EXHIBIT 4.4
DATA CONVERSION LABORATORY, INC.
PURCHASE WARRANT
Issued to:
▇▇▇▇▇▇▇ INVESTMENT COMPANY, INC.
Exercisable to Purchase
125,000 Units
THIS WARRANT HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933
AND IS NOT TRANSFERABLE
EXCEPT AS PROVIDED HEREIN
Void after _______, 2007
This is to certify that, for value received and subject to the
terms and conditions set forth below, the Warrantholder (hereinafter defined) is
entitled to purchase, and the Company promises and agrees to sell and issue to
the Warrantholder, at any time on or after __________, 2003 and on or
before_________ , 2007, up to 125,000 Units (hereinafter defined) at the
Exercise Price (hereinafter defined).
This Warrant Certificate is issued subject to the following
terms and conditions:
1. Definitions of Certain Terms. Except as may be otherwise
clearly required by the context, the following terms have the following
meanings:
(a) "Act" means the Securities Act of 1933, as amended.
(b) "Closing Date" means the date on which the Offering is
closed.
(c) "Commission" means the Securities and Exchange Commission.
(d) "Common Share" means the common stock, $.01 par value, of
the Company.
(e) "Company" means Data Conversion Laboratory, Inc., a New
York corporation.
(f) "Company's Expenses" means any and all expenses payable by
the Company or the Warrantholder in connection with an offering described in
Section 6 hereof, except Warrantholder's Expenses.
(g) "Effective Date" means the date on which the Registration
Statement is declared effective by the Commission.
(h) "Exercise Price" means the price at which the
Warrantholder may purchase one complete Unit (or Securities obtainable in lieu
of one complete Unit) upon exercise of Warrants as determined from time to time
pursuant to the provisions hereof. The initial Exercise Price is $ ________ per
Unit (120% of the initial public offering price of a Unit). If a Warrant is
exercised for a component of a Unit or Units, then the price payable in
connection with such exercise shall be determined by allocating $0.001 to the
Unit Warrant and the balance of the Exercise Price to the Common Share, or, in
each case, to any securities obtainable in addition to or in lieu of such Unit
Warrant or Common Share by virtue of the application of Section 3 of this
Warrant.
(i) "Offering" means the public offering of Units made
pursuant to the Registration Statement.
(j) "Participating Underwriter" means any underwriter
participating in the sale of the Securities pursuant to a registration under
Section 6 of this Warrant Certificate.
Page 1 - Purchase Warrant
(k) "Registration Statement" means the Company's registration
statement (File No. 333-90090), as amended on the Closing Date.
(l) "Rules and Regulations" means the rules and regulations of
the Commission adopted under the Act.
(m) "Securities" means the securities obtained or obtainable
upon exercise of the Warrant or securities obtained or obtainable upon exercise,
exchange or conversion of such securities.
(n) "Unit" means, as the case may require, either one of the
Units offered to the public pursuant to the Registration Statement or one of the
Units obtainable on exercise of a Warrant, each Unit consisting of one Common
Share and one Unit Warrant, each Unit Warrant to purchase one Common Share on
the terms and conditions described in the Registration Statement.
(o) "Unit Warrant" means a Common Share purchase warrant
included as a component of a Unit.
(p) "Warrant Certificate" means a certificate evidencing the
Warrant.
(q) "Warrantholder" means a record holder of the Warrant or
Securities. The initial Warrantholder is ▇▇▇▇▇▇▇ Investment Company, Inc.
(r) "Warrantholder's Expenses" means the sum of (i) the
aggregate amount of cash payments made to an underwriter, underwriting
syndicate, or agent in connection with an offering described in Section 6 hereof
multiplied by a fraction, the numerator of which is the aggregate sales price of
the Securities sold by such underwriter, underwriting syndicate, or agent in
such offering on behalf of the Warrantholder and the denominator of which is the
aggregate sales price of all of the securities sold by such underwriter,
underwriting syndicate, or agent in such offering and (ii) all out-of-pocket
expenses of the Warrantholder, except for the fees and disbursements of one firm
retained as legal counsel for the Warrantholder that will be paid by the
Company.
(s) "Warrant" means the warrant evidenced by this certificate,
any similar certificate issued in connection with the Offering, or any
certificate obtained upon transfer or partial exercise of the Warrant evidenced
by any such certificate.
2. Exercise of Warrants. All or any part of the Warrant may be
exercised commencing on the first anniversary of the Effective Date and ending
at 5:00 p.m. (Pacific Time) on the fifth anniversary of the Effective Date by
surrendering this Warrant Certificate, together with appropriate instructions,
duly executed by the Warrantholder or by its duly authorized attorney, at the
office of the Company, 184-13 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Expressway, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, or at such other office or agency as the Company may designate. Upon
receipt of notice of exercise, the Company shall immediately instruct its
transfer agent to prepare certificates for the Securities to be received by the
Warrantholder upon completion of the Warrant exercise. When such certificates
are prepared, the Company shall notify the Warrantholder and deliver such
certificates to the Warrantholder or as per the Warrantholder's instructions
immediately upon payment in full by the Warrantholder, in lawful money of the
United States, of the Exercise Price payable with respect to the Securities
being purchased. If the Warrantholder shall represent and warrant that all
applicable registration and prospectus delivery requirements for their sale have
been complied with upon sale of the securities received upon exercise of the
Warrant, such certificates shall not bear a legend with respect to the Act.
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If fewer than all the Securities purchasable under the Warrant are
purchased, the Company will, upon such partial exercise, execute and deliver to
the Warrantholder a new Warrant Certificate (dated the date hereof), in form and
tenor similar to this Warrant Certificate, evidencing that portion of the
Warrant not exercised. The Securities to be obtained on exercise of the Warrant
will be deemed to have been issued, and any person exercising the Warrants will
be deemed to have become a holder of record of those Securities, as of the date
of the payment of the Exercise Price.
3. Adjustments in Certain Events. Except as provided in
subsection 3(g) below, the number, class, and price of Securities for which this
Warrant Certificate may be exercised are subject to adjustment from time to time
upon the happening of certain events as follows:
(a) If the outstanding Common Shares of the Company are
divided into a greater number of shares or a dividend in stock is paid on the
Common Shares, the number of Common Shares for which the Warrant is then
exercisable will be proportionately increased and the Exercise Price will be
proportionately reduced; and, conversely, if the outstanding Common Shares are
combined into a smaller number of Common Shares, the number of Common Shares for
which the Warrant is then exercisable will be proportionately reduced and the
Exercise Price will be proportionately increased. The increases and reductions
provided for in this subsection 3(a) will be made with the intent and, as nearly
as practicable, the effect that neither the percentage of the total equity of
the Company obtainable on exercise of the Warrants nor the price payable for
such percentage upon such exercise will be affected by any event described in
this subsection 3(a).
(b) In case of any change in the Common Stock through merger,
consolidation, reclassification, reorganization, partial or complete
liquidation, purchase of substantially all the assets of the Company, or other
change in the capital structure of the Company (other than changes in par
value), then, as a condition of such change, lawful and adequate provision will
be made so that the holder of this Warrant Certificate will have the right
thereafter to receive upon the exercise of the Warrant the kind and amount of
shares of stock or other securities or property to which he would have been
entitled if, immediately prior to such event, he had held the number of Common
Shares obtainable upon the exercise of the Warrant. In any such case,
appropriate adjustment will be made in the application of the provisions set
forth herein with respect to the rights and interest thereafter of the
Warrantholder, to the end that the provisions set forth herein will thereafter
be applicable, as nearly as reasonably may be, in relation to any shares of
stock or other property thereafter deliverable upon the exercise of the Warrant.
The Company will not permit any change in its capital structure to occur unless
the issuer of the shares of stock or other securities to be received by the
holder of this Warrant Certificate, if not the Company, agrees to be bound by
and comply with the provisions of this Warrant Certificate.
(c) When any adjustment is required to be made in the number
of Common Shares, other securities, or the property purchasable upon exercise of
the Warrant, the Company will promptly determine the new number of such shares
or other securities or property purchasable upon exercise of the Warrant and (i)
prepare and retain on file a statement describing in reasonable detail the
method used in arriving at the new number of such shares or other securities or
property purchasable upon exercise of the Warrant and (ii) cause a copy of such
statement to be mailed to the Warrantholder within thirty (30) days after the
date of the event giving rise to the adjustment.
Page 3 - Purchase Warrant
(d) No fractional Common Shares or other securities will be
issued in connection with the exercise of the Warrant, but the Company will pay,
in lieu of fractional shares, a cash payment therefor on the basis of the mean
between the bid and asked prices of the Common Shares in the over-the-counter
market or the last sale price of the Common Shares on the Nasdaq SmallCap Market
or a national securities exchange on the day immediately prior to exercise.
(e) If securities of the Company or securities of any
subsidiary of the Company are distributed pro rata to holders of Common Stock,
such number of securities will be distributed to the Warrantholder or his
assignee upon exercise of his rights hereunder as such Warrantholder or assignee
would have been entitled to if this Warrant Certificate had been exercised prior
to the record date for such distribution. The provisions with respect to
adjustment of the Common Shares provided in this Section 3 will also apply to
the securities to which the Warrantholder or his assignee is entitled under this
subsection 3(e).
(f) Notwithstanding anything herein to the contrary, there
will be no adjustment made hereunder on account of the sale by the Company of
the Common Shares or other Securities purchasable upon exercise of the Warrant.
(g) The Underwriting Agreement between the Company and ▇▇▇▇▇▇▇
Investment Company, Inc., as the representative of the underwriters, relating to
the sale of the Units provides that, if the Company's audited pre-tax income for
the year ending December 31, 2002 is less tan $1.3 million, it will issue a 10%
stock dividend to all holders of Common Shares of record on the record date of
the dividend (the "Stock Dividend"). None of the adjustments considered by this
Section 3 will be made as a result of the issuance of the Stock Dividend.
4. Reservation of Securities. The Company agrees that the number
of Common Shares, Unit Warrants or other Securities sufficient to provide for
the exercise of the Warrant upon the basis set forth above will at all times
during the term of the Warrant be reserved for issuance upon exercise of the
Warrant.
5. Validity of Securities. All Securities delivered upon the
exercise of the Warrant will be duly and validly issued in accordance with their
terms, and the Company will pay all documentary and transfer taxes, if any, in
respect of the original issuance thereof upon exercise of the Warrant.
6. Registration of Securities Issuable on Exercise of Warrant
Certificate.
(a) The Company will register the Securities with the
Commission pursuant to the Act so as to allow the unrestricted sale of the
Securities to the public from time to time commencing on the first anniversary
of the Effective Date and ending at 5:00 p.m. (Pacific Time) on the fifth
anniversary of the Effective Date (the "Registration Period"). The Company will
also file such applications and other documents necessary to permit the sale of
the Securities to the public during the Registration Period in those states
designated by the Warrantholder among those in which the Units were qualified
for sale in the Offering or in such other states as the Company and the
Warrantholder agree to. In order to comply with the provisions of this Section
6(a), the Company is not required to file more than one registration statement
in addition to the Registration Statement.
Page 4 - Purchase Warrant
(b) The Company will pay all of the Company's Expenses and
each Warrantholder will pay its pro rata share of the Warrantholder's Expenses
relating to the registration, offer and sale of the Securities.
(c) Except as specifically provided herein, the manner and
conduct of the registration, including the contents of the registration
statement, will be entirely in the control and at the discretion of the Company.
The Company will file such post-effective amendments and supplements as may be
necessary to maintain the currency of the registration statement during the
Registration Period. In addition, if the Warrantholder participating in the
registration is advised by counsel that the registration statement, in their
opinion, is deficient in any material respect, the Company will use its best
efforts to cause the registration statement to be amended to eliminate the
concerns raised.
(d) The Company will furnish to the Warrantholder the number
of copies of a prospectus, including a preliminary prospectus, in conformity
with the requirements of the Act, and such other documents as it may reasonably
request in order to facilitate the disposition of Securities owned by it.
(e) The Company will, at the request of Warrantholders holding
at least 50 percent of the then outstanding Warrants, (i) furnish an opinion of
the counsel representing the Company for the purposes of the registration
pursuant to this Section 6, addressed to the Warrantholders and any
Participating Underwriter, (ii) in the event of an underwritten offering,
furnish an appropriate letter from the independent public accountants of the
Company, addressed to the Warrantholders and any Participating Underwriter, and
(iii) make such representations and warranties to the Warrantholders and any
Participating Underwriter as are customarily given to underwriters of public
offerings of equity securities in connection with such offerings. A request
pursuant to this subsection (e) may be made on three occasions. The documents
required to be delivered pursuant to this subsection (e) will be dated within
ten days of the request and will be, in form and substance, equivalent to
similar documents furnished to the underwriters in connection with the Offering,
with such changes as may be appropriate in light of changed circumstances.
7. Indemnification in Connection with Registration.
(a) If any of the Securities are registered, the Company will
indemnify and hold harmless each selling Warrantholder, any person who controls
any selling Warrantholder within the meaning of the Act, and any Participating
Underwriter against any losses, claims, damages, or liabilities, joint or
several, to which any Warrantholder, controlling person, or Participating
Underwriter may be subject under the Act or otherwise; and it will reimburse
each Warrantholder, each controlling person, and each Participating Underwriter
for any legal or other expenses reasonably incurred by the Warrantholder,
controlling person, or Participating Underwriter in connection with
investigating or defending any such loss, claim, damage, liability or action,
insofar as such losses, claims, damages, or liabilities, joint or several (or
actions in respect thereof), arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained, on the effective
date thereof, in any such registration statement or any preliminary prospectus
or final prospectus, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company will not be liable in any case
to the extent that any loss, claim, damage, or liability arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in any registration statement, preliminary prospectus,
final prospectus, or any amendment or supplement thereto, in reliance upon and
in conformity with information furnished by a Warrantholder for use in the
preparation thereof. The indemnity agreement contained in this subsection (a)
will not apply to amounts paid to any claimant in settlement of any suit or
claim unless such payment is first approved by the Company, such approval not to
be unreasonably withheld.
Page 5 - Purchase Warrant
(b) Each selling Warrantholder, as a condition of the
Company's registration obligation, will indemnify and hold harmless the Company,
each of its directors, each of its officers who have signed any registration
statement or other filing, or any amendment or supplement thereto, and any
person who controls the Company within the meaning of the Act, against any
losses, claims, damages, or liabilities to which the Company or any such
director, officer, or controlling person may become subject under the Act or
otherwise, and will reimburse any legal or other expenses reasonably incurred by
the Company or any such director, officer, or controlling person in connection
with investigating or defending any such loss, claim, damage, liability, or
action, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue or alleged untrue
statement of any material fact contained in said registration statement, any
preliminary or final prospectus, or other filing or any amendment or supplement
thereto, or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, but only to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in said registration statement, preliminary or final prospectus, or other
filing, or amendment or supplement, in reliance upon and in conformity with
written information furnished by such Warrantholder for use in the preparation
thereof; provided, however, that the indemnity agreement contained in this
subsection (b) will not apply to amounts paid to any claimant in settlement of
any suit or claim unless such payment is first approved by the Warrantholder,
such approval not to be unreasonably withheld.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against an
indemnifying party, notify the indemnifying party of the commencement thereof;
but the omission to notify the indemnifying party will not relieve it from any
liability that it may have to any indemnified party otherwise than under
subsections (a) and (b) except to the extent it was prejudiced by such failure
to notify.
(d) If any such action is brought against any indemnified
party and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in, and, to the extent that
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such indemnified party;
and after notice from the indemnifying party to such indemnified party of its
election to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation.
Page 6 - Purchase Warrant
8. Restrictions on Transfer. This Warrant Certificate and the
Warrant may not be sold, transferred, assigned, pledged or hypothecated for a
period of one year following the Effective Date of the Offering, except
transfers to officers or partners (not directors) of the underwriters and
members of the selling group who participated in the initial public offering of
the Company's securities, and/or their officers or partners or by will or
operation of law. The Warrant may be divided or combined, upon request to the
Company by the Warrantholder, into a certificate or certificates evidencing the
same aggregate number of Warrants.
9. No Rights as a Shareholder. Except as otherwise provided
herein, the Warrantholder will not, by virtue of ownership of the Warrant, be
entitled to any rights of a shareholder of the Company but will, upon written
request to the Company, be entitled to receive such quarterly or annual reports
as the Company distributes to its shareholders.
10. Optional Conversion.
(a) In addition to and without limiting the right of any
Warrantholder under the terms of this Warrant, the Warrantholder shall have the
right (the "Conversion Right") to convert this Warrant or any portion thereof
into Securities as provided in this Section 10 at any time or from time-to-time
after the first anniversary of the date hereof and prior to its expiration. Upon
exercise of the Conversion Right with respect to a particular number of Units
subject to this Warrant (the "Converted Securities"), the Company shall deliver
to the holder of this Warrant, without payment by the holder of any exercise
price or any cash or other consideration, that number of Units equal to the
quotient obtained by dividing the Net Value (as hereinafter defined) of the
Converted Securities by the sum of the fair market value (as defined in
paragraph (c) below) of one Common Share plus one Unit Warrant, determined in
each case as of the close of business on the Conversion Date (as hereinafter
defined). The "Net Value" of the Converted Securities shall be determined by
subtracting the aggregate Exercise Price of the Converted Securities from the
aggregate fair market value of the Converted Securities. Notwithstanding
anything in this Section 10 to the contrary, the Conversion Right cannot be
exercised with respect to a number of Converted Securities having a Net Value
below $100. No fractional shares shall be issuable upon exercise of the
Conversion Right, and if the number of shares to be issued in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
holder of this Warrant an amount in cash equal to the fair market value of the
resulting fractional share.
(b) The Conversion Right may be exercised by the holder of
this Warrant by the surrender of this Warrant at the principal office of the
Company together with a written statement specifying that the holder thereby
intends to exercise the Conversion Right and indicating the number of Securities
subject to this Warrant which are being surrendered (referred to in paragraph
(a) above as the Converted Securities) in exercise of the Conversion Right. Such
conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement, or on such later date as is
specified therein (the "Conversion Date"), but not later than the expiration
date of this Warrant. Certificates for the Common Shares and Unit Warrants
issuable upon exercise of the Conversion Right, together with a check in payment
of any fractional share and, in the case of a partial exercise, a new Warrant
evidencing the Securities remaining subject to this Warrant, shall be issued as
of the Conversion Date, and shall be delivered to the holder of this Warrant
within seven days following the Conversion Date.
Page 7 - Purchase Warrant
(c) For purposes of this Section 10, the "fair market value"
of a Common Share or Unit Warrant as of a particular date shall be the mean
between the bid and asked price of the Common Shares or Unit Warrant, as the
case may be, as quoted in the over the counter market, or, if applicable, the
closing sale price of the Common Shares or Unit Warrant, as the case may be, on
the Nasdaq Stock Market or a national exchange.
11. Notice. Any notices required or permitted to be given
hereunder will be in writing and may be served personally or by mail addressed
as follows:
If to the Company:
▇▇▇-▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
If to the Warrantholder:
at the address furnished
by the Warrantholder to the
Company for the purpose of
notice.
Any notice so given by mail will be deemed effectively given 48 hours
after mailing when deposited in the United States mail, registered or certified
mail, return receipt requested, postage prepaid and addressed as specified
above. Any party may by written notice to the other specify a different address
for notice purposes.
[Remainder of Page Intentionally Blank]
Page 8 - Purchase Warrant
12. Applicable Law. This Warrant Certificate will be governed by
and construed in accordance with the laws of the state of Oregon, without
reference to conflict of laws principles thereunder. All disputes relating to
this Warrant Certificate shall be tried before the courts of Oregon located in
Multnomah County, Oregon, to the exclusion of all other courts that might have
jurisdiction.
Dated as of ______________, 2002.
DATA CONVERSION LABORATORY, INC.
By:
---------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇,
President
Agreed and Accepted as of , 2002:
-----------------------------
▇▇▇▇▇▇▇ INVESTMENT COMPANY, INC.
By:
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POR1 #147027 v1
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