Exhibit 4.2
DISCAS, INC.
A DELAWARE CORPORATION
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY
WARRANT AGENT
WARRANT AGREEMENT
TABLE OF CONTENTS
SECTION PAGE
------- ----
1. Appointment of Warrant Agent....................................... 1
2. Form of Warrant.................................................... 1
3. Countersignature and Registration.................................. 2
4. Transfers and Exchanges............................................ 2
5. Exercise of Warrants; Payment of Warrant Solicitation Fee.......... 2
6. Payment of Taxes................................................... 5
7. Mutilated or Missing Warrants...................................... 5
8. Reservation of Common Stock........................................ 5
9. Warrant Price: Adjustments......................................... 6
10. Fractional Interests............................................... 11
11. Notices to Warrantholders.......................................... 11
12. Disposition of Proceeds on Exercise of Warrants.................... 12
13. Redemption of Warrants............................................. 12
14. Merger or Consolidation or Change of Name of Warrant Agent......... 13
15. Duties of Warrant Agent............................................ 13
16. Change of Warrant Agent............................................ 15
17. Identity of Transfer Agent......................................... 16
18. Notices............................................................ 16
19. Supplements and Amendments......................................... 16
20. New York Contract.................................................. 17
21. Benefits of this Agreement......................................... 17
22. Successors......................................................... 17
WARRANT AGREEMENT, dated as of __________ __, 1997, by and among
DISCAS, INC., a Delaware corporation (the "Company"), and AMERICAN STOCK
TRANSFER & TRUST COMPANY, as warrant agent (hereinafter called the "Warrant
Agent").
WHEREAS, the Company proposes to issue and sell, through an initial
public offering (the "Offering") by Roan Capital Partners L.P. and Merit
Capital Associates, Inc. (the "Underwriters", or each, an "Underwriter"),
pursuant to an Underwriting Agreement dated __________ __, 1997, an aggregate
of up to 920,000 shares of common stock, $.0001 par value per share (the
"Common Stock"), and up to 920,000 Common Stock Purchase Warrants (the "Public
Warrants") of the Company; and in connection with such offering the Company has
agreed to issue to the Underwriters or their designees options to purchase up
to 80,000 shares of Common Stock and 80,000 Public Warrants (the "Underwriters'
Warrant");
WHEREAS, the Company has sold an additional 800,000 Warrants pursuant
to a Private Placement Memorandum prior to the Offering (the "Bridge
Warrants"), each on the same terms and conditions as the Public Warrants (the
Public Warrants and the Bridge Warrants collectively referred to herein as the
"Warrants");
WHEREAS, each Warrant will entitle the holder to purchase one
share of Common Stock;
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, exchange and exercise of the Warrants;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
Section 1. Appointment of Warrant Agent. The Company hereby appoints
the Warrant Agent to act as Warrant Agent for the Company in accordance with
the instructions hereinafter set forth in this Agreement, and the Warrant Agent
hereby accepts such appointment.
Section 2. Form of Warrant. The text of the Warrants and of the form
of election to purchase Common Stock to be printed on the reverse thereof shall
be substantially as set forth in Exhibit A attached hereto. Each Warrant shall
entitle the registered holder thereof to purchase one share of Common Stock at
a purchase price of $6.25, at any time commencing thirteen (13) months from the
effective date of the prospectus of the public offering (__________ __, 1997)
("Effective Date") until 5:00 p.m. Eastern time, on __________ __, 2002. The
warrant exercise price and the number of shares of Common Stock issuable upon
exercise of the
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Warrants are subject to adjustment upon the occurrence of certain events, all
as hereinafter provided. The Warrants shall be executed on behalf of the
Company by the manual or facsimile signature of the present or any future
President or Vice President of the Company, and attested to by the manual or
facsimile signature of the present or any future Secretary or Assistant
Secretary of the Company.
Warrants shall be dated as of the issuance by the Warrant Agent either
upon initial issuance or upon transfer or exchange.
In the event the aforesaid expiration dates of the Warrants falls on a
Saturday or Sunday, or on a legal holiday on which the New York Stock Exchange
is closed, then the Warrants shall expire at 5:00 p.m. Eastern time on the next
succeeding business day.
Section 3. Countersignature and Registration. The Warrant Agent shall
maintain books for the transfer and registration of the Warrants. Upon the
initial issuance of the Warrants, the Warrant Agent shall issue and register
the Warrants in the names of the respective holders thereof. The Warrants shall
be countersigned manually or by facsimile by the Warrant Agent (or by any
successor to the Warrant Agent then acting as warrant agent under this
Agreement) and shall not be valid for any purpose unless so countersigned. The
Warrants may, however, be so countersigned by the Warrant Agent (or by its
successor as Warrant Agent) and be delivered by the Warrant Agent,
notwithstanding that the persons whose manual or facsimile signatures appear
thereon as proper officers of the Company shall have ceased to be such officers
at the time of such countersignature or delivery.
Section 4. Transfers and Exchanges. The Warrant Agent shall transfer,
from time to time, any outstanding Warrants upon the books to be maintained by
the Warrant Agent for that purpose, upon surrender thereof for transfer
properly endorsed or accompanied by appropriate instructions for transfer. Upon
any such transfer, a new Warrant shall be issued to the transferee and the
surrendered Warrant shall be cancelled by the Warrant Agent. Warrants so
cancelled shall be delivered by the Warrant Agent to the Company from time to
time upon request. Warrants may be exchanged at the option of the holder
thereof, when surrendered at the office of the Warrant Agent, for another
Warrant, or other Warrants of different denominations of like tenor and
representing in the aggregate the right to purchase a like number of shares of
Common Stock.
Section 5. Exercise of Warrants; Payment of Warrant Solicitation Fee.
Subject to the provisions of this Agreement, each registered holder of Warrants
shall have the right, which may be exercised commencing at the opening of the
business on , 1998, to purchase from the Company (and the Company shall
issue
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and sell to such registered holder of Warrants) the number of fully paid and
non-assessable shares of Common Stock specified in such Warrants upon surrender
of such Warrants to the Company at the office of the Warrant Agent, with the
form of election to purchase on the reverse thereof duly filled in and signed,
and upon payment to the Company of the warrant price, determined in accordance
with the provisions of Sections 9 and 10 of this Agreement, for the number of
shares of Common Stock in respect of which such Warrants are then exercised.
Payment of such warrant price shall be made in cash or by certified check or
bank draft to the order of the Company. Subject to Section 6, upon such
surrender of Warrants and payment of the warrant price, the Company shall issue
and cause to be delivered with all reasonable dispatch to or upon the written
order of the registered holder of such Warrants and in such name or names as
such registered holder may designate, a certificate or certificates for the
number of full shares of Common Stock so purchased upon the exercise of such
Warrants. Such certificate or certificates shall be deemed to have been issued
and any person so designated to be named therein shall be deemed to have become
a holder of record of such shares of Common Stock as of the date of the
surrender of such Warrants and payment of the warrant price as aforesaid. The
rights of purchase represented by the Warrants shall be exercisable, at the
election of the registered holders thereof, either as an entirety or from time
to time for a portion of the shares specified therein and, in the event that
any Warrant is exercised in respect of less than all of the shares of Common
Stock specified therein at any time prior to the date of expiration of the
Warrants, a new Warrant or Warrants will be issued to the registered holder for
the remaining number of shares of Common Stock specified in the Warrant so
surrendered, and the Warrant Agent is hereby irrevocably authorized to
countersign and to deliver the required new Warrants pursuant to the provisions
of this Section and of Section 3 of this Agreement and the Company, whenever
requested by the Warrant Agent, will supply the Warrant Agent with Warrants
duly executed on behalf of the Company for such purpose. Anything in the
foregoing to the contrary notwithstanding, no Warrant will be exercisable
unless at the time of exercise the Company has filed with the Securities and
Exchange Commission a registration statement under the Securities Act of 1933
(the "Act") covering the shares of Common Stock issuable upon exercise of such
Warrant and such registration statement shall have been declared effective,
such shares have been so registered or qualified or deemed to be exempt under
the securities laws of the state of residence of the holder of such Warrant.
The Company shall use its best efforts to have all shares so registered or
qualified on or before the date on which the Warrants become exercisable.
(a) If at the time of exercise of any Warrant after
__________ __, 1998 (i) the market price of the Company's Common
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Stock is equal to or greater than the then exercise price of the Warrant, (ii)
the exercise of the Warrant is solicited by an Underwriter at such time as it
is a member of the National Association of Securities Dealers, Inc. ("NASD"),
(iii) the Warrant is not held in a discretionary account, (iv) disclosure of
the compensation arrangement is made both at the time of the offering and at
the time of the exercise of the Warrants, (v) the Underwriter is designated in
writing as the soliciting broker and (vi) the solicitation of the exercise of
the Warrant is not in violation of Regulation M (as such rule or any successor
rule may be in effect as of such time of exercise) promulgated under the
Securities Exchange Act of 1934, then the Underwriter soliciting such Warrant
shall be entitled to receive from the Company upon exercise of each of the
Warrants so exercised a fee of seven percent (7%) of the aggregate price of the
Warrants so exercised (the "Exercise Fee"). The procedures for payment of the
warrant solicitation fee are set forth in Section 5(b) below.
(b) (1) Within five (5) days of the last day of each month
commencing with __________ __, 1998, the Warrant Agent will notify the
Underwriters of each Warrant Certificate which has been properly completed for
exercise by holders of Warrants during the last month. The Company and Warrant
Agent shall determine, in their sole and absolute discretion, whether a Warrant
Certificate has been properly completed. The Warrant Agent will provide the
Underwriters with such information, in connection with the exercise of each
Warrant, as the Underwriters shall reasonably request.
(2) The Company hereby authorizes and instructs the
Warrant Agent to deliver to the soliciting Underwriter the Exercise Fee
promptly after receipt by the Warrant Agent from the Company of a check payable
to the order of the soliciting Underwriter in the amount of the Exercise Fee.
In the event that an Exercise Fee is paid to the Underwriter with respect to a
Warrant which the Company or the Warrant Agent determines is not properly
completed for exercise or in respect of which the Underwriter is not entitled
to an Exercise Fee, the soliciting Underwriter will return such Exercise Fee to
the Warrant Agent which shall forthwith return such fee to the Company.
The Underwriters and the Company may at any time after __________ __,
1998, and during business hours, examine the records of the Warrant Agent,
including its ledger of original Warrant certificates returned to the Warrant
Agent upon exercise of Warrants. Notwithstanding any provision to the contrary,
the provisions of paragraph 5(a) and 5(c) may not be modified, amended or
deleted without the prior written consent of the Underwriters.
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Section 6. Payment of Taxes. The Company will pay any documentary
stamp taxes attributable to the initial issuance of Common Stock issuable upon
the exercise of Warrants; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates of shares of Common
Stock in a name other than that of the registered holder of Warrants in respect
of which such shares are issued, and in such case neither the Company nor the
Warrant Agent shall be required to issue or deliver any certificate for shares
of Common Stock or any Warrant until the person requesting the same has paid to
the Company the amount of such tax or has established to the Company's
satisfaction that such tax has been paid.
Section 7. Mutilated or Missing Warrants. In case any of the Warrants
shall be mutilated, lost, stolen or destroyed, the Company may, in its
discretion, issue and the Warrant Agent shall countersign and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant,
or in lieu of and in substitution for the Warrant lost, stolen or destroyed, a
new Warrant of like tenor and representing an equivalent right or interest, but
only upon receipt of evidence satisfactory to the Company and the Warrant Agent
of such loss, theft or destruction and, in case of a lost, stolen or destroyed
Warrant, indemnity, if requested, also satisfactory to them. Applicants for
such substitute Warrants shall also comply with such other reasonable
regulations and pay such reasonable charges as the Company or the Warrant Agent
may prescribe.
Section 8. Reservation of Common Stock. There have been reserved, and
the Company shall at all times keep reserved, out of the authorized and
unissued shares of Common Stock, a number of shares of Common Stock sufficient
to provide for the exercise of the rights of purchase represented by the
Warrants, and the transfer agent for the shares of Common Stock and every
subsequent transfer agent for any shares of the Company's Common Stock issuable
upon the exercise of any of the rights of purchase aforesaid are irrevocably
authorized and directed at all times to reserve such number of authorized and
unissued shares of Common Stock as shall be required for such purpose. The
Company agrees that all shares of Common Stock issued upon exercise of the
Warrants shall be, at the time of delivery of the certificates of such shares,
validly issued and outstanding, fully paid and nonassessable and listed on any
national securities exchange upon which the other shares of Common Stock are
then listed. So long as any unexpired Warrants remain outstanding, the Company
will file such post-effective amendments to the registration statement (Form
SB-2, Registration No. 333 - 26543) (the "Registration Statement") filed
pursuant to the Act with respect to the Warrants (or other appropriate
registration statements or post-effective
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amendment or supplements) as may be necessary to permit it to deliver to each
person exercising a Warrant, a prospectus meeting the requirements of Section
10(a)(3) of the Act and otherwise complying therewith, and will deliver such
prospectus to each such person. To the extent that during any period it is not
reasonably likely that the Warrants will be exercised, due to market price or
otherwise, the Company need not file such a post-effective amendment during
such period. The Company will keep a copy of this Agreement on file with the
transfer agent for the shares of Common Stock and with every subsequent
transfer agent for any shares of the Company's Common Stock issuable upon the
exercise of the rights of purchase represented by the Warrants. The Warrant
Agent is irrevocably authorized to requisition from time to time from such
transfer agent stock certificates required to honor outstanding Warrants. The
Company will supply such transfer agent with duly executed stock certificates
for that purpose. All Warrants surrendered in the exercise of the rights
thereby evidenced shall be cancelled by the Warrant Agent and shall thereafter
be delivered to the Company, and such cancelled Warrants shall constitute
sufficient evidence of the number of shares of Common Stock which have been
issued upon the exercise of such Warrants. Promptly after the date of
expiration of the Warrants, the Warrant Agent shall certify to the Company the
total aggregate amount of Warrants then outstanding, and thereafter no shares
of Common Stock shall be subject to reservation in respect of such Warrants
which shall have expired.
Section 9. Warrant Price: Adjustments.
(a) The warrant price at which Common Stock shall be
purchasable upon the exercise of the Warrants shall be $6.25 at any time from
__________ __, 1998 until 5:00 Eastern time on __________ __, 2002 or after
adjustment, as provided in this Section, shall be such price as so adjusted
(the "Warrant Price").
(b) The Warrant Price shall be subject to adjustment from
time to time as follows:
(i) In case the Company shall at any time after the
date hereof pay a dividend in shares of Common Stock or make a distribution in
shares of Common Stock, then upon such dividend or distribution the Warrant
Price in effect immediately prior to such dividend or distribution shall
forthwith be reduced to a price determined by dividing:
(A) an amount equal to the total number of
shares of Common Stock outstanding immediately prior to such dividend or
distribution multiplied by the Warrant Price in effect immediately prior to
such dividend or distribution, by
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(B) the total number of shares of Common Stock outstanding
immediately after such issuance or sale.
For the purposes of any computation to be made in accordance with the
provisions of this clause:
(i) The following provisions shall be applicable:
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 date following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution.
(ii) In case the Company shall at any time
subdivide or combine the outstanding Common Stock, the Warrant Price shall
forthwith be proportionately decreased in the case of subdivision or increased
in the case of combination to the nearest one cent. Any such adjustment shall
become effective at the time such subdivision or combination shall become
effective.
(iii) Within a reasonable time after the close of
each quarterly fiscal period of the Company during which the Warrant Price has
been adjusted as herein provided, the Company shall:
(A) File with the Warrant Agent a certificate signed by the
President or Vice President of the Company and by the Treasurer or Assistant
Treasurer or the Secretary or an Assistant Secretary of the Company, showing
in detail the facts requiring all such adjustments occurring during such
period and the Warrant Price after each such adjustment; and
(B) The Warrant Agent shall have no duty with respect to any
such certificate filed with it except to keep the same on file and available
for inspection by holders of Warrants during reasonable business hours, and
the Warrant Agent may conclusively rely upon the latest certificate furnished
to it hereunder. The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of a Warrant to determine whether any facts exist
which may require any adjustment of the Warrant Price, or with respect to the
nature or extent of any adjustment of the Warrant Price when made, or with
respect to the method employed in making any such adjustment, or with respect
to the nature or extent of the property or securities deliverable hereunder.
In the absence of a certificate having been furnished, the Warrant Agent may
conclusively rely upon the provisions of the Warrants with respect to the
Common Stock deliverable upon the exercise of the Warrants and the applicable
Warrant Price thereof.
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(C) Notwithstanding anything contained herein to the contrary,
no adjustment of the Warrant Price shall be made if the amount of such
adjustment shall be less than $.05, but 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 and together with the next subsequent adjustment which,
together with any adjustment so carried forward, shall amount to not less than
$.05.
(c) In the event that the number of outstanding shares of Common
Stock is increased by a stock dividend payable in Common Stock or by a
subdivision of the outstanding Common Stock, then, from and after the time at
which the adjusted Warrant Price becomes effective pursuant to Subsection (b)
of this Section by reason of such dividend or subdivision, the number of shares
of Common Stock issuable upon the exercise of each Warrant shall be increased
in proportion to such increase in outstanding shares. In the event that the
number of shares of Common Stock outstanding is decreased by a combination of
the outstanding Common Stock, then, from and after the time at which the
adjusted Warrant Price becomes effective pursuant to Subsection (b) of this
Section by reason of such combination, the number of shares of Common Stock
issuable upon the exercise of each Warrant shall be decreased in proportion to
such decrease in the outstanding shares of Common Stock.
(d) In case of any reorganization or reclassification of the
outstanding Common Stock (other than a change in par value, or from par value
to no par value, or as a result of a subdivision or combination), or in case of
any consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any reclassification of the
outstanding Common Stock), 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, the holder of each Warrant then outstanding shall thereafter have
the right to purchase the kind and amount of shares of Common Stock and/or
other securities and property receivable upon such reorganization,
reclassification, consolidation, merger, sale or conveyance by a holder of the
number of shares of Common Stock which the holder of such Warrant shall then be
entitled to purchase; such adjustments shall apply with respect to all such
changes occurring between the date of this Warrant Agreement and the date of
exercise of such Warrant.
(e) Subject to the provisions of this Section 9, in case the
Company shall, at any time prior to the exercise of the Warrants, make any
distribution of its assets to holders of its Common Stock as a liquidating or a
partial liquidating dividend, then the holder of Warrants who exercises his
Warrants after the
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record date for the determination of those holders of Common Stock entitled to
such distribution of assets as a liquidating or partial liquidating dividend
shall be entitled to receive for the Warrant Price per Warrant, in addition to
each share of Common Stock, the amount of such distribution (or, at the option
of the Company, a sum equal to the value of any such assets at the time of such
distribution as determined by the Board of Directors of the Company in good
faith), which would have been payable to such holder had he been the holder of
record of the Common Stock receivable upon exercise of his Warrant on the
record date for the determination of those entitled to such distribution.
(f) In case of the dissolution, liquidation or winding-up of the
Company, all rights under the Warrants shall terminate on a date fixed by the
Company, such date to be no earlier than ten (10) days prior to the
effectiveness of such dissolution, liquidation or winding-up and not later than
five (5) days prior to such effectiveness. Notice of such termination of
purchase rights shall be given to the last registered holder of the Warrants,
as the same shall appear on the books of the Company maintained by the Warrant
Agent, by registered mail at least thirty (30) days prior to such termination
date.
(g) In case the Company shall, at any time prior to the expiration
of the Warrants and prior to the exercise thereof, offer to the holders of its
Common Stock any rights to subscribe for additional shares of any class of the
Company, then the Company shall give written notice thereof to the last
registered holder thereof not less than thirty (30) days prior to the date on
which the books of the Company are closed or a record date is fixed for the
determination of the stockholders entitled to such subscription rights. Such
notice shall specify the date as to which the books shall be closed or record
date fixed with respect to such offer of subscription and the right of the
holder thereof to participate in such offer of subscription shall terminate if
the Warrant shall not be exercised on or before the date of such closing of the
books or such record date.
(h) Any adjustment pursuant to the aforesaid provisions shall be
made on the basis of the number of shares of Common Stock which the holder
thereof would have been entitled to acquire by the exercise of the Warrant
immediately prior to the event giving rise to such adjustment.
(i) Irrespective of any adjustments in the Warrant Price or the
number or kind of shares purchasable upon exercise of the Warrants, Warrants
previously or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the similar Warrants initially
issuable pursuant to this Warrant Agreement.
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(j) The Company may retain a firm of independent public accountants
(who may be any such firm regularly employed by the Company) to make any
computation required under this Section, and any certificate setting forth such
computation signed by such firm shall be conclusive evidence of the correctness
of any computation made under this Section.
(k) If at any time, as a result of an adjustment made pursuant to
paragraph (d) above, the holders of a Warrant or Warrants shall become entitled
to purchase any securities other than shares of Common Stock, thereafter the
number of such securities so purchasable upon exercise of each Warrant and the
Warrant Price for such shares shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to the provisions
with respect to the Common Stock contained in paragraphs (b) and (c).
(l) No adjustment to the Purchase Price of the Warrants or to the
number of shares of Common Stock purchasable upon the exercise of such Warrants
will be made, however under the following circumstances:
(i) upon the grant or exercise of any of the
options presently outstanding (or options which may hereafter be granted and/or
exercised) under the Company's 1997 Stock Option Plan for officers, directors
and/or employees, consultants and similar situated parties of the Company; or
(ii) upon the sale or exercise of the Warrants; or
(iii) upon exercise of the Underwriters' Warrant as
otherwise described in the Company's Prospectus dated __________ __, 1997; or
(iv) upon exercise or sale of the Warrants issuable
upon exercise of the Underwriters' Warrant; or
(v) upon any amendment to or change in the term of
any rights or warrants to subscribe for or purchase, or options for the
purchase of Common Stock or convertible securities, including, but not limited
to, any extension of any expiration date of any such right, warrant or option,
any change in any exercise or purchase price provided for in any such right,
warrant or option, any extension of any date through which any convertible
securities are convertible into or exchangeable for Common Stock or any change
in the rate at which any convertible securities are convertible into or
exchangeable for Common Stock.
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Section 10. Fractional Interests. The Warrants may only be exercised
to purchase full shares of Common Stock and the Company shall not be required
to issue fractions of shares of Common Stock on the exercise of Warrants.
However, if a Warrantholder exercises all Warrants then owned of record by him
and such exercise would result in the issuance of a fractional share, the
Company will pay to such Warrantholder, in lieu of the issuance of any
fractional share otherwise issuable, an amount of cash based on the market
value of the Common Stock of the Company on the last trading day prior to the
exercise date.
Section 11. Notices to Warrantholders.
(a) Upon any adjustment of the Warrant Price and the number
of shares of Common Stock issuable upon exercise of a Warrant, then and in each
such case, the Company shall give written notice thereof to the Warrant Agent,
which notice shall state the Warrant Price resulting from such adjustment and
the increase or decrease, if any, in the number of shares purchasable at such
price upon the exercise of a Warrant, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based. The
Company shall also mail such notice to the holders of the Warrants at their
respective addresses appearing in the Warrant register. Failure to give or mail
such notice, or any defect therein, shall not affect the validity of the
adjustments.
(b) In case at any time:
(i) the Company shall pay dividends payable in
stock upon its Common Stock or make any distribution (other than regular cash
dividends) to the holders of its Common Stock; or
(ii) the Company shall offer for subscription pro
rata to all of the holders of its Common Stock any additional shares of stock
of any class or other rights; or
(iii) there shall be any capital reorganization or
reclassification of the capital stock of the Company, or consolidation or
merger of the Company with, or sale of substantially all of its assets to
another corporation; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company; then in any one or more
of such cases, the Company shall give written notice in the manner set forth in
Section 1 l(a) of the date on which (A) a record shall be taken for such
dividend, distribution or subscription rights, or (B) such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up shall take place, as the case may be. Such notice shall also specify
the date as of which the holders of Common Stock of record
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shall participate in such dividend, distribution or subscription rights, or
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up as the case may be. Such
notice shall be given at least thirty (30) days prior to the action in question
and not less than thirty (30) days prior to the record date in respect thereof.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of any of the matters set forth in this Section 1(b).
(c) The Company shall cause copies of all financial
statements and reports, proxy statements and other documents that are sent to
its stockholders to be sent by first-class mail, postage prepaid, on the date
of mailing to such stockholders, to each registered holder of Warrants at his
address appearing in the Warrant register as of the record date for the
determination of the stockholders entitled to such documents.
Section 12. Disposition of Proceeds on Exercise of Warrants.
(a) The Warrant Agent shall promptly forward to the Company
all monies received by the Warrant Agent for the purchase of shares of Common
Stock through the exercise of such Warrants.
(b) The Warrant Agent shall keep copies of this Agreement
available for inspection by holders of Warrants during normal business hours.
Section 13. Redemption of Warrants. The Warrants are redeemable by the
Company commencing on __________ __, 1998, and prior to their expiration on
__________ __, 2002, in whole or in part, on not less than thirty (30) days'
prior written notice at a redemption price of $.10 per Warrant at any time;
provided that the closing bid price per share on the Nasdaq SmallCap Market, or
the last sale price, if listed on the Nasdaq National Market or a national
exchange (the "Market Place"), of the Common Stock for a period of twenty (20)
consecutive trading days ending within fifteen (15) days prior to the date of
any redemption notice, exceeds 150% of the current Warrant exercise price. Any
redemption in part shall be made pro rata to all Warrant holders. The
redemption notice shall be mailed to the holders of the Warrants at their
respective addresses appearing in the Warrant register. Holders of the Warrants
will have exercise rights until the close of business on the date fixed for
redemption.
The Warrants underlying the Underwriters' Warrant shall not be subject
to redemption by the Company until they have been exercised and the underlying
Warrants are outstanding.
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Section 14. Merger or Consolidation or Change of Name of Warrant
Agent. Any corporation or company which may succeed to the corporate trust
business of the Warrant Agent by any merger or consolidation or otherwise shall
be the successor to the Warrant Agent hereunder without the execution or filing
of any paper or any further act on the part of any of the parties hereto,
provided that such corporation would be eligible for appointment as a successor
Warrant Agent under t he provisions of Section 16 of this Agreement. In case at
the time such successor to the Warrant Agent shall succeed to the agency
created by this Agreement, any of the Warrants shall have been countersigned
but not delivered, any such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent and deliver such Warrants so
countersigned.
In case at any time the name of the Warrant Agent shall be changed and
at such time any of the Warrants shall have been countersigned but not
delivered, the Warrant Agent may adopt the countersignature under its prior
name and deliver Warrants so countersigned. In all such cases such Warrants
shall have the full force provided in the Warrants and in the Agreement.
Section 15. Duties of Warrant Agent. The Warrant Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Warrants, by their
acceptance thereof, shall be bound:
(a) The statements of fact and recitals contained herein and
in the Warrants shall be taken as statements of the Company, and the Warrant
Agent assumes no responsibility for the correctness of any of the same except
as such describe the Warrant Agent or action taken or to be taken by it. The
Warrant Agent assumes no responsibility with respect to the distribution of the
Warrants except as herein expressly provided.
(b) The Warrant Agent shall not be responsible for any
failure of the Company to comply with any of the covenants in this Agreement or
in the Warrants to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any holder of
any Warrant in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or the advice of such counsel.
(d) The Warrant Agent shall incur no liability or
responsibility to the Company or to any holder of any Warrant for any action
taken in reliance on any notice, resolution, waiver,
13
consent, order, certificate or other instrument believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties.
(e) The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the execution of
this Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges incurred by the Warrant Agent in the
execution of this Agreement and to indemnify the Warrant Agent and save it
harmless against any and all liabilities, including judgments, costs and
reasonable counsel fees, for anything done or omitted by the Warrant Agent in
the execution of this Agreement except as a result of the Warrant Agent's
negligence, willful misconduct or bad faith.
(f) The Warrant Agent shall be under no obligation to
institute any action, suit or legal proceeding or to take any other action
likely to involve expenses unless the Company or one or more registered holders
of Warrants shall furnish the Warrant Agent with reasonable security and
indemnity for any costs and expenses which may be incurred (for which there is
no obligation of the Company to do so, except as provided herein) but this
provision shall not affect the power of the Warrant Agent to take such action
as the Warrant Agent may consider proper, whether with or without any such
security or indemnity. All rights of action under this Agreement or under any
of the Warrants may be enforced by the Warrant Agent without the possession of
any of the Warrants or the production thereof at any trial or other proceeding,
and any such action, suit or proceeding instituted by the Warrant Agent shall
be brought in its name as Warrant Agent, and any recovery of judgment shall be
for the ratable benefit of the registered holders of the Warrants, as their
respective rights and interests may appear.
(g) The Warrant Agent and any stockholder, director, officer,
partner or employee of the Warrant Agent may buy, sell or deal in any of the
Warrants or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or
lend money to or otherwise act as fully and freely as though it were not the
Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant
Agent from acting in any other capacity for the Company or for any other legal
entity.
(h) The Warrant Agent shall act hereunder solely as agent and
its duties shall be determined solely by the provisions hereof.
(i) The Warrant Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys, agents or employees, and the Warrant
Agent shall not be answerable or
14
accountable for any such attorneys, agents or employees or for any loss to the
Company, provided reasonable care had been exercised in the selection and
continued employment thereof.
(j) Any request, direction, election, order or demand of the
Company shall be sufficiently evidenced by an instrument signed in the name of
the Company by its President or a Vice President or its Secretary or an
Assistant Secretary or its Treasurer or an Assistant Treasurer (unless other
evidence in respect thereof be herein specifically prescribed); and any
resolution of the Board of Directors may be evidenced to the Warrant Agent by a
copy thereof certified by the Secretary or an Assistant Secretary of the
Company.
Section 16. Change of Warrant Agent. The Warrant Agent may resign and
be discharged from its duties under this Agreement by giving to the Company
notice in writing, and to the holders of the Warrants notice by mailing such
notice to the holders at their respective addresses appearing on the Warrant
register, of such resignation, specifying a date when such resignation shall
take effect. The Warrant Agent may be removed by like notice to the Warrant
Agent from the Company and the like mailing of notice to the holders of the
Warrants. If the Warrant Agent shall resign or be removed or shall otherwise
become incapable of action, the Company shall appoint a successor to the
Warrant Agent. If the Company shall fail to make such appointment within a
period of thirty (30) days after such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Warrant Agent or after the Company has received such notice from a registered
holder of a Warrant (who shall, with such notice, submit his Warrant for
inspection by the Company), then the registered holder of any Warrant may apply
to any court of competent jurisdiction for the appointment of a successor to
the Warrant Agent. Any successor Warrant Agent, whether appointed by the
Company or by such a court, shall be a bank or trust company, in good standing,
incorporated under any state or federal law. After appointment, the successor
Warrant Agent shall be vested with the same powers, rights, duties and
responsibility as if it had been originally named as Warrant Agent without
further act or deed and the former Warrant Agent shall deliver and transfer to
the successor Warrant Agent all cancelled Warrants, records and property at the
time held by it hereunder, and execute and deliver any further assurance or
conveyance necessary for the purpose. Failure to file or mail any notice
provided for in this Section, however, or any defect therein, shall not affect
the validity of the resignation or removal of the Warrant Agent or the
appointment of the successor Warrant Agent, as the case may be.
Section 17. Identity of Transfer Agent. Forthwith upon the
appointment of any transfer agent for the shares of Common Stock or
15
of any subsequent transfer agent for the shares of Common Stock or other shares
of the Company's Common Stock issuable upon the exercise of the` rights of
purchase represented by the Warrants, the Company will file with the Warrant
Agent a statement setting forth the name and address of such transfer agent.
Section 18. Notices. Any notice pursuant to this Agreement to be given
by the Warrant Agent, or by the registered holder of any Warrant to the
Company, shall be sufficiently given if sent by first-class mail, postage
prepaid, addressed (until another is filed in writing by the Company with the
Warrant Agent) as follows:
Discas, Inc.
▇▇▇-▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
and a copy thereof to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Green, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Any notice pursuant to this Agreement to be given by the Company or by
the registered holder of any Warrant to the Warrant Agent shall be sufficiently
given if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing by the Warrant Agent with the Company) as follows:
American Stock Transfer & Trust Company
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Section 19. Supplements and Amendments. The Company, the Warrant Agent
and the Representative may from time to time supplement or amend this Agreement
in order to cure any ambiguity or to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Warrant Agent and the
Representative may deem necessary or desirable and which shall not be
inconsistent with the provisions of the Warrants and which shall not adversely
affect the interest of the holders of Warrants.
16
Section 20. New York Contract. This Agreement and each Warrant issued
hereunder shall be deemed to be a contract made under the laws of the State of
New York and shall be construed in accordance with the laws of New York
applicable to agreements to be performed wholly within New York.
Section 21. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person or corporation other than the Company,
the Warrant Agent and the registered holders of the Warrants any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Warrant Agent and the
registered holders of the Warrants.
Section 22. Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or the Warrant
Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.
IN WITNESS WHEREOF, the parties have entered into this Agreement on
the date first above written.
DISCAS, INC.
By:
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
AMERICAN STOCK TRANSFER & TRUST COMPANY
By:
---------------------------------------
Name:
Title:
17
EXHIBIT A
[Form of Face of Warrant Certificate]
No. W Warrants
VOID AFTER ________ ___,2002
WARRANT CERTIFICATE FOR PURCHASE OF COMMON STOCK
DISCAS, INC.
THIS CERTIFIES THAT FOR VALUE RECEIVED ____________________________________
___________________________________________________________________________
or registered assigns (the "Registered Holder") is the owner of the number of
Redeemable Common Stock Purchase Warrants ("Warrants") specified above. Each
Warrant initially entitles the Registered Holder to purchase, subject to the
terms and conditions set forth in this Certificate and the Warrant Agreement
(as hereinafter defined), one fully paid and nonassessable share of Common
Stock, $.0001 par value per share ("Common Stock"), of DISCAS, INC., a Delaware
corporation (the "Company"), at any time between 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 & TRUST COMPANY as Warrant Agent, or its successor (the "Warrant
Agent"), accompanied by payment of $6.25 (the "Purchase Price") in lawful money
of the United States of America in cash or by official bank or certified check
made payable to Discas, Inc.
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 or the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modifications or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional shares of Common Stock will be issued. In
the case of the exercise of less than all the Warrants represented hereby, the
Company shall cancel this Warrant Certificate upon the surrender hereof and
shall execute and deliver a new Warrant Certificate or Warrant Certificates of
like tenor, which the Warrant Agent shall countersign, for the balance of such
Warrants.
A-1
The term "Initial Warrant Exercise Date" shall mean __________ __, 1998.
The term "Expiration Date" shall mean 5:00 p.m. New York time) on
__________ __, 2002, or such earlier date as the Warrants shall be redeemed. 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 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, with respect to such securities is then
effective. 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 with any transfer
fee in addition to any tax or other governmental charge imposed in connection
therewith, 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.
This Warrant may be redeemed at the option of the Company, at a
redemption price of $.10 per Warrant any time after _________ __, 1998,
provided the per share Market Price (as defined in the Warrant Agreement) for
the securities issuable upon exercise of such Warrant shall exceed 150% of the
current Warrant exercise price on each of the twenty (20) consecutive trading
days during a period ending within fifteen (15) days prior to the date on which
notice of redemption is given. 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 date fixed for redemption, the
Registered Holder shall have no
A-2
rights with respect to this Warrant except to receive the $.10 per Warrant upon
surrender of this Certificate.
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.
The Company has agreed to pay a fee of 7% of the Purchase Price upon
certain conditions as specified in the Warrant Agreement upon the exercise of
any Warrants represented hereby.
This Warrant Certificate shall be governed by and construed in accordance
with the laws of the State of New York.
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.
DISCAS, INC.
By:
----------------------------------------
By:
----------------------------------------
Dated:
--------------------
[Seal]
COUNTERSIGNED:
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Warrant Agent
By:
----------------------------
Authorized Officer
A-3
[Form of Reverse of Warrant Certificate]
NOTICE OF ELECTION TO EXERCISE
To Be Executed by the Registered Holder
in Order to Exercise Warrants
THE UNDERSIGNED REGISTERED HOLDER hereby irrevocably elects to exercise
_______________ Warrants represented by this Warrant Certificate, and to
purchase the securities issuable upon the exercise of such Warrants, and
requests that certificates for such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER and be delivered
to:
____________________________________________
____________________________________________
____________________________________________
____________________________________________
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
The undersigned represents that the exercise of the Warrants evidenced
hereby was solicited by a member of the National Association of Securities
Dealers, Inc. If not solicited by an NASD member firm, please write
"unsolicited" in the space below. Unless otherwise indicated by listing the
name of another NASD member firm, it will be assumed that the exercise was
solicited by Roan Capital Partners L.P.
------------------------------------
(Name of NASD Member, if other than
Roan Capital Partners L.P.)
------------------------------------
Dated: ------------------------------------
-------------------
------------------------------------
Address
------------------------------------
Taxpayer Identification Number
------------------------------------
Signature Guaranteed
------------------------------------
A-4
ASSIGNMENT
To Be Executed by the Registered Holder in Order to Assign Warrants
FOR VALUE RECEIVED, __________________________________ hereby
sells, assigns, and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF TRANSFEREE
----------------------------------------
----------------------------------------
----------------------------------------
----------------------------------------
(please print or type name and address)
__________ of the Warrants represented by this Warrant Certificate, and hereby
irrevocably constitutes and appoints _________________________ Attorney to
transfer this Warrant Certificate on the books of the Company, with full power
of substitution in the premises.
Dated: X
-------------------- -----------------------------------
Signature Guaranteed
-----------------------------------
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE
GUARANTEED BY AN ELIGIBLE INSTITUTION (AS DEFINED IN RULE 17Ad-15 UNDER THE
SECURITIES AND EXCHANGE ACT OF 1934) WHICH MAY INCLUDE A COMMERCIAL BANK OR
TRUST COMPANY, SAVINGS ASSOCIATION, CREDIT UNION OR A MEMBER FIRM OF THE
AMERICAN STOCK EXCHANGE, NEW YORK STOCK EXCHANGE, PACIFIC STOCK EXCHANGE OR
MIDWEST STOCK EXCHANGE.
A-5