EXHIBIT 10.81
[Xxxxx Warrant]
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Polyphase Corporation
Common Stock Purchase Warrant
Dated as of April 24, 1998
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THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAW OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THIS WARRANT AND SUCH
SECURITIES MAY NOT BE SOLD, TRANSFERRED (OTHER THAN TO ACCREDITED INVESTORS) OR
OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THIS
WARRANT.
TABLE OF CONTENTS
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Page
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1. Exercise of Warrant......................................... 1
1.1. Manner of Exercise.......................................... 1
1.2. When Exercise Effective..................................... 1
1.3. Delivery of Stock Certificates, etc......................... 2
1.4. Company to Reaffirm Obligations............................. 2
1.5. Payment by Application of Shares Otherwise Issuable......... 2
1.6. Tax Basis................................................... 2
2. No Dilution or Impairment................................... 3
3. Consolidation, Xxxxxx, etc.................................. 3
3.1. Adjustments for Consolidation, Merger, Sale of Assets,
Reorganization, etc......................................... 3
4. Accountants' Report as to Adjustments....................... 4
5. Financial and Business Information.......................... 4
5.1. Quarterly Information....................................... 4
5.2. Annual Information.......................................... 5
5.3. Filings..................................................... 5
5.4. Notices of Corporate Action................................. 5
6. Registration of Common Stock................................ 6
7. Restrictions on Transfer.................................... 6
7.1. Restrictive Legends......................................... 6
7.2. Transfer to Comply With the Securities Act.................. 7
7.3. Termination of Restrictions................................. 7
8. Reservation of Stock, etc................................... 8
9. Registration and Transfer of Warrants, etc.................. 8
9.1. Warrant Register; Ownership of Warrants..................... 8
9.2. Transfer of Warrants........................................ 8
9.3. Replacement of Warrants..................................... 9
9.4. Adjustments To Warrant Quantity............................. 9
9.5. Fractional Shares........................................... 9
10. Definitions................................................. 9
11. Remedies; Specific Performance.............................. 12
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12. No Rights or Liabilities as Shareholder..................... 12
13. Notices..................................................... 12
14. Amendments.................................................. 12
15. Descriptive Headings, Etc................................... 12
16. GOVERNING LAW............................................... 13
17. Judicial Proceedings; Waiver of Jury........................ 13
18. Counterparts................................................ 13
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POLYPHASE CORPORATION
Common Stock Purchase Warrant
Void After April 24, 2003
No. W-2
April 24, 1998
POLYPHASE CORPORATION (the "Company"), a Nevada corporation, for value
received, hereby certifies that XXXXXXX XXXXX WORLD INCOME FUND, INC., a
Maryland corporation, or registered assigns (the "Holder"), is entitled to
purchase from the Company one-hundred five thousand (105,000) duly authorized,
validly issued, fully paid and nonassessable shares of common stock, par value
$0.01 per share, of the Company (the "Common Stock") at the purchase price per
share of $.01, at any time or from time to time prior to 5:30 PM, Dallas time,
on April 24, 2003 (the "Expiration Date"), (the aggregate number of shares
entitled to be purchased by the Holder pursuant to this Warrant shall be the
"Warrant Quantity"), all subject to the terms, conditions and adjustments set
forth below in this Warrant.
This Warrant is one of several Warrants (the "Warrant," such term to
include any such warrants issued in substitution therefor) issued in connection
with the Indenture, dated as of July 5, 1994, by and among the Company and IBJ
Xxxxxxxx Bank & Trust Company (as supplemented on December 5, 1997, the
"Indenture"). The Warrant originally so issued evidences the right to purchase
a number of shares of Common Stock equal to the Warrant Quantity. Certain
capitalized terms used in this Warrant are defined in Section 10; references to
an "Exhibit" are, unless otherwise specified, to one of the Exhibits attached to
this Warrant and references to a "Section" are, unless otherwise specified, to
one of the Sections of this Warrant.
1. Exercise of Warrant.
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1.1 Manner of Exercise. This Warrant may be exercised by the Holder,
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in whole or part, during normal business hours on any Business Day, by surrender
of this Warrant to the Company at its principal office, accompanied by the Form
of Subscription in substantially the form attached as Exhibit A to this Warrant
(or a reasonable facsimile thereof) duly executed by the Holder and accompanied
by payment, in cash, by certified or official bank check payable to the order of
the Company, or in the manner provided in Section 1.5 (or by any combination of
such methods), in the amount obtained by multiplying (a) the number of shares of
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Common Stock for up to but not exceeding 105,000 shares designated in such Form
of Subscription by (b) $.01, and such Holder shall thereupon be entitled to
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receive such number of duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock (or Other Securities).
1.2 When Exercise Effective. Each exercise of this Warrant shall be
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deemed to have been effected immediately prior to the close of business on the
Business Day on which this Warrant shall have been surrendered to the Company as
provided in Section 1.1. At such time the
Person or Persons in whose name or names any certificate or certificates for
shares of Common Stock (or Other Securities) shall be issuable upon such
exercise, as provided in Section 1.3, shall be deemed to have become the Holder
or Holders of record thereof.
1.3 Delivery of Stock Certificates, etc. As soon as practicable
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after each exercise of this Warrant, and in no event later than 10 days, in
whole or in part, the Company at its expense (including the payment by it of any
applicable transfer taxes) will cause to be issued in the name of and delivered
to the Holder hereof or, subject to Section 7, as such Holder (upon payment by
such Holder of any applicable transfer taxes) may direct,
1.3 a certificate or certificates for the number of duly authorized,
validly issued, fully paid and nonassessable shares, including, if the Company
so elects, fractional shares of Common Stock (or Other Securities) to which
such Holder shall be entitled upon such exercise plus, at the discretion of the
Company, in lieu of any fractional share to which such Holder would otherwise be
entitled, cash in an amount equal to the same fraction of the Current Market
Price per share on the Business Day next preceding the date of such exercise,
and
1.3 in case such exercise is in part only, a new Warrant or Warrants
of like tenor, calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock equal to the number of such shares called for
on the face of this Warrant minus the number of such shares designated by the
Holder upon such exercise as provided in Section 1.1.
1.4 Company to Reaffirm Obligations. The Company will, at the time
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of each exercise of this Warrant, upon the request of the Holder, acknowledge in
writing its continuing obligation to afford to such Holder all rights
(including, without limitation, any rights to registration of the shares of
Common Stock or Other Securities issued upon such exercise) to which such Holder
shall continue to be entitled after such exercise in accordance with the terms
of this Warrant, provided that if the Holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford such rights to such Holder.
1.5 Payment by Application of Shares Otherwise Issuable. Upon any
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exercise of this Warrant, the Holder may, at its option, instruct the Company,
by written notice accompanying the surrender of this Warrant at the time of such
exercise, to apply to the payment required by Section 1.1 such number of the
shares of Common Stock otherwise issuable to such Holder upon such exercise as
shall be specified in such notice, in which case an amount equal to the excess
of the aggregate Current Market Price of such specified number of shares on the
date of exercise over the portion of the payment required by Section 1.1
attributable to such shares shall be deemed to have been paid to the Company and
the number of shares issuable upon such exercise shall be reduced by such
specified number.
1.6 Tax Basis. The Company and the Holder shall mutually agree as to
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the tax basis and tax treatment of this Warrant for purposes of the Internal
Revenue Code of 1986, as amended (the "Code"), and the treatment of this Warrant
under the Code by each of the Company and the Holder shall be consistent with
such agreement.
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2. No Dilution or Impairment. The Company will not, by amendment of
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its articles of incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the Holder
against dilution or other impairment. Without limiting the generality of the
foregoing, the Company (a) shall not permit the par value of any shares of stock
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receivable upon the exercise of this Warrant to exceed the amount payable
therefor upon such exercise, (b) will take all such action as may be necessary
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or appropriate in order that the Company may validly and legally issue fully
paid and nonassessable shares of stock, free from all taxes, liens, security
interests, encumbrances, preemptive rights and charges on the exercise of the
Warrants from time to time outstanding, (c) will not take any action which
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results in any adjustment of the Warrant Quantity if the total number of shares
of Common Stock (or Other Securities) issuable after the action upon the
exercise of all of the Warrants would exceed the total number of shares of
Common Stock (or Other Securities) then authorized by the Company's articles of
incorporation and available and reserved for the purpose of issue upon such
exercise, and (d) will not issue any capital stock of any class which is
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preferred as to dividends or as to the distribution of assets upon voluntary or
involuntary dissolution, liquidation or winding-up, unless the rights of the
holders thereof shall be limited to a fixed sum or percentage of par value or a
sum determined by reference to a formula based on a published index of interest
rates, an interest rate publicly announced by a financial institution or a
similar indicator of interest rates in respect of participation in dividends and
to a fixed sum or percentage of par value in any such distribution of assets.
3. Consolidation, Merger, etc.
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3.1 Adjustments for Consolidation, Merger, Sale of Assets,
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Reorganization, etc. In case the Company after the date hereof (a) shall
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consolidate with or merge into any other Person and shall not be the continuing
or surviving corporation of such consolidation or merger, or (b) shall permit
any other Person to consolidate with or merge into the Company and the Company
shall be the continuing or surviving Person but, in connection with such
consolidation or merger, the Common Stock or Other Securities shall be changed
into or exchanged for stock or other securities of any other Person or cash or
any other property, or (c) shall transfer all or substantially all of its
properties or assets to any other Person, or (d) shall effect a capital
reorganization or reclassification resulting in the issue of Additional Shares
of Common Stock, then, and in the case of each such transaction, proper
provision shall be made so that, upon the basis and the terms and in the manner
provided in this Warrant, the Holder, upon the exercise hereof at any time after
the consummation of such transaction, shall be entitled to receive (at the
aggregate purchase price in effect at the time of such consummation for all
Common Stock or Other Securities issuable upon such exercise immediately prior
to such consummation), in lieu of the Common Stock or Other Securities issuable
upon such exercise prior to such consummation, the highest amount of securities,
cash or other property to which such Holder would actually have been entitled as
a shareholder upon such consummation if such Holder had exercised the rights
represented by this Warrant immediately prior thereto, provided that if a
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purchase, tender or exchange offer shall have been made to and accepted by the
holders of more than 50% of the outstanding shares of Common Stock, and if the
Holder so designates in a notice given to the Company on or before the date
immediately preceding the date of the consummation of such transaction, the
Holder shall be entitled to receive the highest amount
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of securities, cash or other property to which such Holder would actually have
been entitled as a shareholder if the Holder had exercised this Warrant prior to
the expiration of such purchase, tender or exchange offer and accepted such
offer.
4. Accountants' Report as to Adjustments. In each case of any
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adjustment or readjustment in the shares of Common Stock (or Other Securities)
issuable upon the exercise of this Warrant, the Company at its expense will
promptly compute such adjustment or readjustment in accordance with the terms of
this Warrant and cause independent certified public accountants of recognized
national standing (which may be the regular auditors of the Company) selected by
the Company to verify such computation (other than any computation of the fair
value of property as determined in good faith by the Board of Directors of the
Company (if Holder objects to such determination, Holder may seek and receive,
at the Company's expense, third party appraisal, which shall be the exclusive
and binding determination to be used)) and prepare a report setting forth such
adjustment or readjustment and showing in reasonable detail the method of
calculation thereof and the facts upon which such adjustment or readjustment is
based, including a statement of (a) the consideration received or to be received
by the Company for any Additional Shares of Common Stock issued or sold or
deemed to have been issued, (b) the number of shares of Common Stock outstanding
or deemed to be outstanding, and (c) the Warrant Quantity in effect immediately
prior to such issue or sale and as adjusted and readjusted on account thereof.
The Company will forthwith mail a copy of each such report to each Holder of a
Warrant and will, upon the written request at any time of any Holder of a
Warrant, furnish to such Holder a like report setting forth the Warrant Quantity
at the time in effect and showing in reasonable detail how it was calculated.
The Company will also keep copies of all such reports at its principal office
and will cause the same to be available for inspection at such office during
normal business hours by any Holder of a Warrant or any prospective purchaser of
a Warrant designated by the Holder thereof.
5. Financial and Business Information.
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5.1 Quarterly Information. If during any period the Company (i) is
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not subject to the reporting requirements of Section 15(d) of the Exchange Act
and (ii) does not have securities registered under Section 12(b) or 12 (g) of
the Exchange Act, the Company will deliver to the Holder, as soon as practicable
after the end of each quarterly fiscal period in each fiscal year of the
Company, and in any event within 60 days thereafter, a copy of the unaudited
consolidated balance sheet as at the close of such quarter, and the related
unaudited consolidated statements of income, shareholders' equity and cash flow
of the Company and its subsidiaries for that portion of the fiscal year ending
as of the close of such quarter. Such financial statements shall be prepared by
the Company in accordance with generally accepted accounting principles, applied
on a consistent basis ("GAAP") (subject to normal year end adjustments and the
inclusion of footnotes) and accompanied by the certification of the Company's
chief executive officer or chief financial officer that, to the best of his
knowledge, such financial statements are complete and correct in all material
respects and fairly present in accordance with GAAP (subject to normal year end
adjustments and the inclusions of footnotes) the consolidated financial
position, the consolidated statements of income, shareholder equity and cash
flow of the Company and its subsidiaries as at the end of such quarter and for
such year-to-date period, as the case may be. If during any period the Company
either (i) is subject to the reporting requirements of Section 15(g) of the
Exchange Act or (ii) has securities registered under
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Section 12(b) or 12(g) of the Exchange Act, the Company shall be considered a
"Public Company" and need not provide the information required by this Section
5.1.
5.2 Annual Information. If during any period the Company is not a
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Public Company, the Company will deliver to the Holder as soon as practicable
after the end of each fiscal year of the Company, and in any event within 120
days thereafter, one copy of:
(i) an audited consolidated balance sheet of the Company
and its subsidiaries as at the end of such year, and
(ii) audited consolidated statements of income,
shareholders' equity and cash flow of the Company and its subsidiaries
for such year;
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all prepared in accordance with GAAP, and
which audited financial statements shall be accompanied by (i) a certification
of the chief executive officer or chief financial officer of the Company that,
to the best of his knowledge, all such financial statements are complete and
correct in all material respects and present fairly in accordance with GAAP the
consolidated financial position of the Company and its subsidiaries as at the
end of such fiscal year and for the period then ended, (ii) an opinion thereon
of the independent certified public accountants regularly retained by the
Company, or any other firm of independent certified public accountants of
recognized national standing selected by the Company, and (iii) a report of such
independent certified public accountants confirming any adjustments.
5.3 Filings. During any period when the Company is a Public Company,
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the Company will file on or before the required date all required regular or
periodic reports (pursuant to the Exchange Act) with the Commission and will
deliver to the Holder promptly upon their becoming available one copy of each
report, notice or proxy statement sent by the Company to its stockholders
generally, and of each regular or periodic report (pursuant to the Exchange Act)
and any registration statement, prospectus or written communication (other than
transmittal letters) (pursuant to the Securities Act), filed by the Company with
(i) the Commission or (ii) any securities exchange on which shares of Common
Stock (or Other Securities) are listed.
5.4 Notices of Corporate Action. In the event of
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(a) any taking by the Company of a record of the holders of any
class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend (other than a regular periodic
dividend payable in cash out of earned surplus in an amount not exceeding
the amount of the immediately preceding cash dividend for such period) or
other distribution, or any right to subscribe for, purchase or otherwise
acquire any shares of stock of any class or any other securities or
property, or to receive any other right, or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company or
any consolidation or merger involving the Company and any other Person, any
transaction or series of transactions in which more
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than 50% of the Voting Securities of the Company are transferred to another
Person or any transfer, sale or other disposition of all or substantially
all the assets of the Company to any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
the Company will mail to the Holder a notice specifying (i) the date or expected
date on which any such record is to be taken for the purpose of such dividend,
distribution or right, and the amount and character of such dividend,
distribution or right, and (ii) the date or expected date on which any such
reorganization, reclassification, recapitalization, consolidation, merger,
transfer, dissolution, liquidation or winding-up is to take place and the time,
if any such time is to be fixed, as of which the holders of record of Common
Stock (or Other Securities) shall be entitled to exchange their shares of Common
Stock (or Other Securities) for the securities or other property deliverable
upon such reorganization, reclassification, recapitalization, consolidation,
merger, transfer, dissolution, sale, disposition, liquidation or winding-up.
Such notice shall be mailed at least 45 days prior to the date therein
specified.
6. Registration of Common Stock. The Company will use its best
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efforts to register the shares of Common Stock (or Other Securities) issuable
upon exercise of this Warrant so that the Person exercising this Warrant
receives registered securities. In accordance with this Section 6, the Company
has entered into a Registration Rights Agreement, dated April 24, 1998, with
each of the Holders. Such Registration Rights Agreement provides for demand and
piggyback registration rights with respect to all such securities. If any
shares of Common Stock (or Other Securities) issuable upon exercise of this
Warrant require registration with or approval of any governmental authority
under any federal or state law (other than securities laws), the Company will,
at its expense and as expeditiously as possible, use its best efforts to cause
any shares of Common Stock (or Other Securities) to be duly registered or
approved, as the case may be. Immediately upon the exercise of this Warrant, or
any portion thereof, the Company will, at its expense, obtain promptly and
maintain the approval for listing on each such exchange, upon official notice of
issuance, the shares of Common Stock (or Other Securities) issuable upon
exercise of the then outstanding Warrants and maintain the listing of such
shares after their issuance.
7. Restrictions on Transfer.
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7.1 Restrictive Legends. Except as otherwise permitted by this
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Section 7, each Warrant (including each Warrant issued upon the transfer of any
Warrant) shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"THIS WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAW OF ANY STATE AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF (OTHER THAN TO ACCREDITED INVESTORS)
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT
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TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND
SUCH LAWS. THIS WARRANT AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN
THIS WARRANT.
Except as otherwise permitted by this Section 7, each certificate for Common
Stock (or Other Securities) issued upon the exercise of any Warrant, and each
certificate issued upon the transfer of any such Common Stock (or Other
Securities), shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAW OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
(OTHER THAN TO ACCREDITED INVESTORS) EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND SUCH LAWS. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE CONDITIONS SPECIFIED IN
CERTAIN COMMON STOCK PURCHASE WARRANTS ISSUED BY POLYPHASE CORPORATION,
PURSUANT TO THE COMMON STOCK PURCHASE WARRANT, DATED APRIL 24, 1998. A
COMPLETE AND CORRECT COPY OF THE FORM OF SUCH WARRANT IS AVAILABLE FOR
INSPECTION AT THE PRINCIPAL OFFICE OF POLYPHASE CORPORATION, OR AT THE
OFFICE OR AGENCY MAINTAINED BY POLYPHASE CORPORATION, AS PROVIDED IN SUCH
WARRANTS AND WILL BE FURNISHED TO THE HOLDER OF SUCH SECURITIES UPON
WRITTEN REQUEST AND WITHOUT CHARGE."
7.2 Transfer to Comply With the Securities Act. Restricted
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Securities may not be sold, assigned, pledged, hypothecated, encumbered or in
any manner transferred or disposed of, in whole or in part (other than to
accredited investors), except in compliance with the provisions of the
Securities Act and state securities or Blue Sky laws and the terms and
conditions hereof.
7.3 Termination of Restrictions. The restrictions imposed by this
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Section 7 on the transferability of Restricted Securities shall cease and
terminate as to any particular Restricted Securities (a) when a registration
statement with respect to the sale of such securities shall have been declared
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (b) when such securities are
sold pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act, or (c) when, in the opinion of both counsel for the Holder and
counsel for the Company, such restrictions are not longer required or necessary
in order to protect the Company against a violation of the Securities Act upon
any sale or other disposition of such securities without registration
thereunder. Whenever such restrictions shall cease and terminate as to any
Restricted Securities, the Holder shall be entitled to receive from the
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Company, without expense, new securities of like tenor not bearing the
applicable legends required by Section 6.1.
8. Reservation of Stock, etc. The Company shall at all times
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reserve and keep available, solely for issuance and delivery upon exercise of
the Warrants, the number of shares of Common Stock (or Other Securities) from
time to time issuable upon exercise of all Warrants at the time outstanding.
All shares of Common Stock (or Other Securities) issuable upon exercise of any
Warrants shall be duly authorized and, when issued upon such exercise, shall be
validly issued and, in the case of shares, fully paid and nonassessable with no
liability on the part of the holders thereof, and, in the case of all
securities, shall be free from all taxes, liens, security interests,
encumbrances, preemptive rights and charges. The transfer agent for the Common
Stock, which may be the Company ("Transfer Agent"), and every subsequent
Transfer Agent for any shares of the Company's capital stock issuable upon the
exercise of any of the purchase rights represented by this Warrant, are hereby
irrevocably authorized and directed at all times until the Expiration Date to
reserve such number of authorized and unissued shares as shall be requisite for
such purpose. The Company shall keep copies of this Warrant on file with the
Transfer Agent for the Common Stock and with every subsequent Transfer Agent for
any shares of the Company's capital stock issuable upon the exercise of the
rights of purchase represented by this Warrant. The Company shall supply such
Transfer Agent with duly executed stock certificates for such purpose. All
Warrant certificates surrendered upon the exercise of the rights thereby
evidenced shall be canceled, and such canceled Warrants shall constitute
sufficient evidence of the number of shares of stock which have been issued upon
the exercise of such Warrants. Subsequent to the Expiration Date, no shares of
stock need be reserved in respect of any unexercised Warrant.
9. Registration and Transfer of Warrants, etc.
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9.1 Warrant Register; Ownership of Warrants. Each Warrant issued by
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the Company shall be numbered and shall be registered in a warrant register (the
"Warrant Register") as it is issued and transferred, which Warrant Register
shall be maintained by the Company at its principal office or, at the Company's
election and expense, by a Warrant Agent or the Company's transfer agent. 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 affected by any notice to the
contrary, except that, if and when any Warrant is properly assigned in blank,
the Company may (but shall not be obligated to) treat the bearer thereof as the
owner of such Warrant for all purposes. Subject to Section 9, a Warrant, if
properly assigned, may be exercised by a new holder without a new Warrant first
having been issued.
9.2 Transfer of Warrants. Subject to compliance with Section 7, if
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applicable, this Warrant and all rights hereunder are transferable in whole or
in part, without charge to the Holder hereof, upon surrender of this Warrant
with a properly executed Form of Assignment attached hereto as Exhibit B at the
principal office of the Company. Upon any partial transfer, the Company shall
at its expense issue and deliver to the Holder a new Warrant of like tenor, in
the name of the Holder, which shall be exercisable for such number of shares of
Common Stock with respect to which rights under this Warrant were not so
transferred.
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9.3 Replacement of Warrants. On receipt by the Company of evidence
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reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender of such Warrant to the Company at its principal office
and cancellation thereof, the Company at its expense shall execute and deliver,
in lieu thereof, a new Warrant of like tenor.
9.4 Adjustments To Warrant Quantity. Notwithstanding any adjustment
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in the Warrant Quantity or in the number or kind of shares of Common Stock (or
Other Securities) purchasable upon exercise of this Warrant, any Warrant
theretofore or thereafter issued may continue to express the same number and
kind of shares of Common Stock as are stated in this Warrant, as initially
issued.
9.5 Fractional Shares. Notwithstanding any adjustment pursuant to
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Section 3 in the number of shares of Common Stock covered by this Warrant or any
other provision of this Warrant, the Company may, but shall not be required to,
issue fractions of shares upon exercise of this Warrant or to distribute
certificates which evidence fractional shares. In lieu of fractional shares,
the Company shall may payment to the Holder, at the time of exercise of this
Warrant as herein provided, in an amount in cash equal to such fraction
multiplied by the Current Market Price of a share of Common Stock on the date of
Warrant exercise.
10. Definitions. As used herein, unless the context otherwise
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requires, the following terms have the following respective meanings:
Additional Shares of Common Stock: All shares (including treasury
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shares) of Common Stock issued or sold by the Company after the date hereof,
whether or not subsequently reacquired or retired by the Company, other than
(a) shares issued upon the exercise of the Warrant,
(b) such additional number of shares as may become issuable upon
the exercise of the Warrant by reason of adjustments required pursuant to
anti-dilution provisions applicable to the Warrant as in effect on the date
hereof,
(c) shares, warrants, options and other securities issued at any
time to the Holder or any Affiliate thereof.
Affiliate: Any Person that directly or indirectly, through one or
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more intermediaries, controls, is controlled by, or is under common control
with, the applicable Person. For purposes of this definition "control" has the
meaning specified in Rule 12b-2 under the Exchange Act.
Business Day: Any day other than a Saturday or Sunday or a day on
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which commercial banking institutions in the City of New York are authorized by
law to be closed. Any reference to "days" (unless Business Days are specified)
shall mean calendar days.
Code: As defined in Section 1.6.
----
9
Commission: The Securities and Exchange Commission or any other
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federal agency at the time administering the Securities Act.
Common Stock: As defined in the introduction to this Warrant, such
------------
term to include any stock into which such Common Stock shall have been changed
or any stock resulting from any reclassification of such Common Stock, and all
other stock of any class or classes (however designated) of the Company the
holders of which have the right, without limitation as to amount, either to all
or to a share of the balance of current dividends and liquidating dividends
after the payment of dividends and distributions on any shares entitled to a
preference.
Company: As defined in the introduction to this Warrant, such term to
-------
include any Person which shall succeed to or assume the obligations of the
Company hereunder in compliance with Section 3.
Convertible Securities: Any evidence of indebtedness, shares of stock
----------------------
(other than Common Stock) or other securities directly or indirectly convertible
into or exchangeable for Additional Shares of Common Stock.
Current Market Price: On any date specified herein, the average daily
--------------------
Market Price during the period of the most recent 20 days, ending on such date,
on which the national securities exchanges were open for trading, except that if
no Common Stock is then listed or admitted to trading on any national securities
exchange or quoted in the over-the-counter market, the Current Market Price
shall be the Market Price on such date.
Exchange Act: The Securities Exchange Act of 1934, or any similar
------------
federal statute, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
Expiration Date: As defined in the introduction to this Warrant.
---------------
Holder: As defined in the introduction to this Warrant.
------
Indenture: As defined in the introduction to the Warrant.
---------
Market Price: On any date specified herein, the amount per share of
------------
the Common Stock equal to (a) the last reported sale price of such Common Stock,
regular way, on such date or, in case no such sale takes place on such date, the
average of the closing bid and asked prices thereof, regular way, on such date,
in either case as officially reported on the principal national securities
exchange on which such Common Stock is then listed or admitted for trading, or
(b) if such Common Stock is not then listed or admitted for trading on any
national securities exchange but is designated as a national market system
security by the NASD, the last reported trading price of the Common Stock on
such date, or (c) if there shall have been no trading on such date or if the
Common Stock is not so designated, the average of the closing bid and asked
prices of the Common Stock on such date as shown by the NASD automated quotation
system, or (d) if neither a, b nor c is applicable, the higher of (x) the book
value thereof as determined by any firm of independent public accountants of
recognized standing selected by the Board of Directors of the Company as of
10
the last day of any month ending within 60 days preceding the date as of which
the determination is to be made and (y) the fair value thereof (as of the date
which is within 20 days of the date as of which the determination is to be made)
determined in good faith by the Board of Directors of the Company (if Holder
objects to such determination, Holder may seek and receive, at the Company's
expense, third party appraisal, which shall be the exclusive and binding
determination to be used).
NASD: The National Association of Securities Dealers, Inc.
----
Options: Rights, options or warrants to subscribe for, purchase or
-------
otherwise acquire either Additional Shares of Common Stock or Convertible
Securities.
Other Securities. Any stock (other than Common Stock) and other
----------------
securities of the Company or any other Person (corporate or otherwise) which the
holders of the Warrants at any time shall be entitled to receive, or shall have
received, upon the exercise of the Warrants, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant to
Section 3 or otherwise.
Person: An individual, firm, partnership, corporation, professional
------
corporation, trust, joint venture, association, joint stock company, limited
liability company, unincorporated organization or any other entity or
organization, including a government or agency or political subdivision thereof,
and shall include any successor (by merger or otherwise) of such entity.
Restricted Securities: (a) any Warrants bearing the applicable legend
---------------------
set forth in Section 7.1, (b) any shares of Common Stock (or Other Securities)
issued or issuable upon the exercise of Warrants but only so long as they are
required to be evidenced by a certificate or certificates bearing the applicable
legend set forth in such Section, and (c) any shares of Common Stock (or Other
Securities) issued subsequent to the exercise of any of the Warrants as a
dividend or other distribution with respect to, or resulting from a subdivision
of the outstanding shares of Common Stock (or other Securities) into a greater
number of shares by reclassification, stock splits or otherwise, or in exchange
for or in replacement of the Common Stock (or Other Securities) issued upon such
exercise, but only so long as they are required to be evidenced by a certificate
or certificates bearing the applicable legend set forth in such Section.
Securities Act: The Securities Act of 1933, or any similar federal
--------------
statute, and the rules and regulations of the Commission thereunder, all as the
same shall be in effect at the time.
Voting Securities: Stock of any class or classes (or equivalent
-----------------
interests), if the holders of the stock of such class or classes (or equivalent
interests) are ordinarily, in the absence of contingencies, entitled to vote for
the election of the directors (or persons performing similar functions) of the
issuer, even though the right so to vote has been suspended by the happening of
such a contingency.
Warrant: As defined in the introduction to this Warrant.
-------
Warrant Quantity: As defined in the introduction to this Warrant.
----------------
11
11. Remedies; Specific Performance. The Company stipulates that
------------------------------
there would be no adequate remedy at law to the Holder of this Warrant in the
event of any default or threatened default by the Company in the performance of
or compliance with any of the terms of this Warrant and accordingly, the Company
agrees that, in addition to any other remedy to which the Holder may be entitled
at law or in equity, the Holder shall be entitled to seek to compel specific
performance of the obligations of the Company under this Warrant, without the
posting of any bond, in accordance with the terms and conditions of this Warrant
in any court of the United States or any State thereof having jurisdiction, and
if any action should be brought in equity to enforce any of the provisions of
this Warrant, the Company shall not raise the defense that there is an adequate
remedy at law. Except as otherwise provided by law, a delay or omission by the
Holder hereto in exercising any right or remedy accruing upon any such breach
shall not impair the right or remedy or constitute a waiver of or acquiescence
in any such breach. No remedy shall be exclusive of any other remedy. All
available remedies shall be cumulative.
12. No Rights or Liabilities as Shareholder. Nothing contained in
---------------------------------------
this Warrant shall be construed as conferring upon the Holder hereof any rights
as a shareholder of the Company or as imposing any obligation on the Holder to
purchase any securities or as imposing any liabilities on the Holder as a
shareholder of the Company, whether such obligation or liabilities are asserted
by the Company or by creditors of the Company.
13. Notices. All notices and other communications (and deliveries)
-------
provided for or permitted hereunder shall be made in writing by hand delivery,
telecopier, any courier guaranteeing overnight delivery or first class
registered or certified mail, return receipt requested, postage prepaid,
addressed (a) if to the Company, to the attention of its Chief Financial Officer
at its principal office located at 0000 Xxxxxxxx, Xxxxx X, Xxxxxx, Xxxxx 00000
or such other address as may hereafter be designated in writing by the Company
to the Holder in accordance with the provisions of this Section, or (b) if to
the Holder, at its address as it appears in the Warrant Register.
All such notices and communications (and deliveries) shall be deemed
to have been duly given: at the time delivered by hand, if personally
delivered; when receipt is acknowledged or confirmed (by automatic confirmation
or otherwise), if telecopied; on the next Business Day, if timely delivered to a
courier guaranteeing overnight delivery; and five days after being deposited in
the mail, if sent first class or certified mail, return receipt requested,
postage prepaid; provided, that the exercise of any Warrant shall be effective
--------
in the manner provided in Section 1.
14. Amendments. This Warrant and any term hereof may not be amended,
----------
modified, supplemented or terminated, and waivers or consents to departures from
the provisions hereof may not be given, except by written instrument duly
executed by the party against which enforcement of such amendment, modification,
supplement, termination or consent to departure is sought.
15. Descriptive Headings, Etc. The headings in this Warrant are for
-------------------------
convenience of reference only and shall not limit or otherwise affect the
meaning of terms contained herein. Unless the context of this Warrant otherwise
requires: (1) words of any gender shall be deemed to include each other gender;
(2) words using the singular or plural number shall also include the plural or
singular number, respectively; (3) the words "hereof," "herein" and "hereunder"
and words of
12
similar import when used in this Warrant shall refer to this Warrant as a whole
and not to any particular provision of this Warrant, and Section and paragraph
references are to the Sections and paragraphs of this Warrant unless otherwise
specified; (4) the word "including" and words of similar import when used in
this Warrant shall mean "including, without limitation," unless otherwise
specified; (5) "or" is not exclusive; and (6) provisions apply to successive
events and transactions.
16. GOVERNING LAW. This Warrant shall be governed by, and construed
-------------
in accordance with, the laws of the State of Texas (without giving effect to the
conflict of laws principles thereof).
17. Judicial Proceedings; Waiver of Jury. Any legal action, suit or
------------------------------------
proceeding brought against the Company with respect to this Warrant may be
brought in any federal court of Texas or any state court located in Dallas
County, State of Texas, and by execution and delivery of this Warrant, the
Company hereby irrevocably and unconditionally waives any claim (by way of
motion, as a defense or otherwise) of improper venue, that it is not subject
personally to the jurisdiction of such court, that such courts are an
inconvenient forum or that this Warrant or the subject matter may not be
enforced in or by such court. The Company irrevocably submits to the exclusive
jurisdiction of the aforementioned courts in such action, suit or proceeding.
The Company hereby irrevocably and unconditionally consents to the service of
process of any of the aforementioned courts in any such action, suit or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, at its address set forth or provided for in Section 15 (with
copies of such process also being sent to the Company's counsel referred to in
such section), such service to become effective 10 days after such mailing.
Nothing herein contained shall be deemed to affect the right of any party to
serve process in any manner permitted by law or commence legal proceedings or
otherwise proceed against any other party in any other jurisdiction to enforce
judgments obtained in any action, suit or proceeding brought pursuant to this
Section. THE COMPANY HEREBY IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION,
SUIT OR PROCEEDING, WHETHER AT LAW OR EQUITY, BROUGHT BY IT OR THE HOLDER IN
CONNECTION WITH THIS WARRANT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
18. Counterparts. This Warrant may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
13
POLYPHASE CORPORATION
By:
--------------------------------------
Name:
-------------------------------
Title:
------------------------------
XXXXXXX XXXXX WORLD INCOME FUND, INC.
By:
--------------------------------
Name:
-------------------------
Title:
------------------------
14
Exhibit A
---------
FORM OF SUBSCRIPTION
--------------------
[To be executed only upon exercise of Warrant]
To: POLYPHASE CORPORATION
The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder, _____ /*/ shares of Common
stock of POLYPHASE CORPORATION and herewith makes payment of $___________
therefor, and requests that the certificates for such shares be issued in the
name of, and delivered to ___________________________ whose address is
__________________________________________________.
Dated: _______________________________________
(Signature must conform in all respects
to the name of holder as specified on
the face of Warrant)
_______________________________________
(Street Address)
_______________________________________
(City) (State) (Zip Code)
_______________________
/*/ Insert here the number of shares called for on the face of this
Warrant (or in the case of a partial exercise, the portion thereof as to which
this Warrant is being exercised), in either case without making any adjustment
for Additional Shares of Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of this Warrant,
may be delivered upon exercise. In the case of partial exercise, a new Warrant
or Warrants will be issued and delivered, representing the unexercised portion
of the Warrant, to the holder surrendering the Warrant.
15
Exhibit B
---------
FORM OF ASSIGNMENT
------------------
[To be executed only upon assignment of Warrant]
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto ______________________ the right
represented by such Warrant to purchase _____/**/ shares of Common Stock of
POLYPHASE CORPORATION to which such Warrant relates, and appoints
________________ Attorney to make such transfer on the books of POLYPHASE
CORPORATION maintained for such purpose, with full power of substitution in the
premises.
Dated: _______________________________________
(Signature must conform in all respects
to the name of holder as specified on
the face of Warrant)
_______________________________________
(Street Address)
_______________________________________
(City) (State) (Zip Code)
Signed in the presence of:
__________________________________
_________________________
/**/ Insert here the number of shares called for on the face of this Warrant
(or in the case of a partial exercise, the portion thereof as to which this
Warrant is being exercised), in either case without making any adjustment for
Additional Shares of Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of this Warrant,
may be delivered upon exercise. In the case of partial exercise, a new Warrant
or Warrants will be issued and delivered, representing the unexercised portion
of the Warrant, to the holder surrendering the Warrant.
16
