REPRESENTATIVE'S WARRANT
Dated: February 1997
THIS CERTIFIES THAT X.X. XXXXXX & CO., INC. (herein sometimes called
the "Holder") is entitled to purchase from GENERAL BEARING CORPORATION, a
Delaware corporation (the "Company"), at the respective prices and during the
period hereinafter specified, up to 90,000 shares of the Common Stock, $.01 par
value, of the Company (the "Common Stock"). This Representative's Warrant (this
"Warrant") is issued pursuant to an Underwriting Agreement dated __________,
1997 between the Company and X.X. Xxxxxx & Co., Inc. (the "Representative"), as
representative of certain underwriters, including itself (the "Underwriters"),
in connection with a public offering, through the Underwriters (the "Offering"),
of 900,000 shares of Common Stock (and up to 135,000 additional shares of Common
Stock covered by an over-allotment option granted to the Underwriters), in
consideration of $5.00 received by the Company for this Warrant. Except as
otherwise expressly provided herein, the shares of Common Stock issued upon
exercise of this Warrant shall bear the same terms and conditions described
under the caption "Description Of Securities" in the registration statement
(File No. 333-15477) on Form S-1 relating to the Offering (the "Registration
Statement"), except that (i) the Holder shall have registration rights under the
Securities Act of 1933, as amended (the "Act"), for this Warrant and the Common
Stock as more fully described in Section 6. Each certificate evidencing the
Registrable Securities (as hereinafter defined) shall bear the appropriate
restrictive legend set forth below, except that any such certificate shall not
bear such restrictive legend if (a) it is transferred pursuant to an effective
registration statement under the Act or in compliance with Rule 144 or Rule 144A
promulgated under the Act, or (b) the Company is provided with an opinion of
counsel to the effect that such legend is not required in order to establish
compliance with the provisions of the Act:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT.
COPIES OF THE REPRESENTATIVE'S WARRANT COVERING REGISTRATION RIGHTS
PERTAINING TO THESE SECURITIES AND RESTRICTING THEIR TRANSFER MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF
THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY AT THE OFFICE OF THE
COMPANY AT WEST NYACK, NEW YORK."
Unless the context otherwise requires, all references herein to a "Section"
shall mean the appropriate Section of this Warrant.
1. EXERCISE PRICE AND PERIOD. The rights represented by this War-
rant shall be exercised at the price and during the periods set forth below:
(a) During the period from [EFFECTIVE DATE] to [EFFECTIVE
DATE+1 YEAR-1 DAY] (the "First Anniversary Date") inclusive, the Holder shall
have no right to purchase any Securities hereunder, except that in the event of
any merger or consolidation of the Company into another entity, or any sale of
substantially all of the assets of the Company as an entirety, prior to the
First Anniversary Date, the Holder shall have the right to exercise this Warrant
at such tie and into such kinds and amounts of shares of stock and other
securities and property (including cash) as would be receivable by a holder of
the number of shares of Common Stock into which this Warrant might have been
exercisable immediately prior thereto.
(b) Between [EFFECTIVE DATE+1 YEAR] and [EFFECTIVE DATE+5
YEARS-1 DAY] (the "Expiration Date") inclusive, the Holder shall have the right
to purchase hereunder: (i) shares of Common Stock at a price of $9.80 per share
(that being 140 percent of the public offering price of the shares of Common
Stock) (the "Share Exercise Price").
(c) Notwithstanding the provisions of Section 1(b) with
respect to the Exercise Price to the contrary, the Holder may elect to exercise
this Warrant, in whole or in part, by receiving Common Stock equal to the value
(as herein determined) of the portion of this Warrant then being exercised, in
which event the Company shall issue to the Holder the number of shares of Common
Stock determined by using the following formula:
X = Y(A-B)
------
A
X = the number of shares of Common Stock to be issued to the
Holder under the provisions of this Section 1(c)
Y = the number of shares of Common Stock that would
otherwise be issued upon such exercise
A = the Current Fair Market Value (as hereinafter defined)
of one share of Common Stock calculated as of the last
trading day immediately preceding such exercise
B = the Exercise Price
As used herein, the "Current Fair Market Value" of the Common Stock as of a
specified date shall mean with respect to each share of Common Stock, (i) the
average of the closing prices of the Common Stock sold on all securities
exchanges on which the Common Stock may at the time be listed, or (ii) if there
have been no sales on any such exchange on such day, the
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average of the highest bid and lowest asked prices on all such exchanges at the
end of such day, or (iii) if on such day the Common Stock is not so listed, the
average of the representative bid and asked prices quoted in the NASDAQ System
as of 4:00 p.m., New York time, or (iv) if on such day the Common Stock is not
quoted in the NASDAQ System, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated or any similar successor organization,
in each such case either (i) calculated ont eh date which the form of election
specified in Section 2 herein is deemed to have been sent to the Company or (ii)
averaged over a period of 5 days consisting of the day as of which the Current
Fair Market Value is being determined and the 4 consecutive business days prior
to such day. The Holder hereof shall determine in its sole discretion which
method of calculation to use. If on the date of which Current Fair Market Value
is to be determined the Common Stock is not listed on any securities exchange or
quoted in the NASDAQ System or the over-the-counter market, then Current Fair
Market Value of the Common Stock shall be the highest price per share which the
Company could then obtain from a willing buyer (not a current employee or
director) for Common Stock sold by the Company from authorized but unissued
shares, as determined in good faith by the Board of Directors of the Company,
unless prior to such date the Company has become subject to a merger,
consolidation, reorganization, acquisition or other similar transaction pursuant
to which the Company is not the surviving entity, in which case the Current Fair
Market Value of the Common Stock shall be deemed to be the per share value
received or to be received in such transaction by the holders of Common Stock.
(d) After the Expiration Date, the Holder shall have no right
to purchase any shares of Common Stock hereunder.
2. EXERCISE. The rights represented by this Warrant may be exercised,
in whole or in part (with respect to shares of Common Stock, by the Holder at
any time within the periods specified in Section 1 by: (a) surrender of this
Warrant for cancellation (with the purchase form at the end hereof properly
executed) at the principal executive office of the Company (or at such other
office or agency of the Company as it may designate by notice in writing to the
Holder at the address of the Holder appearing on the books of the Company); (b)
to the extent that the Holder does not use the election provided by Section
1(c), payment to the Company of the Exercise Price for the number of shares of
Common Stock specified in the such purchase form, together with the amount of
applicable stock transfer taxes, if any; and (c) delivery to the Company of a
duly executed agreement signed by the person(s) designated in the purchase form
to the effect that such person(s) agree(s) to be bound by all of the terms and
conditions of this Warrant, including without limitation the provisions of
Section 6 and 7. This Warrant shall be deemed to have been exercised, in whole
or in part to the extent specified immediately prior to the close of business on
the date on which all of the provisions of this Section 2 are satisfied, and the
person(s) designated in the purchase form shall become the holder(s) of record
of the shares of Common Stock issuable upon such exercise at that time and date.
The certificates representing the shares of Common Stock so purchased shall be
delivered to the Holder within a reasonable time, not exceeding ten business
days, after this Warrant shall have been so exercised.
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3. TRANSFER OF WARRANT.
(a) During the period from [EFFECTIVE DATE] to the First
Anniversary Date inclusive, this Warrant shall not be transferred, sold,
assigned or hypothecated, except that during such period this Warrant may be
transferred (i) to successors in interest of the Holder, or (ii) in whole or in
part to any one or more directors or officers of the Holder, in each case
subject to compliance with applicable Federal and state securities laws and
Interpretations of the Board of Governors of the National Association of
Securities Dealers, Inc.
(b) Between [EFFECTIVE DATE+1 YEAR] and the Expiration Date
inclusive, this Warrant shall be freely transferable, in whole or in part,
subject to the other terms and conditions hereof and to compliance with
applicable Federal and state securities laws; provided, however, that this
Warrant shall be immediately exercised upon any such transfer to any person or
entity that is not a shareholder, director or officer of the Holder and that if
this Warrant is not so exercised upon a transfer to any person or entity which
is not a shareholder, director or officer of the Holder, that this Warrant shall
immediately lapse.
(c) Any transfer of this Warrant permitted by this Section 3
shall be effected by: (i) surrender of this Warrant for cancellation (with the
assignment form at the end hereof properly executed) at the office or agency of
the Company referred to in Section 2; (ii) delivery of a certificate (signed, if
the Holder is a corporation or partnership, by an authorized officer or partner
thereof), stating that each transferee designated in the assignment form is a
permitted transferee under this Section 3; and (iii) delivery of an opinion of
counsel stating that the proposed transfer may be made without registration or
qualification under applicable Federal or state securities laws. This Warrant
shall be deemed to have been transferred, in whole or in part to the extent
specified, immediately prior to the close of business on the date the provisions
of this Section 3(c) are satisfied, and the transferee(s) designated in the
assignment form shall become the holder(s) of record at that time and date. The
Company shall issue, in the name(s) of the designated transferee(s) (including
the Holder if this Warrant has been transferred in part) a new Warrant or
Warrants of like tenor and representing, in the aggregate, rights to purchase
the same number of shares of Common Stock as are then purchasable under this
Warrant. Such new Warrant or Warrants shall be delivered to the record holder(s)
thereof within a reasonable time, not exceeding ten business days, after the
rights represented by this Warrant shall have been so transferred. As used
herein (unless the context otherwise requires), the term "Holder" shall include
each such transferee, and the term "Warrant" shall include each such transferred
Warrant.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees that all
shares of Common Stock which may be issued upon exercise of this Warrant shall,
upon issuance in accordance with the terms hereof, be duly and validly issued,
fully paid and non-assessable, with no personal liability attaching to the
Holder thereof. The Company further covenants and agrees that during the period
within which this Warrant may be exercised, the Company shall at all times have
authorized and reserved a sufficient number of shares of Common Stock for
issuance upon exercise of this Warrant.
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5. SHAREHOLDER'S RIGHTS. This Warrant shall not entitle the Holder
to any voting rights or other rights as a shareholder of the Company.
6. REGISTRATION RIGHTS.
(A) CERTAIN DEFINITIONS. As used herein, the term:
(i) "Registrable Securities" shall mean this Warrant and/or
the shares of Common Stock issued or issuable upon exercise of this Warrant, as
the same shall be so designated by the Holder.
(ii) "50% Holder" shall mean the Holder(s) of at least 50
percent of the total number of shares of Common Stock comprising the Registrable
Securities (whether or not this Warrant has been exercised), and shall include
any Holder or combination of Holders.
(B) "PIGGYBACK" REGISTRATION. From the date hereof until the
Expiration Date, the Company shall advise the Holder, whether the Holder holds
this Warrant or has exercised this Warrant and holds any of the Common Stock, by
written notice at least four weeks prior to the filing of any post-effective
amendment to the Registration Statement (unless the Company determines that to
comply with Federal securities law it must file such post-effective amendment in
less than four weeks' time, in which case the Company shall give the Holder the
most notice practicable under the circumstances), or of any new registration
statement or post-effective amendment thereto under the Act (other than a
registration statement on Form S-8 or its counterpart), or any Notification on
Form 1-A under the Act, covering any securities of the Company, whether for its
own account or for the account of others, and shall, upon the request of the
Holder, include in any such post-effective amendment or new registration
statement such information as may be required to permit a public offering of any
or all of the Registrable Securities of the Holder, all at no expense whatsoever
to the Holder (except in the case of any post-effective amendment to the extent
as permitted by the Act or the rules and regulations promulgated thereunder),
except that each Holder whose Registrable Securities are included in such
registration shall bear the fees of its own counsel and any underwriting
discounts or commissions applicable to the Securities sold by it.
(C) DEMAND REGISTRATION.
(i) If any 50% Holder shall give notice to the Company, at
any time after the First Anniversary Date and prior to the Expiration Date, to
the effect that such 50% Holder desires to register under the Act any
Registrable Securities under such circumstances that a public distribution
(within the meaning of the Act) of any such securities shall be involved, then
the Company shall promptly, but no later than 30 days after receipt of such
notice, use its reasonable best efforts to file a post-effective amendment to
the Registration Statement or a new registration statement under the Act, to the
end that Registrable Securities of such 50% Holder may be publicly sold under
the Act as promptly as practicable thereafter, and the Company shall use its
best efforts to cause such registration to become effective as soon as possible;
provided, however, that such 50% Holder shall furnish the Company
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with appropriate information in connection therewith as the Company may
reasonably request in writing; and provided further that the Company shall then
have available current financial statements (unless the unavailability of
current financial statements results from the Company's fault or neglect). The
50% Holder may, at its option, cause Registrable Securities to be included in
such registration under this Section 6(c) on a maximum of two occasions during
the four-year period beginning on the First Anniversary Date and ending on the
Expiration Date.
(ii) Within ten days after receiving any such notice
pursuant to this Section 6(c), the Company shall give notice to each other
Holder (whether such Holder holds a Warrant or has exercised the Warrant and
holds any of the Securities), advising that the Company is proceeding with such
post-effective amendment or new registration statement and offering to include
therein Registrable Securities held by such other Holders, provided that they
shall furnish the Company with such appropriate information in connection
therewith as the Company shall reasonably request in writing.
(iii) All costs and expenses (including without limitation,
legal, accounting, printing, mailing and filing fees) of the first such
registration effected under this Section 6(c) shall be borne by the Company,
except that the Holder(s) whose Registrable Securities are included in such
registration shall bear the fees of their own counsel and any underwriting
discounts or commissions applicable to the securities sold by them. All costs
and expenses of the second such registration effected under this Section 6(c)
shall be borne by the Holder(s) whose Registrable Securities are included in
such registration.
(iv) The Company shall cause each registration statement or
post- effective amendment filed pursuant to this Section 6(c) to remain current
under the Act (including the taking of such steps as are necessary to obtain the
removal of any stop order) for a period of at least six months (and for up to an
additional three months if requested by the Holder(s)) from the effective date
thereof, or until all the Registrable Securities included in such registration
have been sold, whichever is earlier.
(D) FURTHER RIGHTS. The registration rights provided by this
Section 6 may be exercised by the Holder either prior or subsequent to its
exercise of this Warrant. A 50% Holder may, at its option, request registration
pursuant to Section 6(b) and/or pursuant to Section 6(c), and its request for
registration under one such Section shall not affect its right to request
registration under the other. The registration rights provided by this Section 6
shall supersede and be prior in right to any registration rights granted by the
Company to other holders of its outstanding securities.
(E) FURTHER OBLIGATIONS OF COMPANY. With respect to all
registrations under this Section 6, the Company shall: (i) supply prospectuses
and such other documents as the Holder may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Securities;
(ii) use its best efforts to register and qualify the Registrable Securities for
sale in such states as the Holder designates (provided, however, that in no
event shall the Company be required to qualify as a foreign corporation or a
dealer in securities or to execute a general consent to service of process); and
(iii) do any and all other
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acts and things which may be necessary or desirable to enable the Holder to
consummate the public sale or other disposition of the Registrable Securities.
7. INDEMNIFICATION.
(A) INDEMNIFICATION BY THE COMPANY. As used in this Section 7,
the term "Liabilities" shall mean any and all losses, claims, damages and
liabilities, and actions and proceedings in respect thereof, including without
limitation all reasonable costs of defense and investigation and all attorneys'
fees. Whenever pursuant to Section 6 a registration statement relating to any
Registrable Securities is filed under the Act, or amended or supplemented, the
Company shall indemnify and hold harmless each Holder of Registrable Securities
included in such registration statement, amendment or supplement (each, a
"Distributing Holder"), and each person (if any) who controls (within the
meaning of the Act) the Distributing Holder, and each underwriter (within the
meaning of the Act) of such Registrable Securities, and each person (if any) who
controls (within the meaning of the Act) any such underwriter, from and against
all Liabilities, joint or several, to which the Distributing Holder or any such
controlling person or underwriter may become subject, under the Act or
otherwise, insofar as such Liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any such
registration statement, or any preliminary prospectus or final prospectus
constituting a part thereof, or any amendment or supplement thereto, or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Company shall not be liable
in any such case to the extent that any such Liabilities arise out of or are
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, preliminary prospectus,
final prospectus, or amendment or supplement thereto, in reliance upon and in
conformity with written information furnished by such Distributing Holder or by
any other Distributing Holder for use in the preparation thereof. The foregoing
indemnity shall be in addition to any other liability which the Company may
otherwise have.
(B) INDEMNIFICATION BY HOLDER. The Distributing Holder(s) shall
indemnify and hold harmless the Company, and each of its directors, each nominee
(if any) named in any preliminary prospectus or final prospectus constituting a
part of such registration statement, each of its officers who have signed such
registration statement and such amendments or supplements thereto, and each
person (if any) who controls the Company (within the meaning of the Act) against
all Liabilities, joint or several, to which the Company or any such director,
nominee, officer or controlling person may become subject, under the Act or
otherwise, insofar as such Liabilities arise out of or are based upon any untrue
or alleged untrue statement of any material fact contained in such registration
statement, preliminary prospectus, final prospectus, or amendment or supplement
thereto, or arise out of or are based upon he omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent that such Liabilities arise out of or are based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, preliminary prospectus, final prospectus or
amendment or supplement thereto in reliance upon and in conformity with written
information furnished by such Distributing
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Holder(s) for use in the preparation thereof. The foregoing indemnity shall be
in addition to any other liability which the Distributing Holder(s) may
otherwise have.
(C) PROCEDURE. Promptly after receipt by an indemnified party
under this Section 7 of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against any
indemnifying party, give the indemnifying party notice of the commencement
thereof; but the omission so to notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party otherwise than
under this Section 7. In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party shall not be entitled to participate in and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall be liable to such indemnified party under this Section
7 for any legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable costs of
investigation.
(D) LIMITATION. Notwithstanding the foregoing, if the
Registrable Securities are to be distributed by means of an underwritten public
offering, to the extent that the provisions on indemnification and contribution
contained in the underwriting agreement entered into in connection with such
underwriting are in conflict with the provisions of this Section 7, the
provisions of such underwriting agreement shall be controlling, provided that
the Holder is a party to such underwriting agreement.
8. ANTI-DILUTION. In the event that the outstanding shares of Com-
mon Stock are at any time increased or decreased in number, or changed into or
exchanged for a different number or kind of shares or other security of the
Company or of another corporation through reorganization, merger, consolidation,
liquidation, recapitalization or, in the case of Common Stock, stock split,
reverse split, combination of shares or stock dividends payable with respect to
such Common Stock, sold at below the exercise price of this Warrant, and for
other unusual events (other than employee benefit and stock option plans for
employees and advisors of the Company) appropriate adjustments shall be made in
the number and kind of such securities then subject to this Warrant and in the
Exercise Price of this Warrant effective as of the date of such occurrence, so
that the position of the Holder upon exercise of this Warrant shall be the same
as it would have been had it owned immediately prior to the occurrence of such
event the Common Stock subject to this Warrant; provided, however, that in no
event shall two adjustments be made for the same event. For example, if the
Company declares a 2-for-1 stock dividend or stock split, then the number of
shares of Common Stock then subject to this Warrant shall each be doubled and
the Share Exercise Price shall each be reduced by 50 percent. Such adjustments
shall be made successively whenever any event described by this Section 8 shall
occur.
9. GOVERNING LAW. This Warrant shall be governed by and construed
in accordance with the laws of the State of New York applicable to agreements
made and to be performed entirely within such State, without reference to
such State's laws regarding the conflict of laws.
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10. AMENDMENT OR WAIVER. Any provision of this Warrant may be amended,
waived or modified upon the written consent of the Company and any 50% Holder;
provided, however, that such amendment, waiver or modification applies by its
terms to each Holder; and provided further, that a Holder may waive any of its
rights or the Company's obligations to such Holder without obtaining the consent
of any other Holder.
IN WITNESS WHEREOF, GENERAL BEARING CORPORATION has caused this Warrant
to be signed by its duly authorized officers under its corporate seal and to be
dated as of the date set forth on the first page hereof.
GENERAL BEARING CORPORATION
By:______________________________
Name:
Title:
(Corporate Seal)
Attest:
-------------------------
Secretary
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PURCHASE FORM
(TO BE SIGNED ONLY UPON EXERCISE OF WARRANT)
The undersigned, the Holder of the foregoing Warrant, hereby
irrevocably elects to exercise the purchase rights represented by such Warrant
for, and to purchase thereunder, _________ shares of Common Stock, $.01 par
value, of GENERAL BEARING CORPORATION (the "Company") and (i) herewith makes
payment of an aggregate of $_______________ therefor and/or (ii) pursuant to
Section 1(c) of such Warrant hereby tenders the right to exercise such Warrant
to the extent of _______ shares of Common Stock of the Company. The undersigned
requests that the certificates for the shares of such Common Stock be issued in
the name(s) of, and delivered to, the person(s) whose name(s) and address(es)
are set forth below:
Dated: ____________________
----------------------------
Name:
----------------------------
Address:
Signatures guaranteed by:
------------------------------
Taxpayer Identification Number:
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TRANSFER FORM
(TO BE SIGNED ONLY UPON TRANSFER OF WARRANT)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers unto _______________________________________ the right to purchase
shares of the Common Stock, $.01 par value per share, of GENERAL BEARING
CORPORATION (the "Company") represented by the foregoing Warrant to the extent
of ____ shares of Common Stock and appoints ____________________________
attorney to transfer such rights on the books of the Company, with full power of
substitution in the premises.
Dated: ____________________
----------------------------
Name:
----------------------------
Address:
Signatures guaranteed by:
------------------------------
Taxpayer Identification Number:
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