AMENDED AND RESTATED WARRANT AGREEMENT
AMENDED AND RESTATED WARRANT AGREEMENT, dated as of November , 1997
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by and between IDM ENVIRONMENTAL CORP., a New Jersey corporation (the
"Company"), and XXXXXX CAPITAL GROUP, LTD. (the "Placement Agent").
The Company previously issued to the Placement Agent warrants (the
"Original Warrants") to purchase 100,000 shares of common stock of the Company,
$.001 par value per share ("Common Stock") in connection with services provided
pursuant to a Placement Agency Agreement, dated as of February 10, 1997, by and
between the Company and the Placement Agent (the "Placement Agency Agreement").
The Original Warrants were issued subject to the terms and conditions of that
certain Warrant Agreement, dated as of February 11, 1997 (the "Original Warrant
Agreement"), by and between the parties hereto. Subsequent to the issuance of
the Original Warrants, certain disputes arose between the Company and the
Placement Agent. Pursuant to the terms of a Settlement Agreement (the
"Settlement Agreement"), the Company agreed to amend the terms of the Original
Warrants and the parties hereto agreed to surrender and cancel the Original
Warrants and to cause replacement warrants (the "First Warrants") to be issued
to the Placement Agent to purchase 100,000 shares of Common Stock and to cause
new warrants (the "Second Warrants") to be issued to the Placement Agent to
purchase 100,000 shares of Common Stock (except as other specifically indicated,
when used herein, the term "Warrants" shall refer to both the "First Warrants"
and the "Second Warrants"), subject to adjustment as provided in Section 8
hereof (such number of shares, as adjusted, being hereinafter referred to as the
"Shares"), each Warrant entitling the holder ("Holder") thereof to purchase one
share of Common Stock. All capitalized terms used herein and not otherwise
defined herein shall have the same meanings as assigned thereto in the
Settlement Agreement, or if not defined therein, in the Placement Agency
Agreement. This Amended and Restated Warrant Agreement amends and restates the
Original Warrant Agreement in its entirety.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Issuance of Warrants; Form of Warrant. On the Settlement Date the
Company will issue, sell and deliver the Warrants to the Placement Agent or its
bona fide officers or principals. The form of the Warrant and of the form of
Election to Purchase to be attached thereto shall be as set forth on Exhibits A
and B attached hereto. The Warrants shall be executed on behalf of the Company
by the manual or facsimile signature of the present or any future Chairman or
Co-Chairman, President or any Vice President of the Company, under its corporate
seal, affixed or in facsimile, and attested by the manual or facsimile signature
of the present or any future Secretary or Assistant Secretary of the Company.
2. Registration. The Warrants shall be numbered and shall be registered in
a Warrant register (the "Warrant Register"). The Company shall be entitled to
treat the registered holder of any Warrant on the Warrant Register as the owner
in fact thereof for all purposes and shall not be bound to recognize any
equitable or other claim to or interest in such Warrant on the part of any other
person, and shall not be liable for any registration or transfer of Warrants
which are registered or are to be registered in the name of a fiduciary or the
nominee of a fiduciary unless made with the actual knowledge that a fiduciary or
nominee is committing a breach of trust in requesting such registration or
transfer, or with such knowledge of such facts that its participation therein
amounts to bad faith. The Warrants shall be registered initially in the name of
the Placement Agent in such denominations as the Placement Agent may request in
writing to the Company; provided, however, that the Placement Agent may
designate that all or a portion of the Warrants be issued in varying amounts
directly to its bona fide officers or principals and not to itself. Such
designation will only be made by the Placement Agent if it determines that such
issuances would not violate the interpretation of the Board of Governors of the
National Association of Securities Dealers, Inc. (the "NASD"), relating to the
review of corporate financing arrangements.
3. Transfer of Warrants. The Holder of a Warrant Certificate, by its
acceptance thereof, acknowledges that the Warrants are "restricted securities"
which have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), and represents that the Warrants are being acquired as an
investment and not with a view to the distribution thereof and will not transfer
such Warrants, except to bona fide officers, directors, shareholders,
principals, employees or registered representatives of the Holder upon written
request to the Company delivered in accordance with Section 12 hereof and upon
delivery of the Warrant Certificate duly endorsed by the Holder or by his duly
authorized attorney or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer. In all cases of transfer by an
attorney, the original power of attorney, duly approved, or an official copy
thereof, duly certified, shall be deposited with the Company. In case of
transfer by executors, administrators, guardians or other legal representatives,
duly authenticated evidence of their authority shall be produced, and may be
required to be deposited with the Company in its discretion. Upon any
registration of transfer, the Company shall deliver a new Warrant or Warrants to
the persons entitled thereto. The Warrants may be exchanged at the option of the
Holder thereof for other Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of shares of
Common Stock upon surrender to the Company or its duly authorized agent. The
Company may require payment of a sum sufficient to cover all taxes and other
governmental charges that may be imposed in connection with any voluntary
transfer, exchange or other disposition of the Warrants. Notwithstanding the
foregoing, the Company shall have no obligation to cause Warrants to be
transferred on its books to any person, if such transfer would violate the
Securities Act or applicable state securities laws.
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4. Exercise of Warrants.
(a) Term of Warrants; Exercise of Warrants. The Placement Agent is
hereby granted 100,000 First Warrants and 100,000 Second Warrants. Each
First Warrant entitles the registered owner thereof to purchase one Share
at a purchase price of $2.40 per share and each Second Warrant entitles the
registered owner thereof to purchase one Share at a purchase price equal to
the lesser of (i) $3.00 per share or (ii) the lowest conversion price of
the Convertible Notes issued by the Company on August 13, 1997 (the
purchase price with respect to each specific exercise of Second Warrants
shall be determined based on all conversions of Convertible Notes occurring
prior to the date of that exercise)(as adjusted from time to time pursuant
to the provisions hereof, the "Exercise Price"). The Exercise Price and the
Shares issuable upon exercise of Warrants are subject to adjustment upon
the occurrence of certain events, pursuant to the provisions of Section 8
of this Agreement. Subject to the provisions of this Agreement, each Holder
shall have the right, which may be exercised for a period commencing on the
date on which a registration statement covering the Shares is declared
effective by the Securities and Exchange Commission, and ending on February
12, 2002 with respect to First Warrants and August 20, 2000 with respect to
Second Warrants, to purchase from the Company (and the Company shall issue
and sell to such Holder) the number of fully paid and nonassessable shares
(rounded up to the nearest full share) specified in such Warrants, upon
surrender to the Company, or its duly authorized agent, of such Warrants,
with the form of Election to Purchase attached thereto duly completed and
signed, with signatures guaranteed by a member firm of a national
securities exchange, a commercial bank (not a savings bank or savings and
loan association) or trust company located in the United States or a member
of the NASD and upon payment to the Company of the Exercise Price, as
adjusted in accordance with the provisions of Section 8 of this Agreement,
for the number of Shares in respect of which such Warrants are then
exercised. Payment of such Exercise Price may be made in cash or by
certified check or official bank check payable to the order of the Company.
No adjustment shall be made for any dividends on any Shares issuable upon
exercise of a Warrant. Upon each surrender of Warrants and payment of the
Exercise Price as aforesaid, the Company shall issue and cause to be
delivered with all reasonable dispatch to or upon the written order of the
Holder of such Warrants and in such name or names as such Holder may
designate, a certificate or certificates for the number of full Shares so
purchased upon the exercise of such Warrants. Such certificate or
certificates shall be deemed to have been issued and any person so
designated to be named therein shall be deemed to have become a holder of
record of such Shares as of the date of the surrender of Warrants and
payment of the Exercise Price as aforesaid; provided, however, that if, at
the date of surrender of such Warrants and payment of such Exercise Price,
the transfer books for the Common Stock or other class of securities
issuable upon the exercise of such Warrants shall be closed, the
certificates for the Shares shall be issuable as of the date on which such
books shall next be opened and until such date the Company shall be under
no duty to deliver any certificate for such Shares; provided, further,
however, that the transfer books of record, unless otherwise required by
law, shall not be closed at any one time for a period longer than twenty
(20) days. The rights of purchase represented by the Warrants shall be
exercisable, at the election of the Holder(s) thereof, either in full or
from time to time in part and, in the event that any Warrant is exercised
in respect of less than all of the Shares issuable upon such exercise, a
new Warrant or Warrants will be issued for the remaining number of Shares
specified in the Warrant so surrendered.
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(b) Exercise by Surrender of Warrant. In addition to the method of
payment set forth in subsection (a) above and in lieu of any cash payment
required thereunder, the Holder of the Warrants shall have the right at any
time and from time to time to exercise the Warrants in full or in part by
surrendering the Warrant in the manner specified in the Warrant in exchange
for the number of Shares equal to the product of (x) the number of shares
as to which the Warrants are being exercised multiplied by (y) a fraction,
the numerator of which is the Market Price (as defined below) of the Shares
less the Exercise Price and the denominator of which is such Market Price.
Solely for the purposes of this paragraph, Market Price shall be the
average closing bid price of the Common Stock as calculated over the five
(5) trading-day period preceding the date on which the Election to Purchase
is sent to the Company.
5. Payment of Taxes. The Company will pay all documentary stamp taxes, if
any, attributable to the issuance of Shares upon the exercise of Warrants;
provided, however, that the Company shall not be required to pay any tax or
taxes which may be payable in respect of any transfer involved in the issue or
delivery of any certificates for Shares in a name other than that of the Holder
of Warrants in respect of which such Shares are issued.
6. Mutilated or Missing Warrants. In case any of the Warrants shall be
mutilated, lost, stolen or destroyed, the Company shall issue and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant, or
in lieu of and substitution for the Warrant lost, stolen or destroyed, a new
Warrant of like tenor and representing an equivalent right or interest, but only
upon receipt of evidence reasonably satisfactory to the Company of such
mutilation, loss, theft or destruction of such Warrant and indemnity, if
requested, reasonably satisfactory to the Company. An applicant for such
substitute Warrants shall also comply with such other reasonable regulations and
pay such other reasonable charges and expenses as the Company may prescribe.
7. Reservation of Shares, etc. There have been reserved, and the Company
shall at all times keep reserved, out of the authorized and unissued Common
Stock of the Company, a number of shares of Common Stock sufficient to provide
for the exercise of the rights of purchase represented by the outstanding
Warrants. Continental Stock Transfer & Trust Company, transfer agent for the
Common Stock (the "Transfer Agent"), and every subsequent transfer agent, if
any, for the Company's securities issuable upon the exercise of the Warrants
will be irrevocably authorized and directed at all times to reserve such number
of authorized and unissued shares as shall be required for such purpose. The
Company will keep a copy of this Agreement on file with the Transfer Agent and
with every subsequent transfer agent for any shares of the Company's securities
issuable upon the exercise of the Warrants. The Company will supply the Transfer
Agent or any subsequent transfer agent with duly executed certificates for such
purpose. All Warrants surrendered in the exercise of the rights thereby
evidenced shall be canceled, and such canceled Warrants shall constitute
sufficient evidence of the number of Shares that have been issued upon the
exercise of such Warrants.
8. Adjustments of Exercise Price and Number of Shares. The Exercise Price
and the number and kind of securities issuable upon exercise of each Warrant
shall be subject to adjustment from time to time upon the happening of certain
events, as follows:
(a) In case the Company shall (i) declare a dividend on its Common
Stock in shares of Common Stock or make a distribution in shares of Common
Stock, (ii) subdivide its outstanding shares of Common Stock, (iii) combine
its outstanding shares of Common Stock into a smaller number of shares of
Common Stock or (iv) issue by reclassification of its shares of Common
Stock other securities of the Company (including any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing corporation), the number of Shares purchasable upon exercise of
each Warrant immediately prior thereto shall be adjusted so that the Holder
of each Warrant shall be entitled to receive the kind and number of Shares
or other securities of the Company which he would have owned or have been
entitled to receive after the happening of any of the events described
above, had such Warrant been exercised immediately prior to the happening
of such event or any record date with respect thereto. An adjustment made
pursuant to this paragraph (a) shall become effective immediately after the
effective date of such event retroactive to immediately after the record
date, if any, for such event.
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(b) In case the Company shall issue rights, options or warrants to all
holders of its shares of Common Stock, without any charge to such holders,
entitling them (for a period expiring within 45 days after the record date
mentioned below in this paragraph (b)) to subscribe for or to purchase
shares of Common Stock at a price per share that is lower at the record
date mentioned below than the then current market price per share of Common
Stock (as defined in paragraph (d) below), the number of Shares thereafter
purchasable upon exercise of each Warrant shall be determined by
multiplying the number of Shares theretofore purchasable upon exercise of
each Warrant by a fraction, of which the numerator shall be the number of
shares of Common Stock outstanding on such record date plus the number of
additional shares of Common Stock offered for subscription or purchase, and
of which the denominator shall be the number of shares of Common Stock
outstanding on such record date plus the number of shares which the
aggregate offering price of the total number of shares of Common Stock so
offered would purchase at the then current market price per share of Common
Stock. Such adjustment shall be made whenever such rights, options or
warrants are issued, and shall become effective retroactively to
immediately after the record date for the determination of shareholders
entitled to receive such rights, options or warrants.
(c) In case the Company shall distribute to all holders of its shares
of Common Stock shares of stock other than Common Stock or evidences of its
indebtedness or assets (excluding cash dividends payable out of
consolidated earnings or retained earnings and dividends or distributions
referred to in paragraph (a) above) or rights, options or warrants or
convertible or exchangeable securities containing the right to subscribe
for or purchase shares of Common Stock (excluding those referred to in
paragraph (b) above), then in each case the number of Shares thereafter
issuable upon the exercise of each Warrant shall be determined by
multiplying the number of Shares theretofore issuable upon the exercise of
each Warrant, by a fraction, of which the numerator shall be the current
market price per share of Common Stock (as defined in paragraph (d) below)
on the record date mentioned below in this paragraph (c), and of which the
denominator shall be the current market price per share of Common Stock on
such record date, less the then fair value (as determined in good faith by
the Board of Directors of the Company, whose determination shall be
conclusive) of the portion of the shares of stock other than Common Stock
or assets or evidences of indebtedness so distributed or of such
subscription rights, options or warrants, or of such convertible or
exchangeable securities applicable to one share of Common Stock. Such
adjustment shall be made whenever any such distribution is made, and shall
become effective on the date of distribution retroactive to immediately
after the record date for the determination of shareholders entitled to
receive such distribution.
(d) For the purpose of any computation under paragraphs (b) and (c) of
this Section 8, the current market price per share of Common Stock at any
date (the "Current Market Price") shall be the average of the daily closing
prices for fifteen (15) consecutive trading days commencing twenty (20)
trading days before the date of such computation. The closing price for
each day shall be the last reported sale price or, in case no such reported
sale takes place on such day, the average of the closing bid and asked
prices for such day, in either case on the principal national securities
exchange on which the shares are listed or admitted to trading, or if they
are not listed or admitted to trading on any national securities exchange,
but are traded in the over-the-counter market, the closing sale price of
the Common Stock or, in case no sale is publicly reported, the average of
the representative closing bid and asked quotations for the Common Stock on
the Nasdaq system or any comparable system, or if the Common Stock is not
listed on the Nasdaq system or a comparable system, the closing sale price
of the Common Stock or, in case no sale is publicly reported, the average
of the closing bid and asked prices as furnished by two members of the NASD
selected from time to time by the Company for that purpose.
(e) No adjustment in the number of Shares purchasable hereunder shall
be required unless such adjustment would require an increase or decrease of
at least one percent (1%) in the number of Shares purchasable upon the
exercise of each Warrant; provided, however, that any adjustments which by
reason of this paragraph (e) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment but not later
than three years after the happening of the specified event or events. All
calculations shall be made to the nearest one thousandth of a share.
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(f) Whenever the number of Shares purchasable upon the exercise of
each Warrant is adjusted, as herein provided, the Exercise Price shall be
adjusted by multiplying the Exercise Price in effect immediately prior to
such adjustment by a fraction, of which the numerator shall be the number
of Shares purchasable upon the exercise of each Warrant immediately prior
to such adjustment, and of which the denominator shall be the number of
Shares so purchasable immediately thereafter.
(g) For the purpose of this Section 8, the term "shares of Common
Stock" shall mean (i) the class of stock designated as the Common Stock of
the Company at the date of this Agreement or (ii) any other class of stock
resulting from successive changes or reclassifications of such shares
consisting solely of changes in par value, or from no par value to par
value, or from par value to no par value. In the event that at any time, as
a result of an adjustment made pursuant to paragraph (a) above, the Holders
shall become entitled to purchase any shares of capital stock of the
Company other than shares of Common Stock, thereafter the number of such
other shares so purchasable upon exercise of each Warrant and the Exercise
Price of such shares shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Shares contained in paragraphs (a) through (f),
inclusive, and paragraphs (h) through (m), inclusive, of this Section 8,
and the provisions of Sections 4, 5, 7 and 10, with respect to the Shares,
shall apply on like terms to any such other shares.
(h) Upon the expiration of any rights, options, warrants or conversion
rights or exchange privileges, if any thereof shall not have been
exercised, the Exercise Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall, upon such expiration,
be readjusted and shall thereafter be such as it would have been had it
originally been adjusted (or had the original adjustment not been required,
as the case may be) as if (i) the only shares of Common Stock so issued
were the shares of Common Stock, if any, actually issued or sold upon the
exercise of such rights, options, warrants or conversion rights or exchange
privileges and (ii) such shares of Common Stock, if any, were issued or
sold for the consideration actually received by the Company upon such
exercise plus the aggregate consideration, if any, actually received by the
Company for the issuance, sale or grant of all of such rights, options,
warrants or conversion rights or exchange privileges whether or not
exercised; provided, however, that no such readjustment shall have the
effect of decreasing the number of shares issuable upon the exercise of
each Warrant or increasing the Exercise Price by an amount in excess of the
amount of the adjustment initially made in respect of the issuance, sale or
grant of such rights, options, warrants or conversion rights or exchange
privileges.
(i) The Company may, at its option at any time during the term of the
Warrants, reduce the then current Exercise Price to any amount deemed
appropriate by the Board of Directors of the Company.
(j) Whenever the number of Shares issuable upon the exercise of each
Warrant or the Exercise Price of such Shares is adjusted, as herein
provided, the Company shall promptly mail by first class mail, postage
prepaid, to each Holder, notice of such adjustment or adjustments. The
Company shall retain a firm of independent public accountants (who may be
the regular accountants employed by the Company) to make any computation
required by this Section 8 and shall cause such accountants to prepare a
certificate setting forth the number of Shares issuable upon the exercise
of each Warrant and the Exercise Price of such Shares after such
adjustment, setting forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was
made. Such certificate shall be conclusive as to the correctness of such
adjustment and each Holder shall have the right to inspect such certificate
during reasonable business hours.
(k) Except as provided in this Section 8, no adjustment in respect of
any dividends shall be made during the term of a Warrant or upon the
exercise of a Warrant.
(l) In case of any consolidation of the Company with or merger of the
Company with or into another corporation or in case of any sale or
conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, the Company or such successor or
purchasing corporation (or an affiliate of such successor or purchasing
corporation), as the case may be, agrees that each Holder shall have the
right thereafter upon payment of the Exercise Price in effect immediately
prior to such
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action to purchase upon exercise of each Warrant the kind and amount of
shares and other securities and property (including cash) which he would
have owned or have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had such Warrant been exercised
immediately prior to such action. The provisions of this paragraph (l)
shall similarly apply to successive consolidations, mergers, sales or
conveyances.
(m) Notwithstanding any adjustment in the Exercise Price or the number
or kind of shares purchasable upon the exercise of the Warrants pursuant to
this Agreement, certificates for Warrants issued prior or subsequent to
such adjustment may continue to express the same price and number and kind
of Shares as are initially issuable pursuant to this Agreement.
9. Reserved.
10. Registration Rights.
(a) Demand Registration Rights. The Company covenants and agrees with
the Placement Agent and any other or subsequent Holders of the Registrable
Securities (as defined in paragraph (f) of this Section 10) that, subject
to the availability of audited financial statements which would comply with
Regulation S-X under the Securities Act, upon written request of the then
Holder(s) of at least a majority of the Warrants or the Registrable
Securities, or both, which were originally issued to the Placement Agent or
its designees, made at any time within the period commencing on the
Settlement Date and ending five years after the Closing Date, the Company
will file as promptly as practicable and, in any event, within 60 days
after receipt of such written request, at its expense (other than the fees
of counsel and sales commissions for such Holders), no more than once, a
post-effective amendment (the "Amendment") to a registration statement, or
a new registration statement or a Regulation A Offering Statement (an
"Offering Statement") under the Securities Act, registering or qualifying
the Registrable Securities for sale. Within fifteen (15) days after
receiving any such notice, the Company shall give notice to the other
Holders of the Registrable Securities advising that the Company is
proceeding with such Amendment, registration statement or Offering
Statement and offering to include therein the Registrable Securities of
such Holders. The Company shall not be obligated to any such other Holder
unless such other Holder shall accept such offer by notice in writing to
the Company within ten (10) days thereafter. The Company will use its best
efforts, through its officers, directors, auditors and counsel in all
matters necessary or advisable, to file and cause to become effective such
Amendment, registration statement or Offering Statement as promptly as
practicable and for a period of nine months thereafter to reflect in the
Amendment, registration statement or Offering Statement financial
statements which are prepared in accordance with Section 10(a)(3) of the
Securities Act and any facts or events arising that, individually, or in
the aggregate, represent a fundamental and/or material change in the
information set forth in the Amendment, registration statement or Offering
Statement to enable any Holders of the Warrants to either sell such
Warrants or to exercise such Warrants and sell Shares, or to enable any
holders of Shares to sell such Shares, during said nine-month period. The
Holders may sell the Registrable Securities pursuant to the Amendment,
registration statement or the Offering Statement without exercising the
Warrants. If any registration pursuant to this paragraph (a) is an
underwritten offering, the Holders of a majority of the Registrable
Securities to be included in such registration shall be entitled to select
the underwriter or managing underwriter (in the case of a syndicated
offering) of such offering, subject to the Company's approval which shall
not be unreasonably withheld.
(b) Piggyback Registration Rights. The Company covenants and agrees
with the Placement Agent and any other Holders or subsequent Holders of the
Registrable Securities that if, at any time within the period commencing on
the Settlement Date and ending five years after the Closing Date, it
proposes to file a registration statement or Offering Statement with
respect to any class of equity or equity-related security (other than in
connection with an offering to the Company's employees or in connection
with an acquisition, merger or similar transaction) under the Securities
Act in a primary registration on behalf of the Company and/or in a
secondary registration on behalf of holders of such securities and the
registration form or Offering Statement to be used may be used for
registration of the Registrable Securities, the Company will give prompt
written notice (which, in the case of a registration statement or
notification pursuant to the exercise of demand registration rights other
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than those provided in Section 10(a) of this Agreement, shall be within ten
(10) business days after the Company's receipt of notice of such exercise
and, in any event, shall be at least 30 days prior to such filing) to the
Holders of Registrable Securities (regardless of whether some of the
Holders shall have theretofore availed themselves of the right provided in
Section 10(a) of this Agreement) at the addresses appearing on the records
of the Company of its intention to file a registration statement or
Offering Statement and will offer to include in such registration statement
or Offering Statement all but not less than 20% of the Registrable
Securities and limited, in the case of a Regulation A offering, to the
amount of the available exemption, subject to paragraphs (i) and (ii) of
this paragraph (b), such number of Registrable Securities with respect to
which the Company has received written requests for inclusion therein
within ten (10) days after the giving of notice by the Company. All
registrations requested pursuant to this paragraph (b) are referred to
herein as "Piggyback Registrations". All Piggyback Registrations pursuant
to this paragraph (b) will be made solely at the Company's expense. This
paragraph is not applicable to a registration statement filed by the
Company with the Commission on Forms S-4 or S-8 or any successor forms.
(i) Priority on Primary Registrations. If a Piggyback
Registration includes an underwritten primary registration on behalf
of such Company and the underwriter(s) for such offering determines in
good faith and advises the Company in writing that in its/their
opinion the number of Registrable Securities requested to be included
in such registration exceeds the number that can be sold in such
offering without materially adversely affecting the distribution of
such securities by the Company, the Company will include in such
registration (A) first, the securities that the Company proposes to
sell and (B) second, the Registrable Securities requested to be
included in such registration, apportioned pro rata among the Holders
of Registrable Securities, provided, however, the Company will use its
best efforts to include not less than 20% of the Registrable
Securities, and (C) third, securities of the holders of other
securities requesting registration.
(ii) Priority on Secondary Registrations. If a Piggyback
Registration consists only of an underwritten secondary registration
on behalf of holders of securities of the Company (other than pursuant
to Section 10(a)), and the underwriter(s) for such offering advises
the Company in writing that in its/their opinion the number of
Registrable Securities requested to be included in such registration
exceeds the number which can be sold in such offering without
materially adversely affecting the distribution of such securities by
the Company, the Company will include in such registration (A) first,
the securities requested to be included therein by the holders
requesting such registration and the Registrable Securities requested
to be included in such registration, pro rata among all such holders
on the basis of the number of shares requested to be included by each
such holder, provided, however, the Company will use its best efforts
to include not less than 20% of the Registrable Securities, and (B)
second, other securities requested to be included in such
registration.
Notwithstanding the foregoing, if any such underwriter shall determine in
good faith and advise the Company in writing that the distribution of the
Registrable Securities requested to be included in the registration concurrently
with the securities being registered by the Company would materially adversely
affect the distribution of such securities by the Company, then the Holders of
such Registrable Securities shall delay their offering and sale for such period
ending on the earliest of (1) 90 days following the effective date of the
Company's registration statement, (2) the day upon which the underwriting
syndicate, if any, for such offering shall have been disbanded or, (3) such date
as the Company, managing underwriter and Holders of Registrable Securities shall
otherwise agree. In the event of such delay, the Company shall file such
supplements, post-effective amendments and take any such other steps as may be
necessary to permit such Holders to make their proposed offering and sale for a
period of 120 days immediately following the end of such period of delay. If any
party disapproves of the terms of any such underwriting, it may elect to
withdraw therefrom by written notice to the Company, the underwriter, and the
Placement Agent. Notwithstanding the foregoing, the Company shall not be
required to file a registration statement to include Shares pursuant to this
Section 10(b) if independent counsel, reasonably satisfactory to counsel for the
Company and counsel for the Placement Agent, renders an opinion to the Company
that the Shares proposed to be disposed of may be transferred pursuant to the
provisions of Rule 144 under the Securities Act or otherwise without
registration under the Securities Act.
8
(c) Other Registration Rights. In addition to the rights above provided,
the Company will cooperate with the then Holders of the Registrable Securities
in preparing and signing any registration statement or Offering Statement, in
addition to the registration statements and Offering Statements discussed above,
required in order to sell or transfer the Registrable Securities and will supply
all information required therefor, but such additional registration statement or
Offering Statement, shall be at the then Holders' cost and expense; provided,
however, that if the Company elects to register or qualify additional shares of
Common Stock, the cost and expense of such registration statement or Offering
Statement will be pro rated between the Company and the Holders of the
Registrable Securities according to the aggregate sales price of the securities
being issued. Notwithstanding the foregoing, the Company will not be required to
file a registration statement or Offering Statement pursuant to this paragraph
(c), (i) at a time when the audited financial statements required to be included
therein are not available, which time shall be limited to the period commencing
45 days after the end of the Company's last fiscal year and ending 90 days after
the end of such fiscal year, or (ii) within 90 days after completion of a public
offering by the Company of any of its Common Stock or equity-related securities
or (iii) if it would adversely impact the Company in its capital raising plans
or otherwise (in which latter case filing may be delayed no longer than 120
days).
(d) Action to be Taken by the Company. In connection with the registration
of Registrable Securities in accordance with paragraphs (a), (b) or (c) of this
Section 10, the Company agrees to:
(i) Bear the expenses of any registration or qualification under
paragraphs (a) or (b) of this Section 10, including, but not limited to,
legal, accounting and printing fees; provided, however, that in no event
shall the Company be obligated to pay (A) any fees and disbursements of
special counsel for Holders of Registrable Securities, or (B) any
underwriters' discount or commission in respect of such Registrable
Securities, (C) any stock transfer taxes attributable to the sale of the
Registrable Securities, or (D) upon the exercise of any demand registration
right provided for in paragraph (a) of this Section 10, the cost of any
liability or similar insurance required by an underwriter, to the extent
that such costs are attributable solely to the offering of such Registrable
Securities, payment of which shall, in each case, be the sole
responsibility of the Holders of the Registrable Securities.
(ii) Use its best efforts to register or qualify the Registrable
Securities for offer or sale under state securities or Blue Sky laws of
such jurisdictions in which the Placement Agent or such Holders shall
reasonably request, provided, however, that no qualification shall be
required in any jurisdiction where, as a result thereof, the Company would
be subject to service of general process or to taxation as a foreign
corporation doing business in such jurisdiction to which it is not then
subject, and to do any and all other acts and things which may be necessary
or advisable to enable the holders to consummate the proposed sale,
transfer or other disposition of such securities in any jurisdiction; and
(iii) Enter into a cross-indemnity agreement, in customary form, with
each underwriter, if any, and each holder of securities included in such
Amendment, registration statement or Offering Statement.
(e) Action to be Taken by the Holders. In connection with the registration
of Registrable Securities in accordance with paragraphs (a), (b) or (c) of this
Section 10, the Company's obligation shall be conditioned as to each such public
offering upon a timely receipt by the Company in writing of:
(i) Information as to the terms of such public offering furnished by
or on behalf of each Holder intending to make a public offering of his, her
or its Registrable Securities; and
(ii) Such other information as the Company may reasonably require from
such Holders, or any underwriter for any of them, for inclusion in such
registration statement or Notification on Form 1-A.
(f) For purposes of this Section 10, (i) the term "Holder" shall include
holders of Shares, and (ii) the term "Registrable Securities" shall mean the
Shares, if issued.
9
11. Notices to Holders.
(a) Nothing contained in this Agreement or in any of the Warrants shall be
construed as conferring upon the Holders thereof the right to vote or to receive
dividends or to consent or to receive notice as shareholders in respect of the
meetings of shareholders or the election of directors of the Company or any
other matter, or any rights whatsoever as shareholders of the Company; provided,
however, that in the event that a meeting of shareholders shall be called to
consider and take action on a proposal for the voluntary dissolution of the
Company, other than in connection with a consolidation, merger or sale of all,
or substantially all, of its property, assets, business and good will as an
entirety, then and in that event the Company shall cause a notice thereof to be
sent by first-class mail, postage prepaid, at least twenty (20) days prior to
the date fixed as a record date or the date of closing the transfer books in
relation to such meeting, to each registered Holder of Warrants at such Holder's
address appearing on the Warrant Register; but failure to mail or to receive
such notice or any defect therein or in the mailing thereof shall not affect the
validity of any action taken in connection with such voluntary dissolution.
(b) In the event the Company intends to make any distribution on its Common
Stock (or other securities which may be issuable in lieu thereof upon the
exercise of Warrants), including, without limitation, any such distribution to
be made in connection with a consolidation or merger in which the Company is the
continuing corporation, or to issue subscription rights or warrants to holders
of its Common Stock, the Company shall cause a notice of its intention to make
such distribution to be sent by first-class mail, postage prepaid, at least
twenty (20) days prior to the date fixed as a record date or the date of closing
the transfer books in relation to such distribution, to each registered Holder
of Warrants at such Holder's address appearing on the Warrant Register, but
failure to mail or to receive such notice or any defect therein or in the
mailing thereof shall not affect the validity of any action taken in connection
with such distribution.
12. Notices. Any notice pursuant to this Agreement to be given or made by
the Holder of any Warrant and/or the holder of any Share to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed as follows or to such other address as the Company may
designate by notice given in accordance with this Section 12, to the Holders of
Warrants and/or the holders of Shares:
IDM ENVIRONMENTAL CORP.
000 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Attention: Chief Financial Officer
Notices or demands authorized by this Agreement to be given or made by the
Company to or on the Holder of any Warrant and/or the holder of any Share shall
be sufficiently given or made (except as otherwise provided in this Agreement)
if sent by first-class mail, postage prepaid, addressed to such Holder or such
holder of Shares at the address of such Holder or such holder of Shares as shown
on the Warrant Register or the books of the Company, as the case may be.
13. Governing Law. This Agreement and each Warrant issued hereunder shall
be governed by and construed in accordance with the substantive laws of the
State of New York. The Company hereby agrees to accept service of process by
notice given to it pursuant to the provisions of Section 12.
10
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original; but
such counterparts together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day, month and year first above written.
IDM ENVIRONMENTAL CORP.
By:_____________________________
Name: Xxxx X. Xxxxxxxx
Title: President
XXXXXX CAPITAL GROUP, LTD.
By:_____________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
11
EXHIBIT A
No. ____ 100,000 Warrants
IDM ENVIRONMENTAL CORP.
Warrant Certificate
THIS CERTIFIES THAT for value received Xxxxxx Capital Group, Ltd., or
registered assigns, is the owner of the number of Warrants set forth above, each
of which entitles the owner thereof to purchase one fully paid and nonassessable
share of common stock, $.001 par value (the "Common Stock"), of IDM
ENVIRONMENTAL CORP., a New Jersey corporation (the "Company"), at the purchase
price equal to $2.40, which is the Exercise Price, as defined in the Amended and
Restated Warrant Agreement, dated as of November , 1997 (the "Warrant
Agreement"), between the Company and Xxxxxx Capital Group, Ltd., upon
presentation and surrender of this Warrant Certificate with the Form of Election
to Purchase duly executed. The number of Warrants evidenced by this Warrant
Certificate (and the number of shares which may be purchased upon exercise
thereof, rounded up to the nearest full share) set forth above, and the Exercise
Price per share set forth above, are the number and Exercise Price as of the
date of original issuance of the Warrants, based on the shares of Common Stock
of the Company as constituted at such date. As provided in the Warrant
Agreement, the Exercise Price and the number or kind of shares which may be
purchased upon the exercise of the Warrants evidenced by this Warrant
Certificate are, upon the happening of certain events, subject to modification
and adjustment.
This Warrant Certificate is subject to, and entitled to the benefits of,
all of the terms, provisions and conditions of the Warrant Agreement, which
Warrant Agreement is hereby incorporated herein by reference and made a part
hereof and to which Warrant Agreement reference is hereby made for a full
description of the rights, limitations of rights, duties and immunities
hereunder of the Company and the holders of the Warrant Certificates. Copies of
the Warrant Agreement are on file at the principal office of the Company.
This Warrant Certificate, with or without other Warrant Certificates, upon
surrender at the principal office of the Company, may be exchanged for another
Warrant Certificate or Warrant Certificates of like tenor and date evidencing
Warrants entitling the holder to purchase a like aggregate number of shares of
Common Stock as the Warrants evidenced by the Warrant Certificate or Warrant
Certificates surrendered entitled such holder to purchase. If this Warrant
Certificate shall be exercised in part, the holder hereof shall be entitled to
receive upon surrender hereof another Warrant Certificate or Warrant
Certificates for the number of whole Warrants not exercised.
No holder of this Warrant Certificate shall be entitled to vote, receive
dividends, subscription rights or be deemed the holder of Common Stock or any
other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder hereof, 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 of stock, reclassification of stock, change of
par value or change of stock to no par value, consolidation, merger, conveyance,
or otherwise) or, except as provided in the Warrant Agreement, to receive notice
of meetings, until the Warrant or Warrants evidenced by this Warrant Certificate
shall have been exercised and the Shares shall have become deliverable as
provided in the Warrant Agreement.
If this Warrant shall be surrendered for exercise within any period during
which the transfer books for the Company's Common Stock or other class of stock
purchasable upon the exercise of this Warrant are closed for any purpose, the
Company shall not be required to make delivery of certificates for shares
purchasable upon such exercise until the date of the reopening of said transfer
books, provided, however, that such books shall not be closed for longer than a
20-day period.
A-1
IN WITNESS WHEREOF, THE COMPANY has caused the signature (or facsimile
signature) of its President and its Secretary to be printed hereon and its
corporate seal (or facsimile) to be printed hereon.
Dated: November __, 1997
IDM ENVIRONMENTAL CORP.
By:_____________________________
Name: Xxxx X. Xxxxxxxx
Title: President
Attest:
By:_________________________
Name: Xxxxx X. Xxxxx
Title: Secretary
A-2
FORM OF
ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Warrant Certificates.)
FOR VALUE RECEIVED __________________ hereby sells, assigns and transfers
unto this Warrant Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
____________________, to transfer the within Warrant Certificate on the books of
the within-named Company, with full power of substitution.
Dated: ______________________, 199_
-----------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature of the foregoing Assignment must correspond to the name as
written upon the face of this Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever.
A-3
FORM OF
ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Warrant Certificate).
TO: IDM ENVIRONMENTAL CORP.
The undersigned hereby irrevocably elects to exercise Warrants represented
by this Warrant Certificate to purchase ______ shares of Common Stock issuable
upon the exercise of such Warrants and requests that certificates for such
shares be issued in the name of:
(Please insert social security, tax identification or other identifying number)
-------------------------------
-------------------------------
-------------------------------
(Please print name and address)
If such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, a new Warrant Certificate for the balance remaining of such
Warrants shall be registered in the name of and delivered to:
Please insert social security, tax identification or other identifying number
-------------------------------
-------------------------------
-------------------------------
(Please print name and address)
Dated: _______________, 19__
------------------------------
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Warrant Certificate)
Signature Guaranteed:
A-4
EXHIBIT B
No. ____ 100,000 Warrants
IDM ENVIRONMENTAL CORP.
Warrant Certificate
THIS CERTIFIES THAT for value received Xxxxxx Capital Group, Ltd., or
registered assigns, is the owner of the number of Warrants set forth above, each
of which entitles the owner thereof to purchase one fully paid and nonassessable
share of common stock, $.001 par value (the "Common Stock"), of IDM
ENVIRONMENTAL CORP., a New Jersey corporation (the "Company"), at the purchase
price equal to the lesser of (i) $3.00 or (ii) the lowest conversion price of
the Convertible Notes issued by the Company on August 13, 1997 (the purchase
price with respect to each specific exercise of Second Warrants shall be
determined based on all conversions of Convertible Notes occurring prior to the
date of that exercise), which is the Exercise Price, as defined in the Amended
and Restated Warrant Agreement, dated as of November , 1997 (the "Warrant
Agreement"), between the Company and Xxxxxx Capital Group, Ltd., upon
presentation and surrender of this Warrant Certificate with the Form of Election
to Purchase duly executed. The number of Warrants evidenced by this Warrant
Certificate (and the number of shares which may be purchased upon exercise
thereof, rounded up to the nearest full share) set forth above, and the Exercise
Price per share set forth above, are the number and Exercise Price as of the
date of original issuance of the Warrants, based on the shares of Common Stock
of the Company as constituted at such date. As provided in the Warrant
Agreement, the Exercise Price and the number or kind of shares which may be
purchased upon the exercise of the Warrants evidenced by this Warrant
Certificate are, upon the happening of certain events, subject to modification
and adjustment.
This Warrant Certificate is subject to, and entitled to the benefits of,
all of the terms, provisions and conditions of the Warrant Agreement, which
Warrant Agreement is hereby incorporated herein by reference and made a part
hereof and to which Warrant Agreement reference is hereby made for a full
description of the rights, limitations of rights, duties and immunities
hereunder of the Company and the holders of the Warrant Certificates. Copies of
the Warrant Agreement are on file at the principal office of the Company.
This Warrant Certificate, with or without other Warrant Certificates, upon
surrender at the principal office of the Company, may be exchanged for another
Warrant Certificate or Warrant Certificates of like tenor and date evidencing
Warrants entitling the holder to purchase a like aggregate number of shares of
Common Stock as the Warrants evidenced by the Warrant Certificate or Warrant
Certificates surrendered entitled such holder to purchase. If this Warrant
Certificate shall be exercised in part, the holder hereof shall be entitled to
receive upon surrender hereof another Warrant Certificate or Warrant
Certificates for the number of whole Warrants not exercised.
No holder of this Warrant Certificate shall be entitled to vote, receive
dividends, subscription rights or be deemed the holder of Common Stock or any
other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained in the Warrant
Agreement or herein be construed to confer upon the holder hereof, 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 of stock, reclassification of stock, change of
par value or change of stock to no par value, consolidation, merger, conveyance,
or otherwise) or, except as provided in the Warrant Agreement, to receive notice
of meetings, until the Warrant or Warrants evidenced by this Warrant Certificate
shall have been exercised and the Shares shall have become deliverable as
provided in the Warrant Agreement.
If this Warrant shall be surrendered for exercise within any period during
which the transfer books for the Company's Common Stock or other class of stock
purchasable upon the exercise of this Warrant are closed for any purpose, the
Company shall not be required to make delivery of certificates for shares
purchasable upon such exercise until the date of the reopening of said transfer
books, provided, however, that such books shall not be closed for longer than a
20-day period.
B-1
IN WITNESS WHEREOF, THE COMPANY has caused the signature (or facsimile
signature) of its President and its Secretary to be printed hereon and its
corporate seal (or facsimile) to be printed hereon.
Dated: November __, 1997
IDM ENVIRONMENTAL CORP.
By:_____________________________
Name: Xxxx X. Xxxxxxxx
Title: President
Attest:
By:_________________________
Name: Xxxxx X. Xxxxx
Title: Secretary
B-2
FORM OF
ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Warrant Certificates.)
FOR VALUE RECEIVED __________________ hereby sells, assigns and transfers
unto this Warrant Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
____________________, to transfer the within Warrant Certificate on the books of
the within-named Company, with full power of substitution.
Dated: ______________________, 199_
-----------------------------------
Signature
Signature Guaranteed:
NOTICE
The signature of the foregoing Assignment must correspond to the name as
written upon the face of this Warrant Certificate in every particular, without
alteration or enlargement or any change whatsoever.
B-3
FORM OF
ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Warrant Certificate).
TO: IDM ENVIRONMENTAL CORP.
The undersigned hereby irrevocably elects to exercise Warrants represented
by this Warrant Certificate to purchase ______ shares of Common Stock issuable
upon the exercise of such Warrants and requests that certificates for such
shares be issued in the name of:
(Please insert social security, tax identification or other identifying number)
-------------------------------
-------------------------------
-------------------------------
(Please print name and address)
If such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, a new Warrant Certificate for the balance remaining of such
Warrants shall be registered in the name of and delivered to:
Please insert social security, tax identification or other identifying number
-------------------------------
-------------------------------
-------------------------------
(Please print name and address)
Dated: _______________, 19__
------------------------------
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Warrant Certificate)
Signature Guaranteed:
B-4
