May__, 2000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ SECURITIES CORPORATION
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Training Devices International, Inc. (the "Company"), agrees to issue and
sell to you warrants (the "Warrants") to purchase the number of shares of common
stock, no par value per share (the "Common Stock"), of the Company set forth
herein, subject to the terms and conditions contained herein
1. ISSUANCE OF WARRANTS; EXERCISE PRICE. The Warrants, which shall be in
the form attached hereto as Exhibit A, shall be issued to you concurrently with
the execution hereof in consideration of the payment by you to the Company of
the sum of Ten Dollars ($10.00), the receipt and sufficiency of which are hereby
acknowledged. The Warrant shall provide that you, or such other holder or
holders of the Warrants to whom transfer is authorized in accordance with the
terms of this Agreement, shall have the right to purchase an aggregate of
120,000 shares of Common Stock for an exercise price equal to [$8.40] per share
(the "Exercise Price"). The number, character and Exercise Price of such shares
of Common Stock are subject to adjustment as hereinafter provided, and the term
"Common Stock" shall mean, unless the context otherwise requires, the stock and
other securities and property receivable upon exercise of the Warrants. The term
"Exercise Price" shall mean, unless the context otherwise requires, the price
per share of the Common Stock purchasable under the Warrants as set forth in
this Section 1, as adjusted from time to time pursuant to Section 6.
2. REPRESENTATIONS AND WARRANTIES. The Company represents and warrants to
you and to each subsequent holder of Warrants and agrees that:
(a) This Agreement has been duly authorized, executed and delivered by the
Company and constitutes the valid and binding obligation of the Company
enforceable in accordance with its terms; and neither the issuance of the
Warrants nor the issuance of the shares of Common Stock issuable upon exercise
of the Warrants will result in a breach or violation of any terms or provisions
of, or constitute a default under, any contract, indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which the Company is a
party or by which the Company is bound or the Articles of Incorporation or
Bylaws of the Company, or any law, order, rule, regulation or decree of any
government, governmental instrumentality or court, domestic or foreign, or
result in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company.
(b) No consent, approval, authorization or order of any court or
governmental agency or body is required for the sale and issuance of the
Warrants or the sale and issuance of the shares of Common Stock issuable upon
exercise of the Warrants, except such as have been obtained or may be required
under the Securities Act of 1933, as amended (the "Act"), and such as may be
required under state securities or blue sky laws in connection with the issuance
of the Warrants and the shares of Common Stock issuable upon exercise of the
Warrants. Upon exercise of the Warrants by the holder thereof, the shares of
Common Stock with respect to which the Warrants are exercised will be validly
issued, fully paid, and non-assessable, and good and marketable title to such
shares of Common Stock shall be delivered to such holder free and clear of all
liens, encumbrances, equities, claims or preemptive or similar rights.
(c) During the term of this Agreement, the Company shall make timely
filings of all periodic and other reports and forms and other materials required
(but only to the extent required) to be filed with the Securities and Exchange
Commission (the "Commission") pursuant to the Act or the Securities Exchange Act
of 1934, as amended, and with any national securities exchange or quotation
system upon which any of the securities of the Company may be listed.
3. NOTICES OF RECORD DATE; ETC. In the event of (i) any taking by the
Company of a record date with respect to the holders of any class of securities
of the Company for purposes of determining which of such holders are entitled to
dividends or other distributions (other than regular quarterly dividends), or
any right to subscribe for, purchase or otherwise acquire shares of stock of any
class or any other securities or property, or to receive any other right, (ii)
any capital reorganization of the Company, or reclassification or
recapitalization of capital stock of the Company or any transfer in one or more
related transactions of all or a majority of the assets or revenue or income
generating capacity of the Company to, or consolidation or merger of the Company
with or into, any other entity or person, or (iii) any voluntary or involuntary
dissolution or winding up of the Company, then and in each such event the
Company will mail or cause to be mailed to each holder of a Warrant at the time
outstanding a notice specifying, as the case may be, (A) the date on which any
such record is to be taken for the purpose of such dividend, distribution or
right, and stating the amount and character of such dividend, distribution or
right; or (B) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, conveyance, dissolution,
liquidation or winding up is to take place and the time, if any is to be fixed,
as of which the holders of record of Common Stock (or any other class of stock
or securities of the Company, or another issuer pursuant to Section 6,
receivable upon the exercise of the Warrants) shall be entitled to exchange
their shares of Common Stock (or such other stock or securities) for securities
or other property deliverable upon such event. Any such notice shall be
deposited in the United States mail, postage prepaid, at least ten (10) days
prior to the date therein specified, and the holders(s) of the Warrant(s) may
exercise the Warrant(s) and participate in such event as a registered holder of
Common Stock, upon exercise of the Warrant(s) so held, within the ten (10) day
period from the date of mailing of such notice.
4. NO IMPAIRMENT. The Company shall not, by amendment of its organizational
documents or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other action, avoid or
seek to avoid the observance or performance of any of the terms of this
Agreement or of the Warrants, but will at all times in good faith take any and
all action as may be necessary in order to protect the rights of the holders of
the Warrants against impairment. Without limiting the generality of the
foregoing, the Company (a) will at all times reserve and keep available, solely
for issuance and delivery upon exercise of the Warrants, shares of Common Stock
issuable from time to time upon exercise of the Warrants, (b) will not increase
the par value of any shares of stock receivable upon exercise
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of the Warrants above the amount payable in respect thereof upon such exercise,
and (c) will take all such action as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and non-assessable
stock upon the exercise of the Warrants, or any of them.
5. EXERCISE OF WARRANTS. At any time and from time to time on and after the
first anniversary of the effective date of the Company's initial public offering
and expiring on the fifth anniversary of the effective date of the Company's
initial public offering of the Common Stock at 5:00 p.m., Sarasota, Florida
time, Warrants may be exercised as to all or any portion of the whole number of
shares of Common Stock covered by the Warrants by the holder thereof by
surrender of the Warrants, accompanied by a subscription for shares to be
purchased in the form attached hereto as Exhibit B and by a check payable to the
order of the Company in the amount required for purchase of the shares as to
which the Warrant is being exercised, delivered to the Company at its principal
office at ▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇. #2C, Denver, Colorado 80112, Attention:
President, or any substitute address where notice is to be given in accordance
with Section 12. Warrants may also be exercised from time to time, without any
payment required for the purchase of the shares as to which the Warrant is being
exercised, as to all or any portion of the number of shares of Common Stock
covered by the Warrant(s) by the holder thereof by surrender of the Warrants,
accompanied by a subscription for shares in the form attached as Exhibit C,
pursuant to which the holder thereof will be entitled to receive upon such
surrender of the Warrant(s) (and without any further payment) that number of
shares of Common Stock equal to the product of the number of shares of Common
Stock obtainable upon exercise of the Warrant(s) (or the portion thereof as to
which the exercise relates) multiplied by a fraction: (i) the numerator of which
shall be the difference between the then Current Value (as defined in this
Section 5 and Section 7(d)) of one full share of Common Stock on the date of
exercise and the Exercise Price, and (ii) the denominator of which shall be the
Current Value of one full share of Common Stock on the date of exercise. Upon
the exercise of a Warrant in whole or in part, the Company will within five (5)
days thereafter, at its expense (including the payment by the Company of any
applicable issue or transfer taxes), cause to be issued in the name of and
delivered to the Warrant holder a certificate or certificates for the number of
fully paid and non-assessable shares of Common Stock to which such holder is
entitled upon exercise of the Warrant. In the event such holder is entitled to a
fractional share, in lieu thereof such holder shall be paid a cash amount equal
to such fraction, multiplied by the Current Value of one full share of Common
Stock on the date of exercise. Certificates for shares of Common Stock issuable
by reason of the exercise of the Warrant or Warrants shall be dated and shall be
effective as of the date of the surrendering of the Warrant for exercise,
notwithstanding any delays in the actual execution, issuance or delivery of the
certificates for the shares so purchased. In the event a Warrant or Warrants is
exercised as to less than the aggregate amount of all shares of Common Stock
issuable upon exercise of all Warrants held by such person, the Company shall
issue a new Warrant to the holder of the Warrant so exercised covering the
aggregate number of shares of Common Stock as to which Warrants remain
unexercised.
For purposes of this section, Current Value is defined (i) in the case for
which a public market exists for the Common Stock at the time of such exercise,
according to Section 7(d), and (ii) in the case no public market exists at the
time of such exercise, at the Appraised Value. For the purposes of this
Agreement, "Appraised Value" is the value determined in accordance with the
following procedures. For a period of five (5) days after the date of an event
(a "Valuation
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Event") requiring determination of Current Value at a time when no public market
exists for the Common Stock (the "Negotiation Period"), the Company and the
Warrant holder for whom the Appraised Value is to be determined agree to
negotiate in good faith to reach agreement upon the Appraised Value of the
securities or property at issue, as of the date of the Valuation Event, which
will be the fair market value of such securities or property, without premium
for control or discount for minority interests, illiquidity or restrictions on
transfer. In the event that the parties are unable to agree upon the Appraised
Value of such securities or other property by the end of the Negotiation Period,
then the Appraised Value of such securities or property will be determined for
purposes of this Agreement by a recognized appraisal or investment banking firm
mutually agreeable to the holders of the Warrants and the Company (the
"Appraiser"). If the holders of the Warrants and the Company cannot agree on an
Appraiser within two (2) business days after the end of the Negotiation Period,
the Company, on the one hand, and the holders of the Warrants, on the other
hand, will each select an Appraiser within ten (10) business days after the end
of the Negotiation Period and those two Appraisers will select within ten (10)
days after the end of the Negotiation Period an independent Appraiser to
determine the fair market value of such securities or property, without premium
for control or discount for minority interests. Such independent Appraiser will
be directed to determine fair market value of such securities or property as
soon as practicable, but in no event later than thirty (30) days from the date
of its selection. The determination by an Appraiser of the Appraised Value fair
market value will be conclusive and binding on all parties to this Agreement.
Appraised Value of each share of Common Stock at a time when (i) the Company is
not a reporting company under the Exchange Act and (ii) the Common Stock is not
traded in the organized securities markets, will, in all cases, be calculated by
determining the Appraised Value of the entire Company taken as a whole and
dividing that value by the number of shares of Common Stock then outstanding,
without premium for control or discount for minority interests, illiquidity or
restrictions on transfer. The costs of the Appraiser will be borne by the
Company. In no event will the Appraised Value of the Common Stock be less than
the per share consideration received or receivable with respect to the Common
Stock or securities or property of the same class in connection with a pending
transaction involving a sale, merger, recapitalization, reorganization,
consolidation, or share exchange, dissolution of the Company, sale or transfer
of all or a majority of its assets or revenue or income generating capacity. or
similar transaction.
6. PROTECTION AGAINST DILUTION. The Exercise Price for the shares of Common
Stock and number of shares of Common Stock issuable upon exercise of the
Warrants is subject to adjustment from time to time as follows:
(a) ADJUSTMENT OF NUMBER OF WARRANT SHARES ISSUABLE. Upon each adjustment
of the Exercise Price pursuant to this SECTION 6, the holder of a Warrant shall
be entitled to purchase, at the Exercise Price in effect after such adjustment,
a number of Warrant Shares equal to the amount obtained by multiplying the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Shares issuable upon exercise of such Warrant immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting from
such adjustment.
(b) ADJUSTMENT OF PRICE UPON ISSUANCE OF COMMON STOCK. If and whenever
after the date hereof, the Company shall issue or sell any shares of Common
Stock for a consideration per share less than Current Value at the time of such
issue or sale, then forthwith upon such issue or sale, the Exercise Price shall
be reduced to the price (calculated to the nearest cent) determined
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by multiplying the Exercise Price in effect immediately prior to the time of
such issue or sale by a fraction, the numerator of which shall be the sum of (A)
the number of shares of Common Stock outstanding immediately prior to such issue
or sale multiplied by the Current Value immediately prior to such issue or sale
plus (B) the consideration received by the Company upon such issue or sale, and
the denominator of which shall be the product of (C) the total number of shares
of Common Stock outstanding immediately after such issue or sale, multiplied by
(D) the Current Value immediately prior to such issue or sale.
No adjustment of any Exercise Price, however, shall be made in an amount less
than 1% of the Exercise Price, but any such lesser adjustment shall be carried
forward and shall be made at the time of, and together with, the next subsequent
adjustment which together with any adjustments so carried forward shall amount
to at least 1% of the Exercise Price.
(c) ADDITIONAL ADJUSTMENTS. For the purposes of SUBSECTION (b) of this
SECTION 6, the following clauses shall also be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. In case at any time the Company
shall grant (whether directly or by assumption in a merger in which the
Company is the surviving Company or otherwise) any rights (other than the
Warrants) to subscribe for or to purchase, or any options for the purchase
of, Common Stock or any stock or securities convertible into or
exchangeable for Common Stock (such convertible or exchangeable stock or
securities being herein called "CONVERTIBLE SECURITIES") whether or not
such rights or options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price per share
for which Common Stock is issuable upon the exercise of such rights or
options or upon conversion or exchange of such Convertible Securities
(determined as provided below) shall be less than 100% of the Current Value
determined as of the date of granting such rights or options, then the
total maximum number of shares of Common Stock issuable upon the exercise
of such rights or options or upon conversion or exchange of the total
maximum amount of such Convertible Securities issuable upon the exercise of
such rights or options shall (as of the date of granting of such rights or
options) be deemed to be outstanding and to have been issued for such price
per share, and the Exercise Price shall be adjusted in accordance with
SECTION 6(b). Except as provided in CLAUSE (III) of this SUBSECTION, no
further adjustments of any Exercise Price shall be made upon the actual
issue of such Common Stock or of such Convertible Securities upon exercise
of such rights or options or upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities. For the
purposes of this CLAUSE (I), the price per share for which Common Stock is
issuable upon the exercise of any such rights or options or upon conversion
or exchange of any such Convertible Securities shall be determined by
dividing (A) the total amount, if any, received or receivable by the
Company as consideration for the granting of such rights or options, plus
the minimum aggregate amount of additional consideration payable to the
Company upon the exercise of all such rights or options, plus, in the case
of such rights or options which relate to Convertible Securities, the
minimum aggregate amount of additional consideration, if any, payable upon
the issue or sale of such Convertible Securities and upon the conversion or
exchange thereof, by (B) the total maximum number of shares of Common Stock
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issuable upon the exercise of such rights or options or upon conversion or
exchange of all such Convertible Securities issuable upon the exercise of
such rights or options.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES. In case the Company shall
issue (whether directly or by assumption in a merger in which the Company
is the surviving Company or otherwise) or sell any Convertible Security,
whether or not the rights to exchange or convert thereunder are immediately
exercisable, and the price per share for which Common Stock is issuable
upon conversion or exchange of such Convertible Securities (determined as
provided below) shall be less than 100% of the Current Value, determined as
of the date of such issue or sale of such Convertible Securities, as the
case may be), then the total maximum number of shares of Common Stock
issuable upon conversion or exchange of all such Convertible Securities
shall (as of the date of the issue or sale of such Convertible Securities)
be deemed to be outstanding and to have been issued for such price per
share, and the Exercise Price shall be adjusted in accordance with SECTION
6(b), provided that (A) except as provided in CLAUSE (iii) of this
subsection, no further adjustments of any Exercise Price shall be made upon
the actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities, and (B) if any such issue or sale of such
Convertible Securities is made upon exercise of any rights to subscribe for
or to purchase or any option to purchase any such Convertible Securities
for which adjustments of any Exercise Price have been or are to be made
pursuant to other provisions of this SUBSECTION (c), no further adjustment
of any Exercise Price shall be made by reason of such issue or sale. For
the purposes of this CLAUSE (ii), the price per share for which Common
Stock is issuable upon conversion or exchange of Convertible Securities
shall be determined by dividing (C) the total amount, if any, received or
receivable by the Company as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or
exchange thereof, by (D) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible
Securities.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the purchase price
provided for in any rights or options referred to in CLAUSE (i) above, or
the additional consideration, if any, payable upon the conversion or
exchange of Convertible Securities referred to in CLAUSE (i) or (ii) above,
or the rate at which any Convertible Securities referred to in CLAUSE (i)
or (ii) above are convertible into or exchangeable for Common Stock, shall
change (other than under or by reason of provisions designed to protect
against dilution), then the Exercise Price in effect at the time of such
event shall forthwith be readjusted to the Exercise Price which would have
been in effect at such time had such rights, options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or conversion rate, as the case may be, at the
time initially granted, issued or sold; and on the expiration of any such
option or right or the termination of any such right to convert or exchange
such Convertible Securities, the Exercise Price then in effect hereunder
shall forthwith be increased to the Exercise Price which would have been in
effect at the time of such expiration or termination had such right, option
or Convertible Security, to the extent outstanding immediately prior to
such expiration or termination, never been issued, and the Common Stock
issuable thereunder shall no longer be deemed to be outstanding. If the
purchase price provided for in any
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such right or option referred to in CLAUSE (i) above or the rate at which
any Convertible Securities referred to in CLAUSE (i) or (ii) above are
convertible into or exchangeable for Common Stock, shall decrease at any
time under or by reason of provisions with respect thereto designed to
protect against dilution, then in case of delivery of Common Stock upon the
exercise of any such right or option or upon conversion or exchange of any
such Convertible Security, the Exercise Price then in effect hereunder
shall forthwith be adjusted to such respective amount as would have
obtained had such right, option or Convertible Security never been issued
as to such Common Stock and had adjustments been made upon the issuance of
the share of Common Stock delivered as aforesaid, but only if as a result
of such adjustment the Exercise Price then in effect hereunder is thereby
decreased.
(iv) STOCK DIVIDENDS. In case the Company shall declare a dividend or
make any other distribution upon any stock of the Company payable in Common
Stock or Convertible Securities, any Common Stock or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration and the Exercise Price shall be adjusted in accordance with
SECTION 6(b).
(v) CONSIDERATION FOR STOCK. In case any shares of Common Stock or
Convertible Securities or any rights or options to purchase any such Common
Stock or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the amount received
by the Company therefor, without deduction therefrom of any expenses
incurred or any underwriting commissions or concessions paid or allowed by
the Company in connection therewith. In case any shares of Common Stock or
Convertible Securities or any rights or options to purchase any such Common
Stock or Convertible Securities shall be issued or sold for a consideration
other than cash, the amount of the consideration other than cash received
by the Company shall be deemed to be the fair value of such consideration
as determined reasonably and in good faith by the board of directors of the
Company, without deduction of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in connection
therewith. In case any shares of Common Stock or Convertible Securities or
any rights or options to purchase such shares of Common Stock or
Convertible Securities shall be issued in connection with any merger or
consolidation in which the Company is the surviving corporation (other than
any consolidation or merger in which the previously outstanding shares of
Common Stock of the Company shall be changed into or exchanged for the
stock or other securities of another corporation), the amount of
consideration therefor shall be deemed to be the fair value as determined
reasonably and in good faith by the board of directors of the Company or
such portion of the assets and business of the non-surviving corporation as
such board may reasonably and in good faith determine to be attributable to
such shares of Common Stock, Convertible Securities, rights or options, as
the case may be. In the event of any consolidation or merger of the Company
in which the Company is not the surviving corporation or in which the
previously outstanding shares of Common Stock of the Company shall be
changed into or exchanged for the stock or other securities of another
entity or in the event of any sale of all or substantially all of the
assets of the Company for stock or other securities of any entity, the
Company shall be deemed to
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have issued a number of shares of its Common Stock for stock or securities
or other property of such entity computed on the basis of the actual
exchange ratio on which the transaction was predicated and for a
consideration equal to the fair market value on the date of such
transaction of all such stock or securities or other property of such
entity, and if any such calculation results in adjustment of the Exercise
Price in accordance with SECTION 6(b), the determination of the number of
shares of Common Stock issuable upon exercise of the Warrants immediately
prior to such merger, consolidation or sale, for purposes of SECTION 6(f),
shall be made after giving effect to such adjustment of the Exercise Price.
(vi) RECORD DATE. In case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (A) to
receive a dividend or other distribution payable in Common Stock or in
Convertible Securities, or (B) to rights to subscribe for or to purchase,
or any options for the purchase of, Common Stock or Convertible Securities,
then such record date shall be deemed to be the date of the issue or sale
of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or
the date of the granting of such right, as the case may be.
(vii) TREASURY SHARES. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or
for the account of the Company, and the disposition of any such shares
shall be considered an issue or sale of Common Stock for the purposes of
this SECTION 6.
(d) ADJUSTMENT FOR CERTAIN SPECIAL DIVIDENDS. In case the Company shall
declare a dividend upon the Common Stock payable otherwise than out of earnings
or earned surplus, determined in accordance with generally accepted accounting
principles, and otherwise than in Common Stock or Convertible Securities (such a
dividend, a "SPECIAL DIVIDEND"), the Exercise Price in effect immediately prior
to the declaration of such a Special Dividend shall be reduced by an amount
equal, in the case of a Special Dividend in cash, to the amount per share of the
Common Stock so declared as payable or, in the case of any other Special
Dividend, to the fair value per share of the Common Stock of the property so
declared as payable, as determined, reasonably and in good faith, by the board
of directors of the Company. For the purposes of determining whether a dividend
is a Special Dividend, a dividend other than in cash shall be considered payable
out of earnings or earned surplus (other than revaluation or paid-in surplus)
only to the extent that such earnings or earned surplus are charged an amount
equal to the fair value of such dividend as determined, reasonably and in good
faith, by the board of directors of the Company. Such reductions shall take
effect as of the date on which a record is taken for the purpose of such
dividend, or, if a record is not taken, the date as of which the holders of
Common Stock of record entitled to such dividend are determined.
(e) SUBDIVISION OR COMBINATION OF STOCK. In case the Company shall at any
time subdivide the outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision shall
be proportionately reduced, and conversely, in case the outstanding shares of
Common Stock shall be combined into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination shall be proportionately
increased.
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(f) ADJUSTMENTS FOR CONSOLIDATION, MERGER, SALE OF ASSETS, REORGANIZATION.
ETC. In case the Company (i) consolidates with or merges into any other entity
and is not the continuing or surviving corporation of such consolidation or
merger, or (ii) permits any other entity to consolidate with or merge into the
Company and the Company is the continuing or surviving corporation but, in
connection with such consolidation or merger, the Common Stock is changed into
or exchanged for stock or other securities of any other corporation or cash or
any other assets, or (iii) transfers all or substantially all of its properties
and assets to any other entity, or (iv) effects a capital reorganization or
reclassification of the capital stock of the Company in such a way that holders
of Common Stock shall be entitled to receive stock, securities, cash or assets
with respect to or in exchange for Common Stock, then, and in each such case,
proper provision shall be made so that, upon the basis and upon the terms and in
the manner provided in this SUBSECTION (f), the holder of this Warrant
Certificate, upon the exercise of each Warrant at any time after the
consummation of such consolidation, merger, transfer, reorganization or
reclassification, shall be entitled to receive (at the aggregate Exercise Price
in effect for all Warrant Shares issuable upon such exercise immediately prior
to such consummation as adjusted to the time of such transaction), in lieu of
shares of Common Stock issuable upon such exercise prior to such consummation,
the stock and other securities, cash and assets to which such holder would have
been entitled upon such consummation if such holder had so exercised such
Warrant immediately prior thereto (subject to adjustments subsequent to such
corporate action as nearly equivalent as possible to the adjustments provided
for in this SECTION 6).
(g) NOTICE OF ADJUSTMENT. Upon any adjustment of any Exercise Price, then
and in each such case the Company shall promptly deliver a notice to the
registered holder of the Warrants, which notice shall state the Current Value,
if any adjustment depends upon a determination of Current Value, and the
Exercise Price resulting from such adjustment and the increase or decrease, if
any, in the number of shares purchasable at such price upon the exercise of each
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based.
(h) OTHER NOTICES. In case at any time:
(i) the Company shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class or other
rights;
(ii) the Company shall authorize the distribution to all holders of
its Common Stock of evidence of its indebtedness or assets (other than cash
dividends or cash distributions payable out of earnings or earned surplus
or dividends payable in Common Stock);
(iii) there shall be any capital reorganization, reclassification of
the capital stock of the Company, consolidation or merger of the Company
with another entity (other than a subsidiary of the Company in which the
Company is the surviving or continuing corporation and no change occurs in
the Company's Common Stock), or sale of all or substantially all of its
assets to, another entity;
(iv) there shall be a voluntary or involuntary dissolution,
liquidation, bankruptcy, assignment for the benefit of creditors, or
winding up of the Company; or
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(v) the Company proposes to take any other action or an event occurs
which would require an adjustment of the Exercise Price pursuant to
SUBSECTION (i) of this SECTION 6 then, in any one or more of said cases,
the Company shall give written notice, addressed to the holder of this
Warrant Certificate at the address of such holder as shown on the books of
the Company, of (1) the date on which the books of the Company shall close
or a record shall be taken for such dividend, distribution or subscription
rights, or (2) the date (or, if not then known, a reasonable approximation
thereof by the Company) on which such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, bankruptcy,
assignment for the benefit of creditors, winding-up or other action or
event, as the case may be, shall take place. Such notice shall also specify
(or, if not then known, reasonably approximate) the date as of which the
holders of Common Stock of record shall participate in such dividends,
distribution or subscription rights, or shall be entitled to exchange their
Common Stock for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation, bankruptcy, assignment for the benefit of creditors, winding
up, or other action or event, as the case may be. Such written notice shall
be given at least twenty days prior to the action in question and not less
than twenty days prior to the record date or the date on which the
Company's transfer books are closed in respect thereto.
(i) CERTAIN EVENTS. If any event occurs as to which, in the reasonable
opinion of the Company, in good faith, the other provisions of this SECTION 6
are not strictly applicable but the lack of any adjustment would not in the
opinion of the Company fairly protect the purchase rights of the holder of this
Warrant Certificate in accordance with the basic intent and principles of such
provisions, or if strictly applicable would not fairly protect the purchase
rights of the holder of this Warrant Certificate in accordance with the basic
intent and principles of such provisions, then the Company shall appoint a firm
of independent certified public accountants (which may be the regular auditors
of the Company) of recognized national standing, which shall give their opinion
upon the adjustment, if any, on a basis consistent with the basic intent and
principles established in the other provisions of this SECTION 6, necessary to
preserve, without dilution, the exercise rights of the registered holder of this
Warrant Certificate. Upon receipt of such opinion, the Company shall forthwith
make the adjustments described therein.
(j) EXEMPT ISSUANCES. Notwithstanding anything in this Warrant Certificate
to the contrary, no holder of this Warrant Certificate shall be entitled to any
adjustment, and no adjustments shall be made, in respect of the sale or issuance
of Common Stock, Convertible Securities or the granting of any rights to
subscribe for or to purchase Common Stock as follows:
(i) Shares, or options or other rights to acquire Common Stock, issued
to directors, officers, agents or employees of the Company or any of its
incentives or compensation so long as they do not exceed ____ shares in the
aggregate.
(ii) Shares issued to satisfy currently outstanding options or other
rights issued to directors, officers, agents or employees of the Company or
its Affiliates as incentives or compensation;
10
(iii) Any shares, options or other rights to acquire Common Stock
issued to any lender and considered for purposes of the Company's financial
statements as part of the interest or cost of funds for amounts borrowed by
the Company or any of its Affiliates from the lender, provided such lender
is not an affiliate of the Company; and
(iv) Shares issued upon conversion or exercise of any warrants or
options issued and outstanding on the date hereof in accordance with their
current terms.
7. REGISTRATION RIGHTS.
(a) The Company agrees that upon written notice given to the Company at any
time on or after the first anniversary of the effective date of the public
offering of the Common Stock but before the fifth anniversary of the effective
date of the public offering, from the holder or holders of not less than
fifty-one percent (51%) of the shares issued and issuable upon exercise of the
Warrants, of a proposed distribution by such holder or holders of Common Stock
issued or issuable upon exercise of Warrants, the Company will, within
forty-five (45) days after receipt of such notice, promptly prepare, file and
diligently prosecute to effectiveness, an appropriate filing with the Commission
of a registration statement covering the proposed sale or distribution of all or
any part of such shares under the Securities Act of 1933, as amended (the
"Act"), and the appropriate registration statements or applications under the
securities laws of such states as such holders, in their discretion, shall
determine, and will use its reasonable best efforts to have such registration
and application (including both the registration under the Act and the
registration or application made under the various state securities laws)
declared effective as soon as practicable after the filing thereof and to remain
effective for such period that may be reasonably necessary to complete the
distribution of securities so registered or qualified. At least fifteen (15)
days prior to such filing, the Company shall give written notice of such
proposed filing to each registered holder of any Warrants at the holders'
addresses appearing on the records of the Company and to each registered holder
of Common Stock purchased from the exercise of any Warrants at such holder's
address appearing on the Company records, and shall offer to include in such
registration statement any proposed distribution of such Common Stock held or to
be held by each such registered holder; provided, however, that except as
provided in Section 7(e), the Company need not effect the registration of the
sale or distribution of Common Stock purchased upon exercise of Warrants more
than once. Except as provided below, all expenses, disbursements and fees
incident to the Company's performance of or compliance with this Section 7
(including fees and expenses of counsel for the Company, special auditing fees
specifically attributable to the sale by the selling holder or holders of Common
Stock, printing expenses (including all necessary copies of the registration
statement and prospectuses contained therein), registration and filing fees and
blue sky fees and expenses, and fees and charges of the Company's transfer agent
and registrar for services rendered in connection therewith) shall be borne by
the Company; provided, however, that the Company shall not be required to pay
for any expenses of any registration proceeding begun (in which case holders
shall bear such expenses), if the registration is withdrawn any time at the
request of the holder or holders of not less than fifty-one percent (51%) of the
shares issued and issuable upon exercise of the Warrants, unless such withdrawal
is due to the misconduct of the Company or due to an unforeseen material adverse
change in the business, properties, prospects or financial condition of the
Company occurring prior to the effectiveness of the registration statement, in
which case the
11
Company will continue to bear such expenses. All expenses, disbursement and fees
of the selling holder or holders unrelated to the registration, filing, listing
and compliance with securities and Blue Sky laws and all underwriting discounts
and commissions and transfer taxes shall be borne by the selling holder or
holders on a pro rata basis (unless selling holders agree to an allocation other
than pro rata). Pro rata shall for the purposes of this Section 7 be based upon
the number of shares sold. Notwithstanding the foregoing, the Company shall
reimburse the selling holder or holders the reasonable fees and expenses of one
counsel retained in connection with such registration by the holder or holders.
(b) In connection with any registration under the Act and specified state
securities law pursuant to this Agreement, the Company will, without charge,
furnish each holder whose shares are registered thereunder with copies of the
registration statement and all amendments thereto and will, without charge,
supply each such holder with copies of any preliminary and final prospectus
included therein in such quantities as may be necessary for the purposes of such
proposed sale or distribution that the holder or holders may reasonably request.
(c) In connection with any registration of shares pursuant to this Section
7, the holders whose shares are being registered shall furnish the Company with
such information concerning such holders and the proposed sale or distribution
as shall be required for use in the preparation of such registration statement
and applications.
(d) Notwithstanding the foregoing provisions of this Section 7, upon
receipt of such written notice from the holder or holders of not less than fifty
one percent (51%) of the shares issued and issuable upon exercise of the
Warrants requesting that the Company effect registration of the sale or
distribution of Common Stock as provided in Section 7(a) or upon election by
holders of Warrants or Common Stock to participate in a registration pursuant to
Section 7(e), the Company shall have the option, for a period of ten (10) days
thereafter, to purchase all or any such Warrants and all or any such shares of
Common Stock acquired pursuant to the exercise of the Warrants and held by
holders providing the request for registration under Section 7(a) and/or 7(e)
and held by any other holder of Warrants or shares issued and will exercise its
option if it so elects as follows:
(i) as to such Warrants, at a price per Warrant equal to the
difference between (A) the average of the means between the closing bid and
asked prices of the Common Stock in the over-the-counter market for twenty
(20) consecutive business days commencing thirty (30) business days before
the date of receipt of such notice, (B) if the Common Stock is quoted on
the Nasdaq SmallCap Market, at the average of the means of the daily
closing bid and asked prices of the Common Stock for twenty (20)
consecutive business days commencing thirty (30) business days before the
date of such notice, or (C) if the Common Stock is listed on any national
securities exchange or quoted on the Nasdaq National Market System, at the
average of the daily closing prices of the Common Stock for twenty (20)
consecutive business days commencing thirty (30) business days before the
date of such notice and the Exercise Price of the Warrant at the time of
receipt of such notice; and
(ii) as to shares of Common Stock previously purchased pursuant to the
exercise of Warrants, at a price per share equal to (A) the average of the
means between
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the closing bid and asked prices of the Common Stock in the
over-the-counter market for twenty (20) consecutive business days
commencing thirty (30) business days before the date of such notice, (b) if
the Common Stock is quoted on the Nasdaq SmallCap Market, at the average of
the means of the daily closing bid and asked prices of the Common Stock for
twenty (20) consecutive business days commencing thirty (30) business days
before the date of such notice or (C) if the Common Stock is listed on any
national securities exchange or the Nasdaq National Market System, at the
average of the daily closing prices of the Common Stock for twenty (20)
consecutive business days commencing thirty (30) business days before the
date of such notice (such value of shares so determined in this Section
7(d)(ii), as the case may be, is referred to herein as the "Current
Value").
(iii) If any time on or after the first anniversary of the date hereof
but before the fifth anniversary of the date hereof the Company proposes to
file a registration statement under the Act covering a proposed sale of
shares of Common Stock, it shall give to each holder who then owns any
Warrants or any shares of Common Stock acquired pursuant to the exercise of
the Warrants notice of such proposed registration at least thirty (30) days
prior to the filing of the registration statement and shall afford each
such holder who then proposed to sell or distribute publicly any of the
shares subject to the Warrants upon giving not less than ten (10) days
notice prior to such filing, the opportunity to have such shares included
in the securities registered under the registration statement. Except as
provided below, all expenses, disbursements and fees incident to the
Company's performance of or compliance with this Section 7 (including, but
without limitation, fees and expenses of counsel, auditing fees, printing
expenses, SEC filing fees and expenses, but excluding any underwriting
discounts or commissions) incurred in connection with the registration by
the Company of the sale of any shares for any such holder under this
Section 7(e) shall be borne by the Company. All expenses, disbursement and
fees of the selling holder or holders unrelated to the registration,
filing, listing and compliance with securities and Blue Sky laws and all
underwriting discounts and commissions and transfer taxes shall be borne by
the selling holder or holders on a pro rata basis (unless selling holders
agree to an allocation other than pro rata). Pro rata shall for the
purposes of this Section 7 be based upon the number of shares sold.
Notwithstanding the foregoing, the Company shall reimburse the selling
holder or holders the reasonable fees and expenses of one counsel retained
in connection with such registration by the holder or holders. This Section
7(e) shall not apply to a filing of a registration statement by the Company
on a form that does not permit the inclusion of shares being sold by the
holders, including without limitation, Form S-4 and Form S-8. If the
registration statement covered by this Section 7(e) is for an offering
underwritten in whole or in part, the Company may, as a condition to
inclusion in such offering, require that the above-described shares
requested to be included in the registration statement be included in the
underwriting on the same terms and conditions as securities otherwise being
sold through the underwriters. If in the good faith judgment of the
managing underwriter of any public offering inclusion of all of the
above-described shares covered by a request for registration would reduce
the number of shares to be offered by the Company or interfere with the
successful marketing of the shares offered by the Company, the number of
the above-described shares to be included in the public offering and the
Registration Statement may be reduced pro rata (by a number of shares)
13
among the holders requesting inclusion of the registration; provided,
within six (6) months thereafter the Company shall register any such
excluded shares pursuant to Section 7(a) above.
(e) The registration rights stated in Section 7 shall not be applicable to
shares issuable or issued upon the exercise of warrants to a holder if the
holder can sell all of those shares so acquired and at one time under Rule 144
of the Securities and Exchange Commission immediately upon the exercise of the
Warrant or Warrants.
(f) Anything in this Agreement to the contrary notwithstanding, the Company
shall be entitled to postpone for a period of time in its reasonable judgment,
but not to exceed 120 days (a "Blackout Period"), the filing of any registration
statement, and the preparation and/or filing of any prospectus or any amendments
or supplements to any registration statement or prospectus, if the Company
reasonably determines that any such filing or the offering of any shares would
(i) impede, delay or otherwise interfere with any financing, offer or sale of
securities, acquisition, corporate reorganization or other significant
transaction involving the Company or any of its subsidiaries, or (ii) require
disclosure of material information which, if disclosed at that time, would be
harmful to the interests of the Company and its shareholders; provided, however,
that, in the case of a Blackout Period pursuant to (ii) above, the blackout
period shall earlier terminate upon public disclosure by the Company or public
admissions by the Company of such material information. Upon notice by the
Company to the holders of such determination, each of the fact of any such
notice strictly confidential, (ii) promptly halt any offer, sale, trading or
transfer by of any of the shares for the duration of the Blackout period set
forth in such notice (or until earlier terminated in writing by the Company) and
(iii) promptly halt any use, publication, dissemination or distribution of any
registration statement with respect to any shares and any prospectus included
therein for the duration of the Blackout Period set forth in such notice (or
until earlier terminated in writing by the Company).
8. INDEMNIFICATION; CONTRIBUTION.
(a) The Company will indemnify and hold harmless each holder and each
affiliate thereof of Common Stock registered pursuant to this Agreement with the
Commission, or under any Blue Sky Law or regulation against any losses, claims,
damages, or liabilities, joint or several, to which such holder may become
subject under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, registration statement, prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse each
such holder and affiliate for any legal or other expenses reasonably incurred by
such holder in connection with investigating or defending any such action or
claim regardless of the negligence of any such holder or affiliate; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in any preliminary prospectus, registration statement or prospectus, or any
such amendment or supplement thereto, in reliance upon and in conformity with
written information furnished to the Company by any such holder expressly for
use therein.
14
(b) Each holder of Common Stock registered pursuant to this Agreement will
indemnify and hold harmless the Company against any losses, claims, damages or
liabilities to which the Company may become subject, under the Act or otherwise,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus,
registration statement or prospectus, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in any preliminary prospectus, registration statement
or prospectus, or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by such holder
expressly for use therein.
(c) Promptly after receipt by an indemnified party under Sections 8(a) or
(b) above of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under
either such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability that it may otherwise have to any indemnified
party. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof the
indemnifying party shall be entitled to assume the defense thereof by notice in
writing to the indemnified party. After notice from the indemnifying party to
such indemnified party of its election to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under either of
such subsections for any legal expenses of other counsel or any other expense,
in each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation incurred prior
to the assumption by the indemnifying party, unless such expenses have been
specifically authorized in writing by the indemnifying party, the indemnifying
party has failed to assume the defense and employ counsel, or the named parties
to any such action include both the indemnified party and the indemnifying
party, as appropriate, and such indemnified party has been advised by counsel
that the representation of such indemnified party and the indemnifying party by
the same counsel would be inappropriate due to actual or potential differing
interests between them, in each of which cases the fees of one counsel (together
with appropriate local counsel) for the indemnified party will be paid by the
indemnifying party. In no event shall any indemnifying party be liable in
respect of any amounts paid in settlement of any action unless the indemnifying
party shall have approved the terms of the settlement; provided, however, that
such consent or approval shall not unreasonably be withheld.
(d) If the indemnification provided for in this Section 8 is unavailable or
insufficient to hold harmless an indemnified party under Section 8(a) or 8(b) in
respect of any losses, claims, damages or liabilities (or action in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the holder or holders from this Agreement and from the offering of
the shares of Common Stock. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits
15
but also the relative fault of the Company and the holders in connection with
the statement or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the holder and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the holders agree that it
would not be just and equitable if contribution pursuant to this Section 8(d)
were determined by pro rata allocation (even if the holders were treated as one
entity for such purpose) or by any other method of allocation that does not take
into account the equitable considerations referred to above in this subsection
(e). Except as provided in Section 8(c), the amount paid or payable by an
indemnified party as a result of the losses, claims, damages, or liabilities (or
actions in respect thereof) referred to above in this Section 8(d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigation or defending any such action
or claim. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Notwithstanding any
provision in this Section 8(d) to the contrary, no holder shall be liable for
any amount, in the aggregate, in excess of the net proceeds to such holder from
the sale of such holder's shares (obtained upon exercise of Warrants) giving
rise to such losses, claims, damages or liabilities.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability that the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any holder of Warrants within the meaning of the Act. The
obligations of the holders of Common Stock under this Section 8 shall be in
addition to any liability that such holders may otherwise have and shall
extend, upon the same terms and conditions to each person, if any, who
controls the Company within the meaning of the Act.
9. STOCK EXCHANGE LISTING. In the event the Company lists its Common Stock
on any national securities exchange, the Company will, at its expense, also list
on such exchange, upon exercise of a Warrant, all shares of Common Stock
issuable pursuant to such Warrant.
10. SPECIFIC PERFORMANCE. The Company stipulates that remedies at law, in
money damages, available to the holder of a Warrant, or of a holder of Common
Stock issued pursuant to exercise of a 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 Agreement are not and will not be adequate. Therefore, the
Company agrees that the terms of this Agreement may be specifically enforced by
a decree for the specific performance of any agreement contained herein or by an
injunction against a violation of any of the terms hereof or otherwise.
11. SUCCESSORS AND ASSIGNS; BINDING EFFECT. This Agreement shall be binding
upon and inure to the benefit of you and the Company and their respective
successors and permitted assigns.
16
12. NOTICES. Any notice hereunder shall be given by registered or certified
mail, if to the Company, at its principal office referred to in Section 5 and,
if to the holders, to their respective addresses shown in the Warrant ledger of
the Company, provided that any holder may at any time on three (3) days' written
notice to the Company designate or substitute another address where notice is to
be given and the Company may at any time on three (3) days' written notice to
the holders of the Warrants or shares issued upon exercise of the Warrants
designate or substitute another address where notice is to be given.. Notice
shall be deemed given and received after a certified or registered letter,
properly addressed with postage prepaid, is deposited in the U.S. mail.
13. SEVERABILITY. Every provision of this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the remainder of this
Agreement.
14. ASSIGNMENT; REPLACEMENT OF WARRANTS. If the Warrant or Warrants are
assigned, in whole or in part, the Warrants shall be surrendered at the
principal office of the Company, and thereupon, in the case of a partial
assignment, a new Warrant shall be issued to the holder thereof covering the
number of shares not assigned, and the assignee shall be entitled to receive a
new Warrant covering the number of shares so assigned. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of any Warrant and appropriate bond or indemnification protection,
the Company shall issue a new Warrant of like tenor. Except as contemplated by
Section 7 of this Agreement, the Warrants will not be transferred, sold or
otherwise hypothecated by you or any other person and the Warrants will be
nontransferable, except to (i) one or more persons, each of which on the date of
transfer is an officer or partner of you; (ii) a partnership or partnerships,
the partners of which are you and one or more persons, each of whom on the date
of transfer is an officer to you; (iii) a successor to you in merger or
consolidation; (iv) a purchaser of all or substantially all of your assets; or
(v) a person that receives a Warrant upon death of a Holder pursuant to will,
trust, or the laws of intestate succession.
15. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Oklahoma without giving effect to the
principles of choice of laws thereof.
16. DEFINITION. All references to the word "you," and to "▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Securities Corporation." in this Agreement shall be deemed to apply with equal
effect to any persons or entities to whom Warrants have been transferred in
accordance with the terms hereof, and, where appropriate, to any persons or
entities holding shares of Common Stock issuable upon exercise of Warrants.
17. HEADINGS. The headings herein are for purposes of reference only and
shall not limit or otherwise affect the meaning of any of the provisions hereof.
Very truly yours,
TRAINING DEVICES INTERNATIONAL, INC.
17
By:
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
Accepted as of May _____, 2000.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ SECURITIES CORPORATION
BY:
----------------------------------
18
WARRANT CERTIFICATE
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO THE ISSUER, THAT AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
No. ______ _______ Warrants
TRAINING DEVICES INCORPORATED
COMMON STOCK PURCHASE WARRANT
THIS IS TO CERTIFY thatKashner Davidson Securities Corporation or its assigns as
permitted in that certain Warrant Agreement (the "Warrant Agreement") dated
_____________ __, 2000, by and among the Company (as hereinafter defined) and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Securities Corporation is entitled to purchase at any time or
from time to time on or after the first anniversary of the effective date of the
Company's initial public offering (the "Effective Date") until 5:00 p.m.,
Sarasota, Florida time on the fifth anniversary of the Effective Date, an
aggregate of 120,000 shares of Common Stock without par value of Training
Devices International, Inc., a Colorado corporation (the "Company"), for an
exercise price per share as set forth in the Warrant Agreement referred to
herein. This Warrant is issued pursuant to the Warrant Agreement, and all rights
of the holder of this Warrant are further governed by, and subject to the terms
and provisions of such Warrant Agreement, copies of which are available upon
request to the Company. The holder of this Warrant and the shares issuable upon
the exercise hereof shall be entitled to the benefits, rights and privileges and
subject to the obligations, duties and liabilities provided in the Warrant
Agreement.
The issuance of this Warrant and the shares issuable upon the due and timely
exercise hereof have not been registered under the Securities Act of 1933, as
amended (the "Act"), or any similar state securities law or act, and, as such,
no public offering of either this Warrant of any of the shares of Common Stock
issuable upon exercise of this Warrant may be made other than under an exemption
under the Act or until the effectiveness of a registration statement under such
Act covering such offering. Transfer of this Warrant is restricted as provided
in Section 14 of the Warrant Agreement.
Subject to the provisions of the Act, of the Warrant Agreement and of this
Warrant, this Warrant and all rights hereunder are transferable, in whole or in
part, only to the extent expressly permitted in such documents and then only at
the principal office of the Company, Attention: President, by the holder hereof
or by a duly authorized attorney-in-fact, upon surrender of this Warrant duly
endorsed, together with the Assignment hereof duly endorsed. Until transfer
hereof on the books of the Company, the Company may treat the registered holder
as the owner hereof for all purposes.
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed and its
corporate seal to be hereunto affixed by its proper corporate officers thereunto
duly authorized.
TRAINING DEVICES INTERNATIONAL, INC.
By:
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
19
[NOT TO BE COMPLETED PRIOR TO EXERCISE OF WARRANTS]
NOTICE OF EXERCISE OF WARRANTS
To: Training Devices International, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇. #2C
Englewood, Colorado 80112-3931
The undersigned hereby irrevocably elects to exercise ______ warrants
represented and evidenced by the within Certificate of Warrants for, and to
purchase thereunder ______ shares of Common Stock of Training Devices
International, Inc. provided for therein, and hereby delivers herewith
either: a certified check bank cashier's check, or wire transfer to a bank
specified by the Company, payable in United States Dollars to Training
Devices Incorporated in the aggregate amount of $______, which represents the
purchase price of such shares.
The undersigned hereby certifies that it qualifies as an "accredited
investor" as that term is defined under Regulation D of the Securities Act of
1933, as amended, and any applicable successor regulation or rule. The
undersigned to provide any supporting documentation to substantiate this status
as Training Devices Incorporated may reasonably request.
The undersigned further certifies that it is resident of the State of
_____________________ and that such State [ ] was [ ] was not (check one) the
state of the undersigned's residence at the time of the issuance of the
Warrants. (If "was not" in the foregoing statement was checked, the undersigned
shall deliver evidence of the compliance with the current resident state's "blue
sky" or state securities laws.)
If said number of shares shall not be all the shares purchasable
thereunder, please issue a new Certificate for the balance remaining of the
Warrants exercisable under the within Certificate registered in the name of the
undersigned holder of the within Certificate as indicated below, and deliver to
the address set forth below.
Dated:
------------------------
Name of Holder:
------------------------
Address:
-------------------------------
Signature:
--------------------------
Note: The above signature must correspond with the name as written upon the
face of the within Certificate in every particular, without alteration
or any change whatsoever.
20