Exhibit 4.15
WARRANT AGREEMENT
AGREEMENT, dated as of this 12th day of February, 1999, by and between
PARADIGM MEDICAL INDUSTRIES, INC. (the ACompany") and KSH INVESTMENT GROUP, INC.
(the "Warrant Holder").
WITNESSETH:
WHEREAS, the Warrant Holder is serving as placement agent for the
Company with respect to the offer and sale, in a private placement (the "Private
Placement"), of a minimum of 572,000 shares and a maximum of 1,066,340 shares of
the Company=s Series D Convertible Preferred Stock, $.001 par value (the "Series
D Preferred Stock");
WHEREAS, pursuant to the Selling Agreement dated December 11, 1998, as
modified by the letter agreement dated February 2, 1999, between the Company and
the Warrant Holder, the Company agreed to issue pursuant to this Warrant
Agreement to the Warrant Holder as compensation in part for its services as
placement agent and investment banking services (i) Placement Agent Warrants to
be issued to the Warrant Holder at each closing under the Private Placement to
purchase at any time from the date of such closing through the applicable
Warrant Expiration Date a number of shares of Common Stock of the Company equal
to 6% of the number of shares of Common Stock into which the Series D Preferred
Stock sold at such closing is convertible at a purchase price equal to the
applicable Market Price (as defined in Section 1 hereof) for the date of such
closing and (ii) Investment Banking Fee Warrants (to be issued to the Warrant
Holder at the last closing under the Private Placement) to purchase for the
applicable Market Price for such date at any time through the applicable Warrant
Expiration Date 87,500 shares of Common Stock if a gross cumulative amount of
$1,000,000 is raised, additional identical Investment Banking Fee Warrants to
purchase an additional 17,500 shares of Common Stock for every additional
$250,000 raised up to $1,750,000 and additional identical Investment Banking Fee
Warrants to purchase up to an additional 17,500 shares of Common Stock if the
final $116,095 is raised, up to a maximum of Investment Banking Fee Warrants to
purchase 140,000 shares of Common Stock; it is understood that the Investment
Banking Fee Warrants will be issued by the Company dated, and exercisable for
the number of shares of Common Stock applicable to, the actual last closing date
under the Private Placement, even if at the time of the actual last closing date
a further closing was anticipated; and
WHEREAS, the Company desires to set forth the terms and conditions
relating to the issuance, registration, transfer, exchange and redemption of the
Placement Agent Warrants and the Investment Banking Fee Warrants, the issuance
of certificates representing the Warrants substantially in the form of Warrant
Certificate annexed as Exhibit A hereto, with such changes therein as shall be
applicable to the particular Warrant, the exercise of the Warrants, and the
rights of the holder or holders thereof.
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NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Warrants and the certificates representing the Warrants and
the respective rights and obligations thereunder of the Company and the Warrant
Holder, the parties hereto agree as follows:
1. Definitions. As used herein, the following terms shall have the following
meanings, unless the context shall otherwise require:
(a) "Common Stock" shall mean the common stock of the Company which at
the date hereof consists of 20,000,000 authorized shares, $ .001 par value, and
shall also include any capital stock of any class of the Company thereafter
authorized which shall not be limited to a fixed sum or percentage in respect to
the rights of the holders thereof to participate in dividends and in the
distribution of assets upon the voluntary liquidation, dissolution or winding up
of the Company; provided, however, that the shares issuable upon exercise of the
Warrants shall include (i) only shares of such class designated in the Company's
Certificate of Incorporation as Common Stock on the date of the original issue
of the Warrants, or (ii) in the case of any reclassification, change,
consolidation, merger, sale or conveyance of the character referred to in
Section 8(b) hereof, the stock, securities or property provided for in such
section; or (iii) in the case of any reclassification or change in the
outstanding shares of Common Stock issuable upon exercise of the Warrants as a
result of a subdivision or combination or a change in par value, or from par
value to no par value, or from no par value to par value, such shares of Common
Stock as so reclassified or changed.
(b) "Corporate Office" shall mean the office of the Company at which at
any particular time its principal business shall be administered, which office
is located at the date hereof at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇.
(c) "Exercise Date" shall mean, as to any Warrant, the date on which
the Company shall have received both (a) the Warrant Certificate representing
such Warrant, with the exercise form thereon duly executed by the Registered
Holder (as defined below) thereof or his attorney duly authorized in writing,
and (b) payment in cash, or by official bank or certified check made payable to
the Company, of an amount in lawful money of the United States of America equal
to the applicable Purchase Price (as defined below).
(d) "Initial Warrant Exercise Date" shall mean, with respect to each
Warrant, the date of original issuance thereof in accordance with the provisions
hereof.
(e) "Purchase Price," with respect to a Warrant issued on any date,
shall mean the purchase price per share to be paid upon exercise of such Warrant
in accordance with the terms hereof, which price shall be the Market Price,
subject to adjustment from time to time pursuant to the terms and provisions of
Section 8 hereof.
(f) "Market Price" at any date shall be deemed to be the (i) last
reported sale price on the prior trading day, as officially reported by the
principal securities exchange on which the Common Stock is listed or admitted to
trading, or (ii) if the Common Stock is not listed or admitted to trading on any
national securities exchange but is listed or quoted on the Nasdaq Stock Market
(National Market or SmallCap Market) (referred to hereinafter as "Nasdaq"), the
closing sales price on the prior trading day, or, (iii) if the Common Stock is
not listed or admitted to trading on any national securities exchange or Nasdaq,
but quotes for the Common Stock are available in the OTC Bulletin Board or "pink
sheets" the closing bid price on the last trading day, or (iv) in the event the
Common Stock is not traded upon a principal exchange and not listed on Nasdaq
and quotes are not available on the OTC Bulletin Board, the price as determined
in good faith by resolution of the Board of Directors of the Company, based on
the best information available to it.
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(g) "Registered Holder" shall mean as to any Warrant and as of any
particular date, the person in whose name the certificate representing the
Warrant shall be registered on that date on the books maintained by the Company
pursuant to Section 6.
(h) "Warrant Expiration Date" shall mean, with respect to the Placement
Agent Warrants, 5:00 P. M. (New York time) on the fifth anniversary of the date
of the initial closing under the Private Placement and, with respect to the
Investment Banking Fee Warrants, the fifth anniversary of the date of the last
closing under the Private Placement; provided that if any such date shall in the
State of New York be a holiday or a day on which banks are authorized or
required to close, then in lieu thereof 5:00 P.M. (New York time) on the next
following day which in the State of New York is not a holiday or a day on which
banks are authorized or required to close. Upon thirty (30) days' written notice
to all warrant holders, the Company shall have the right to extend the Warrant
Expiration Date of the Placement Agent Warrants or the Investment Banking Fee
Warrants.
(i) "Warrant Shares" shall have the meaning ascribed thereto in Section
2(a).
2. Warrants and Issuance of Warrant Certificates.
(a) A Warrant initially shall entitle the Registered Holder of the
Warrant to purchase the number of shares of Common Stock issuable upon the
exercise thereof (sometimes referred to as the "Warrant Shares"), in accordance
with the terms hereof and thereof, subject to modification and adjustment as
provided in Section 8.
(b) At each closing under the Private Placement, warrant certificates
("Warrant Certificates") in the form of Exhibit A annexed hereto shall be issued
and delivered by the Company to the Placement Agent representing the number of
Placement Agent Warrants and Investment Banking Fee Warrants required to be
delivered to the Placement Agent at such closing as provided in the second
WHEREAS clause at the head of this Agreement.
(c) From time to time, up to the applicable Warrant Expiration Date,
the Company shall or shall cause its transfer agent to countersign and deliver
stock certificates in required whole number denominations representing the
shares of Common Stock issuable, subject to adjustment as described herein, upon
the exercise of Warrants in accordance with this Agreement.
(d) From time to time, up to the applicable Warrant Expiration Date,
the Company shall countersign and deliver Warrant Certificates in required whole
number denominations to the persons entitled thereto in connection with any
transfer or exchange permitted under this Agreement; provided that no Warrant
Certificates shall be issued except (i) those initially issued hereunder, (ii)
those issued on or after the applicable Initial Warrant Exercise Date, upon the
exercise of fewer than all Warrants represented by any Warrant Certificate, to
evidence any unexercised Warrants held by the exercising Registered Holder,
(iii) those issued upon any transfer or exchange pursuant to Section 6; (iv)
those issued in replacement of lost, stolen, destroyed or mutilated Warrant
Certificates pursuant to Section 7; and (v) those issued at the option of the
Company, in such form as may be approved by the its Board of Directors, to
reflect any adjustment or change made pursuant to Section 8 hereof in the
Purchase Price or the number of shares of Common Stock purchasable upon exercise
of the Warrants.
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3. Form and Execution of Warrant Certificates.
(a) The Warrant Certificates shall be substantially in the form
attached hereto as Exhibit A (the provisions of which are hereby incorporated
herein) and may have such letters, numbers or other marks of identification or
designation and such legends, summaries or endorsements thereon as the Company
may deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law or with any rule or
regulation, or to conform to usage or to the requirements of Section 2(b). The
Warrant Certificates shall be dated the date of issuance thereof (whether upon
initial issuance, transfer, exchange or in lieu of mutilated, lost, stolen or
destroyed Warrant Certificates) and issued in registered form. Warrant
Certificates representing Placement Agent Warrants and Investment Banking Fee
Warrants shall each be numbered serially and designated with the letters PA and
IBF, respectively.
(b) Warrant Certificates shall be executed on behalf of the Company by
its President, or any Vice President and by its Secretary or an Assistant
Secretary, by manual signatures.
4. Exercise; Cashless Exercise.
(a) Each Warrant may be exercised by the Registered Holder thereof at
any time on or after the Initial Warrant Exercise Date, but not after the
Warrant Expiration Date, upon the terms and subject to the conditions set forth
herein and in the applicable Warrant Certificate. A Warrant shall be deemed to
have been exercised immediately prior to the close of business on the Exercise
Date and the person entitled to receive the securities deliverable upon such
exercise shall be treated for all purposes as the holder of those securities
upon the exercise of the Warrant as of the close of business on the Exercise
Date. Promptly following, and in any event within three (3) business days after
the date of such exercise, the Company shall cause to be issued and delivered to
the person or persons entitled to receive the same, a certificate or
certificates for the securities deliverable upon such exercise (plus a
certificate for any remaining unexercised Warrants of the Registered Holder).
(b) Notwithstanding any provisions herein to the contrary, in lieu of
exercising any Warrant as hereinabove permitted, the Registered Holder may elect
to exercise a Warrant or a portion thereof and to pay for the Warrant Shares
issuable upon such exercise by way of cashless exercise by surrendering the
certificate representing such Warrant at the Corporate Office of the Company,
together with the Subscription Form, in which event the Company shall issue to
the Registered Holder that number of Warrant Shares computed using the following
formula:
WS x (MP B EP)
CS = --------------------
MP
Where:
CS equals the number of Warrant Shares to be issued to the Holder;
WS equals the number of Warrant Shares purchasable under the Warrant
or, if only a portion of the Warrant is being exercised, the portion of the
Warrant being exercised (at the date of such calculation);
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MP equals the Market Price of the Warrant Shares; and
EP equals the Exercise Price of the Warrant Shares.
Solely for the purposes of this Section 4(b), Market Price shall be
calculated on the date on which the form of election attached to the Warrant
Certificate is (i) if mailed by the Warrant Holder, the date it is post marked
or (ii) if sent via facsimile, the date the facsimile is received by the Company
("Notice Date").
5. Reservation of Shares, Listing Payment of Taxes, etc.
(a) The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issue
upon exercise of Warrants, such number of shares of Common Stock as shall then
be issuable upon the exercise of all outstanding Warrants. The Company covenants
that all shares of Common Stock which shall be issuable upon exercise of the
Warrants shall, at the time of delivery, be duly and validly issued, fully paid,
non-assessable and free from all taxes, liens and charges with respect to the
issue thereof (other than those which the Company shall promptly pay or
discharge) and that upon issuance such shares shall be listed on each national
securities exchange or eligible for inclusion in each automated quotation
system, if any, on which the other shares of outstanding Common Stock of the
Company are then listed or eligible for inclusion.
(b) The Company shall pay all documentary, stamp or similar taxes and
other governmental charges that may be imposed with respect to the issuance of
Warrants, or the issuance, or delivery of any shares upon exercise of the
Warrants; provided, however, that if the shares of Common Stock are to be
delivered in a name other than the name of the Registered Holder of the Warrant
Certificate representing any Warrant being exercised, then no such delivery
shall be made unless the person requesting the same has paid to the Company the
amount of transfer taxes or charges incident thereto, if any.
6. Exchange and Registration of Transfer.
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants of the same
class or may be transferred in whole or in part only to an officer or partner of
the Warrant Holder. Warrant Certificates to be exchanged shall be surrendered to
the Company at its Corporate Office, and upon satisfaction of the terms and
provisions hereof, the Company shall execute, issue and deliver in exchange
therefor the Warrant Certificate or Certificates which the Registered Holder
making the exchange shall be entitled to receive. The Registered Holder shall
pay all transfer taxes, if any, for any transfer of Warrant Certificates.
(b) The Company shall keep at its office books in which, subject to
such reasonable regulations as it may prescribe, it shall register Warrant
Certificates and the transfer thereof in accordance with its regular practice.
Upon due presentment for registration of transfer of any Warrant Certificate at
such office, the Company shall execute, issue and deliver to the transferee or
transferees a new Warrant Certificate or Certificates of like kind and tenor
representing an equal aggregate number of Warrants.
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(c) With respect to all Warrant Certificates presented for registration
or transfer, or for exchange or exercise, the assignment or subscription form
attached thereto shall be duly endorsed, or be accompanied by a written
instrument or instruments of transfer and subscription, in form satisfactory to
the Company, duly executed by the Registered Holder or his attorney-in-fact duly
authorized in writing.
(d) All Warrant Certificates surrendered for exercise or for exchange
in case of mutilated Warrant Certificates shall be promptly canceled by the
Company and thereafter retained by the Company until termination of this
Agreement.
(e) Prior to due presentment for registration of transfer thereof, the
Company may deem and treat the Registered Holder of any Warrant Certificate as
the absolute owner thereof and of each Warrant represented thereby
(notwithstanding any notations of ownership or writing thereon made by anyone
other than a duly authorized officer of the Company) for all purposes and shall
not be affected by any notice to the contrary.
7. Loss or Mutilation. Upon receipt by the Company of evidence
satisfactory to it of the ownership of and loss, theft, destruction or
mutilation of any Warrant Certificate and (in case of loss, theft or
destruction) of indemnity satisfactory to it, and (in the case of mutilation)
upon surrender and cancellation thereof, the Company shall execute (in the
absence of notice to the Company that the Warrant Certificate has been
transferred pursuant to the terms of Section 6(a) hereof) and deliver to the
Registered Holder in lieu thereof a new Warrant Certificate of like tenor
representing an equal aggregate number of Warrants. Applicants for a substitute
Warrant Certificate shall comply with such other reasonable regulations and pay
such other reasonable charges as the Company may prescribe.
8. Adjustment of Exercise Price and Number of Shares of Common Stock or
Warrants.
(a) In the event the Company shall, at any time or from time to time
after the date hereof, issue any shares of Common Stock as a stock dividend to
the holders of Common Stock, or subdivide or combine the outstanding shares of
Common Stock into a greater or lesser number of shares, then, and thereafter
upon each further such stock dividend, subdivision or combination, the Purchase
Price with respect to each Warrant in effect immediately prior to such stock
dividend, subdivision or combination shall be proportionately adjusted.
Upon each adjustment of the Purchase Price with respect to a Warrant
pursuant to this Section 8, the total number of shares of Common Stock
purchasable upon the exercise of such Warrant shall (subject to the provisions
contained in Section 8(b) hereof) be such number of shares (calculated to the
nearest tenth) purchasable at the Purchase Price in effect immediately prior to
such adjustment multiplied by a fraction, the numerator of which shall be the
Purchase Price in effect immediately prior to such adjustment and the
denominator of which shall be the Purchase Price in effect immediately after
such adjustment.
(b) In case of any reclassification, capital reorganization or other
similar change of outstanding shares of Common Stock, or in case of any
consolidation or merger of the Company with or into another corporation (other
than a consolidation or merger in which the Company is the continuing
corporation and which does not result in any reclassification, capital
reorganization or other similar change of outstanding shares of Common Stock),
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or in case of any sale or conveyance to another corporation of the property of
the Company as, or substantially as, an entirety (other than a sale leaseback,
mortgage or other financing transaction), the Company shall cause effective
provision to be made so that each holder of a Warrant then outstanding shall
have the right thereafter, by exercising such Warrant, to purchase the kind and
number of shares of stock or other securities or property (including cash)
receivable upon such reclassification, capital reorganization or other similar
change, consolidation, merger, sale or conveyance by a holder of the number of
shares of Common Stock that might have been purchased upon exercise of such
Warrant immediately prior to such reclassification, capital reorganization or
other similar change, consolidation, merger, sale or conveyance. Any such
provision shall include provision for adjustments that shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
8. The Company shall not effect any such consolidation, merger or sale unless
prior to or simultaneously with the consummation thereof the successor (if other
than the Company) resulting from such consolidation or merger or the corporation
purchasing assets or other appropriate corporation or entity shall assume, by
written instrument executed and delivered to the Company, the obligation to
deliver to the holder of each Warrant such shares of stock, securities or assets
as, in accordance with the foregoing provisions, such holders may be entitled to
purchase and the other obligations under this Agreement. The foregoing
provisions shall similarly apply to successive reclassifications, capital
reorganizations and other similar changes of outstanding shares of Common Stock
and to successive consolidations, mergers, sales or conveyances.
(c) Irrespective of any adjustments or changes in the Purchase Price or
the number of shares of Common Stock purchasable upon exercise of the Warrants,
the Warrant Certificates theretofore issued shall, unless the Company shall
exercise its option to issue new Warrant Certificates pursuant to Section
2(d)(v) hereof, continue to express the Purchase Price per share and the number
of shares purchasable thereunder as the Purchase Price per share and the number
of shares purchasable were expressed in the Warrant Certificates when the same
were originally issued.
(d) After each adjustment of the Purchase Price for any Warrant
pursuant to this Section 8, the Company will promptly prepare a certificate
signed by the President or a Vice President, and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary, of the Company
setting forth: (i) the Purchase Price as so adjusted, (ii) the number of shares
of Common Stock purchasable upon exercise of such Warrant after such adjustment,
and (iii) a brief statement of the facts accounting for such adjustment. The
Company will promptly cause a brief summary thereof to be sent by ordinary first
class mail to each Registered Holder of Warrants at his last address as it shall
appear on the registry books of the Company. No failure to mail such notice nor
any defect therein or in the mailing thereof shall affect the validity thereof.
The affidavit of the Secretary or an Assistant Secretary of the Company that
such notice has been mailed shall, in the absence of fraud, be prima facie
evidence of the facts stated therein.
(e) No adjustment of the Purchase Price shall be made unless such
adjustment would require an increase or decrease of at least $.10 in such price;
provided that any adjustments which by reason of this Section 8(e) are not
required to be made shall be carried forward and shall be made at the time of
and together with the next subsequent adjustment which, together with any
adjustment(s) so carried forward, shall require an increase or decrease of at
least $.10 in the Purchase Price then in effect hereunder.
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(f) Any determination as to whether an adjustment in the Purchase Price
in effect hereunder is required pursuant to Section 8, or as to the amount of
any such adjustment, if required, shall be binding upon the holders of the
Warrants and the Company if made in good faith by the Board of Directors of the
Company.
(g) If and whenever the Company shall contemplate the grant to all the
holders of Common Stock, as such, rights or warrants to subscribe for or to
purchase, or any options for the purchase of, Common Stock or securities
convertible into or exchangeable for or carrying a right, warrant or option to
purchase Common Stock, the Company shall give each Registered Holder notice of
such contemplated grant at the same time it gives the holders of its Common
Stock notice of such grant, but in any event not later that 10 days prior to the
record date for such grant. No Registered Holder shall be entitled to such
rights, warrants or options unless, prior to the record date for such
transaction, such Registered Holder shall have exercised its Warrant and shall
have become a holder of Common Stock. Any Registered Holder that does exercise
its Warrant prior to such record date shall be entitled to receive such rights,
warrants or options that are attributable to the number of shares of Common
Stock held by such Registered Holder.
9. Private Placement.
The Warrants and the Warrant Shares have not been registered
under the Securities Act. Upon exercise, in part or in whole, of this Warrant,
certificates representing the Warrant Shares shall bear the following legend:
These securities have not been registered under the Securities
Act of 1933. Such securities may not be sold or offered for
sale, transferred, hypothecated or otherwise assigned in the
absence of an effective registration statement with respect
thereto under such Act or an opinion of counsel reasonably
satisfactory to the Company that an exemption from
registration for such sale, offer, transfer, hypothecation or
other assignment is available under such Act.
10. Registration of Warrant Shares.
(a) The Company agrees to include the Warrant Shares in the
registration statement which the Company has agreed to file with the Securities
and Exchange Commission (the "SEC") promptly after the last closing date under
the Private Placement to register the sale of the shares of Common Stock
issuable upon conversion of the Series D Preferred Stock sold in the Private
Placement. The Company will use its best efforts to have such registration
statement declared effective and will keep such registration statement current
until such time as the Warrant Shares are fully tradeable pursuant to Rule 144
(k) promulgated under the Securities Act.
(b) In connection with any registration of Warrant Shares under this
Section 10, the Company covenants and agrees as follows:
(i) The Company shall pay all costs (excluding fees and expenses of
counsel of any holder of Warrants Shares and any underwriting or selling
commissions or other charges of any broker-dealer acting on behalf of any
holder(s)), fees and expenses in connection with the registration statement
filed pursuant to Section 10(a) hereof including, without limitation, the
Company's legal and accounting fees, printing expenses and blue sky fees and
expenses.
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(ii) The Company will take all necessary action that may be required in
qualifying or registering the Warrants Shares for offering and sale under the
securities or blue sky laws of such states as reasonably are requested by the
holder(s) of the Warrants, provided that the Companv shall not be obligated to
qualify as a foreign corporation to do business under the laws of any such
jurisdiction.
(iii) The Company shall indemnify the holder(s) of the Warrant Shares
to be sold pursuant to the registration statement and each person, if any, who
controls such holder(s) within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), against all loss, claim, damage, expense or liability
(including all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may become subject
under the Securities Act, the Exchange Act or any other statute, common law or
otherwise, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in such registration statement executed
by the Company or based upon written information furnished by the Company filed
in any jurisdiction in order to qualify the Warrant Shares under the securities
laws thereof or filed with the SEC, any state securities commission or agency,
the National Association of Securities Dealers, Inc., Nasdaq or any securities
exchange, or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements contained
therein not misleading, unless such statement or omission was made in reliance
upon and in conformity with written information furnished to the Company by the
holder(s) expressly for use in such registration statement, any amendment or
supplement thereto or any application, as the case may be. If any action is
brought against the holder(s) or any controlling person of the holder(s) in
respect of which indemnity may be sought against the Company pursuant to this
Section 10(b)(iii), the holder(s) or such controlling person shall, within
thirty (30) days after the receipt of a summons or complaint, notify the Company
in writing of the institution of such action and the Company shall assume the
defense of such action, including, the employment and payment of reasonable fees
and expenses of counsel (which counsel shall be reasonably satisfactory to the
holder(s) or such controlling person), but the failure to give such notice shall
not affect such indemnified person's right to indemnification hereunder except
to the extent that the Company's defense of such action was materially adversely
affected thereby. The holder(s) or such controlling person shall have the right
to employ its or their own counsel in any such case, but the fees and expenses
of such counsel shall be at the expense of the holder(s) or such controlling
person unless the employment of such counsel shall have been authorized in
writing by the Company in connection with the defense of such action, the
Company shall not have employed counsel to have charge of the defense of such
action or such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to the Company (in which case the Company shall
not have the right to direct the defense of such action on behalf of the
indemnified party or parties) in any of which events the fees and expenses of
not more than one additional firm of attorneys for the holder(s) and/or such
controlling person shall be borne by the Company. Except as expressly provided
in the previous sentence, in the event that the Company shall have assumed the
defense of any such action or claim, the Company shall not thereafter be liable
to the holder(s) or such controlling person in investigating, preparing or
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defending any such action or claim. The Company agrees promptly to notify the
holder(s) of the commencement of any litigation or proceedings against the
Company or any of its officers, directors or controlling persons in connection
with the resale of the Warrant Shares or in connection with such registration
statement.
(iv) The holders of the Warrant Shares to be sold pursuant to the
registration statement, and their successors and assigns, shall severally, and
not jointly, indemnify the Company, its officers and directors and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, against all loss, claim,
damage, expense or liability (including all expenses reasonable incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Securities Act, the Exchange Act or otherwise,
arising from written information furnished by or on behalf of such holder(s), or
their successors or assigns, expressly for use in such registration statement.
As used in this Section 10, references to "holders of the Warrant
Shares" shall include the holders of the Warrants not yet exercised.
11. Fractional Warrants and Fractional Shares.
If the number of shares of Common Stock purchasable upon the exercise
of each Warrant is adjusted pursuant to Section 8 hereof, the Company
nevertheless shall not be required to issue fractions of shares, upon exercise
of the Warrants or otherwise, or to distribute certificates that evidence
fractional shares. In such event, the Company may at its option elect to round
up the number of shares to which the Holder is entitled to the nearest whole
share or to pay cash in respect of fractional shares in accordance with the
following: With respect to any fraction of a share called for upon any exercise
hereof, the Company shall pay to the Holder an amount in cash equal to such
fraction multiplied by the current Market Price of one share of Common Stock.
12. Warrant Holders Not Deemed Stockholders. No holder of Warrants
shall, as such, be entitled to vote or to receive dividends or be deemed the
holder of Common Stock that may at any time be issuable upon exercise of such
Warrants for any purpose whatsoever, nor shall anything contained herein be
construed to confer upon the holder of Warrants, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action (whether upon any recapitalization,
issue or reclassification of stock, change of par value or change of stock to no
par value, consolidation, merger or conveyance or otherwise), or to receive
notice of meetings, or to receive dividends or subscription rights, until such
Holder shall have exercised such Warrants and been issued shares of Common Stock
in accordance with the provisions hereof.
13. Rights of Action. All rights of action with respect to this
Agreement are vested in the respective Registered Holders of the Warrants, and
any Registered Holder of a Warrant or of the holder of any other Warrant, may,
in his own behalf and for his own benefit, enforce against the Company his right
to exercise his Warrants for the purchase of shares of Common Stock in the
manner provided in the Warrant Certificate and this Agreement.
-10-
14. Agreement of Warrant Holders. Every holder of a Warrant, by his
acceptance thereof, consents and agrees with the Company, and every other holder
of a Warrant that:
(a) The Warrants are transferable only on the registry books of the
Company by the Registered Holder thereof in person or by his attorney-in-fact
duly authorized in writing and only if the Warrant Certificates representing
such Warrants are surrendered at the office of the Company, duly endorsed or
accompanied by a proper instrument of transfer satisfactory to the Company in
its discretion, together with payment of any applicable transfer taxes; and
(b) The Company may deem and treat the Registered Holder as the
absolute, true and lawful owner of the Warrants represented thereby for all
purposes, and the Company shall not be affected by any notice or knowledge to
the contrary.
15. Cancellation of Warrant Certificates. If the Company shall purchase
or acquire any Warrant, the Warrant Certificate or Warrant Certificates
evidencing the same shall thereupon be delivered to the Company and canceled by
it and retired. The Company shall also cancel any Warrant Certificates following
exercise of any of the Warrants Certificates represented thereby or delivered to
it for transfer, split up, combination or exchange.
16. Modification of Agreement. This Agreement shall not be modified,
supplemented or altered in any respect except with the consent in writing of the
Company and the Warrant Holder, other than such changes as are specifically
prescribed by this Agreement as originally executed or are made in compliance
with applicable law.
17. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been made when
delivered or mailed first class registered or certified mail, postage prepaid as
follows: if to the Registered Holder of a Warrant Certificate, at the address of
such holder as shown on the registry books maintained by the Company; if to the
Company, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ or such other
address as the Company may specify.
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without reference to
principles of conflicts of laws.
19. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Company and the Registered Holders, and their respective
successors and assigns, and the holders from time to time of Warrant
Certificates. Nothing in this Agreement is intended or shall be construed to
confer upon any other person any right, remedy or claim, in equity or at law, or
to impose upon any other person any duty, liability or obligation.
20. Termination. This Agreement shall terminate at the close of
business on the latest Warrant Expiration Date of all the Warrants or such
earlier date upon which all Warrants have been exercised.
-11-
21. Counterparts. This Agreement may be executed in several
counterparts, which taken together shall constitute a single document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
PARADIGM MEDICAL INDUSTRIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
_____________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: CEO
KSH INVESTMENT GROUP, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
_____________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
-12-
EXHIBIT A
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SECURITIES MAY NOT BE SOLD OR OFFERED FOR SALE, TRANSFERRED,
HYPOTHECATED OR OTHERWISE ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT WITH RESPECT THERETO UNDER SUCH ACT OR AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT AN EXEMPTION FROM REGISTRATION FOR
SUCH SALE, OFFER, TRANSFER, HYPOTHECATION OR OTHER ASSIGNMENT IS AVAILABLE UNDER
SUCH ACT.
FORM OF WARRANT CERTIFICATE
No. ____
WARRANT CERTIFICATE FOR PURCHASE OF COMMON STOCK
PARADIGM MEDICAL INDUSTRIES, INC.
THIS CERTIFIES THAT
FOR VALUE RECEIVED _______________________________________ or
registered assigns (the "Registered Holder") is the owner of the number of
Common Stock Purchase Warrants ("Warrants") specified above. Each Warrant
initially entitles the Registered Holder to purchase, subject to the terms and
conditions set forth in this Certificate and the Warrant Agreement (as
hereinafter defined), one fully paid and non-assessable share of Common Stock,
$.001 par value ("Common Stock"), of PARADIGM MEDICAL INDUSTRIES, INC., a
Delaware corporation (the "Company"), at any time between the Initial Exercise
Date (as herein defined) and the Expiration Date (as hereinafter defined), upon
the presentation and surrender of this Warrant Certificate with the Subscription
Form attached hereto duly executed, at the corporate office of the Company,
accompanied by payment of $ (see footnote 1) per share of common stock, subject
to adjustment from time to time pursuant to the terms and provisions of Section
8 of the Warrant Agreement in lawful money of the United States of America in
cash or by official bank or certified check made payable to the Company.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the "Warrant Agreement") dated February 12,
1999, by and between the Company and the Registered Holder. Terms not defined
herein shall have the meanings assigned to them in the Warrant Agreement.
--------------------
1 The blanks in the form of warrant certificate shall be completed in the
actual Warrant Certificates in accordance with the terms and provisions
of the Warrant Agreement and the Placement Agency Agreement.
-13-
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price and/or the number of shares of Common Stock
subject to purchase upon the exercise of each Warrant represented hereby are
subject to modifications or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional shares of Common Stock will be issued. In
the case of the exercise of less than all the Warrants represented hereby, the
Company shall cancel this Warrant Certificate upon the surrender hereof and
shall execute and deliver a new Warrant Certificate or Warrant Certificates of
like tenor, which the Warrant Agent shall countersign, for the balance of such
Warrants.
The term "Initial Exercise Date" shall mean as of the date hereof.
The term "Expiration Date" shall mean 5:00 p.m. (New York time) on (see
footnote 1), 2004. If such date shall in the State of New York be a holiday or a
day on which the banks are authorized to close, then the Expiration Date shall
mean 5:00 p.m. (New York time) the next following day which in the State of New
York is not a holiday or a day on which banks are authorized to close.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York, without reference to
principles of conflicts of laws.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or in facsimile by its officer thereunto duly
authorized.
PARADIGM MEDICAL INDUSTRIES, INC.
By:___________________________________
Name:
Title:
Date:_________________________________
-14-
SUBSCRIPTION FORM
(To Be Executed by the Registered Holder in Order to Exercise Warrants)
--------------------------
Date:______________________
The Undersigned hereby elects irrevocably to exercise the
within Warrant and to purchase ____________ Shares of Common Stock of
Paradigm Medical Industries, Inc. and hereby makes payment of
$_____________________ (at the rate of $______________ per share) in
payment of the Exercise Price pursuant thereto. Please issue the
shares as to which this Warrant is exercised in accordance with the
instructions given below.
OR
The Undersigned hereby elects irrevocably to exercise the
within Purchase Option and to purchase ___________ Shares of Common
Stock of Paradigm Medical Industries, Inc. by surrender of the
unexercised portion of the within Warrant. Please issue the Common
Stock comprising the Warrant in accordance with the instructions given
below.
------------------------------
Signature
------------------------------
Signature Guaranteed
INSTRUCTIONS FOR REGISTRATION OF SECURITIES
Name________________________________________________________________________
(Print in Block Letters)
Address_____________________________________________________________________
NOTICE: The signature to this form must correspond with the
name as written upon the face of the within Warrant in every
particular without alteration or enlargement or any change whatsoever,
and must be guaranteed by a bank, other than a savings bank, or by a
trust company or by a firm having membership on a registered national
securities exchange.
ASSIGNMENT
(To Be Executed by the Registered Holder in Order to Assign Warrants)
---------------------------
FOR VALUE RECEIVED, the Undersigned Registered Holder hereby sells,
assigns and transfers unto
------------------------------------------
(insert name)
whose taxpayer identification or other identifying number is:
____________________ and whose address is:
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
(please print or type address)
the following number of the Warrants represented by this Warrant Certificate:
___________________, and hereby irrevocably constitutes and appoints
___________________ Attorney to transfer this Warrant Certificate on the books
of the Company, with full power of substitution in the premises.
---------------------------
(Date)
---------------------------
(Signature)
2