
Signature Guaranteed: _________________________________________________________
(Signature must be guaranteed by a bank savings and loan association,
stockbroker, or credit union with membership in an approved signature guaranty
Medallion Program pursuant to Securities Exchange Act Rule 17Ad-15.)
EXH. A-4
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED, _______________________ hereby sells, assigns and transfers
unto [NAME OF TRANSFEREE] this Warrant Certificate, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
_________________________ Attorney, to transfer the within Warrant Certificate
on the books of the within-named Company, with full power of substitution.
Dated: _________________
Signature: ___________________________________
(Signature must conform in all respects to
name of holder as specified on the face of the
Warrant Certificate.)
Address: _____________________________________
_____________________________________
_____________________________________
(Insert Social Security or Other
Identifying Number of Holder)
Signature Guaranteed: _________________________________________________________
(Signature must be guaranteed by a bank savings and loan association,
stockbroker, or credit union with membership in an approved signature guaranty
Medallion Program pursuant to Securities Exchange Act Rule 17Ad-15.)
XXX. X-0
