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EXHIBIT (A)
SECURITIES PURCHASE AGREEMENT
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SECURITIES PURCHASE AGREEMENT
dated as of
JUNE 19, 1997
among
QUANTUM INDUSTRIAL PARTNERS LDC
T/F PURIFINER, INC.
MEMBERS of the ▇▇▇▇▇▇ FAMILY LISTED ON
THE SIGNATURE PAGES HERETO
and
MEMBERS OF THE FORD FAMILY LISTED ON
THE SIGNATURE PAGES HERETO
SECURITIES PURCHASE AGREEMENT
AGREEMENT dated as of June 19, 1997 among QUANTUM INDUSTRIAL PARTNERS LDC,
a Cayman Islands exempted limited liability duration company (the "BUYER"), T/F
PURIFINER, INC., a Delaware corporation (the "COMPANY"), the members of the
▇▇▇▇▇▇ family listed on the signature pages hereto (collectively, "▇▇▇▇▇▇"), and
the members of the Ford family listed on the signature pages hereto
(collectively, "FORD").
W I T N E S S E T H
WHEREAS, Buyer desires to purchase the Note, the Warrant, the ▇▇▇▇▇▇
Shares and the Ford Shares (each as hereinafter defined) on the terms and
subject to the conditions set forth herein;
WHEREAS, the Company desires to sell the Note and the Warrant to the Buyer
on the terms and subject to the conditions herein set forth; and
WHEREAS, ▇▇▇▇▇▇ desires to sell the ▇▇▇▇▇▇ Shares to the Buyer on the
terms and subject to the conditions herein set forth; and
WHEREAS, Ford desires to sell the Ford Shares to the Buyer on the terms
and subject to the conditions herein set forth.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. The following terms, as used herein, have the following
meanings:
"AFFILIATE" means, with respect to any Person, any other Person directly
or indirectly controlling, controlled by, or under common control with such
Person.
"COMMON STOCK" means the Common Stock, par value $.001 per share, of the
Company.
"ENCUMBRANCES" means all voting trusts, arrangements, stockholder
agreements, proxies, liens, encumbrances, transfer restrictions, preemptive
rights, security, interests or community property rights.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FORD SHARES" shall have the meaning set forth in Section 2.1(c) hereof.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the assets,
properties, business, prospects, operations or condition, financial or
otherwise, on the Company.
"NOTE" shall have the meaning set forth in Section 2.1(a)(i) hereof.
"PERSON" means an individual, corporation, limited liability company,
partnership, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"REGISTRATION AGREEMENT" means the Registration Rights Agreement dated as
of the date hereof between the Company and the Buyer, substantially in the form
attached hereto as Exhibit A.
"SEC" means the Securities and Exchange Commission.
"SEC DOCUMENTS" means all documents required to have been filed by the
Company with the SEC under Sections 13, 14(a) and 15(d) of the Exchange Act
since its registration of its Common Stock under Section 12(g) of the Exchange
Act.
"SECURITIES" means the Note, the Warrant, the ▇▇▇▇▇▇ Shares and the Ford
Shares, collectively.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"▇▇▇▇▇▇ SHARES" shall have the meaning set forth in Section 2.1(b) hereof.
"WARRANT" shall have the meaning set forth in Section 2.1(a)(ii) hereof.
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ARTICLE II
PURCHASE AND SALE
2.1 PURCHASE AND SALE OF SECURITIES.
(a) The Company hereby agrees to sell to the Buyer and, subject to the
terms and conditions herein set forth, the Buyer agrees to purchase from the
Company, the following:
(i) the Company's promissory note (the "NOTE") in the aggregate
principal amount of $2,000,000, dated the date hereof and attached hereto
as Exhibit B; and
(ii) the Company's common stock purchase warrant (the "WARRANT") for
the purchase of 500,000 shares of Common Stock at an exercise price of
$2.75 per share, dated the date hereof and attached hereto as Exhibit C .
(b) Each Person on Schedule I hereto agrees severally to sell to the
Buyer and, subject to the terms and conditions hereinafter set forth, the Buyer
agrees to purchase from each person on Schedule I hereto that number of shares
of Common Stock set forth opposite such person's name, the total amount of such
shares aggregating 285,000 shares of Common Stock (collectively, the "▇▇▇▇▇▇
SHARES"), in each case at $2.75 per share for an aggregate purchase price of
$783,750.
(c) Each Person on Schedule II hereto agrees severally to sell to the
Buyer and, subject to the terms and conditions hereinafter set forth, the Buyer
agrees to purchase from each person on Schedule II hereto that number of shares
of Common Stock set for opposite such persons name, the total amount of such
shares aggregating 785,000 shares of Common Stock (collectively, the "FORD
SHARES"), in each case at $2.75 per share for an aggregate purchase price of
$2,158,750.
2.2 CLOSING. The closing (the "CLOSING") of the several purchases and
sales of the Securities shall take place at the offices of Akin, Gump, Strauss,
▇▇▇▇▇ & ▇▇▇▇, L.LP., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ on the date
hereof. All transactions at the Closing shall be deemed to take place
simultaneously. At the Closing:
(a) The Buyer shall deliver to the Company $2,000,000 in cash or other
immediately available funds to an account designated by the Company.
(b) The Buyer shall deliver to Atlas, ▇▇▇▇▇▇▇▇, Trop & Borkson, P.A., as
escrow agent for ▇▇▇▇▇▇ (the "Escrow Agent"), $783,750 in cash or other
immediately available funds to an account designated by the Escrow Agent, which
the parties hereto agree is in full satisfaction of the purchase price for the
▇▇▇▇▇▇ Shares.
(c) The Buyer shall deliver (i) to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, as representative of
Ford, $2,158,750 less $209,078.01 (such amount paid to the Company as specified
in Section 2.2(c)(ii)) in cash or other immediately available funds to an
account designated by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, and
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(ii) to the Company $209,078.01 in partial satisfaction of loans made to ▇▇▇▇▇▇▇
▇. ▇▇▇▇ by the Company, which the parties hereto agree is in full satisfaction
of the purchase price for the Ford Shares.
(d) The Escrow Agent, on behalf of the Taylors, shall deliver to the
Buyer the certificates representing the ▇▇▇▇▇▇ Shares duly endorsed or with duly
executed stock powers attached and in proper form for transfer to the Buyer.
Ford shall deliver to the Buyer the certificates representing the
Ford Shares duly endorsed or with duly executed stock powers attached and in
proper form for transfer to the Buyer.
(f) Upon receipt by the Buyer of the certificates representing the
▇▇▇▇▇▇ Shares and the Ford Shares, the Buyer shall surrender such certificates
to the Company in exchange for a certificate representing the aggregate number
of shares of the ▇▇▇▇▇▇ Shares and the Ford Shares duly registered in the name
of the Buyer.
(g) The Company shall deliver to the Buyer, the Note, the Warrant, the
▇▇▇▇▇▇ Shares and the Ford Shares, in each case duly registered in the name of
the Buyer.
(h) The Company shall deliver to an account designated by Akin, Gump,
Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., the amounts owed it pursuant to Section 7.2.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Buyer that:
3.1 CORPORATE EXISTENCE AND POWER; CAPITALIZATION. The Company is a
corporation duly incorporated and validly existing and in good standing under
the laws of the State of Delaware, and has all corporate powers required to
carry on its business as now being conducted. The Company has no Subsidiaries.
The Company is authorized or duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities make such
qualification necessary. The capitalization of the Company as of the date hereof
is set forth on Schedule 3.1 hereto. The SEC Documents describe accurately all
outstanding stock options, warrants and other rights to purchase any equity
securities of the Company. Except as set forth on Schedule 3.1, there are no
outstanding options, warrants, rights to subscribe to, or securities or rights
convertible or exercisable into or exchangeable for any shares of capital stock
of the Company or arrangements by which the Company is or may become bound to
issue additional shares of its capital stock other than pursuant to this
Agreement and the Warrant.
3.2 CORPORATE AUTHORIZATION. The execution, delivery and performance by
the Company of this Agreement, Registration Agreement, the Note and the Warrant
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and the consummation by the Company of the transactions contemplated hereby and
thereby, are within the Company's corporate power and have been duly authorized
by all necessary corporate action on the part of the Company. This Agreement,
the Registration Agreement, the Note and the Warrant have each been duly and
validly executed by the Company and constitute the valid and binding agreements
of the Company, each enforceable against the Company in accordance with its
terms.
3.3 GOVERNMENTAL AND COURT AUTHORIZATION. The execution, delivery and
performance by the Company of this Agreement, the Registration Agreement, the
Note and the Warrant require no consent, approval or authorization of, or
filing, registration or qualification with, any governmental body, agency,
official, court or other authority that has not been obtained or made.
3.4 NON-CONTRAVENTION. The execution, delivery and performance by the
Company of this Agreement, the Registration Agreement, the Note and the Warrant
do not and will not (A) contravene or conflict with the Company's certificate of
incorporation or by-laws, or (B) (i) contravene or conflict with or constitute a
violation of any provision of any federal or state law, regulation, judgment,
injunction, order or decree binding upon or applicable to the Company, (ii)
except as set forth on Schedule 3.4, require any consent, approval or other
action by any Person or constitute a default under or give rise to any right of
termination, cancellation or acceleration of any right or obligation of the
Company or to a loss of any benefit to which the Company is entitled under any
provision of any agreement, contract, indenture, lease or other instrument
binding upon the Company or any license, franchise, permit or other similar
authorization held by the Company or (iii) result in the creation or imposition
of any Encumbrances on the Securities.
3.5 SEC DOCUMENTS; DISCLOSURE DOCUMENTS. Each report or proxy statement
delivered to the Buyer is a true and complete copy of such document as filed by
the Company with the SEC. The Company has delivered to the Buyer all SEC
Documents filed with the SEC since January 1, 1994. The Company has filed in a
timely manner all documents that the Company was required to file with the SEC
under Sections 13, 14(a) and 15(d) of the Exchange Act since its registration of
its Common Stock under Section 12(g) of the Exchange Act. As of their respective
filing dates, all SEC Documents filed by the Company with the SEC complied in
all material respects with the Exchange Act or the Securities Act, as
applicable. None of the SEC Documents as of their respective dates contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents (the "FINANCIAL
STATEMENTS") complied as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto. The Financial Statements have been prepared in accordance
with generally accepted accounting principles consistently applied and fairly
present the financial position of the Company at the dates thereof and the
results of operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal, recurring adjustments).
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3.6 DUE AUTHORIZATION AND VALIDITY OF THE SECURITIES. All of the
Securities have been duly authorized and, when delivered against payment
therefor as contemplated hereby, will be validly issued, fully paid and
non-assessable and, will not be subject to any preemptive or similar rights.
3.7 ABSENCE OF CERTAIN CHANGES. Since March 31, 1997, there has been no
Material Adverse Effect.
3.8 LITIGATION. Except as set forth in the SEC Documents, there is no
action, suit, investigation or proceeding pending against, or to the knowledge
of the Company threatened against or affecting, the Company or any of their
respective properties before any court or arbitrator or any governmental body,
agency, official or authority which (i) could reasonably be expected to have a
Material Adverse Effect or (ii) in any manner would enjoin, alter, call into
question, affect or delay the transactions contemplated by this Agreement.
3.9 FIRPTA. The Company is not a "United States real property holding
corporation" within the meaning of Section 896(c)(2) of the Internal Revenue
Code of 1986, as amended.
3.10 NO UNDISCLOSED LIABILITIES. Except as set forth on Schedule 3.14,
the Company has no liabilities or obligations not disclosed in the SEC Documents
and those incurred in the ordinary course of the Company's business since March
31, 1997.
3.11 NO BROKERS. The Company has taken no action which would give rise to
any claim by any Person for brokerage commissions, finders' fees or similar
payments by the Buyer relating to this Agreement or the transactions
contemplated thereby.
3.12 DISCLOSURE. No representation, warranty or statement made by the
Company in this Agreement, the Registration Agreement or any agreement,
certificate, statement or document furnished by or on behalf of the Company in
connection herewith or therewith contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which they were
made, misleading.
TRANSACTIONS WITH AFFILIATES. Except as set forth in the SEC
Documents, there are no business relationships or related party transactions
that would be required to be disclosed therein by Item 404 of Regulation S-K of
the SEC that are not so disclosed.
3.14 INTELLECTUAL PROPERTY. Except as disclosed in the SEC Documents or
Schedule 3.14 hereto:
(a) the Company owns, possesses, controls or is licensed under,
such patents (or applications therefor), trademarks and service marks (and
registrations thereof), copyrights (and registrations thereof), utility models,
inventions, know-how, trade secrets, and other intellectual property (all of
aforesaid referred to as "Necessary Intellectual Property Rights") as are
necessary for the operation of the business now conducted or operated by the
Company, including but not limited to the property listed on Schedule 3.14;
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(b) to the knowledge of Company all Necessary Intellectual
Property Rights are valid and subsisting and the Company is unaware of any fact
which, individually or in the aggregate, would materially detrimentally affect
the validity, ownership or enforceability of the Necessary Intellectual Property
Rights;
(c) the Company is not aware of, or has not received notice of,
any asserted right with respect to any of the Necessary Intellectual Property
Rights which, if determined unfavorably with respect to the interests of the
Company would have a Material Adverse Effect;
(d) the Company is unaware of any patent, trademark, copyright or
other intellectual property license to which the Company is a party as licensor
or licensee, which has been revoked, terminated or canceled, or which is likely
or subject to being revoked, terminated or canceled, where the revocation,
cancellation or termination would have a Material Adverse Effect; and
(e) the Company has not been notified or advised, has not been the
recipient of a claim, or is otherwise not aware, that any activity of the
Company infringes or violates the patent, trademark, copyright or other
intellectual property right of any third party.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇ AND FORD
(A) ▇▇▇▇▇▇ and Ford hereby represent and warrant, severally and not
jointly, to the Buyer that:
4.1 AUTHORIZATION. This Agreement has been duly and validly authorized
by it and constitutes its valid and binding agreement and is enforceable against
it in accordance with its terms.
4.2 GOVERNMENTAL AND COURT AUTHORIZATION. The execution, delivery and
performance by it of this Agreement requires no consent, approval or
authorization of, or filing, registration or qualification with, any
governmental body, agency, official, court or other authority that has not been
obtained or made.
4.3 NON-CONTRAVENTION. The execution, delivery and performance by it of
this Agreement do not and will not (i) contravene or conflict with or constitute
a violation of any provision of any federal or state law, regulation, judgment,
injunction, order or decree binding upon or applicable to it, (ii) require any
consent, approval or other action by any Person, or (iii) result in the creation
or imposition of any Encumbrances on the ▇▇▇▇▇▇ Shares or the Ford Shares.
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4.4 TITLE TO SHARES. It is the owner of, and each has valid and
marketable title to, the ommon Stock proposed to be sold by it, free and clear
of all Encumbrances. There is no litigation pending or threatened which
questions the validity of the ownership of the shares of Common Stock to be sold
to it pursuant to the terms of this Agreement. Upon delivery of the such shares
to be sold by it, and payment of the purchase price for such shares, the Buyer
shall receive good and marketable title to such shares free and clear of any
Encumbrances.
4.5 NO BROKERS. It has not taken any action which would give rise to any
claim by any Person for brokerage commissions, finders' fees or similar payments
by the Buyer to this Agreement or to the transactions contemplated thereby.
(B) Ford represents and warrants to the Buyer that it has (A) no reason
to believe that the representations and warranties of the Company contained
herein or any information in the SEC Documents are not true and correct and (B)
no knowledge of any material fact, condition or information not disclosed in the
SEC Documents which could have a Material Adverse Effect and (ii) the sale of
the Securities by it pursuant to this Agreement is not prompted by any
information concerning the Company which is not set forth in the SEC Documents.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants, to the Company, ▇▇▇▇▇▇ and Ford
as of the date hereof that:
5.1 ORGANIZATION; EXISTENCE. The Buyer is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, and the Buyer has all necessary corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now being conducted.
5.2 CORPORATE AUTHORIZATION. The execution, delivery and performance by
the Buyer of this Agreement and the Registration Agreement and the consummation
by the Buyer of the transactions contemplated hereby and thereby are within the
Buyer's corporate powers and have been duly authorized by all necessary
corporate or other action on the part of the Buyer.
5.3 GOVERNMENTAL AND COURT AUTHORIZATION. The execution, delivery and
performance by the Buyer of this Agreement and the Registration Agreement
require no consent, approval or authorization of, or filing, registration or
qualification with, any governmental body, agency, official, court or authority
that has not been obtained or made.
5.4 NON-CONTRAVENTION. The execution, delivery and performance by the
Buyer of this Agreement and the Registration Agreement do not and will not (A)
contravene or conflict with the certificate of incorporation or bylaws of it or
(B) contravene or conflict with or constitute a violation of any provision of
any law, regulation, judgment, injunction, order or decree binding upon or
applicable to it.
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5.5 PURCHASE FOR INVESTMENT; LEGENDS.
(a) The Securities are being acquired for its own account, and not with
a view to the public distribution of such Company Securities in violation of the
Securities Act. Notwithstanding the foregoing, the Buyer shall have the right at
all times to sell or otherwise dispose of all or any part of the Securities
pursuant to a registration, or exemption therefrom, under the Securities Act. It
is an "accredited investor" as defined in Rule 501 under the Securities Act.
(b) Upon original issuance thereof, and until such time as the same is
no longer required under the applicable requirements of the Securities Act, the
Securities (and all securities issued in exchange therefor or substitution
thereof) shall bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD,
ASSIGNED, OR OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN
COMPLIANCE WITH SUCH ACT AND THE APPLICABLE RULES AND REGULATIONS
THEREUNDER.
5.6 RELIANCE ON ▇▇▇▇▇▇. Except for the representations set forth in
Article IV hereof, the Company is not relying on any other information supplied
by ▇▇▇▇▇▇, or anyone in their capacity as ▇▇▇▇▇▇'▇ agent, in connection with its
investment in the Securities pursuant to this Agreement.
ARTICLE VI
COVENANTS
6.1 REGISTRATION. If and to the extent required by the Registration
Agreement, the Company agrees that it will register any or all of the Securities
(and any or all securities issued in exchange thereof or substitution thereof)
for sale under federal and state securities laws in accordance with the
Registration Agreement.
6.2 BOARD REPRESENTATION. The Company, Ford and the Buyer shall take all
action within their respective powers, including without limitation, the voting
of all their respective shares of Common Stock, the execution of written
consents, the calling of special meetings, the removal of directors, the filling
of vacancies on the Board of Directors, the waiving of notice and the attending
of meetings, so as to cause the Board of Directors of the Company to have as
directors commencing on the date hereof (a) ▇▇▇▇▇ ▇▇▇▇ so long as he becomes and
remains Chief Executive Officer of the Company; (b) ▇▇▇▇ ▇▇▇▇ or one of his
designees; (c) one representative designated by Ford; (d) one representative
designated by the Buyer so long as the Buyer owns shares of Common Stock and/or
securities convertible or exercisable into or exchangeable for shares of Common
Stock in an amount equal to 40% of the aggregate number of shares of Common
Stock and securities convertible and exercisable into and exchangeable for
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shares of Common Stock purchased by the Buyer pursuant to this Agreement and the
Warrant, and (e) upon the completion by the Company of a future equity or debt
financing between the Company and a third-party investor, a representative
designated by such third party investor of the Company. The Company shall
reimburse each director of the Company for reasonable expenses incurred in
attending each meeting of the Board of Directors or any committee thereof.
6.3 PROCEEDS OF FINANCING. The proceeds of the sale of the Notes shall
be used by the Company solely for (i) general operating expenses of the Company
and (ii) to hire additional marketing employees for the Company. The portion of
the proceeds of the sale of the Ford Shares which would have otherwise been
received by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, as such portion is set forth opposite ▇▇. ▇▇▇▇'▇
name on Schedule II hereto, shall be delivered directly to the Company in
partial satisfaction of loans made to ▇▇. ▇▇▇▇ by the Company. Except for the
Agreement in Partial Settlement of T/F Purifiner, Inc. Issues (the "Settlement
Agreement"), the Company will not use any of the proceeds from the sale of the
Note for the repayment of any loans made to any shareholder of the Company or
dividends or other Restricted Payments (as defined in Section 6.5 below).
6.4 TRANSACTIONS WITH AFFILIATES. So long as the Note is outstanding,
without the Buyer's written consent, the Company shall not conduct any business
or enter into any transaction or series of similar transactions with any
Affiliate of the Company or any legal or beneficial owner of 5% or more of any
class of capital stock of the Company with an affiliate of such owner unless the
terms of such business, transaction or series of transactions are set forth in
writing and as favorable to the Company as terms that would be obtainable at the
time for a comparable transaction or series of similar transactions in arm's
length dealings with an unrelated third person. Notwithstanding the foregoing,
so long as the Note is outstanding the Company shall not make, or cause any
other party to make, any loans to any shareholders of the Company.
6.5 RESTRICTED PAYMENTS. So long as the Note is outstanding, the Company
will not, without the prior written consent of the Buyer, (i) declare or pay any
dividend or make any other payment or distribution on account of any capital
stock of the Company, (ii) purchase redeem or otherwise acquire or retire for
value any capital stock of the Company or (iii) except for the Settlement
Agreement, purchase, redeem, defease or otherwise acquire or retire for value
any indebtedness that is subordinate or pari passu to the Note (each a
"RESTRICTED PAYMENT").
ARTICLE VII
CLOSING DELIVERIES
Simultaneously with the execution and delivery of this Agreement, the
following deliveries shall be made:
7.1 REGISTRATION RIGHTS AGREEMENT. The Buyer and the Company shall enter
into the Registration Agreement.
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7.2 REIMBURSEMENT. The Company shall have reimbursed the Buyer for its
out-of-pocket costs and expenses incurred in connection with the closing of the
transactions contemplated by this Agreement and the Registration Rights
Agreement, including without limitation, all out-of-pocket costs and expenses
incurred by the Buyer in connection with the Buyer's legal assessment of patents
and any litigation relating to the Company's patents; provided, however, that
such in no event shall reimbursement for out-of-pocket costs and expenses
relating to patent issues exceed $10,000.
7.3 OFFICER'S CERTIFICATE. The Company shall deliver a certificate from
its Secretary attesting to the authenticity of the following documents: (i) the
certificate of incorporation of the Company; (ii) the by-laws of the Company;
(iii) the resolutions of the Company authorizing the sale of the Note and
Warrant; and (iv) the form of certificate for Common Stock (representing shares
of Common Stock equal to the sum of the ▇▇▇▇▇▇ Shares and the Ford Shares).
7.4 OPINION. The Company shall cause Atlas, ▇▇▇▇▇▇▇▇, Trop & Borkson,
P.A., to deliver to the Buyer an opinion in the form attached hereto as Exhibit
D.
7.5 AMENDMENT TO ESCROW AGREEMENT. ▇▇▇▇▇▇, the Company, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
and the Escrow Agent shall enter into and deliver to the Buyer an amendment to
that Escrow Agreement dated March 7, 1997 among said parties in the form
attached hereto as Exhibit E.
ARTICLE VIII
SURVIVAL; INDEMNIFICATION
8.1 SURVIVAL. The covenants, agreements, representations and warranties
of the parties hereto contained in this Agreement or in any certificate or other
writing delivered pursuant hereto or in connection herewith shall survive the
Closing.
8.2 INDEMNIFICATION. (a) The Company shall indemnify and hold harmless
the Buyer (and its directors, officers, employees, Affiliates and permitted
assigns) from and against all losses, liabilities, charges, damages,
deficiencies, costs and expenses (including interest, penalties and attorney's
fees and disbursements) (collectively, "LOSS"), sustained or incurred by the
Buyer based upon or arising out of (i) any inaccuracy or defect or breach of any
representation or warranty by the Company in this Agreement or (ii) any failure
by the Company to perform or observe any term or covenant of this Agreement or
the Registration Agreement required to be performed by it, and will reimburse
the Buyer for any reasonable legal or other expenses incurred by it in
connection with the investigating or defending of any Loss.
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(b) ▇▇▇▇▇▇ shall indemnify and hold harmless the Buyer (and its
directors, officers, employees, Affiliates and permitted assigns) from and
against all Loss sustained or incurred by the Buyer based upon or arising out of
(i) any inaccuracy or defect or breach of any representation or warranty by
▇▇▇▇▇▇ in this Agreement, or (ii) any failure by ▇▇▇▇▇▇ to perform or observe
any term or covenant of this Agreement required to be performed by it, and will
reimburse the Buyer for any reasonable legal or other expenses incurred by it in
connection with the investigating or defending of any Loss.
(c) Ford shall indemnify and hold harmless the Buyer (and its directors,
officers, employees, Affiliates and permitted assigns) from and against all Loss
sustained or incurred by the Buyer based upon or arising out of (i) any
inaccuracy or defect or breach of any representation or warranty by Ford in this
Agreement, or (ii) any failure by Ford to perform or observe any term or
covenant of this Agreement required to be performed by it, and will reimburse
the Buyer for any legal or other expenses incurred by it in connection with the
investigating or defending of any Loss. In addition, Ford shall indemnify and
hold harmless the Buyer from and against 50% of all Loss sustained or incurred
by it based upon or arising out of any inaccuracy or defect or breach of any
representation or warranty by the Company in this Agreement and will reimburse
the Buyer in such 50% pro rata portion for any reasonable legal or other
expenses incurred by it in connection with the investigating or defending of any
Loss.
ARTICLE IX
MISCELLANEOUS
NOTICES. All notices, requests and other communications to any part
hereunder shall be in writing (including telecopy or similar writing) and shall
be effective upon receipt and shall be given, if to the Buyer, to:
Quantum Industrial Partners LDC
c/o Curacao Corporation Company, N.V.
Kaya Flamboyan
Willemstad, Curacao
Netherlands, Antilles
Fax: ▇▇▇-▇-▇▇▇-▇▇▇
with a copy to:
▇▇▇▇▇ Fund Management
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
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Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If the Company to:
T/F Purifiner, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇.▇. ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Atlas, ▇▇▇▇▇▇▇▇, Trop & Borkson, P.A.
New River Center - Suite 1900
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to ▇▇▇▇▇▇ to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
c/o Taylor Made Group
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Bond, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Ford to:
14
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
Atlas, ▇▇▇▇▇▇▇▇, Trop & Borkson, P.A.
New River Center - Suite 1900
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or Person as any of the parties may designate by
written notice hereunder.
9.2 AMENDMENTS: NO WAIVERS.
(a) Any provision of this Agreement may be amended or waived if, and
only if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Buyers and the Company, or in the case of a waiver, by the
party against whom the waiver is to be effective.
(b) No failure or delay by either party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law;
9.3 EXPENSES. Subject to the proviso contained in Section 7.3, all
reasonable costs and expenses incurred by the Buyer in connection with this
Agreement and the Registration Agreement shall be paid by the Company. Each of
the Company, ▇▇▇▇▇▇ and Ford shall pay its own expenses incurred in connection
with this Agreement.
9.4 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns; provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without the
consent of the other parties hereto.
9.5 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
9.6 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto
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and hereto were upon the same instrument. This Agreement shall become effective
when each party hereto shall have received a counterpart hereof signed by the
other parties hereto.
9.7 ENTIRE AGREEMENT. This Agreement and the Registration Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect to the
subject matter of this Agreement.
9.8 JURISDICTION. Any suit, action or proceeding seeking to enforce any
provision of, or based on any matter arising out of or in connection with, this
Agreement or the transactions contemplated hereby may be brought against any of
the parties in the courts of the State of New York in New York City, or, if it
has or can acquire jurisdiction, in the United States District Court for the
Southern District of New York, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such suit, action or proceeding and waives any objection to venue laid therein.
Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the State of New York.
9.9 CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized signatories as of the day and year
first above written.
QUANTUM INDUSTRIAL PARTNERS LDC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Attorney-in-fact
T/F PURIFINER, INC.
By: /s/ ▇▇▇▇▇ ▇.▇. ▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇.▇. ▇▇▇▇
Title: President
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Attorney-in-Fact
▇▇▇▇▇▇▇▇ ▇▇▇ FORD
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Attorney-in-Fact
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Attorney-in-Fact
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
Attorney-in-Fact
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
Attorney-in-Fact
▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
Attorney-in-Fact
▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
US$2,000,000 June 19, 1997
FOR VALUE RECEIVED, the undersigned, T/F PURIFINER, INC. (the
"Maker") unconditionally promises to pay to the order of QUANTUM INDUSTRIAL
PARTNERS LDC or its assigns (the "Holder") on the Termination Date (as defined
below) at such place or to such bank account in the United States of America as
the Holder may from time to time direct in lawful money of the United States of
America and in immediately available funds, the principal amount (the "Principal
Amount") of TWO MILLION DOLLARS ($2,000,000). The Termination Date shall mean
with respect to this promissory note (this "Note") the date which is six months
from the date hereof.
Any amounts that have become due and payable hereunder and remain
unpaid by the Maker shall accrue interest thereafter until payment in full of
such amounts at the rate of twelve percent (12%) (the "Default Rate") per annum
and shall be payable upon demand by the Holder. Interest shall be computed on
the basis of a fraction, the denominator of which is three hundred sixty (360)
and the numerator of which is the actual number of days elapsed from the date
such interest becomes due and payable, but in no case shall the interest rate
exceed the maximum rate allowed by law. The Default Rate shall be effective both
before and after any judgment as may be rendered in a court of competent
jurisdiction; provided, however, that if such Default Rate is deemed to be
interest in excess of the amount permitted to be charged to Maker under
applicable law, Holder shall be entitled to collect a Default Rate only at the
highest rate permitted by law, and any interest actually collected by Holder in
excess of such lawful amount shall be deemed a payment in reduction of the
Principal Amount then outstanding under this Note and shall be so applied.
This Note can be prepaid at any time without premium or penalty.
This note is also subject to mandatory prepayment prior to the Termination Date
upon the Maker's consummation of any public offering of either debt or equity
securities.
All payments due under this Note are payable in lawful money to
Holder at Curacao Corporation Company, N.V., Kaya Flamboyan, Willemstad,
Curacao, Netherlands, Antilles or at such other place as Holder or other holder
hereof shall notify the Maker in writing.
All payments received by Holder on this Note shall be applied by
Holder as follows: first, to the payment of delinquency or "late" charges, if
any; and second, to the reduction of the Principal Amount.
The payment obligations represented by this Note shall be
subordinate to any indebtedness of the Maker for cash advanced by any bank or
financial institution ("Bank Debt") but shall rank at least pari passu with all
other indebtedness of the Maker. The Maker hereby covenants that it will not
issue, directly or indirectly, any debt which is senior to the indebtedness
represented by this Note unless such indebtedness is Bank Debt.
The occurrence of any of the following events or conditions shall
constitute an event of default (each an "Event of Default") with respect to the
Maker under this Note:
(a) Any amounts due under any of this Note are not paid on
the day after the due date therefore;
(b) The Maker (i) shall commence any case, proceeding or
other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its
debts, or (B) seeking appointment of a receiver,
trustee, custodian or other similar official for it or
for all or any substantial part of its assets, or
Maker shall make a general assignment for the benefit
of its creditors; or (ii) there shall be commenced
against Maker any case, proceeding or other action of
a nature referred to in clause (i) above which (A)
results in the entry of an order for relief or any
such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of
90 days; or
(c) The Maker shall fail to perform any agreement or
covenant on its part contained herein or in the
Securities Purchase Agreement, dated as of June 19,
1997, among the Maker, the Holder and other
signatories thereto.
Upon the occurrence and during the continuance of an Event of
Default, the Holder will have the option, upon notice to the Maker, of declaring
the Principal Amount hereunder together with unpaid accrued Default Interest
thereon, if any, to be immediately due and payable.
The Maker agrees to pay on demand all of the Holder's costs and
expenses, including, without limitation, reasonable attorneys' fees, in
connection with the collection of any sums due to the Holder and the enforcement
or protection of its rights or interests hereunder.
No failure on the part of Holder or other holder hereof to
exercise any right or remedy hereunder, whether before or after the happening of
a default shall constitute a waiver thereof, and no waiver of any past default
shall constitute waiver of any future default or of any other default. No
failure to accelerate the debt evidenced hereby by reason of default hereunder,
or acceptance of a past due installment, or indulgence granted from time to time
shall be construed to be a waiver of the right to insist upon prompt payment
thereafter or to impose late charges retroactively or prospectively, or shall be
deemed to be a novation of this Note or as a reinstatement of the debt evidenced
hereby or as a waiver of such right or acceleration or any other right, or be
construed so as to preclude the exercise of any right which Holder may have,
2
whether by the laws of the State of New York, by agreement or otherwise; and
Maker hereby expressly waives the benefit of any statute or rule of law or
equity which would produce a result contrary to or in conflict with the
foregoing. This Note may not be changed orally, but only by an agreement in
writing signed by the party against whom such agreement is sought to be
enforced.
The Maker may not assign any of its rights or delegate any of its
obligations under this Note (or any part thereof) without the prior written
consent of the Holder.
Maker represents, warrants and covenants to Holder that it shall
use its best efforts to repay this Note in accordance with the terms hereof.
The Maker hereby waives diligence, presentment, protest, demand,
and notice of every kind and, to the full extent permitted by law, the right to
plead any statute of limitations as a defense to any demand hereunder.
It is the intention of the parties to conform strictly to
applicable usury laws from time to time in force, and all agreements between
Maker and Holder, whether now existing or hereafter arising and whether oral or
written, are hereby expressly limited so that in no contingency or event
whatsoever, whether by acceleration of maturity hereof or otherwise, shall the
amount paid or agreed to be paid to Holder or the holder hereof, or collected by
Holder or such holder, for the use, forbearance, or detention of the money to be
lent hereunder or otherwise, or for the payment or performance of any covenant
or obligation contained herein, or in any other document pertaining to the
indebtedness evidenced hereby, exceed the maximum amount permissible under
applicable usury laws. If under any circumstances whatsoever fulfillment of any
provision hereof at the time performance of such provision shall be due, shall
involve transcending the limit of validity prescribed by law, then ipso facto,
the obligation to be fulfilled shall be reduced to the limit of such validity;
and if under any circumstances Holder or other holder hereof shall ever receive
an amount deemed interest, by applicable law, which would exceed the highest
lawful rate, such amount that would be excessive interest under applicable usury
law shall be applied to the reduction of the Principal Amount owing hereunder
and not to the payment of interest, or if such excessive interest exceeds the
unpaid principal amount and other indebtedness, the excess shall be deemed to
have been a payment made by mistake and shall be refunded to Maker or to any
other person making such payment on Maker's behalf. The terms and provisions of
this paragraph shall control and supersede every other provision of all
agreements between Maker and Holder.
3
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAW
PRINCIPLES OF SUCH STATE.
T/F PURIFINER, INC.
/s/ ▇▇▇▇▇ ▇.▇. ▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇ ▇.▇. ▇▇▇▇
Title: President
4
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and
entered into as of this 19th day of June, 1997, by and between T/F PURIFINER,
INC., a Delaware corporation (the "Company"), and QUANTUM INDUSTRIAL PARTNERS
LDC, a Cayman Islands limited duration company (the "Investor").
This Agreement is made pursuant to the Securities Purchase
Agreement, dated as of June 19, 1997, by and among the Company, the Investor and
the other signatories thereto (the "Securities Purchase Agreement"). In order to
induce the Investor to enter into the Securities Purchase Agreement, the Company
has agreed to provide registration rights with respect to (i) the shares of
common stock, par value $.001 per share (the "Common Stock"), of the Company
issued to the Investor pursuant to the Securities Purchase Agreement and (ii)
the shares of Common Stock issued or issuable upon exercise of the warrant
issued to the Investor pursuant to the Securities Purchase Agreement.
The parties hereby agree as follows:
1. Securities Subject to this Agreement
------------------------------------
The term "Registrable Securities" shall mean (i) shares of the
Company's common stock, par value $.001 per share (the "Common Stock"), issued
and sold to the Investor pursuant to the Securities Purchase Agreement, (ii)
shares of Common Stock issuable upon exercise of the warrant (the "Warrant")
issued to the Investor pursuant to the Securities Purchase Agreement, that are
from time to time held by the Investor or any subsequent holder thereof
(together with the Investor, the "Holders") and (iii) shares of Common Stock
issued or issuable to the Holders by way of a dividend, stock split or other
distribution or in connection with a combination of shares, recapitalization,
merger, consolidation, reorganization or otherwise; provided, that such
securities shall cease to be Registrable Securities when (a) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (b) they shall cease to be
outstanding or (c) they are distributed to the public pursuant to Rule 144 (or
any similar provision then in effect) under the Securities Act.
2. Demand Registration
-------------------
(a) REQUEST FOR REGISTRATION. At any time after the date hereof, the
Holders of a majority of the Registrable Securities (the "Majority Holders") may
make a written request for registration under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to this Section 2 of all or part of its
Registrable Securities (a "Demand Registration"); provided, that the Company
need effect only three (3) such Demand Registrations. Such request shall specify
the number of shares of Registrable Securities proposed to be sold and will also
specify the intended method of disposition thereof. Unless the Majority Holders
requesting such Demand Registration shall consent in writing, no other parties
(except other Holders) shall be permitted to offer securities under any such
Demand Registration.
1
(b) EFFECTIVE REGISTRATION AND EXPENSES. A registration will not
count as a Demand Registration until it has become effective. In any
registration initiated as a Demand Registration, the Company will pay all
Registration Expenses (as hereinafter defined) in connection therewith, whether
or not it becomes effective.
(c) SELECTION OF UNDERWRITERS. If the Majority Holders requesting a
Demand Registration so elect, the offering of such Registrable Securities
pursuant to such Demand Registration shall be in the form of an underwritten
offering. If any Demand Registration is in the form of an underwritten offering,
the Majority Holders requesting such Demand Registration will select and obtain
the investment banker or investment bankers that will administer the offering.
3. Registration on Form S-3
------------------------
(a) REQUEST FOR REGISTRATION. In addition to Demand Registrations,
at any time after the Company shall be eligible to register securities under
Form S-3 under the Securities Act, the Majority Holders may make a written
request for registration on Form S-3 (or any equivalent successor form under the
Securities Act) pursuant to this Section 3 of all or part of its Registrable
Securities (an "S-3 Demand Registration"); provided, that the Company need
effect only two (2) such S-3 Demand Registrations in a calendar year. Such
request shall specify the number of shares of the issue of Registrable
Securities proposed to be sold and will also specify the intended method of
disposition thereof. Unless the Majority Holders requesting a S-3 Demand
Registration shall consent in writing, no other parties (except other Holders)
shall be permitted to offer securities under any such S-3 Demand Registration.
(b) EXPENSES. The Company will pay all Registration Expenses in
connection with any S-3 Demand Registration.
(c) SELECTION OF UNDERWRITERS. If the Majority Holders requesting a
Demand Registration so elects, the offering of such Registrable Securities
pursuant to such S-3 Demand Registration shall be in the form of an underwritten
offering. If any S-3 Demand Registration is in the form of an underwritten
offering, the Majority Holders requesting a Demand Registration will select and
obtain the investment banker or investment bankers that will administer the
offering.
4. Piggy-Back Registration
-----------------------
(a) REQUEST FOR REGISTRATION. If the Company proposes to file a
registration statement under the Securities Act with respect to an offering for
its own account of any class of security (other than a registration statement on
Form S-4 or S-8 or successor forms thereto), then the Company shall in each case
give written notice of such proposed filing to each Holder at least twenty days
before the anticipated filing date, and such notice shall offer (except as
otherwise contemplated by Section 4(b)) each Holder the opportunity to register
(a "Piggy-Back Registration") such number of shares of Registrable Securities as
such Holder may request.
2
(b) PRIORITY ON PIGGY-BACK REGISTRATIONS. The Company shall use its
best efforts to cause the managing underwriter or underwriters of a proposed
underwritten offering to permit Registrable Securities of the Holders to include
such securities in such offering on the same terms and conditions as any similar
securities of the Company included therein. Notwithstanding the foregoing, if
the managing underwriter or underwriters of such offering delivers a written
opinion to the Holders that the inclusion of such Registrable Securities would
materially and adversely affect the success or offering price of, or materially
increase the consideration (including commissions) to be paid to the underwriter
in connection with, such offering, then the amount of securities to be offered
for the accounts of the Holders shall be reduced pro rata (or eliminated
entirely) to the extent necessary to reduce the total amount of securities to be
included in such offering to the amount recommended by such managing
underwriter; provided, that if securities similar to those represented by the
Registrable Securities are being offered for the account of other Persons (as
defined herein) as well as the Company, such reduction shall not represent a
greater fraction of the number of securities intended to be offered by the
Holders than the fraction of similar reductions imposed on such other Persons
other than the Company over the amount of securities they intended to offer.
Unless a majority of the Holders registering Registrable Securities hereunder
shall consent in writing, no other parties (except the Company and the other
parties set forth on Schedule I hereto pursuant to registration rights granted
prior to the date hereof) shall be permitted to offer securities pursuant to
such Piggy-Back Registration.
(c) EXPENSES. The Company will pay all Registration Expenses in
connection with any Piggy-Back registration.
5. Holdback Agreement
------------------
The Company agrees (i) not to effect any public sale or distribution
of any securities similar to those being registered, or any securities
convertible into or exchangeable or exercisable for such securities (other than
any such sale or distribution of such securities in connection with any merger
or consolidation by either the Company or any subsidiary thereof or the
acquisition by the Company or a subsidiary thereof of the capital stock or all
or substantially all of the assets of any other individual, corporation,
partnership, association, joint-stock company, trust, unincorporated
organization, government or subdivision thereof (each, a "Person") or in
connection with an employee stock option or benefit plan), during the 14 days
prior to, and during the 90-day period beginning on, the effective date of any
registration statement in which the Holders are participating or the
commencement of a public distribution of the Registrable Securities; and (ii)
that any agreement entered into after the date of this agreement pursuant to
which the Company issues or agrees to issue any securities similar to the
Registrable Securities (other than pursuant to an effective registration
statement) shall contain a provision under which any holders of at least one
percent (1%) of such securities agree not to effect any public sale or
distribution of any such securities during the periods described in (i) above,
in each case including a sale pursuant to Rule 144 under the Securities Act.
6. Registration Procedures
-----------------------
Whenever any Holders have requested that any Registrable Securities
be registered pursuant to this Agreement, the Company will, within ten (10) days
3
of the receipt of such request, give written notice of such request to all
Holders and use its best efforts to effect the registration and the sale of all
Registrable Securities which all Holders request to be registered under the
Securities Act, as provided herein, and as expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission
(the "Commission"), not later than 60 days after receipt of a request to
file a registration statement with respect to Registrable Securities, a
registration statement on any form for which the Company then qualifies or
which counsel for the Company shall deem appropriate and which form shall
be available for the sale of such issue of Registrable Securities in
accordance with the intended method of distribution thereof, and use its
best efforts to cause such registration statement to become effective as
promptly as practicable thereafter; provided, that before filing a
registration statement or prospectus or any amendments or supplements
thereto, the Company will (i) furnish to counsel selected by each seller
of Registrable Securities copies of all such documents proposed to be
filed and (ii) notify each seller of Registrable Securities of any stop
order issued or threatened by the Commission and take all actions required
to prevent the entry of such stop order or to remove it if entered;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period of not less than 120 days or such shorter
period which will terminate when all Registrable Securities covered by
such registration statement have been sold (but not before the expiration
of the applicable period referred to in Section 4(3) of the Securities Act
and Rule 174 thereunder, if applicable), and comply with the provisions of
the Securities Act with respect to the disposition of all securities
covered by such registration statement during such period in accordance
with the intended methods of disposition by the sellers thereof set forth
in such registration statement;
(c) furnish to each seller of Registrable Securities to be included
in a registration statement copies of such registration statement as filed
and each amendment and supplement thereto (in each case including all
exhibits thereto), the prospectus included in such registration statement
(including each preliminary prospectus) and such other documents as such
seller may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by such seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other
acts and things which may be necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller; provided, that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this paragraph (d),
(ii) subject itself to taxation in any such jurisdiction or (iii) consent
to general service of process in any such jurisdiction, but the Company
will be required to consent to service of process in actions arising out
of or in connection with the sale of the Registrable Securities or any
violation of state securities laws;
4
(e) use its best efforts to cause the Registrable Securities covered
by such registration statement to be registered with or approved by any
other governmental agencies or authorities as may be necessary by virtue
of the business and operations of the Company to enable the seller or
sellers thereof to consummate the disposition of such Registrable
Securities;
(f) notify each seller of such Registrable Securities at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue
statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein not
misleading, and the Company will prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchaser of such
Registrable Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading;
(g) enter into customary agreements (including an underwriting
agreement in customary form) and take such other actions as are required
in order to expedite or facilitate the disposition of such Registrable
Securities;
(h) use its best efforts to obtain a comfort letter from the
Company's independent public accountants in customary form and covering
such matters of the type customarily covered by comfort letters with
respect to offerings of such type as the Holders may reasonably request;
(i) otherwise comply with all applicable rules and regulations of
the Commission, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering a period of twelve
months, beginning within three months after the effective date of the
registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
and
(j) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are
then listed, provided that the applicable listing requirements are
satisfied.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such Registrable Securities as the
Company may from time to time reasonably request in writing.
5
Each seller of Registrable Securities agrees that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in Section 6(f) hereof, the seller will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such seller's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 6(f) hereof, and, if
so directed by the Company, such seller will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
seller's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice. In the event the Company shall
give any such notice, the Company shall extend the period during which such
registration statement shall be maintained effective pursuant to this Agreement
(including the period referred to in Section 6(b)) by the number of days during
the period from and including the date of the giving of such notice pursuant to
Section 6(f) hereof to and including the date when each seller of Registrable
Securities covered by such registration statement shall have received the copies
of the supplemented or amended prospectus contemplated by Section 6(f) hereof.
7. Preparation; Reasonable Investigation.
--------------------------------------
In connection with the preparation and filing of each registration
statement under the Securities Act pursuant to this Agreement, the Company will
give each seller of Registrable Securities, their underwriters, if any, and
their respective counsel and accountants, the opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the Commission, and each amendment thereof or supplement thereto, and
will give each of them such access to its books and records and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of such sellers' and such underwriters'
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act.
8. Registration Expenses
---------------------
All expenses incident to the Company's performance of or compliance
with this Agreement, including, without limitation, all registration and filing
fees, fees and expenses of compliance with securities or blue sky laws
(including fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), printing expenses, messenger and
delivery expenses, internal expenses (including, without limitation, all
salaries and expenses of the Company's officers and employees performing legal
or accounting duties), the fees and expenses incurred in connection with the
listing of the securities to be registered on each securities exchange on which
similar securities issued by the Company are then listed, and fees and
disbursements of counsel for the Company and their independent certified public
accountants (including the expenses of any special audit or "comfort" letters
6
required by or incident to such performance), securities acts liability
insurance (if the Company elects to obtain such insurance), the fees and
expenses of any special experts retained by the Company in connection with such
registration, fees and expenses of other Persons retained by the Company, fees
and expenses of one counsel (who shall be reasonably acceptable to the Company)
for the sellers of Registrable Securities incurred in connection with each
registration hereunder (but not including any underwriting discounts or
commissions attributable to the sale of Registrable Securities) and any
out-of-pocket expenses of the sellers of Registrable Securities (or the agents
who manage their accounts) (all such expenses being herein referred to as
"Registration Expenses"), will be borne by the Company.
9. Indemnification; Contribution
-----------------------------
(a) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify,
to the full extent permitted by law, each seller of Registrable Securities, its
officers, directors and agents and each Person who controls such seller (within
the meaning of the Securities Act) against all losses, claims, damages,
liabilities and expenses (including reasonable fees and expenses of counsel)
("Losses") caused by any untrue or alleged untrue statement of material fact
contained in any registration statement, prospectus or preliminary prospectus or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in case of a
prospectus or preliminary prospectus, in light of the circumstances under which
they were made) not misleading, except insofar as the same are caused by,
contained in, or, with respect to any material omission, omitted from any
information with respect to such seller furnished in writing to the Company by
such seller expressly for use therein or by such seller's failure to deliver a
copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished such seller with a
sufficient number of copies of the same. The Company will also indemnify any
underwriters of the Registrable Securities, their officers and directors and
each Person who controls such underwriters (within the meaning of the Securities
Act) to the same extent as provided above with respect to the indemnification of
the sellers of Registrable Securities.
(b) INDEMNIFICATION BY SELLER OF REGISTRABLE SECURITIES. In
connection with any registration statement in which a seller of Registrable
Securities is participating, each such seller will furnish to the Company in
writing such information with respect to such seller as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and agrees to indemnify, to the full extent permitted by law, the
Company, its directors and officers and each Person who controls the Company
7
(within the meaning of the Securities Act) against any Losses resulting from any
untrue or alleged untrue statement of a material fact or any omission or alleged
omission of a material fact required to be stated in the registration statement,
prospectus or preliminary prospectus or any amendment thereof or supplement
thereto or necessary to make the statements therein (in the case of a prospectus
or preliminary prospectus, in the light of the circumstances under which they
were made) not misleading, to the extent, but only to the extent, that any
untrue statement is contained in information with respect to such seller
furnished in writing by such seller expressly for use therein. In no event shall
the liability of any seller of Registrable Securities hereunder be greater in
amount than the dollar amount of the proceeds received by such seller upon the
sale of such seller's Registrable Securities in connection with any registration
statement giving rise to such indemnification obligation.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to
indemnification hereunder (each, an "Indemnified Party") agrees to give prompt
written notice to the indemnifying party (each, an "Indemnifying Party") after
the receipt by such Person of any written notice of the commencement of any
action, suit, proceeding or investigation or threat thereof made in writing for
which such Person will claim indemnification or contribution pursuant to this
Agreement (but the failure to give such notice will not affect the right to
indemnification or contribution hereunder unless the Indemnifying Party is
materially prejudiced by such failure) and the Indemnifying Party shall assume
the defense thereof, including the employment of counsel reasonably satisfactory
to such Indemnified Party and payment of all reasonable fees and expenses
(regardless of whether it is ultimately determined that an Indemnified Party is
entitled to indemnification hereunder). Such Indemnified Party shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (i) the employment of such counsel
shall have been specifically authorized in writing by the Indemnifying Party,
(ii) the Indemnifying Party shall have failed to assume the defense and employ
counsel or (iii) the named parties to any such action (including any impleaded
parties) include both such Indemnified Party and the Indemnifying Party and such
Indemnified Party shall have been advised by such counsel that there may be one
or more legal defenses available to it which are different from or additional to
those available to the Indemnifying Party (in which case, the Indemnifying Party
shall not have the right to assume the defense of such action on behalf of such
Indemnified Party, it being understood, however, that the Indemnifying Party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) for
all such Indemnified Parties, which firm shall be designated in writing by the
Indemnified Parties and that all such reasonable fees and expenses shall be
reimbursed as they are incurred). An Indemnifying Party shall not settle,
compromise or consent to the entry of any judgment in any proceeding without the
Indemnified Party's prior written consent, unless the terms of such settlement,
compromise or consent include an unconditional release of each Indemnified Party
from all liability or loss arising out of such proceeding.
8
(d) CONTRIBUTION. If for any reason the indemnity provided for in
this Section 9 is unavailable to, or is insufficient to hold harmless, an
Indemnified Party, then the Indemnifying Party shall contribute to the amount
paid or payable by the Indemnified Party as a result of such Losses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Indemnifying Party on the one hand and the Indemnified Party on the other or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, or provides a lesser sum to the Indemnified Party than the
amount hereinafter calculated, in such proportion as is appropriate to reflect
not only the relative benefits received by the Indemnifying Party on the one
hand and the Indemnified Party on the other but also the relative fault of the
Indemnifying Party and the Indemnified Party as well as any other relevant
equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Parties; and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the Losses referred to above shall be
deemed to include, subject to the limitations set forth in Section 9(c), any
legal or other fees or expenses reasonably incurred by such party in connection
with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
If indemnification is available under this Section 9, the
Indemnifying Parties shall indemnify each Indemnified Party to the full extent
provided in Section 9(a) and (b) without regard to the relative fault of said
Indemnifying Party or Indemnified Party or any other equitable consideration
provided for in this Section 9(d).
10. Rule 144
--------
The Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Securities Exchange Act of 1934, as
amended, and the rules and regulations adopted by the Commission thereunder.
Upon the request of any Holder, the Company will deliver to such Holder a
written statement as to whether it has complied with such requirements.
11. Miscellaneous
-------------
(a) NO INCONSISTENT AGREEMENTS. The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent with the
rights granted to the Holders in this Agreement, including, without limitation,
entering into any agreement which would permit the registration of any
securities to the exclusion of any portion of the Registrable Securities, unless
such exclusion is first waived in writing by the Holders, as the case may be.
Without limiting the generality of the foregoing, any registration rights
9
hereafter granted by the Company shall be subordinate to the registration rights
granted under this Agreement, and the Company shall obtain the written agreement
of each Person to whom such other registration rights may be granted or may
become available to such effect. The Company has not previously entered into any
agreement with respect to any of its securities granting any registration rights
to any Person.
(b) REMEDIES. Each Holder, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agrees to waive (to the extent permitted by law) the defense in any
action for specific performance that a remedy of law would be adequate.
(c) NOTICES. All notices, requests and other communications to any
part hereunder shall be in writing (including telecopy or similar writing) and
shall be effective upon receipt and shall be given, if to the Investor, to:
Quantum Industrial Partners LDC
c/o Curacao Corporation Company, N.V.
Kaya Flamboyan
Willemstad, Curacao
Netherlands, Antilles
Fax: ▇▇▇-▇-▇▇▇-▇▇▇
with a copy to:
▇▇▇▇▇ Fund Management
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
10
If to the Company to:
T/F Purifiner, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇.▇. ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Atlas, ▇▇▇▇▇▇▇▇, Trop & Borkson, P.A.
New River Center - Suite 1900
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to a Holder, at the most current address, with a copy to be sent to each
additional address given by such Holder to the Company in writing.
(d) AMENDMENTS: NO WAIVERS.
(i) Any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed, in the
case of an amendment, by the Majority Holders and the Company, or in the
case of a waiver, by the party against whom the waiver is to be effective.
(ii) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law;
(e) SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto.
(f) GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
(g) COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by the other parties hereto.
11
(h) ENTIRE AGREEMENT. This Agreement and the Securities Purchase
Agreement constitute the entire agreement between the parties with respect to
the subject matter hereof and supersede all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect to the
subject matter of this Agreement.
(i) JURISDICTION. Any suit, action or proceeding seeking to enforce
any provision of, or based on any matter arising out of or in connection with,
this Agreement or the transactions contemplated hereby may be brought against
any of the parties in the courts of the State of New York in New York City, or,
if it has or can acquire jurisdiction, in the United States District Court for
the Southern District of New York, and each of the parties hereby consents to
the jurisdiction of such courts (and of the appropriate appellate courts) in any
such suit, action or proceeding and waives any objection to venue laid therein.
Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the State of New York.
(j) CAPTIONS. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
12
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized signatories as of the day and
year first above written.
QUANTUM INDUSTRIAL PARTNERS LDC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Attorney-in-fact
T/F PURIFINER, INC.
By: /s/ ▇▇▇▇▇ ▇.▇. ▇▇▇▇
------------------------------
Name: ▇▇▇▇▇ ▇.▇. ▇▇▇▇
Title: President
13
The security represented by this Certificate has not been registered
under the Securities Act of 1933, as amended (the "Securities Act"),
or applicable state securities laws, and may not be transferred or
otherwise disposed of unless it has been registered under the
Securities Act or an exemption from registration is available.
T/F PURIFINER, INC.
COMMON STOCK PURCHASE WARRANT
-----------------------------
Certificate No. W- 1
-------
FOR VALUE RECEIVED, T/F Purifiner, Inc., a Delaware corporation (the
"CORPORATION"), hereby grants to Quantum Industrial Partners LDC or its
registered assigns (the "REGISTERED HOLDER" or "HOLDER") this warrant (the
"WARRANT") to purchase, in accordance with the terms set forth herein, 500,000
shares of the Corporation's Common Stock, par value $.001 per share (the "COMMON
STOCK"). This Warrant is issued pursuant to the Securities Purchase Agreement,
dated as of June 19, 1997 (the "PURCHASE AGREEMENT"), by and among the
Corporation, the other signatories thereto and Quantum Industrial Partners LDC
(the "PURCHASER"). Each capitalized term used in this Warrant which is defined
in the Purchase Agreement but not otherwise defined herein has the meaning given
such term in the Purchase Agreement.
This Warrant is subject to the following provisions:
Section 1. WARRANT TERMS. The Warrant is for the purchase of up to
FIVE HUNDRED THOUSAND (500,000) shares of Common Stock (the "Warrant Amount") at
a price per share equal to the then applicable Exercise Price. Subject to the
provisions of Section 2, the "Exercise Price" shall be $2.75 per share (the
"Exercise Price"). This Warrant will expire on December 31, 2000 (the
"Expiration Date").
Section 2. ANTI-DILUTION PROVISIONS. In order to prevent dilution of
the purchase rights granted under Section 1 of this Warrant, the Exercise Price
and the number of shares of Common Stock purchasable upon exercise of this
Warrant shall be subject to adjustment from time to time as set forth herein.
(a) If and whenever the Corporation issues or sells, or in
accordance with Section 2(b) is deemed to have issued or sold, any shares of its
Common Stock (other than shares issued pursuant to the Corporation's 1996 Stock
Option Plan and other than options and warrants outstanding on the date hereof
and set forth on Schedule I attached hereto) for a consideration per share less
than (a) the Exercise Price in effect immediately prior to the time of such
issue or sale or (b) Market Price determined as of the date of such issue or
sale, then immediately upon such issue or sale the Exercise Price shall be
reduced to whichever of the following Exercise Prices is lower:
(1) the Exercise Price determined by dividing (A) the
sum of (x) the product derived by multiplying the Exercise Price in
effect immediately prior to such issue or sale by the number of
shares of Common Stock Deemed Outstanding (as defined in Section
2(g)) immediately prior to such issue or sale, plus (y) the
consideration, if any, received by the Corporation upon such issue
or sale, by (B) the number of shares of Common Stock Deemed
Outstanding immediately after such issue or sale; or
(2) the Exercise Price determined by multiplying the
Exercise Price in effect immediately prior to such issue or sale by
a fraction, the numerator of which shall be the sum of (A) the
number of shares of Common Stock Deemed Outstanding immediately
prior to such issue or sale multiplied by the Market Price
determined as of the date of such issuance or sale, plus (B) the
consideration, if any, received by the Corporation upon such issue
or sale, and the denominator of which shall be the product derived
by multiplying the Market Price by the number of shares of Common
Stock Deemed Outstanding immediately after such issue or sale.
(b) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For
purposes of determining the adjusted Exercise Price under Section 2(a), the
following shall be applicable:
(1) If the Corporation in any manner grants or sells
any Options (as defined in Section 2(g)) and the price per share for
which Common Stock is issuable upon the exercise of such Options, or
upon conversion or exchange of any Convertible Securities (as
defined in Section 2(g)) issuable upon exercise of such Options, is
less than (A) the Exercise Price in effect immediately prior to the
time of the granting or sale of such Options or (B) the Market Price
determined as of such time, then the total maximum number of shares
of Common Stock issuable upon the exercise of such Options or upon
conversion or exchange of the total maximum amount of such
Convertible Securities issuable upon the exercise of such Options
shall be deemed to be outstanding and to have been issued and sold
by the Corporation at the time of the granting or sale of such
Options for such price per share. For purposes of this paragraph,
the "price per share for which Common Stock is issuable" shall be
determined by dividing (A) the total amount, if any, received or
receivable by the Corporation as consideration for the granting or
sale of such Options, plus the minimum aggregate amount of
additional consideration payable to the Corporation upon exercise of
all such Options, plus in the case of such Options which relate to
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable to the Corporation upon the issuance
2
or sale of such Convertible Securities and the conversion or
exchange thereof, by (B) the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable
upon the exercise of such Options. No further adjustment of the
Exercise Price shall be made when Convertible Securities are
actually issued upon the exercise of such Options or when Common
Stock is actually issued upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.
(2) ISSUANCE OF CONVERTIBLE SECURITIES. If the
Corporation in any manner issues or sells any Convertible Securities
and the price per share for which Common Stock is issuable upon
conversion or exchange thereof is less than (A) the Exercise Price
in effect immediately prior to the time of such issue or sale or (B)
the Market Price determined as of such time, then the maximum number
of shares of Common Stock issuable upon conversion or exchange of
such Convertible Securities shall be deemed to be outstanding and to
have been issued and sold by the Corporation at the time of the
issuance or sale of such Convertible Securities for such price per
share. For the purposes of this paragraph, the "price per share for
which Common Stock is issuable" shall be determined by dividing (A)
the total amount received or receivable by the Corporation as
consideration for the issue or sale of such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the conversion or exchange
thereof, by (B) the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of such Convertible
Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which
adjustments of the Exercise Price had been or are to be made
pursuant to other provisions of this Section 2, no further
adjustment of the Exercise Price shall be made by reason of such
issue or sale.
(3) CHANGE IN OPTION PRICE OR CONVERSION RATE. If the
purchase price provided for in any Options, the additional
consideration, if any, payable upon the conversion or exchange of
any Convertible Securities or the rate at which any Convertible
Securities are convertible into or exchangeable for Common Stock
changes at any time, the Exercise Price in effect at the time of
such change shall be immediately adjusted to the Exercise Price
which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold;
PROVIDED, that if such adjustment would result in an increase of the
Exercise Price then in effect, such adjustment shall not be
effective until 30 days after written notice thereof has been given
by the Corporation to all holders of the Shares. For purposes of
this Section 2(b), if the terms of any Option or Convertible
Security which was outstanding as of the date of issuance of this
3
Warrant are changed in the manner described in the immediately
preceding sentence, then such Option or Convertible Security and the
Common Stock deemed issuable upon exercise, conversion or exchange
thereof shall be deemed to have been issued as of the date of such
change; PROVIDED that no such change shall at any time cause the
Exercise Price hereunder to be increased.
(4) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED
CONVERTIBLE SECURITIES. Upon the expiration of any Option or the
termination of any right to convert or exchange any Convertible
Security without the exercise of any such Option or right, the
Exercise Price then in effect hereunder shall be adjusted
immediately to the Exercise Price which would have been in effect at
the time of such expiration or termination had such Option or
Convertible Security, to the extent outstanding immediately prior to
such expiration or termination, never been issued; PROVIDED that if
such expiration or termination would result in an increase in the
Exercise Price then in effect, such increase shall not be effective
until 30 days after written notice thereof has been given to the
Holder. For purposes of this Section 2(b), the expiration or
termination of any Option or Convertible Security which was
outstanding as of the date of issuance of this Warrant shall not
cause the Exercise Price to be adjusted unless, and only to the
extent that, a change in the terms of such Option or Convertible
Security caused it to be deemed to have been issued after the date
of issuance of such Warrant.
(5) CALCULATION OF CONSIDERATION RECEIVED. If any Common
Stock, Option or Convertible Security is issued or sold or deemed to
have been issued or sold for cash, the consideration received
therefor shall be deemed to be the amount received by the
Corporation therefor (net of discounts, commissions and related
expenses). If any Common Stock, Option or Convertible Security is
issued or sold for consideration other than cash, the amount of the
consideration other than cash received by the Corporation shall be
the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of
consideration received by the Corporation shall be the Market Price
as of the date of receipt. If any Common Stock, Option or
Convertible Security is issued to the owners of the non-surviving
entity in connection with any merger in which the Corporation is the
surviving corporation, the amount of consideration therefor shall be
deemed to be the fair value of such portion of the net assets and
business of the non-surviving entity as is attributable to such
Common Stock, Option or Convertible Security, as the case may be.
The fair value of any consideration other than cash and securities
shall be determined by the Board of Directors of the Corporation.
4
(6) INTEGRATED TRANSACTIONS. In case any Option is
issued in connection with the issue or sale of other securities of
the Corporation, together comprising one integrated transaction in
which no specific consideration is allocated to such Option by the
parties thereto, the Board of Directors of the Corporation shall
determine in good faith the consideration for such Option.
(7) TREASURY SHARES. The number of shares of Common
Stock outstanding at any given time shall not include shares owned
or held by or for the account of the Corporation or any Subsidiary
(as defined in Section 2(g)), and the disposition of any shares so
owned or held shall be considered an issue or sale of Common Stock.
(8) RECORD DATE. If the Corporation takes a record of
the holders of Common Stock for the purpose of entitling them (a) to
receive a dividend or other distribution payable in Common Stock,
Options or in Convertible Securities or (b) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such
record date shall be deemed to be the date of the issue or sale of
the shares of Common Stock deemed to have been issued or sold upon
the declaration of such dividend or upon the making of such other
distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(c) SUBDIVISION OR COMBINATION OF COMMON STOCK. If the
Corporation at any time subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced, and if
the Corporation at any time combines (by reverse stock split or otherwise) one
or more classes of its outstanding shares of Common Stock into a smaller number
of shares, the Exercise Price in effect immediately prior to such combination
shall be proportionately increased.
(d) REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Corporation's assets or other
transaction, in each case which is effected in such a manner that the holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock, is referred to herein as an "ORGANIC CHANGE." Prior to the
consummation of any Organic Change, the Corporation shall make appropriate
provisions to insure that the Holder shall thereafter have the right to acquire
and receive, in lieu of or in addition to (as the case may be) the shares of
Common Stock immediately theretofore acquirable and receivable upon the exercise
5
of this Warrant, such shares of stock, securities or assets as such Holder would
have received in connection with such Organic Change if such Holder had
exercised this Warrant immediately prior to such Organic Change. In each such
case, the Corporation shall also make appropriate provisions (in form and
substance satisfactory to the Majority Warrant Holders) to insure that the
provisions of this Section 2 shall thereafter be applicable to this Warrant
(including, in the case of any such consolidation, merger or sale in which the
successor entity or purchasing entity is other than the Corporation, an
immediate adjustment of the Exercise Price to the value for the Common Stock
reflected by the terms of such consolidation, merger or sale, and a
corresponding immediate adjustment in the number of shares of Common Stock
acquirable and receivable upon exercise of this Warrant, if the value so
reflected is less than the Exercise Price in effect immediately prior to such
consolidation, merger or sale). The Corporation shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor entity (if other than the Corporation) resulting from consolidation or
merger or the entity purchasing such assets assumes by written instrument (in
form and substance satisfactory to the Majority Warrant Holders), the obligation
to deliver to each such Holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
acquire.
(e) CERTAIN EVENTS. If any event occurs of the type
contemplated by the provisions of this Section 2 but not expressly provided for
by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features)
other than the grant of options to purchase Common Stock pursuant to the
Corporation's 1996 Stock Option Plan, then the Corporation's Board of Directors
shall make an appropriate adjustment in the Exercise Price so as to protect the
rights of the Holder; PROVIDED that no such adjustment shall increase the
Exercise Price as otherwise determined pursuant to this Section 2 or decrease
the number of shares of Common Stock issuable upon exercise of this Warrant.
(f) NOTICES. Immediately upon any adjustment of the Exercise
Price, the Corporation shall give written notice thereof to the Holder, setting
forth in reasonable detail and certifying the calculation of such adjustment.
The Corporation shall give written notice to the Holder at least 20 days prior
to the date on which the Corporation closes its books or takes a record (A) with
respect to any dividend or distribution upon Common Stock, (B) with respect to
any pro rata subscription offer to holders of Common Stock or (C) for
determining rights to vote with respect to any Organic Change, dissolution or
liquidation. The Corporation shall also give written notice to the Holder at
least 20 days prior to the date on which any Organic Change shall take place.
6
(g) DEFINITIONS.
"COMMON STOCK DEEMED OUTSTANDING" means, at any given time,
the number of shares of Common Stock actually outstanding at such time, plus the
number of shares of Common Stock deemed to be outstanding pursuant to Sections
2(b)(1) and 2(b)(2) whether or not the Options or Convertible Securities are
actually exercisable at such time.
"CONVERTIBLE SECURITIES" means any stock or securities of the
Corporation directly or indirectly convertible into or exchangeable for Common
Stock.
"MAJORITY WARRANT HOLDERS" means the holders of more than 50%
of all shares of Common Stock underlying this Warrant initially issued to the
Holders.
"MARKET PRICE" means the average of the closing prices of
shares of the Common Stock's sales on all securities exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, on such day, or, if on any day
shares of the Common Stock are not quoted in the NASDAQ System, the "Market
Price" shall be the fair value thereof determined in good faith by the Board of
Directors of the Corporation. If such parties are unable to reach agreement
within a reasonable period of time, such fair value shall be determined by an
independent appraiser experienced in valuing securities jointly selected by the
Corporation and the Majority Warrant Holders. The determination of such
appraiser shall be final and binding upon the parties, and the Corporation shall
pay the fees and expenses of such appraiser.
"OPTIONS" means any rights, warrants or options to subscribe
for or purchase Common Stock or Convertible Securities other than options (i)
granted pursuant to the Corporation's 1996 Stock Option Plan or (ii) set forth
on Schedule I hereto.
"SUBSIDIARY" means, with respect to the Corporation, any
corporation, limited liability company, partnership, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by the Corporation
or one or more of the other Subsidiaries of the Corporation or a combination
thereof, or (ii) if a limited liability company, partnership, association or
other business entity, a majority of the partnership or other similar ownership
interest thereof is at the time owned or controlled, directly or indirectly, by
the Corporation or one or more Subsidiaries of the Corporation or a combination
thereof. For purposes hereof, the Corporation shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association or
other business entity if the Corporation shall be allocated a majority of
limited liability company, partnership, association or other business entity
gains or losses or shall be or control the managing general partner of such
limited liability company, partnership, association or other business entity.
7
(h) NUMBER OF SHARES. Upon each adjustment of the Exercise
Price as a result of the calculations made in this Section 2, each Warrant
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Exercise Price, that number of
shares (calculated to the nearest hundredth) obtained by (i) multiplying the
number of shares of Common Stock purchasable upon exercise of the Warrant
immediately prior to adjustment by the Exercise Price in effect immediately
prior to adjustment of the Exercise Price and (ii) dividing the product so
obtained by the Exercise Price in effect immediately after such adjustment of
the Exercise Price.
Section 3. EXERCISE OF WARRANT.
(a) The Holder shall have the right to exercise all or a
portion of this Warrant:
(i) at any time and from time to time on or prior
to the Expiration Date, by surrendering at the principal office of the
Corporation this Warrant and a completed Exercise Agreement (in the form of
Exhibit I hereto) and by paying the Exercise Price by check or wire transfer to
an account designated by the Corporation as to the number of shares of Common
Stock as to which the Warrant is being exercised (the "Exercise Amount") and
receiving in exchange therefor the number of shares of Common Stock equal to the
Exercise Amount;
(ii) at any time and from time to time on or prior
to the Expiration Date, by surrendering at the principal office of the
Corporation this Warrant and a completed Exercise Agreement (in the form of
Exhibit I hereto) and receiving in exchange therefor the number of shares equal
to the product of the Exercise Amount multiplied by a fraction, the numerator of
which is the Market Price (as defined in Section 2(g)) less the Exercise Price
and the denominator of which is such Market Price; and/or
(iii) at any time and from time to time on or prior
to the Expiration Date, by surrendering at the principal office of the
Corporation this Warrant and a completed Exercise Agreement (in the form of
Exhibit I hereto) and by surrendering shares of Common Stock of the Corporation
valued at the Market Price and receiving in exchange therefor the number of
shares of Common Stock equal to the Exercise Amount.
(b) A Holder may use one or more of the methods of exercise
outlined in Section 3(a) when exercising this Warrant so long as the completed
Exercise Agreement accurately states which method or methods such Holder intends
to use and the number of shares as to which each such method will be used.
8
(c) Certificates for shares of Common Stock acquired through
exercise of this Warrant shall be delivered by the Corporation to the Holder
within five (5) business days after receipt by the Corporation of the items
required by Section 3(a) for the respective method or methods of exercise.
Unless this Warrant has expired or all of the purchase rights represented hereby
have been exercised, the Corporation shall prepare a new Warrant, substantially
identical hereto, representing the rights formerly represented by this Warrant
which have not expired or been exercised and shall, within such five-day period,
deliver such new Warrant to such Holder.
(d) The Common Stock issuable upon exercise of this Warrant
shall be deemed to have been issued to the Holder on the date by which the
Corporation receives the completed Exercise Agreement and payment of the
Exercise Price, if any, and such Holder shall be deemed for all purposes to have
become the record holder of such Common Stock on such date.
(e) The issuance of certificates for shares of Common Stock
upon exercise of this Warrant shall be made without charge to the Holder for any
issuance tax in respect thereof or other cost incurred by the Corporation in
connection with such exercise and the related issuance of shares of Common
Stock.
(f) The Corporation shall at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of issuance upon exercise of this Warrant, such number of shares of
Common Stock as are issuable upon exercise of this Warrant. All such shares of
Common Stock shall, when issued, be duly and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges. The Corporation shall
take all such actions as may be necessary to assure that all such shares of
Common Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
upon which shares of Common Stock may be listed (except for official notice of
issuance which shall be immediately delivered by the Corporation upon each such
issuance). In addition, prior to the issuance of any Common Stock upon an
exercise of this Warrant, the Company shall at its expense procure the listing
of such Common Stock which shall be issued upon exercise of this Warrant as then
may be required on all stock exchanges or interdealer quotation systems on which
the Common Stock is then listed and shall maintain such listing if and so long
as any shares of the Common Stock shall be listed on such stock exchanges or
interdealer quotation systems.
Section 4. WARRANT TRANSFERABLE. Subject to the transfer conditions
referred to in the legend endorsed hereon, this Warrant and all rights hereunder
are transferable, in whole or in part, without charge to the Holder; upon
surrender of this Warrant with a properly executed Assignment (in the form of
EXHIBIT II hereto) at the principal office of the Corporation.
9
Section 5. WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This
Warrant is exchangeable, upon the surrender hereof by the Holder at the
principal office of the Corporation, for new Warrants, substantially identical
hereto, representing in the aggregate the rights formerly represented by this
Warrant, and each of such new Warrants shall represent such portion of such
rights as is designated by the Holder at the time of such surrender. The date
the Corporation initially issues this Warrant shall be the date of issuance of
such new Warrants regardless of the number of times new certificates
representing the unexpired and unexercised rights formerly represented by this
Warrant shall be issued.
Section 6. REPLACEMENT. Upon receipt of evidence reasonably
satisfactory to the Corporation (an affidavit of the Holder shall be
satisfactory) of the ownership and the loss, theft, destruction or mutilation of
any certificate evidencing this Warrant, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory to the
Corporation (provided that if such Holder is a financial institution or other
institutional investor its own agreement shall be satisfactory), or, in the case
of any such mutilation, upon surrender of such certificate, the Corporation
shall (at its expense) execute and deliver in lieu of such certificate a new
certificate, substantially identical hereto, representing the rights represented
by such lost, stolen, destroyed or mutilated certificate and dated the date of
such lost, stolen, destroyed or mutilated certificate.
Section 7. SUCCESSORS AND ASSIGNS. This instrument is intended to
bind and inure to the benefit of and be enforceable by the Investor and his
respective heirs, successors and assigns.
Section 8. AMENDMENT AND WAIVER. Except as otherwise provided
herein, the provisions of this Warrant may be amended only if the Corporation
has obtained the written consent of the Holder.
Section 9. DESCRIPTIVE HEADINGS; GOVERNING LAW. The descriptive
headings of this Warrant are inserted for convenience only and do not constitute
a part of this Warrant. The corporate laws of the State of Delaware will govern
all questions concerning the relative rights of the Corporation and its
stockholders. All other questions concerning the construction, validity and
interpretation of this Warrant will be governed by and construed in accordance
with the domestic laws of the State of New York, without giving effect to any
choice of law or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
Section 10. COMPLETE AGREEMENT; SEVERABILITY. Except as otherwise
expressly set forth herein, this Warrant, the Purchase Agreement and any other
agreement executed by the parties and contemplated by the Purchase Agreement
embodies the complete agreement and understanding among the parties hereto with
respect to the subject matter hereof and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
Whenever possible, each provision of this Warrant will be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Warrant is held to be invalid, illegal or unenforceable in any respect
10
under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability will not affect any other provision or any other
jurisdiction, but this Warrant will be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein.
Section 11. NOTICES. Except as otherwise expressly provided herein,
all notices referred to in this Warrant shall be in writing and shall be
delivered personally, sent by reputable overnight courier service (charges
prepaid) or sent by registered or certified mail, return receipt requested,
postage prepaid and shall be deemed to have been given when so delivered, sent
or deposited in the U.S. Mail (i) to the Corporation, at its principal executive
offices and (ii) to the Holder, at such Holder's address as it appears in the
records of the Corporation (unless otherwise indicated by any such Holder). If
the Holder is a Purchaser, notices to such Holder shall be sent to the address
for such Holder set forth in the Purchase Agreement (unless otherwise indicated
by such Holder) with copies to such persons as are indicated therein.
11
* * * *
IN WITNESS WHEREOF, the Corporation has caused this Warrant to be
signed and attested by its duly authorized officer and to be dated the date of
issuance hereof.
T/F PURIFINER, INC.
By: /S/ ▇▇▇▇▇ ▇.▇. ▇▇▇▇
----------------------------------------
Its:
----------------------------------------
Attest:
-------------------------------
Secretary
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EXHIBIT I
EXERCISE AGREEMENT
------------------
To: T/F PURIFINER, INC.
The undersigned, pursuant to the provisions set forth in the
attached Warrant (Certificate No. W-__), hereby agrees to exercise the Warrant
as to ____________ shares of Common Stock covered by such Warrant (the "Exercise
Amount") at the Exercise Price provided by such Warrant. The following methods
of exercise will be used respectively for the following number of shares:
METHOD OF EXERCISE NUMBER OF SHARES
------------------ ----------------
Section 3(a)(i) _______________
Section 3(a)(ii) _______________
Section 3(a)(iii) _______________
Dated: _________________ Signature ____________________
Address _______________________
13
EXHIBIT II
ASSIGNMENT
----------
FOR VALUE RECEIVED, ________________________________ hereby sells,
assigns and transfers all of the rights of the undersigned under the attached
Warrant (Certificate No. W- _____) with respect to the number of shares of the
Common Stock and covered thereby set forth below, unto:
NAMES OF ASSIGNEE ADDRESS NO. OF SHARES
----------------- ------- -------------
Dated: Signature
--------------- ----------------------------
Address
------------------------------
Witness
------------------------------
14
SCHEDULE I
15