10(vi) Warrant Agreement between the Company and AMERICAN STOCK TRANSFER AND
TRUST COMPANY, as Warrant Agent.
AGREEMENT, dated this _____ day of _____________, 1997, between XETAL,
INC., a Utah corporation (the "Company"), and AMERICAN STOCK TRANSFER AND TRUST
COMPANY, as Warrant Agent (the "Warrant Agent").
W I T N E S S E T H:
WHEREAS, in connection with (i) the offering to the public pursuant to the
Prospectus (the "Prospectus") contained in the Company's Registration Statement
on Form SB-2 (Registration No. 333-20525) of 540,000 shares of the Company's
common stock, $0.001 par value per share (the "Common Stock"), (ii) the
offering to the public pursuant to the Prospectus of 1,080,000 redeemable
common stock purchase warrants (the "Warrants"), each Warrant entitling the
holder thereof to purchase one share of Common Stock, and (iii) the sale to
Worthington Capital Group, Inc. ("Worthington" or the "Underwriter"), its
successors and assigns, of warrants (the "Underwriter's Warrants") to purchase
an aggregate of 162,000 shares of Common Stock and 324,000 Warrants, each
Warrant entitling the holder thereof to purchase one share of Common Stock, the
Company will issue to the public up to 1,080,000 Warrants and to the
Underwriter the Underwriter's Warrants to purchase up to 162,000 shares of
Common Stock and 324,000 Warrants (subject to adjustment); and
WHEREAS, the Company desires to provide for the issuance of certificates
representing the Warrants; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer and exchange of certificates representing the
Warrants and the exercise of the Warrants.
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, the holders of
certificates representing the Warrants and the Warrant Agent, the parties
hereto agree as follows:
SECTION 1 Definitions. As used herein, the following terms shall have the
following meanings, unless the context shall otherwise require:
"Common Stock" shall mean stock of the Company of any class whether now or
hereafter authorized, which has the right to participate in the voting and in
the distribution of earnings and assets of the Company without limit as to
amount or percentage.
"Corporate Office" shall mean the office of the Warrant Agent (or its
successor) at which at any particular time its principal business in New York,
New York, shall be administered, which office is located on the date hereof at
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"Exercise Date" shall mean, subject to the provisions of Section 5(b) hereof,
as to any Warrant, the date on which the Warrant Agent shall have received both
(i) the Warrant Certificate representing such Warrant, with the exercise form
thereon duly executed by the Registered Holder hereof or his attorney duly
authorized in writing, and (ii) payment in cash or by certified or bank check
made payable to the Warrant Agent for the account of the Company, of the amount
in lawful money of the United States of America equal to the applicable
Purchase Price in good funds.
"Initial Warrant Exercise Date" shall mean ____________, 1998.
"Initial Warrant Redemption Date" shall mean__________, 1999.
"Purchase Price" shall mean, subject to modification and adjustment as provided
in Section 8, $5.00.
"Registered Holder" shall mean the person in whose name any certificate
representing the Warrants shall be registered on the books maintained by the
Warrant Agent pursuant to Section 6.
"Underwriter's Warrant Agreement" shall mean the agreement dated as of
______________, 1997 between the Company and the Underwriter relating to and
governing the terms and provisions of the Underwriter's Warrants.
"Subsidiary" or "Subsidiaries" shall mean any corporation or corporations, as
the case may be, of which stock having ordinary power to elect a majority of
the Board of Directors of such corporation (regardless of whether or not at the
time stock of any other class or classes of such corporation shall have or may
have voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned by the Company or by one or more Subsidiaries, or
by the Company and one or more Subsidiaries.
"Transfer Agent" shall mean American Stock Transfer and Trust Company, or its
authorized successor.
"Underwriting Agreement" shall mean the underwriting agreement dated
______________, 1997 between the Company and the Underwriters relating to the
sale to the public by Worthington, as the Company's exclusive agent, on a best
efforts basis, of the 540,000 shares of Common Stock and 1,080,000 Warrants.
"Warrant Certificate" shall mean a certificate representing each of the
Warrants substantially in the form annexed hereto as Exhibit A.
"Warrant Expiration Date" shall mean, unless the Warrants are redeemed as
provided in Section 9 hereof prior to such date, 5:00 p.m. (New York time), on
______________, 2002, or, if such date shall in the State of New York be a
holiday or a day on which banks are authorized to close, then 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 to close.
"Warrant Agent" shall mean American Stock Transfer and Trust Company, or its
authorized successor.
SECTION 2 Warrants and Issuance of Warrant Certificates.
Each Warrant shall initially entitle the Registered Holder of the Warrant
Certificate representing such Warrant to purchase at the Purchase Price
therefor from the Initial Warrant Exercise Date until the Warrant Expiration
Date one share of Common Stock upon the exercise thereof, subject to
modification and adjustment as provided in Section 8.
Upon execution of this Agreement, Warrant Certificates representing 1,080,000
Warrants to purchase up to an aggregate of 1,080,000 shares of Common Stock
(subject to modification and adjustment as provided in Section 8) shall be
executed by the Company and delivered to the Warrant Agent.
Upon exercise of the Underwriter's Warrants as provided therein, Warrant
Certificates representing all or a portion of 324,000 Warrants, including the
Warrants contained in the Underwriter's Warrants to purchase up to an aggregate
of 324,000 shares of Common Stock (subject to modification and adjustment as
provided in Section 8 hereof and in the Underwriters' Warrant Agreement), shall
be countersigned, issued and delivered by the Warrant Agent upon written order
of the Company signed by its Chairman of the Board, President or a Vice
President and by its Treasurer or an Assistant Treasurer or its Secretary or an
Assistant Secretary.
From time to time, up to the Warrant Expiration Date, as the case may be, the
Warrant Agent shall countersign and deliver Warrant Certificates in required
denominations of one or whole number multiples thereof to the person entitled
thereto in connection with any transfer or exchange permitted under this
Agreement. No Warrant Certificates shall be issued except (i) Warrant
Certificates initially issued hereunder, (ii) Warrant Certificates issued upon
any transfer or exchange of Warrants, (iii) Warrant Certificates issued in
replacement of lost, stolen, destroyed or mutilated Warrant Certificates
pursuant to Section 7, (iv) Warrant Certificates issued pursuant to the
Underwriter's Warrant Agreement (including Warrants in excess of the
Underwriter's Warrants to purchase 162,000 shares of Common Stock and 324,000
Warrants issued as a result of the anti-dilution provisions contained in the
Underwriter's Warrant Agreement), and (v) at the option of the Company, Warrant
Certificates in such form as may be approved by its Board of Directors, to
reflect any adjustment or change in the Purchase Price, the number of shares of
Common Stock purchasable upon exercise of the Warrants or the redemption price
therefor made pursuant to Section 8 hereof.
SECTION 3 Form and Execution of Warrant Certificates.
The Warrant Certificates shall be substantially in the form annexed 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 printed, lithographed or engraved 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 made pursuant thereto or with any rule or
regulation of any stock exchange on which Warrants may be listed, or to conform
to usage. 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).
Warrant Certificates shall be executed on behalf of the Company by its Chairman
of the Board, President or any Vice President and by its Treasurer or an
Assistant Treasurer or its Secretary or an Assistant Secretary, by manual
signatures or by facsimile signatures printed thereon, and shall have imprinted
thereon a facsimile of the Company's seal. Warrant Certificates shall be
manually countersigned. In case any officer of the Company who shall have
signed any of the Warrant Certificates shall cease to be such officer of the
Company before the date of issuance of the Warrant Certificates or before
countersignature by the Warrant Agent and issue and delivery thereof, such
Warrant Certificates, nevertheless, may be countersigned by the Warrant Agent,
issued and delivered with the same force and effect as though the person who
signed such Warrant Certificates had not ceased to be such officer of the
Company.
SECTION 4 Exercise.
Warrants in denominations of one or whole number multiples thereof may be
exercised commencing 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 (including the provisions set forth in Sections 5
and 9 hereof) 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, provided that the Warrant Certificate representing such Warrant,
with the exercise form thereon duly executed by the Registered Holder thereof
or his attorney duly authorized in writing, together with payment in cash or by
check made payable to the Warrant Agent for the account of the Company, of an
amount in lawful money of the United States of America equal to the applicable
Purchase Price has been received in good funds by the Warrant Agent. The
person entitled to receive the securities deliverable upon such exercise shall
be treated for all purposes as the holder of such securities as of the close of
business on the Exercise Date. As soon as practicable on or after the Exercise
Date and in any event within five business days after having received
authorization from the Company, the Warrant Agent on behalf of the Company
shall cause to be issued to the person or persons entitled to receive the same
a Common Stock certificate or certificates for the shares of Common Stock
deliverable upon such exercise, and the Warrant Agent shall deliver the same to
the person or persons entitled thereto. Upon the exercise of any Warrant, the
Warrant Agent shall promptly notify the Company in writing of such fact and of
the number of securities delivered upon such exercise and, subject to
subsection (b) below, shall cause all payments of an amount in cash or by check
made payable to the order of the Company, equal to the Purchase Price, to be
deposited promptly in the Company's bank account.
At any time upon the exercise of any Warrants after one (1) year and one day
from the date hereof, the Warrant Agent shall, on a daily basis, within two
business days after such exercise, notify the Underwriter, and its and their
successors or assigns, of the exercise of any such Warrants and shall, on a
weekly basis (subject to collection of funds constituting the tendered Purchase
Price, but in no event later than five business days after the last day of the
calendar week in which such funds were tendered), remit to the Underwriter (so
long as the Underwriter solicited the exercise of such Warrant as indicated
upon the Subscription Form attached to the Warrant Certificate tendered for
exercise), an amount equal to seven percent (7%) of the Purchase Price of such
Warrants being then exercised if written certification is received that (i) the
Warrant is exercised at least 12 months after the date of this Prospectus; (ii)
the market price of the Common Stock on the date that the Warrant is exercised
is greater than the exercise price of the Warrants; (iii) the exercise of the
Warrants was solicited by a member of the National Association of Securities
Dealers, Inc.; (iv) the Warrant is not held in a discretionary account; (v)
disclosure of the compensation arrangements is made at the time of the exercise
of the Warrant; (vi) the holder of the Warrant has stated in writing that the
exercise was solicited and designated in writing the soliciting broker-dealer;
and (vii) the solicitation of exercise of the Warrant was not in violation of
Rule 10b-6 promulgated under the Exchange Act; provided that the Warrant Agent
shall not be obligated to pay any amounts pursuant to this Section 4(b) during
any week that such amounts payable are less than $1,000 and the Warrant Agent's
obligation to make such payments shall be suspended until the amount payable
aggregate $1,000, and provided further, that, in any event, any such payment
(regardless of amount) shall be made not less frequently than monthly.
The Company shall not be required to issue fractional shares upon the exercise
of Warrants. Warrants may only be exercised in such multiples as are required
to permit the issuance by the Company of one or more whole shares. If one or
more Warrants shall be presented for exercise in full at the same time by the
same Registered Holder, the number of whole shares which shall be issuable upon
such exercise thereof shall be computed on the basis of the aggregate number of
shares purchasable on exercise of the Warrants so presented. If any fraction
of a share would, except for the provisions provided herein, be issuable on the
exercise of any Warrant (or specified portion thereof), the Company shall pay
an amount in cash equal to such fraction multiplied by the then current market
value of a share of Common Stock, determined as follows:
(1) If the Common Stock is listed or admitted to unlisted trading privileges
on the NYSE or the AMEX or is traded on the Nasdaq/NM, the current market value
of a share of Common Stock shall be the closing sale price of the Common Stock
at the end of the regular trading session on the last business day prior to the
date of exercise of the Warrants on whichever of such exchanges or Nasdaq/NM
had the highest average daily trading volume for the Common Stock on such day;
or
(2) If the Common Stock is not listed or admitted to unlisted trading
privileges on either the NYSE or the AMEX and is not traded on Nasdaq/NM, but
is quoted or reported on Nasdaq, the current market value of a share of Common
Stock shall be the average of the last reported closing bid and asked prices
(or the last sale price, if then reported by Nasdaq) of the Common Stock at the
end of the regular trading session on the last business day prior to the date
of exercise of the Warrants as quoted or reported on Nasdaq, as the case may
be; or
(3) If the Common Stock is not listed or admitted to unlisted trading
privileges on either of the NYSE or the AMEX, and is not traded on Nasdaq/NM or
quoted or reported on Nasdaq, but is listed or admitted to unlisted trading
privileges on the BSE or other national securities exchange (other than the
NYSE or the AMEX), the current market value of a share of Common Stock shall be
the closing sale price of the Common Stock at the end of the regular trading
session on the last business day prior to the date of exercise of the Warrants
on whichever of such exchanges has the highest average daily trading volume for
the Common Stock on such day; or
(4) If the Common Stock is not listed or admitted to unlisted trading
privileges on any national securities exchange, or listed for trading on
Nasdaq/NM or quoted or reported on Nasdaq, but is traded in the
over-the-counter market, the current market value of a share of Common Stock
shall be the average of the last reported bid and asked prices of the Common
Stock reported by the National Quotation Bureau, Inc. on the last business day
prior to the date of exercise of the Warrants; or
(5) If the Common Stock is not listed or admitted to unlisted trading
privileges on any national securities exchange, or listed for trading on
Nasdaq/NM or quoted or reported on Nasdaq, and bid and asked prices of the
Common Stock are not reported by the National Quotation Bureau, Inc., the
current market value of a share of Common Stock shall be an amount, not less
than the book value thereof as of the end of the most recently completed fiscal
quarter of the Company ending prior to the date of exercise, determined in
accordance with generally accepted accounting principles, consistently applied.
SECTION 5 Reservation of Shares; Listing; Payment of Taxes; etc.
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 thereof, be duly and validly issued and fully
paid and nonassessable and free from all preemptive or similar rights, taxes,
liens and charges with respect to the issue thereof, and that upon issuance
such shares shall be listed on each securities exchange, if any, on which the
other shares of outstanding Common Stock of the Company are then listed.
The Company covenants that if any securities to be reserved for the purpose of
exercise of Warrants hereunder require registration with, or approval of, any
governmental authority under any federal securities law before such securities
may be validly issued or delivered upon such exercise, then the Company will
file a registration statement under the federal securities laws or a post
effective amendment, use its best efforts to cause the same to become effective
and use its best efforts to keep such registration statement current while any
of the Warrants are outstanding and deliver a prospectus which complies with
Section 10(a)(3) of the Securities Act of 1933, as amended, (the "Act"), to the
Registered Holder exercising the Warrant (except, if in the opinion of counsel
to the Company, such registration is not required under the federal securities
law or if the Company receives a letter from the staff of the Securities and
Exchange Commission (the "Commission") stating that it would not take any
enforcement action if such registration is not effected). The Company will use
best efforts to obtain appropriate approvals or registrations under state "blue
sky" securities laws. With respect to any such securities, however, Warrants
may not be exercised by, or shares of Common Stock issued to, any Registered
Holder in any state in which such exercise would be unlawful.
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 of Common Stock upon
exercise of the Warrants; provided, however, that if 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
Warrant Agent the amount of transfer taxes or charges incident thereto, if any.
The Warrant Agent is hereby irrevocably authorized as the Transfer Agent to
requisition from time to time certificates representing shares of Common Stock
or other securities required upon exercise of the Warrants, and the Company
will comply with all such requisitions.
SECTION 6 Exchange and Registration of Transfer.
Warrant Certificates may be exchanged for other Warrant Certificates
representing an equal aggregate number of Warrants or may be transferred in
whole or in part. Warrant Certificates to be so exchanged shall be surrendered
to the Warrant Agent at its Corporate Office, and the Company shall execute and
the Warrant Agent shall countersign, issue and deliver in exchange therefor the
Warrant Certificate or Certificates which the Registered Holder making the
exchange or other trading market shall be entitled to receive.
The Warrant Agent shall keep, at such office, books in which, subject to such
reasonable regulations as it may prescribe, it shall register Warrant
Certificates and the transfer thereof. Upon due presentment for registration
of transfer of any Warrant Certificate at such office, the Company shall
execute and the Warrant Agent shall issue and deliver to the transferee or
transferees a new Warrant Certificate or Certificates representing an equal
aggregate number of Warrants.
With respect to any Warrant Certificates presented for registration or
transfer, or for exchange or exercise, the subscription or exercise form, as
the case may be, on the reverse thereof shall be duly endorsed or be
accompanied by a written instrument of instruments or transfer and
subscription, in form satisfactory to the Company and the Warrant Agent, duly
executed by the Registered Holder thereof or his attorney duly authorized in
writing.
No service charge shall be made for any exchange or registration of transfer of
Warrant Certificates. However, the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith.
All Warrant Certificates surrendered for exercise or for exchange shall be
promptly canceled by the Warrant Agent.
Prior to due presentment for registration or transfer thereof, the Company and
the Warrant Agent may deem and treat the Registered Holder of any Warrant
Certificate as the absolute owner thereof of each Warrant represented thereby
(notwithstanding any notations of ownership or writing thereon made by anyone
other than the Company or the Warrant Agent) for all purposes and shall not be
affected by any notice to the contrary.
SECTION 7 Loss or Mutilation.
Upon receipt by the Company and the Warrant Agent of evidence satisfactory to
them of the ownership of and the loss, theft, destruction or mutilation of any
Warrant Certificate and (in the case of loss, theft or destruction) of
indemnity satisfactory to them, and (in case of mutilation) upon surrender and
cancellation thereof, the Company shall execute and the Warrant Agent shall
countersign and deliver in lieu thereof a new Warrant Certificate representing
an equal aggregate number of Warrants. Applicants for a substitute Warrant
Certificate shall also comply with such other reasonable regulations and pay
such other reasonable charges as the Warrant Agent may prescribe.
SECTION 8 Adjustment of Purchase Price and Number of Shares of Common Stock
Deliverable.
Except as hereinafter provided, in the event the Company shall, at any time or
from time to time after the date hereof, issue any shares of Common Stock for a
consideration per share less than the "Fair Market Value" (as defined in
Section 8(g)) or 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 (any such issuance,
subdivision or combination being herein called a "Change of Shares"), then, and
thereafter upon each further Change of Shares, the Purchase Price for the
Warrants (whether or not the same shall be issued and outstanding) in effect
immediately prior to such Change of Shares shall be changed to a price
(including any applicable fraction of a cent to the nearest cent) determined by
dividing (i) the sum of (a) the total number of shares of Common Stock
outstanding immediately prior to such Change of Shares, multiplied by the
Purchase Price in effect immediately prior to such Change of Shares and (b) the
consideration, if any, received by the Company upon such sale, issuance,
subdivision or combination, by (ii) the total number of shares of Common Stock
outstanding immediately after such Change of Shares; provided, however, that in
no event shall the Purchase Price be adjusted pursuant to this computation to
an amount in excess of the Purchase Price in effect immediately prior to such
computation, except in the case of a combination of outstanding shares of
Common Stock.
For the purposes of any adjustment to be made in accordance with this Section
8(a), the following provisions shall be applicable:
(A) In case of the issuance or sale of shares of Common Stock (or of other
securities deemed hereunder to involve the issuance or sale of shares of Common
Stock) for a consideration part or all of which shall be cash, the amount of
the cash portion of the consideration therefor deemed to have been received by
the Company shall be (i) the subscription price, if shares of Common Stock are
offered by the Company for subscription, or (ii) the public offering price
(before deducting therefrom any compensation paid or discount allowed in the
sale, underwriting or purchase thereof by underwriters or dealers or others
performing similar services, or any expenses incurred in connection therewith),
if such securities are sold to underwriters or dealers for public offering
without a subscription offering, or (iii) the gross amount of cash actually
received by the Company for such securities, in any other case, in each case,
without deduction for any expenses incurred by the Company in connection with
such transaction.
(B) In case of the issuance or sale (other than as a dividend or other
distribution on any stock of the Company) of shares of Common Stock (or of
other securities deemed hereunder to involve the issuance or sale of shares of
Common Stock) for a consideration part or all of which shall be other than
cash, the amount of the consideration therefor other than cash deemed to have
been received by the Company shall be the value of such consideration as
determined in good faith by the Board of Directors of the Company on the basis
of a record of values of similar property or services.
(C) Shares of Common Stock issuable by way of dividend or other distribution
on any stock of the Company shall be deemed to have been issued immediately
after the opening of business on the day following the record date for the
determination of shareholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.
(D) The reclassification of securities of the Company other than shares of
Common Stock into securities including shares of Common Stock shall be deemed
to involve the issuance of such shares of Common Stock for a consideration
other than cash immediately prior to the close of business on the date fixed
for the determination of security holders entitled to receive such shares, and
the value of the consideration allocable to such shares of Common Stock shall
be determined as provided in subsection (B) of this Section 8(a).
(E) The number of shares of Common Stock at any time outstanding shall be
deemed to include the aggregate maximum number of shares issuable (subject to
readjustment upon the actual issuance thereof) upon the exercise of options,
rights or warrants and upon the conversion or exchange of convertible or
exchangeable securities.
Upon each adjustment of the Purchase Price pursuant to this Section 8, the
number of shares of Common Stock purchasable upon the exercise of each Warrant
shall be the number derived by multiplying the number of shares of Common Stock
purchasable immediately prior to such adjustment by the Purchase Price in
effect prior to such adjustment and dividing the product so obtained by the
applicable adjusted Purchase Price.
In case the Company shall at any time after the date hereof issue options,
rights or warrants to subscribe for shares of Common Stock, or issue any
securities convertible into or exchangeable for shares of Common Stock, for a
consideration per share (determined as provided in Section 8(a)(i) and as
provided below) less than the Fair Market Value in effect immediately prior to
the issuance of such options, rights or warrants, or such convertible or
exchangeable securities, or without consideration (including the issuance of
any such securities by way of dividend or other distribution), the Purchase
Price for the Warrants (whether or not the same shall be issued and
outstanding) in effect immediately prior to the issuance of such options,
rights or warrants, or such convertible or exchangeable securities, as the case
may be, shall be reduced to a price determined by making the computation in
accordance with the provisions of Section 8(a)(i) hereof, provided that:
(A) The aggregate maximum number of shares of Common Stock, as the case may
be, issuable or that may become issuable under such options, rights or warrants
(assuming exercise in full even if not then currently exercisable or currently
exercisable in full) shall be deemed to be issued and outstanding at the time
such options, rights or warrants were issued, for a consideration equal to the
minimum purchase price per share provided for in such options, rights or
warrants at the time of issuance, plus the consideration, if any, received by
the Company for such options, rights or warrants; provided, however, that upon
the expiration or other termination of such options, rights or warrants, if any
thereof shall not have been exercised, the number of shares of Common Stock
deemed to be issued and outstanding pursuant to this subsection (A) (and for
the purposes of subsection (E) of Section 8(a)(I) hereof) shall be reduced by
the number of shares as to which options, warrants and/or rights shall have
expired, and such number of shares shall no longer be deemed to be issued and
outstanding, and the Purchase Price then in effect shall forthwith be
readjusted and thereafter be the price that it would have been had adjustment
been made on the basis of the issuance only of the shares actually issued plus
the shares remaining issuable upon the exercise of those options, rights or
warrants as to which the exercise rights shall not have expired or terminated
unexercised.
(B) The aggregate maximum number of shares of Common Stock issuable or that
may become issuable upon conversion or exchange of any convertible or
exchangeable securities (assuming conversion or exchange in full even if not
then currently convertible or exchangeable in full) shall be deemed to be
issued and outstanding at the time of issuance of such securities, for a
consideration equal to the consideration received by the Company for such
securities, plus the minimum consideration, if any, receivable by the Company
upon the conversion or exchange thereof; provided, however, that upon the
termination of the right to convert or exchange such convertible or
exchangeable securities (whether by reason of redemption or otherwise), the
number of shares of Common Stock deemed to be issued and outstanding pursuant
to this subsection (B) (and for the purposes of subsection (E) of Section
8(a)(I) hereof) shall be reduced by the number of shares as to which the c
onversion or exchange rights shall have expired or terminated unexercised, and
such number of shares shall no longer be deemed to be issued and outstanding,
and the Purchase Price then in effect shall forthwith be readjusted and
thereafter be the price that it would have been had adjustment been made on the
basis of the issuance only of the shares actually issued plus the shares
remaining issuable upon conversion or exchange of those convertible or
exchangeable securities as to which the conversion or exchange rights shall not
have expired or terminated unexercised.
(C) If any change shall occur in the price per share provided for in any of
the options, rights or warrants referred to in subsection (A) of this Section
8(b), or in the price per share or ratio at which the securities referred to in
subsection (B) of this Section 8(b) are convertible or exchangeable, such
options, rights or warrants or conversion or exchange rights, as the case may
be, to the extent not theretofore exercise, shall be deemed to have expired or
terminated on the date when such price change became effective in respect of
shares not theretofore issued pursuant to the exercise or conversion or
exchange thereof, and the Company shall be deemed to have issued upon such date
new options, rights or warrants or convertible or exchangeable securities.
In case of any reclassification or change of outstanding shares of Common
Stock issuable upon exercise of the Warrants (other than a change in par value,
or from par value to no par value, or from no par value to par value or as a
result of a subdivision or combination), or in case of any consolidation or
merger of the Company with or into another corporation (other than a merger
with a Subsidiary in which merger the Company is the continuing corporation and
which does not result in any reclassification or change of the then outstanding
shares of Common Stock or other capital stock issuable upon exercise of the
Warrants (other than a change in par value, or from par value to no par value,
or from no par value to par value or as a result of subdivision or combination)
or in case of any sale or conveyance to another corporation of the property of
the Company as an entirety or substantially as an entirety, then, as a
condition of such reclassification, change, consolidation, merger, sale or
conveyance, the Company, or such successor or purchasing corporation, as the
case may be, shall make lawful and adequate provision whereby the Registered
Holder of each Warrant then outstanding shall have the right thereafter to
receive on exercise of such Warrant the kind and amount of securities and
property receivable upon such reclassification, change, consolidation, merger,
sale or conveyance by a holder of the number of securities issuable upon
exercise of such Warrant immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance and shall forthwith file at the
Corporate Office of the Warrant Agent a statement signed by its President or a
Vice President and by its Treasurer or an Assistant Treasurer or its Secretary
or an Assistant Secretary evidencing such provision. Such provisions shall
include provision for adjustments which shall be as nearly equivalent as may be
pract icable to the adjustments provided for in Section 8(a) and (b). The
above provisions of this Section 8(c) shall similarly apply to successive
reclassifications and changes of shares of Common Stock and to successive
consolidations, mergers, sales or conveyances.
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 and thereafter issued shall, unless the
Company shall exercise its option to issue new Warrant Certificates pursuant to
Section 2(e) hereof, continue to express the Purchase Price per share and the
number of shares purchasable thereunder as the Purchase Price per share.
After each adjustment of the Purchase Price pursuant to this Section 8, the
Company will promptly prepare a certificate signed by the Chairman or
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 each Warrant, after such adjustment, and (iii) a brief statement of
the facts accounting for such adjustment. The Company will promptly file such
certificate with the Warrant Agent and cause a brief summary thereof to be sent
by ordinary first class mail to each Registered Holder at his last address as
it shall appear on the registry books of the Warrant Agent. No failure to mail
such notice nor any defect therein or in the mailing thereof shall affect the
validity thereof except as the Registered Holder to whom the Company failed to
mail such notice, or except as to the Registered Holder whose notice was
defective. The affidavit of an officer of the Warrant Agent or 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.
No adjustment of the Purchase Price shall be made as a result of or in
connection with (A) the issuance of shares of Common Stock underlying the
Warrants or the securities issuable upon exercise of the Underwriter's Warrants
pursuant to the Underwriter's Warrant Agreement, or (B) the issuance or sale of
shares of Common Stock if the amount of said adjustment shall be less than
$.10, provided, however, that in such case, any adjustment that would otherwise
be required then to be made shall be carried forward and shall be made at the
time of and together with the next subsequent adjustment that shall amount,
together with any adjustment so carried forward, to at least $.10. In
addition, Registered Holders shall not be entitled to cash dividends paid by
the Company prior to the exercise of any Warrant or Warrants held by them.
"Fair Market Value" shall mean the value of a share of Common Stock as
determined in accordance with the following provisions:
(1) If the Common Stock is listed or admitted to unlisted trading privileges
on the NYSE or the AMEX or is traded on the Nasdaq/NM, the Fair Market Value of
a share of Common Stock shall be equal to the average of the closing sale price
of the Common Stock during the thirty (30) trading days immediately preceding
the date of the event which requires the determination of Fair Market Value on
whichever of such exchanges or Nasdaq/NM had the total highest daily trading
volume for the Common Stock during such thirty (30) day trading period.
(2) If the Common Stock is not listed or admitted to unlisted trading
privileges on either the NYSE or the AMEX and is not traded on Nasdaq/NM, but
is quoted or reported on Nasdaq, the Fair Market Value of a share of Common
Stock shall be the average of the last reported closing bid and asked prices
(or the last sale price, if then reported on Nasdaq) of the Common Stock during
the thirty (30) trading days immediately preceding the date of event which
requires the determination of Fair Market Value.
(3) If the Common Stock is not listed or admitted to unlisted trading
privileges on either of the NYSE or the AMEX and is not traded on Nasdaq/NM or
quoted or reported on Nasdaq, but is listed or admitted to unlisted trading
privileges on the BSE or another national securities exchange (other than the
NYSE or the AMEX), the Fair Market Value of a share of Common Stock shall be
the average of the closing sale price of the Common Stock during the thirty
(30) trading days immediately preceding the date of the event which requires
the determination of Fair Market Value.
(4) If the Common Stock is not listed or admitted to unlisted trading
privileges on any national securities exchange, or listed for trading on
Nasdaq/NM or quoted or reported on Nasdaq, but is traded in the
over-the-counter market, the Fair Market Value of a share of Common Stock shall
be the average of the average of the last reported bid and asked prices of the
Common Stock reported by the National Quotation Bureau, Inc. for the thirty
(30) trading days immediately preceding the date of the event which requires
the determination of Fair Market Value.
(5) If the Common Stock is not listed or admitted to unlisted trading
privileges on any national securities exchange, or listed for trading on
Nasdaq/NM or quoted or reported on Nasdaq, and bid and asked prices of the
Common Stock are not reported by the National Quotation Bureau, Inc., the Fair
Market Value of a share of Common Stock shall be an amount, not less than the
book value thereof as of the end of the most recently completed fiscal quarter
of the company ending prior to the date requiring a determination of fair
market value, determined in accordance with general accepted accounting
principles, consistently applied.
SECTION 9 Redemption.
Commencing on the Initial Warrant Redemption Date, the Company may, on 30
days' prior written notice redeem all the Warrants, other than the Warrants
underlying the Underwriter's Warrants which shall not be redeemable, at five
cents ($.05) per Warrant, provided, however, that before any such call for
redemption of Warrants can take place the closing sale price of the Common
Stock as quoted on NASDAQ or if such shares are not trading on NASDAQ then on
the principal market on which such shares shall then be trading, shall have,
for each of the twenty (20) consecutive trading days ending on the tenth (10th)
day prior to the date on which the notice contemplated by (b) and (c) below is
given, equaled or exceeded $7.50 per share (subject to adjustment in the event
of any stock splits or other similar events as provided in Section 8 hereof).
In case the Company shall exercise its right to redeem all of the Warrants so
redeemable, it shall give or cause notice to such effect to be given to the
Underwriter in the same manner that notice is required to be given by the
Underwriter's Warrant Agreement. The Underwriter may, at its option, solicit
exercises of the Warrants. In the event that the Underwriter does not commence
solicitation of exercises of the Warrants within thirty (30) days of notice
from the Company, the Company may give notice of redemption to the Registered
Holders of the Warrants by mailing to such Registered Holders a notice of
redemption, first class, postage prepaid, at their last address as shall appear
on the records of the Warrant Agent. Any notice mailed in the manner provided
herein shall be conclusively presumed to have been duly given whether or not
the Registered Holder receives such notice. Not less than five business days
prior to the mailing to the Regist ered Holders of the Warrants of the notice
of redemption, the Company shall deliver or cause to be delivered to the
Underwriter a similar notice telephonically and confirmed in writing together
with a list of the Registered Holders (including their respective addresses and
number of Warrants beneficially owned) to whom such notice of redemption has
been or will be given.
The notice of redemption shall specify (i) the redemption price, (ii) the date
fixed for redemption, which shall in no event be less than thirty (30) days
after the date of mailing of such notice, (iii) the place where the Warrant
Certificate shall be delivered and the redemption price shall be paid, (iv)
that the Underwriter is the Company's warrant solicitation agent and may
receive the commission contemplated by Section 4(b) hereof, and (v) that the
right to exercise the Warrant shall terminate at 5:00 p.m. (New York time) on
the business day immediately preceding the date fixed for redemption. The date
fixed for the redemption of the Warrants shall be the Redemption Date. No
failure to mail such notice nor any defect therein or in the mailing thereof
shall affect the validity of the proceedings for such redemption except as to a
holder (a) to whom notice was not mailed or (b) whose notice was defective. An
affidavit of the Warrant Agent or t he Secretary or Assistant Secretary of the
Company that notice of redemption has been mailed shall, in the absence of
fraud, be prima facie evidence of the facts stated therein.
Any right to exercise a Warrant shall terminate at 5:00 p.m. (New York time)
on the business day immediately preceding the Redemption Date. The redemption
price payable to the Registered Holders shall be mailed to such persons at
their addresses of record.
The Company shall indemnify the Underwriter and each person, if any, who
controls the Underwriter within the meaning of Section 15 of the Act or Section
20(a) of 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 Act, the Exchange Act or otherwise, arising from the registration
statement or prospectus referred to in Section 5(b) hereof to the same extent
and with the same effect (including the provisions regarding contribution) as
the provisions pursuant to which the Company has agreed to indemnify the
Underwriter contained in Section 7 of the Underwriting Agreement.
Five business days prior to the Redemption Date, the Company shall furnish to
the Underwriter (i) an opinion of counsel to the Company, dated such date and
addressed to the Underwriter, and (ii) a "cold comfort" letter dated such date
addressed to the Underwriter, signed by the independent public accountants who
have issued a report on the Company's financial statements included in such
registration statement, in each case covering substantially the same matters
with respect to such registration statement (and the prospectus included
therein) and, in the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements, as are customarily covered
in opinions of issuer's counsel and in accountants' letters delivered to
underwriters in underwritten public offerings of securities.
The Company shall as soon as practicable after the Redemption Date, and in any
event within 15 months thereafter, make "generally available to its security
holders" (within the meaning of Rule 158 under the Act) an earnings statement
(which need not be audited) complying with Section 11(a) of the Act and
covering a period of at least 12 consecutive months beginning after the
Redemption Date.
The Company shall deliver within five business days prior to the Redemption
Date copies of all correspondence between the Commission and the Company, its
counsel or auditors and all memoranda relating to discussions with the
Commission or its staff with respect to such registration statement and permit
the Underwriter to do such investigation, upon reasonable advance notice, with
respect to information contained in or omitted from the registration statement
as it deems reasonably necessary to comply with applicable securities laws or
rules of the NASD. Such investigation shall include access to books, records
and properties and opportunities to discuss the business of the Company with
its officers and independent auditors, all to such reasonable extent and at
such reasonable times and as often as the Underwriter shall reasonably request.
SECTION 10 Concerning the Warrant Agent.
The Warrant Agent acts hereunder as agent and in a ministerial capacity for
the Company and the Underwriter, and its duties shall be determined solely by
the provisions hereof. The Warrant Agent shall not, by issuing and delivering
Warrant Certificates or by any other act hereunder, be deemed to make any
representations as to the validity or value or authorization of the Warrant
Certificates or the Warrants represented thereby or of any securities or other
property delivered upon exercise of any Warrant or whether any stock issued
upon exercise of any Warrant is fully paid and nonassessable.
The Warrant Agent shall not at any time be under any duty or responsibility to
any holder of Warrant Certificates to make or cause to be made any adjustment
of the Purchase Price provided in this Agreement, or to determine whether any
fact exists which may require any such adjustment, or with respect to the
nature or extent of any such adjustment, when made, or with respect to the
method employed in making the same. It shall not (i) be liable for any recital
or statement of fact contained herein or for any action taken, suffered or
omitted by it in reliance on any Warrant Certificate or other document or
instrument believed by it in good faith to be genuine and to have been signed
or presented by the proper party or parties, (ii) be responsible for any
failure on the part of the Company to comply with any of its covenants and
obligations contained in this Agreement or in any Warrant Certificate, or (iii)
be liable for any act or omission in connec tion with this Agreement except for
its own gross negligence or willful misconduct.
The Warrant Agent may at any time consult with counsel satisfactory to it (who
may be counsel for the Company) and shall incur no liability or responsibility
for any action taken, suffered or omitted by it in good faith in accordance
with the opinion or advice of such counsel.
Any notice, statement, instruction, request, direction, order or demand of the
Company shall be sufficiently evidenced by an instrument signed by the Chairman
of the Board of Directors, President or any Vice President (unless other
evidence in respect thereof is herein specifically prescribed). The Warrant
Agent shall not be liable for any action taken, suffered or omitted by it in
accordance with such notice, statement, instruction, request, direction, order
or demand.
The Company agrees to pay the Warrant Agent reasonable compensation for its
services hereunder and to reimburse it for its reasonable expenses hereunder;
the Company further agrees to indemnify the Warrant Agent and save it harmless
against any and all losses, expenses and liabilities, including judgments,
costs and counsel fees, for anything done or omitted by the Warrant Agent in
the execution of its duties and powers hereunder except losses, expenses and
liabilities arising as a result of the Warrant Agent's gross negligence or
willful misconduct.
The Warrant Agent may resign its duties and be discharged from all further
duties and liabilities hereunder (except liabilities arising as a result of the
Warrant Agent's own gross negligence or willful misconduct), after giving 30
days' prior written notice to the Company. At least 15 days prior to the date
such resignation is to become effective, the Warrant Agent shall cause a copy
of such notice of resignation to be mailed to the Registered Holder of each
Warrant Certificate at the Company's expense. Upon such resignation the
Company shall appoint in writing a new warrant agent. If the Company shall
fail to make such appointment within a period of 30 days after it has been
notified in writing of such resignation by the resigning Warrant Agent, then
the Registered Holder of any Warrant Certificate may apply to any court of
competent jurisdiction for the appointment of a new warrant agent. Any new
warrant agent, whether appointed by the Compa ny or by such a court, shall be a
bank or trust company having a capital and surplus, as shown by its last
published report to its stockholders, of not less than $10,000,000 or a stock
transfer company doing business in New York. After acceptance in writing of
such appointment by the new warrant agent is received by the Company, such new
warrant agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the warrant
agent, without any further assurance, conveyance, act or deed; but if for any
reason it shall be necessary or expedient to execute and deliver any further
assurance, conveyance, act or deed, the same shall be done at the expense of
the Company and shall be legally and validly executed and delivered by the
resigning Warrant Agent. Not later than the effective date of any such
appointment the Company shall file notice thereof with the resigning Warrant
Agent and shall forthwith cause a copy of such notice to b e mailed to the
Registered Holder of each Warrant Certificate.
Any corporation into which the Warrant Agent or any new warrant agent may be
converted or merged, any corporation resulting from any consolidation to which
the Warrant Agent or any new warrant agent shall be a party, or any corporation
succeeding to the corporate trust business of the Warrant Agent or any new
warrant agent shall be a successor warrant agent under this Agreement without
any further act, provided that such corporation is eligible for appointment as
successor to the Warrant Agent under the provisions of the preceding paragraph.
Any such successor warrant agent shall promptly cause notice of its succession
as warrant agent to be mailed to the Company and to the Registered Holders of
each Warrant Certificate.
The Warrant Agent, its subsidiaries and affiliates, and any of its or their
officers or directors, may buy and hold or sell Warrants or other securities of
the Company and otherwise deal with the Company in the same manner and to the
same extent and with like effect as though it were not Warrant Agent. Nothing
herein shall preclude the Warrant Agent from acting in any other capacity for
the Company or for any other legal entity.
The Warrant Agent shall retain for a period of two years from the date of
exercise any Warrant Certificate received by it upon such exercise.
SECTION 11 Modification of Agreement.
The Warrant Agent and the Company may by supplemental agreement make any
changes or corrections in this Agreement (i) that they shall deem appropriate
to cure any ambiguity or to correct any defective or inconsistent provision or
manifest mistake or error herein contained; or (ii) that they may deem
necessary or desirable and which shall not adversely affect the interests of
the holders of Warrant Certificates; provided, however, that this Agreement
shall not otherwise be modified, supplemented or altered in any respect except
with the consent in writing of the Registered Holders representing not less
that 66-2/3% of the Warrants then outstanding (including, for this purpose
Warrants issuable to the Underwriter pursuant to the Underwriter's Warrant
Agreement, whether or not then outstanding); provided, further, that no change
in the number or nature of the securities purchasable upon the exercise of any
Warrant, or to increase the Purchase Price therefor, s hall be made without the
consent in writing of the Registered Holder of the Warrant Certificate, other
than such changes as are specifically prescribed by this Agreement as
originally executed. In addition, this Agreement may not be modified, amended
or supplemented without the prior written consent of the Underwriter, other
than to cure any ambiguity or to correct any provision which is inconsistent
with any other provision of this Agreement or to make any such change that is
necessary or desirable and which shall not adversely affect the interests of
the Underwriter and the Underwriters and except as may be required by law.
SECTION 12 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 postage prepaid, or delivered to a telegraph office for
transmission if to the Registered Holder of a Warrant Certificate, at the
address of such holder as shown on the registry books maintained by the Warrant
Agent; if to the Company at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇. ▇▇▇ ▇▇▇▇▇, Chief Executive Officer, or at such other address as
may have been furnished to the Warrant Agent in writing by the company; and if
to the Warrant Agent, at its Corporate Office. Copies of any notice delivered
pursuant to this Agreement shall be delivered to Worthington at Worthington
Capital Group, Inc., ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, President, or at such other address as may have been
furnished to the Company and the Warrant Agent in writing.
SECTION 13 Binding Effect.
This Agreement shall be governed by and construed in accordance with the laws
of the State of New York without giving effect to conflicts of laws.
SECTION 14 Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
Company, the Warrant Agent and their respective successors and assigns and the
holders from time to time of Warrant Certificates or any of them. Except as
hereinafter stated, nothing in this Agreement is intended or shall be construed
to confer upon any other person any right, remedy or claim or to impose upon
any other person any duty, liability or obligation. The Underwriter is and
shall at all times irrevocably be deemed to be, third-party beneficiaries of
this Agreement, with full power, authority and standing to enforce the rights
granted to it hereunder.
SECTION 15 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 first date first above written.
[SEAL]
XETAL, INC.
By: ▇▇. ▇▇▇ ▇▇▇▇▇, Chief Executive Officer
AMERICAN STOCK TRANSFER AND TRUST
COMPANY, as Warrant Agent
By:
EXHIBIT A
No. W VOID AFTER ___________, 2002
WARRANTS
WARRANT CERTIFICATE TO
PURCHASE ONE SHARE OF COMMON STOCK
XETAL, INC.
CUSIP
THIS CERTIFIES THAT, FOR VALUE RECEIVED
or registered assigns (the "Registered Holder") is the owner of the number of
Warrants (the "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 nonassessable share of Common Stock, $.001 par value, of XETAL, INC.,
a Utah corporation (the "Company"), at any time between _____________, 1998,
(the "Initial Warrant Exercise Date"), and the Expiration Date (as hereinafter
defined) upon the presentation and surrender of this Warrant Certificate with
the Subscription Form on the reverse hereof duly executed, at the corporate
office of American Stock Transfer and Trust Company, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, as Warrant Agent, or its successor (the "Warrant Agent"),
accompanied by payment of $5.00 subject to adjustment (the "Purchase Price"),
in lawful money of the United States of America in cash or by certified or bank
check made payable to the Warrant Agent for the account of 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
_______________, 1997, by and between the Company and the Warrant Agent.
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional interests will be issued. In the case of
the exercise of less than all of 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 "Expiration Date" shall mean 5:00 p.m. (New York time) on
_______________, 2002. 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. The Company shall not extend the Expiration Date nor
reduce the Purchase Price.
The Company shall not be obligated to deliver any securities pursuant to
the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to such securities
is effective or an exemption thereunder is available. The Company has
covenanted and agreed that it will file a registration statement under the
Federal securities laws, use its best efforts to cause the same to become
effective, use its best efforts to keep such registration statement current, if
required under the Act, while any of the Warrants are outstanding, and deliver
a prospectus which complies with Section 10(a)(3) of the Act to the Registered
Holder exercising this Warrant. This Warrant shall not be exercisable by a
Registered Holder in any state where such exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the surrender hereof by the
Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to
represent such number of Warrants as shall be designated by such Registered
Holder at the time of such surrender. Upon due presentment and payment of any
tax or other charge imposed in connection therewith or incident thereto, for
registration of transfer of this Warrant Certificate at such office, a new
Warrant Certificate or Warrant Certificates representing an equal aggregate
number of Warrants will be issued to the transferee in exchange therefor,
subject to the limitations provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the Registered
Holder shall not be entitled to any rights of a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends or
other distributions, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.
Subject to the provisions of the Warrant Agreement, this Warrant may be
redeemed at the option of the Company, at a redemption price of $.05 per
Warrant, at any time commencing two years after the Initial Warrant Exercise
Date, provided that (i) the closing sale price for the Common Stock as reported
by the National Association of Securities Dealers Automated Quotation System
("Nasdaq") or the National Quotation Bureau, Inc., if the Common Stock is then
traded in the over-the-counter market or (ii) the closing sale price, if the
Common Stock is then traded on Nasdaq/NM or a national securities exchange,
shall have equaled or exceeded for each of the twenty (20) consecutive trading
days ending on the tenth (10) day prior to the Notice of Redemption, as defined
below, $7.50 per share (subject to adjustment in the event of any stock splits
or other similar events). Notice of redemption (the "Notice of Redemption")
shall be given not later than the thirtieth day before the date fixed for
redemption, all as provided in the Warrant Agreement. On and after the close
of business on the day immediately preceding the date fixed for redemption, the
Registered Holder shall have no rights with respect to the Warrants except to
receive the $.05 per Warrant upon surrender of this Warrant Certificate.
Under certain circumstances, the Underwriter shall be entitled to
receive an aggregate of seven percent (7%) of the Purchase Price of the
Warrants represented hereby in accordance with Section 4(b) of the Warrant
Agreement.
Prior to due presentment for registration of transfer hereof, the
Company and the Warrant Agent may deem and treat the Registered Holder as the
absolute owner hereof and of each Warrant represented hereby (notwithstanding
any notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary, except as provided in the
Warrant Agreement.
This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to conflicts of
laws.
This Warrant Certificate is not valid unless countersigned by the Warrant
Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed, manually or in facsimile by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.
Dated: _____________, 1997
[SEAL] XETAL, INC.
By:
▇▇. ▇▇▇ ▇▇▇▇▇, Chief Executive Officer
By:
▇▇. ▇▇▇ ▇▇▇▇▇, Secretary
COUNTERSIGNED:
AMERICAN STOCK TRANSFER
AND TRUST COMPANY
as Warrant Agent
By:
Name:
Title:
10(vii)
Consulting Agreement between the Company and Worthington Capital Group,
Inc.
__________, 1997
Worthington Capital Group, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ENGAGEMENT AGREEMENT:
FINANCIAL CONSULTANT SERVICES
Gentlemen:
Xetal, Inc., a Utah corporation with its principal place of business
located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (the "Company")
hereby engages, upon the following terms and conditions, Worthington Capital
Group, Inc. ("Worthington" or the "Consultant") to provide certain financial
consulting services to the Company. Consulting Services. The Consultant will
provide the Company with the following consulting services, under the following
terms and conditions: The Consultant will assist the Company in the review and
analysis of the Company's business operations, which review and analysis shall
include, but not be limited to, the review and analysis of the Company's annual
net sales and expenses. Upon completing said review, the Consultant shall make
recommendations to the Company with respect thereto. The Consultant will also
assist the Company in the drafting and completion of any business plan(s) which
the Company may require. The Consultant will also assist the Company in
compiling any due diligence material which the Company may require.
Compensation. In consideration of the foregoing financial consulting services,
the Company further agrees to the following financial terms and conditions and
the Company agrees to the Consultant's fees as follows: The Company will engage
the Consultant as its financial consultant for a period of twenty-four (24)
months to commence upon the closing of the $67,500, public offering of the
Company's securities (the "Offering"), at a fee of $67,500, which $67,500 will
be payable in full at the closing of the Offering by deduction from the
proceeds thereof. The Consultant hereby accepts such compensation. 14.
Expenses Payment Schedule. The Company agrees to reimburse the Consultant for
reasonable expenses incurred by the Consultant in connection with the Services
hereunder. The Consultant will invoice the Company in advance for its
estimated expenses for each month. Payment of invoices will be due upon
receipt. A reconciliation of actual versus estimated expenses will be made and
adjusted on a monthly basis. Liability of Consultants. In furnishing the
Company with management advice and other services as herein provided, neither
the Consultant nor any officer, director or agent thereof shall be liable to
the Company or its creditors for errors of judgment or for anything except
wilful malfeasance, bad faith or gross negligence in the performance of their
duties or reckless disregard of their obligations and duties under the terms of
this Agreement. It is further understood and agreed that the Consultant may
rely upon information furnished to it reasonably believed to be accurate and
reliable and that, except as herein provided, the Consultant shall not be
accountable for any loss suffered by the Company by reason of the Company's
action or non-action on the basis of any advice, recommendation or approval of
the Consultant, its officers, partners, employees or agents. Status of
Consultant. The Consultant shall be deemed to be an independent contractor
and, except as expressly provided or authorized in this Agreement, shall have
no authority to act or represent the Company. Other Activities of Consultant.
The Company recognizes the Consultant now renders and may continue to render
management and other services to other companies which may or may not have
policies and conduct activities similar to those of the Company. The
Consultant shall be free to render such advice and other services and the
Company hereby consents thereto. The Consultant shall not be required to
devote its full time and attention to the performance of its duties under this
Agreement, but shall devote only so much of its time and attention as it deems
reasonable or necessary for such purposes. This Agreement shall be defined by
and construed in accordance with the laws of the State of New York. AGREED AND
ACCEPTED as of the date first above written:
XETAL, INC.
By:
▇▇. ▇▇▇ ▇▇▇▇▇,
Chief Executive
Officer
By:
▇▇▇▇▇ ▇▇▇▇▇,
President
WORTHINGTON CAPITAL GROUP, INC.
By:
▇▇▇▇▇▇ ▇▇▇▇▇▇, President