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Registration Statement No. 333-74199
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As filed with the Securities and Exchange Commission on June 30, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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UNIVEC, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-3163455
(State or Other Jurisdiction (IRS Employer
of Incorporation) Identification No.)
22 Dubon Court
Farmingdale, New York, New York, 11735
Telephone: (516) 777-2000
Telecopier: (516) 777-2786
(Address, including zip code, and telephone number,
including area code of Principal Executive Offices)
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Joel Schoenfeld
Chairman of the Board and Chief Executive Officer
UNIVEC, Inc.
22 Dubon Court
Farmingdale, New York, New York, 11735
Telephone: (516) 777-2000
Telecopier: (516) 777-2786
(Name, address, including zip code, and telephone number,
including area code of agent for service)
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Copies to:
Jack Becker, Esq.
Snow Becker Krauss P.C.
605 Third Avenue
New York, New York 10158-0125
Telephone: (212) 687-3860
Telecopier: (212) 949-7052
Approximate Date of Commencement of Proposed Sale to Public: As soon as
practical after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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PRELIMINARY PROSPECTUS, SUBJECT TO COMPLETION, DATED JUNE 30, 1999
UNIVEC, INC.
350,000 Shares of Common Stock
The Selling Securityholder is The common stock is quoted on the
offering to the public 350,000 shares of Nasdaq SmallCap Market under the
common stock which the Selling trading symbols "UNVCE." On June 29,
Securityholder can acquire upon 1999, the closing sale price of one
conversion of our Series C 5% share of common stock on the The
Convertible Preferred Stock, as payment Nasdaq SmallCap Market was $1.00
of dividends on the Series C Preferred per share.
Stock and upon exercise by the Selling
Securityholder of common stock purchase The Company will not receive
warrants issued by us. any proceeds from the sale of common
stock by the Selling Securityholder.
The Selling Securityholder may The Company has agreed to bear
sell common stock directly or through expenses in connection with the
broker-dealers who will receive registration and sale of the shares
commissions or discounts. Sales of being offered by the Selling
common stock made by broker-dealers may Securityholder. The Company has
be ordinary brokerage transactions or agreed to indemnify the Selling
block transactions on The Nasdaq Securityholder against certain
SmallCap Market. Sales may also be made liabilities, including liabilities
through one or more dealers who may under the Securities Act.
resell as principals, in privately
negotiated transactions or otherwise, at The common stock is a speculative
the prevailing market price, a price investment and involves a high degree
related to the prevailing market price of risk. You should read the
or at a negotiated price. To the description of certain risks under
Company's knowledge, the Selling the caption "Risk Factors" commencing
Securityholder has not entered into any on page 3 before purchasing the
underwriting arrangements for the sale common stock.
of the common stock.
These securities have not been approved or disapproved by the SEC or
any state securities commission nor has the SEC or any state securities
commission passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
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The date of this Prospectus is June , 1999.
The information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
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Table of Contents
Page
Risk Factors............................................................... __
Forward Looking Statements................................................. __
Use of Proceeds ........................................................... __
Information About the Company ............................................. __
Legal Matters ............................................................. __
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This prospectus is part of a registration statement we filed with the
SEC. You should rely only on the information or representations provided in this
prospectus. We have not authorized anyone to provide you with different
information. The common stock will not be offered in any state where an offer is
not permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the cover of this prospectus.
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RISK FACTORS
Before you invest in our common stock, you should be aware that there
are various risks, including those described below. You should consider
carefully these risk factors together with all other information included in
this prospectus, including the documents that we incorporate by reference,
before you decide to purchase shares of common stock.
We Have Had Historical Operating Losses and Have an Accumulated Deficit
of Approximately $4.4 Million. We have incurred losses since the inception of
the company. We incurred a net loss of approximately $1,897,206 for the fiscal
year ended December 31, 1998 and a net loss of approximately $1,172,000 for the
fiscal year ended December 31, 1997. We incurred a net loss of approximately
$444,281 for the three months ended March 31, 1999. As a result of continuing
losses our accumulated deficit was approximately $4,434,131 at March 31, 1999.
We expect to continue to incur operating losses until such time, if ever, as we
derive significant increases in revenues from the sale of our locking clip
syringes and other products we may develop. Our ability to operate profitably
depends upon market acceptance of our locking clip syringes, the development of
an effective sales and marketing organization, and our development of new
products, and improvements to existing products and manufacturing processes. We
cannot give you any assurances that our locking clip syringes will achieve a
level of market acceptance in foreign or domestic markets to generate sufficient
revenues to become profitable. See "Risk Factors--We Must Achieve Market
Acceptance of Our Difficult to Reuse Syringes" and our consolidated financial
statements, including the accompanying notes which are incorporated by reference
into this prospectus.
We Have a Limited Operating History. Although we were founded in August
1992, the production and sales of our 1cc locking clip syringe began in July
1997. From August 1992 to June 1997, our operations consisted primarily of the
design of our patented locking clip and plunger, the design and implementation
of the equipment for production of the 1cc locking clip syringe, the hiring of
key personnel, and the sales of medical devices manufactured by others including
difficult-to-reuse syringes of an alternative design. Accordingly, we have a
limited operating history upon which an evaluation of our business and prospects
can be based. An investment in our securities is subject to all of the risks
involved in a newly established business venture. You should be aware of the
problems, delays, expenses and difficulties encountered by companies like ours
at this early stage of operations, many of which may be beyond our control,
including but not limited to commencement of production, marketing and product
introduction, competition, market acceptance of the our difficult to reuse
syringes, and unanticipated problems and additional costs relating to the
development and testing of products. Our officers have limited experience in the
production and sale of medical devices. See "Risk Factors-Limited Experience of
Management in the Development, Production and Sale of Medical Devices."
We Need Additional Financing. We require additional financing to
continue our operations and we may seek to raise funds through the sale of our
securities or by other means. We cannot give you any assurances that additional
funds will be available to us on acceptable terms, if at all. Additional
financing may result in dilution to existing stockholders. If, as we anticipate,
we achieve increased levels of sales (though we cannot give you any assurances
that such projected sales increases will be realized), the need for additional
financing would be reduced. However, if funds are needed but not available in
adequate amounts from
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additional financing sources or from operations, we may be materially and
adversely affected.
We Must Have the Ability to Manage Growth. Subject to sufficient cash
flow from operations and/or additional financing, we contemplate a rapid
expansion of our business. If we were to experience significant growth in the
future, our growth would likely result in new and increased responsibilities for
our management personnel and place significant strain upon our management,
operating and financial systems and resources. To accommodate such growth and
compete effectively, we must continue to implement and improve our operational,
financial, management and information systems, procedures and controls, and to
expand, train and manage our personnel. We cannot give you any assurance that
our personnel, systems, procedures or controls will be adequate to support our
future operations. If we fail to implement and improve our operational,
financial, management and information systems, procedures or controls or to
expand, train or manage employees, our business, financial condition and results
of operations could be materially and adversely affected.
Extensive Effect of Government Regulation in Medical Devices Area. The
FDA, and in some instances, state authorities, regulate the manufacture and
distribution of medical devices in the United States. We have been granted
510(k) clearance by the FDA to market our 1cc locking clip syringe in the United
States and we also comply with applicable foreign requirements for the 1cc
locking clip syringe. New products which we develop will also be subject to
approval in the United States by the FDA and, in foreign countries, by foreign
government authorities. We cannot give you any assurance that the necessary
approvals or clearances for new products will be granted on a timely basis or at
all. If we fail to receive approvals or clearances for new products, or if any
of the approvals or clearances granted for our 1cc locking clip syringe are
withdrawn or rescinded, our business, financial condition and results of
operations could be materially and adversely affected. Furthermore, approvals
that have been or may be granted are subject to continual review, and if
previously unknown problems are discovered later, we may be required to
undertake product labeling restrictions or a withdrawal of the product from the
market. Moreover, changes in existing requirements or adoption of new
requirements or policies could adversely affect our ability to comply with
regulatory requirements. In addition, we cannot give you any assurances that we
will not be required to incur significant costs to comply with applicable laws
and regulations in the future. If we fail to comply with applicable laws or
regulatory requirements our business, financial position and results of
operations could be materially and adversely affected.
FDA and State Regulation Pursuant to the Federal Food, Drug, and
Cosmetic Act, as amended, and the regulations promulgated thereunder. The FDA
regulates the clinical testing, manufacture, labeling, sale, distribution and
promotion of medical devices. Before a new device can be introduced into the
market, a manufacturer must obtain FDA permission to market through either the
510(k) pre-market notification process or the costlier, lengthier and less
certain pre-market approval application process. We have been granted 510(k)
clearance by the FDA to market our 1cc locking clip syringe, which has been
classified as a Class II device under the Food, Drug and Cosmetic Act, and
accordingly, we are permitted to market and sell our 1cc locking clip syringe in
the United States, subject to compliance with other applicable FDA regulatory
requirements. As a Class II device, performance standards may be developed for
the 1cc locking clip syringe which we would then be required to meet.
Furthermore, as manufacturers of medical devices, we are subject to
recordkeeping requirements and required to report adverse experiences relating
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to the use of the device. We are also required to register our establishments
and list our devices with the FDA and with certain state agencies and we are
subject to periodic inspections by the FDA and certain state agencies. The Food,
Drug and Cosmetic Act requires us to manufacture devices in accordance with good
manufacturing practices regulations, and certain procedural and documentation
requirements have been imposed upon us with respect to manufacturing and quality
assurance activities. The FDA conducts periodic audits and surveillance of the
manufacturing, sterilizing and packaging facilities of medical device
manufacturers to determine compliance with good manufacturing practices
requirements. If we fail to demonstrate adequate compliance with good
manufacturing practices requirements in the audit or post-market surveillance,
penalties or enforcement proceedings may be imposed on us. Our manufacturing
facilities have not been certified as satisfying good manufacturing practices
requirements. Our facilities will be subject to extensive audits in the future
pursuant to standard FDA procedure. We cannot give you any assurances that when
we are audited we will be found to be in compliance with good manufacturing
practice requirements, or if we are not found in compliance, what penalties,
enforcement procedures or compliance effort will be levied on or required of us.
The FDA also has the authority to request us to repair, replace or refund the
cost of any device manufactured or distributed by us, and if we fail to meet
standards for effectiveness and safety we could be required to discontinue the
manufacturing and/or the marketing of our product in the United States.
Foreign Regulation. The introduction of our products in foreign markets
will subject us to foreign regulatory clearances which may impose additional
substantive costs and burdens. International sales of medical devices are
subject to the regulatory requirements of each country. The regulatory review
process varies from country to country. Many countries also impose product
standards, packaging requirements, labeling requirements and import restrictions
on devices. In addition, each country has its own tariff regulations, duties and
tax requirements. Our products also are required to satisfy international
manufacturing standards required by the International Standards Organization for
sale in certain foreign countries. Our contract manufacturer all have received
International Standards Organization Certification.
We Must Achieve Market Acceptance of Our Difficult to Reuse Syringes.
We derive our revenues primarily from sales of locking clip syringes. Despite
increased public awareness of the risks associated with conventional disposable
syringes, of the major syringe manufacturers, only Becton-Dickinson and our
company are manufacturing difficult to reuse syringes for sale to international
relief agencies. Accordingly, our future success and financial performance will
depend almost entirely on our ability to successfully market our locking clip
syringes. We cannot give you any assurances that our marketing efforts will be
successful or that sales of our difficult to reuse syringes will generate
sufficient revenues for us to become profitable. See "Risk Factors-Extensive
Effect of Government Regulation in Medical Devices Area."
We May Not Realize Revenues from Licensing Our Patents and Technology.
Although we intend to license the patents and proprietary manufacturing
processes relating to our locking clip and other syringe designs to established
medical device manufacturers worldwide, we cannot give you any assurances that
we will be successful in our licensing efforts.
We Are Dependent on Certain Customers. Our initial marketing efforts
have been directed primarily to, and all of our revenues have been derived from,
international relief agencies. We cannot give you any assurances as to whether
the international relief agencies will continue to purchase difficult-to-reuse
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syringes from us. The failure of international relief agencies to purchase our
locking clip syringes in substantial quantities would have a materially adverse
effect on our business, financial condition and results of operations.
We Are Dependent on Outside Contract Manufacturers and We Could be
Afffected by Interruptions to Production. We rely primarily on several outside
contract manufacturers for the production and assembly of our 1cc locking clip
syringes. We have a contract with West Pharmaceutical Services to manufacture up
to 100,000,000 plungers and another supply contract with a Portuguese
manufacturer with an annual capacity of 75,000,000 units. The Portuguese
manufacturer also manufacturers syringe barrels and assembles and packages
completed 1cc locking clip syringes for us. In addition, we have arrangements
with three other foreign syringe manufacturers, with a capacity of 100,000,000
units annually, to assemble and package completed 1cc locking clip syringes from
proprietary plunger/clip assemblies manufactured for us by West or the
Portuguese manufacturer. The failure of one or more of our outside manufacturers
or assemblers to produce components or to assemble completed 1cc locking clip
syringes on a timely basis could have a materially adverse effect on our
business.
To augment production of outside manufacturers, we have commenced
production of our proprietary plunger/clip assemblies and the completed 1cc
locking clip syringe at our own production facility in Farmingdale, New York.
The Farmingdale facility has an annual capacity of approximately 25,000,000
completed units and can also manufacture the proprietary 1cc plunger/clip for
assembly into completed units by our contract manufacturers. We intend, however,
to rely primarily on our outside manufacturers as a regular source of supply,
since the Farmingdale facility has higher unit costs which could adversely
affect our business. We also cannot give you any assurance that production at
the Farmingdale facility will not be interrupted as a result of delays in
obtaining supplies of components or in complying with FDA manufacturing
requirements, including the attainment of acceptable quality levels.
Management Has Limited Experience in the Development, Production and
Sale of Medical Devices. Our management has had limited experience in the
development, production and sale of medical devices. We cannot give any
assurance that we will be able to compete successfully with the major syringe
manufacturers. See "Risk Factors-We Have a Limited Operating History."
We Must Develop a 3cc Syringe with Extendable Barrel Sleeve. We intend
to develop a 3cc, non-aspirating, locking clip syringe for hospitals and health
clinics, and anticipate that production will commence during 1999. In general,
hospitals and health clinics use more 3cc syringes than 1cc syringes, and may
not be willing to purchase our 1cc locking clip syringes until such time as we
are able to offer 3cc syringes. However, we cannot give any assurance that the
3cc designs selected for commercialization will be accepted by hospitals and
health clinics. Moreover, we have not yet selected a design for the assembly
equipment or an engineering firm to construct the equipment. Our failure to
timely select a design for the assembly equipment or an engineering firm to
construct such assembly equipment, or our inability to obtain adequate supplies
of components, could delay the production and commercial introduction of our 3cc
non-aspirating syringe.
We Are Dependent Upon Our Patents and the Protection of Proprietary
Technology. Our success will depend, in part, on the strength of our patents, as
well as our ability to preserve our trade secrets and operate without infringing
the
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proprietary rights of others. Our policy is to seek protection of our
proprietary position by, among other methods, filing United States and foreign
patent applications related to our technology, inventions and improvements that
are important to the development of our business. We hold three United States
patents, including a patent for our locking clip; we have filed a United States
patent application for our aspirating plunger and we have also filed patent
applications for our locking clip in Canada, Brazil, Mexico, certain European
countries, Japan, South Korea, China, Russia and Australia. In addition, we have
acquired licensed rights for a United States patent on a locking device to be
used in connection with the 3cc non-aspirating syringe that we plan to develop.
We have filed for patent protection in certain European countries for this
invention. We also have licensed the rights to a patent to develop a pre-filled
or unit dose syringe. This invention has U.S. patent protection, but lacks
foreign protection.
We cannot give any assurance that pending or future applications for
patents and trademarks will mature into issued patents, or that we will continue
to develop our own patentable technologies. Furthermore, we cannot give you any
assurance that any of our patents or patents that may be issued to us in the
future will not be challenged, invalidated or circumvented in the future or that
the rights granted under such patents will provide a competitive advantage.
In addition, patent applications filed in foreign countries and patents
granted in such countries are subject to laws, rules and procedures that differ
from those in the United States. Patent protection in such countries may be
different from patent protection provided by the laws of the United States.
Patent applications in the United States are maintained in secrecy until patents
issue, and patent applications in foreign countries are maintained in secrecy
for a period after filing. Publication of discoveries in the scientific or
patent literature tends to lag behind actual discoveries and the filing of
related patent applications. Patents issued and patent applications filed
related to medical devices are numerous and accordingly, we cannot give you any
assurances that current and potential competitors and other third parties have
not filed or in the future will not file applications for, or have not received
or in the future will not receive, patents or obtain additional proprietary
rights that will prevent, limit or interfere with the Company's ability to make,
use or sell its products either in the United States or internationally.
The medical device industry in general has been characterized by
substantial competition and litigation regarding patent and other proprietary
rights. We intend to vigorously protect and defend our patents and other
proprietary rights relating to our proprietary technology. Litigation alleging
infringement claims against us (with or without merit), or instituted by us to
enforce patents and to protect trade secrets or know-how owned by us or to
determine the enforceability, scope and validity of the proprietary rights of
others, is costly and time consuming. If any relevant claims of third-party
patents are upheld as valid and enforceable in any litigation or administrative
proceedings, we could be prevented from practicing the subject matter claimed in
such patents, or would be required to obtain licenses from the patent owners of
each patent, or to redesign our products or processes to avoid infringement. We
cannot give you any assurance that such licenses would be available or, if
available, would be available on terms acceptable to us or that we would be
successful in any attempt to redesign our products or processes to avoid
infringement. Accordingly, an adverse determination in a judicial or
administrative proceeding or failure to obtain necessary licenses could prevent
us from manufacturing and selling our products, which would have a materially
adverse effect on our business, financial condition and results of operations.
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We also rely upon trade secrets, technical know-how and continuing
technological innovation to develop and maintain our competitive position. We
cannot give you any assurance that competitors will not independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to our proprietary technology, or that we can meaningfully protect
our rights in unpatented proprietary technology.
We Must Compete With Larger and Financially Stronger Competitors. Our
principal competition is from manufacturers of traditional disposable syringes.
Becton-Dickinson, Sherwood and Terumo Medical Corporation of Japan control
approximately 74%, 19% and 5%, respectively, or a total of approximately 98%, of
the worldwide syringe market, and are substantially larger, more established and
have significantly greater financial, sales and marketing, distribution,
engineering, research and development and other resources than we do. To our
knowledge, only Becton-Dickinson and Bader & Partner Medizintechnik GmbH, a
German machine tool manufacturer, distribute commercially a line of difficult to
reuse syringes, none of which allow for aspiration. The Bader DestroJect syringe
and the Becton-Dickinson SOLOSHOT and UNIJECT syringes were developed originally
for WHO-UNICEF immunization programs. We cannot give you any assurance that the
major syringe manufacturers or others will not commence production of difficult
to reuse syringes, or that we will be able to successfully compete in this
market.
We Have Limited Products Liability Insurance and Exposure to Uninsured
Risks. The manufacture and sale of medical products exposes us to the risk of
significant damages from product liability claims. Although we maintain product
liability insurance against product liability claims in the amount of $5 million
per occurrence and $5 million in the aggregate, we cannot give you any assurance
that the coverage limits of our insurance policies will be adequate, or that we
will continue to be able to maintain such insurance coverage at acceptable cost.
In addition, any successful claim against us in an amount exceeding our
insurance coverage could have a materially adverse effect on our business,
financial condition or results of operations. Furthermore, we have no recall
insurance for foreign countries or the United States. We intend to apply for
product recall insurance primarily for the United States market. However, we
cannot give you any assurance there that such coverage can be obtained at
acceptable cost.
Management May Be Able to Control the Outcome of Matters Subject to
Shareholder Vote. Our executive officers and directors own (directly or
indirectly) in the aggregate 1,164,110 shares of common stock, or approximately
32% of the outstanding shares of our common stock (excluding (a) shares subject
to options granted under the Company's stock option plans, (b) shares issuable
upon conversion of outstanding shares of Series A Preferred Stock, and (c)
shares issuable upon exercise of the Company's outstanding redeemable common
stock purchase warrants). Although these stockholders may or may not agree on
any particular matter that is the subject of a vote of the stockholders, these
stockholders may be effectively able to control the outcome of any issues which
may be subject to a vote of stockholders, including the election of directors,
proposals to increase the authorized capital stock, or the approval of mergers,
acquisitions, or the sale of all or substantially all of our assets.
We Are Dependent on the Services of Our Chief Executive Officer. We are
dependent on the experience, abilities and continued services of Joel
Schoenfeld, our Chief Executive Officer, for the conduct of our business. Joel
Schoenfeld is employed pursuant to an employment agreement which expires on
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March 28, 2003. Mr. Schoenfeld is the subject of a Federal Grand Jury Indictment
alleging misrepresentation with four other persons in a commercial transaction
in 1991 unrelated to our business. We believe that Mr. Schoenfeld did nothing
improper and will be exonerated, but there can be no assurance that the
indictment will not result in the loss of Mr. Schoenfeld's services. The loss of
the services of Joel Schoenfeld for any reason would have a materially adverse
effect on our business and operations.
The Liability of Our Directors is Limited. Our certificate of
incorporation provides that a director shall not be personally liable to the
company or its stockholders for monetary damages for breach of fiduciary duty as
a director, with certain exceptions under Delaware law. This may discourage
stockholders from bringing suit against a director for breach of fiduciary duty
and may reduce the likelihood of derivative litigation brought by stockholders
on behalf of the company against a director. In addition, our certificate of
incorporation provides for mandatory indemnification of directors and officers.
We Have Not Paid Any Dividends on Our Common Stock. Since inception, we
have not paid any cash dividends on the common stock and we do not anticipate
paying such dividends in the foreseeable future. No dividends may be declared,
set aside or paid on the common stock unless and until all accrued and unpaid
dividends on the outstanding shares of Preferred Stock have been paid. Our Board
of Directors has the discretion to decide on the payment of dividends depending
upon our earnings, capital requirements, financial condition and other factors
deemed relevant by our Board.
There Are Possible Adverse Effects of Issuances of Preferred Stock. Our
Restated Certificate of Incorporation authorizes the issuance of 5,000,000
shares of "blank check" preferred stock with designations, rights and
preferences determined from time to time by the Board of Directors. Accordingly,
the Board of Directors is empowered, without stockholder approval, to issue
preferred stock with dividend, liquidation, conversion, voting or other rights
which could decrease the amount of earnings and assets available for
distribution to holders of common stock and adversely affect the relative voting
power or other rights of the holders of the common stock. In the event of
issuance, the preferred stock could be used, under certain circumstances, as a
method of discouraging, delaying or preventing a change in control of the
company. The Board of Directors has authorized the issuance of 5,000 shares of
Series A Preferred Stock, of which 2,072 shares are outstanding, 1,000 shares of
Series B Convertible Preferred Stock, of which 630 shares are outstanding and
1,000 shares of Series C Convertible Preferred Stock, of which 250 shares are
outstanding. We may issue additional shares of convertible preferred stock from
time to time as a means of financing our company.
There Is No Assurance of An Active Public Market for Common Stock.
Although the common stock is quoted on The Nasdaq SmallCap Market, trading
volume has been limited. We cannot give any assurance that broker-dealers will
act as market makers for the common stock. As a result, investors will be
exposed to a risk of a decline in the market price of the common stock.
The Market Price for the Common Stock May Be Highly Volatile. The
market price of the common stock may be highly volatile as has been the case
with the securities of many emerging companies. Our operating results and
various factors affecting the medical device industry may impact the market
price of our securities to a significant degree. In addition, in recent years
the stock market has experienced a high level of price and volume volatility,
and market prices for the securities of many companies have experienced wide
price
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fluctuations not necessarily related to the operating performance of such
companies. We cannot give you any assurance that the market price of the common
stock and warrants will not experience significant fluctuations or further
declines.
Our Common Stock May be Delisted from the Nasdaq SmallCap Market. The
common stock is quoted on The Nasdaq SmallCap Market. For continued inclusion on
the NASDAQ SmallCap Market, an issuer is required, among other things, to have
net tangible assets of $2 million (or alternatively, net income of $500,000 in
two of the most recent three fiscal years, or a market capitalization of $35
million), a bid price of at least $1.00 and at least two market makers, and to
file reports required to be filed with the Securities and Exchange Commission.
On June 10, 1999, the Nasdaq SmallCap Market conducted a hearing before
a panel to determine whether our securities should continue to be quoted,
notwithstanding that our common stock failed to satisfy the minimum $1 bid
requirement and the late filing of our Annual Report on Form 10-K for the fiscal
year ended December 31, 1998. Under the rules of the Nasdaq SmallCap Market, the
panel may exercise broad discretion in determining whether securities should
continue to be quoted and may consider the ability of an issuer to comply on a
long-term basis with all the requirements for continued inclusion. At the
hearing, we represented to Nasdaq that we could maintain compliance with Nasdaq
continued listing requirements, and we are awaiting the decision of the panel.
If the panel decides that our securities should not continue to be quoted in the
Nasdaq SmallCap Market, our securities would automatically be eligible to be
quoted in Nasdaq's electronic over-the-counter bulletin board. We are entitled
to seek a review of any unfavorable decision of the panel by the Nasdaq Listing
and Hearing Review Council.
We cannot predict whether or not the panel will decide our securities
should continue to be quoted, nor can we predict whether any review of an
unfavorable decision would result in its reversal. Even if Nasdaq decides in the
current proceeding that our securities should continue to be listed, we cannot
give you any assurance that we will be able in the future to satisfy the
maintenance criteria for continued inclusion of the common stock and warrants on
The Nasdaq SmallCap Market. If we are unable to satisfy The Nasdaq SmallCap
maintenance criteria in the future, the common stock and warrants may be
delisted from trading on The Nasdaq SmallCap Market, and if delisted, trading,
if any, would thereafter be conducted in the over-the-counter market in the
so-called "pink sheets" or the NASD's "Electronic Bulletin Board," and
consequently, an investor could find it more difficult to dispose of, or to
obtain accurate quotations as to the price of, our securities.
Risk of Becoming Subject to Regulations Affecting Low-Priced
Securities. The regulations of the Securities and Exchange Commission
promulgated under the Exchange Act require additional disclosure relating to the
market for penny stocks in connection with trades in any stock defined as a
penny stock. Commission regulations generally define a penny stock to be an
equity security that has a market price of less than $5.00 per share, subject to
certain exceptions which are available for our common stock. Unless an exception
is available, those regulations require the delivery, prior to any transaction
involving a penny stock, of a disclosure schedule explaining the penny stock
market and the risks associated therewith and impose various sales practice
requirements on broker-dealers who sell penny stocks to persons other than
established customers and accredited investors (generally institutions). In
10
<PAGE>
addition, the broker-dealer must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. Moreover,
broker-dealers who recommend such securities to persons other than established
customers and accredited investors must make a special written suitability
determination for the purchaser and receive the purchaser's written agreement to
a transaction prior to sale.
If our securities become subject to the regulations applicable to penny
stocks, the market liquidity for our securities could be severely affected. In
such an event, the regulations on penny stocks could limit the ability of
broker-dealers to sell our securities and thus the ability of purchasers of our
securities to sell their securities in the secondary market.
Shares Eligible for Future Sale By Our Current Stockholders May Affect
Our Stock Price. We cannot give any assurance as to the effect, if any, that
future sales of common stock, or the availability of shares of common stock for
future sales, will have on the market price of the common stock from time to
time. Sales of substantial amounts of common stock (including shares issued upon
the exercise of warrants or stock options), or the possibility of such sales,
could adversely affect the market price of the common stock and also impair our
ability to raise capital through an offering of our equity securities in the
future. We have 3,734,209 shares of common stock outstanding as of April 30,
1999, of which 1,936,086 shares of common stock are transferable without
restriction under the Securities Act. The remaining 1,798,123 shares may be
publicly sold if registered under the Securities Act or in accordance with an
applicable exemption from registration, such as Rule 144. In general, under Rule
144, as currently in effect, subject to the satisfaction of certain other
conditions, a person, including an affiliate of ours, who has beneficially owned
restricted securities for at least one year, is entitled to sell (together with
any person with whom such individual is required to aggregate sales), within any
three-month period, a number of shares that does not exceed the greater of 1% of
the total number of outstanding shares of the same class or, if the common stock
is quoted on The Nasdaq Stock Market or a national securities exchange, the
average weekly trading volume during the four calendar weeks preceding the sale.
A person who has not been an affiliate of ours for at least three months and who
has beneficially owned restricted securities for at least two years is entitled
to sell such restricted shares under Rule 144 without regard to any of the
limitations described above. Of the restricted securities, approximately 83,884
shares have been owned by non-affiliates for more than two years and may be sold
without restriction under Rule 144 and an additional 1,122,572 shares are owned
by affiliates and others for more than one year and may be sold subject to the
volume and other limitations of Rule 144. The remaining 591,667 shares which are
not freely transferable have been owned for less than one year and will be
eligible for future sale in accordance with the provisions of Rule 144 or if
registered under the Securities Act. We have also agreed to register 510,000 of
the 591,667 shares under the Securities Act and they will become freely
transferable as soon as the registration of these shares is effective.
In addition to sales by current stockholders, sales of shares of common
stock issuable upon exercise of outstanding options and warrants or exercise of
outstanding convertible securities could have a depressive effect on the market
price for the common stock. See "Risk Factors-The Issuance of Common Stock Upon
Exercise of Warrants, Options and Convertible Securities Could Have a Dilutive
Effect" and "Risk Factors-The Conversion of Shares of Series B and Series C
Preferred Stock Could have a Dilutive Effect"
11
<PAGE>
The Issuance of Common Stock Upon Exercise of Warrants, Options and
Convertible Securities Could Have a Dilutive Effect. We have 8,654,060 shares of
common stock authorized but unissued and not reserved for specific purposes and
12,611,731 shares of common stock unissued but reserved for issuance (i) upon
exercise of options (including options which may be granted in the future
pursuant to our stock option plan), (ii) upon exercise of outstanding warrants,
(iii) upon exercise of the underwriters' warrants, (iv) upon conversion of our
Series A, Series B and Series C Preferred Stock, and (v) in connection with
private offerings of its securities. Except to the extent applicable Nasdaq
regulations require stockholder approval of transactions involving the issuance
of at least 20% of the common stock at less than fair market value (other than
in a public offering) or the issuance of more than 25,000 shares to our officers
and directors as a group (other than pursuant to a plan approved by
stockholders), authorized shares of our common stock may be issued without any
action or approval by our stockholders. Although we have no present plans,
agreements, commitments or undertakings with respect to the issuance of
additional shares (except with respect to outstanding options, warrants and
convertible securities) or securities convertible into any such shares, any
shares of our common stock issued would further dilute the percentage ownership
held by the public stockholders in our company.
The exercise of warrants or options or the conversion of convertible
securities and the sale of the underlying shares of common stock (or even the
potential of such exercise, conversion or sale), including shares under this
prospectus, may have a depressive effect on the market price of the common
stock. Moreover, the terms upon which we will be able to obtain additional
equity capital may be adversely affected since the holders of outstanding
warrants and options or convertible securities can be expected to exercise them,
to the extent they are able, at a time when we would, in all likelihood, be able
to obtain any needed capital on terms more favorable to us than those provided
in the warrants and options.
The Conversion of Shares of Series B and Series C Preferred Stock Could
have a Dilutive Effect. If the holders of the series B and series C convertible
preferred stock had converted their shares on June 15, 1999, the conversion rate
would have been approximately 1,689 shares of common stock per share of series B
or series C convertible preferred stock. The conversion would have resulted in
the issuance of 1,486,320 shares of common stock, or approximately 40% of the
outstanding shares before conversion. Furthermore, if the market price of our
common stock were to decline, we would be required to issue additional shares on
conversion of the series B and series C convertible preferred stock.
Accordingly, the conversion of our series B and series C convertible preferred
stock could have an immediate and significant adverse effect on the market price
of our common stock and would result in substantial dilution to other
stockholders.
Forward Looking Statements
Some of the information in this prospectus may contain forward-looking
statements. Such statements can be identified by the use of forward-looking
terminology such as "may," "will," "expect," "believe," "intend," "anticipate,"
"estimate," "continue" or similar words. These statements discuss future
expectations, estimate the happening of future events or our financial condition
or state other "forward-looking" information. When considering such
forward-looking statements, you should keep in mind the risk factors and other
cautionary statements in this prospectus and the documents that we incorporate
12
<PAGE>
by reference. The risk factors noted in this section and other factors noted
throughout this prospectus, including certain risks and uncertainties, could
cause our actual results to differ materially from those contained in any
forward-looking statement.
Use of Proceeds
The Company will not receive any proceeds from the sale of shares by
the Selling Securityholder.
13
<PAGE>
AVAILABLE INFORMATION ABOUT THE COMPANY
We file reports, proxy statements and other information with the SEC.
You may read and copy any document we file at the Public Reference Room of the
SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Regional Offices of the SEC at Seven World Trade Center, Suite 1300, New
York, New York 10048 and at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Please call 1-800-SEC 0330 for further information
concerning the Public Reference Room. Our filings also are available to the
public from the SEC's website at www.sec.gov. We distribute to our stockholders
annual reports containing audited financial statements.
We are a Delaware corporation, incorporated on October 7, 1996, and the
successor by merger to UNIVEC, Inc., a New York corporation, incorporated on
August 18, 1992. Any references to our company in this prospectus includes
UNIVEC, Inc., which merged with us on October 10, 1996, and Rx Ultra, Inc., our
wholly owned subsidiary.
Information Incorporated by Reference
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we make with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act until
the offering is completed:
1. Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998.
2. Quarterly Report on Form 10-QSB for the fiscal quarter ended March 31,
1999.
3. Current Report on Form 8-K (Date of Earliest Event Reported March 18,
1999).
4. Current Report on Form 8-K (Date of Earliest Event Reported March 22,
1999).
5. Current Report on Form 8-K (Date of Earliest Event Reported April 6,
1999).
6. The description of the common stock and warrants contained in our
Registration Statement on Form 8-A (File No. 0-22413) under Section 12 of
the Securities Exchange Act, including any amendments or report updating
that description.
You may request a copy of these filings, at no cost, by writing or calling us
at:
UNIVEC, INC.
22 Dubon Court
Farmingdale, New York 11735
Tel: (516) 777-2000
Fax: (516) 777-2786
Attn: Corporate Secretary
The Company
At Univec, Inc., we develop, assemble, license and market safety
hypodermic syringes designed to protect the healthcare worker and patient
against cross-infection. We have received 510(k) clearance from the U.S. Food
14
<PAGE>
and Drug administration to market locking clip syringes in the United States,
and since 1997, we have produced and marketed 1cc locking clip syringes which
are designed to make accidental or deliberate reuse difficult. From time to
time, we also sell other medical devices and we intend to develop other
medication delivery systems.
Recent Development. On June 10, 1999, the Nasdaq SmallCap Market
conducted a hearing before a panel to determine whether our securities should
continue to be quoted, because our common stock failed to satisfy Nasdaq'a
minimum $1 bid requirement for continued inclusion and because of the late
filing of our Annual Report on Form 10-K for the fiscal year ended December 31,
1998. At the hearing, we represented to Nasdaq that we could maintain compliance
with Nasdaq continued listing requirements, and we are awaiting the decision of
the panel. Under the rules of the Nasdaq SmallCap Market, the panel has broad
discretion to determine whether securities should continue to be quoted and may
consider our ability to comply on a long-term basis with all of Nasdaq'a
requirements for continued inclusion. We cannot predict whether the decision of
the Panel will be favorable. See "RISK FACTORS -- Our Common Stock May be
Delisted from the Nasdaq SmallCap Market".
----------------------
SELLING SECURITYHOLDER
The table below sets forth, with respect to the Selling Securityholder,
based upon information available to the Company as of June 1, 1999, the number
of shares of Common Stock beneficially owned, the number of shares of Common
Stock to be sold, and the number of outstanding shares of Common Stock
beneficially owned after the sale of the shares of Common Stock offered hereby.
The Selling Securityholder has not been an officer, director or affiliate of the
Company or had any material relationship with the Company during the preceding
three years, except that the Selling Securityholder acquired 750 shares of
Series B Preferred Stock and Warrants expiring August 1, 2001, to purchase
112,500 common stock at $2.15 per share (subject to adjustment) in connection
with a private placement in July 1998 and acquired beneficial ownership of the
shares of Common Stock offered hereby in connection with a private placement in
February 1999 of 250 shares of Series C Preferred Stock, convertible into common
stock until February 8, 2001, and Warrants expiring February 8, 2002, to
purchase 37,500 shares of common stock at $1.92 per share (subject to
adjustment). In connection with the February 1999 private placement the terms of
the Series B Preferred Stock and the warrant sold in the July 1998 private
placement were amended to be substantially the same as the terms of the
preferred stock and warrants issued in the February 1999 private placement. The
following table
15
<PAGE>
assumes that the Selling Securityholder will sell all shares of Common Stock
issuable upon conversion of the Series C and the Series B Preferred Stock and
upon exercise of common stock purchase warrants owned by the Selling
Securityholder, including all of the shares offered by this Prospectus; however,
there can be no assurance that the Selling Securityholder will sell any or all
of the Common Stock.
<TABLE>
<CAPTION>
Amount and Shares of Common
Nature of Beneficial Shares of Common Stock Owned After
Name Ownership Stock to Be Sold Offering
- ---------------------------------------------- --------------------- -------------------- --------------------
<S> <C> <C> <C>
The Shaar Fund Ltd........................... 1,636,320(1) 350,000(2) -0-(3)
</TABLE>
- ----------------------------------
(1) Represents (i) shares of common stock issuable upon conversion of the
Series B and Series C Preferred Stock at the recent conversion rate in
effect and (ii) shares of common stock issuable upon exercise of
warrants to purchase 150,000 shares. Does not include shares of Common
Stock issued in payment of dividends on the Series B or Series C
Preferred Stock or as a result of certain changes in the conversion
rate thereon.
(2) Represents shares of common stock offered pursuant to this prospectus.
(3) Assumes that the Selling Securityholder will sell all shares of Common
Stock issuable upon conversion of the Series C and the Series B
Preferred Stock and upon exercise of common stock purchase warrants
owned by the Selling Securityholder.
PLAN OF DISTRIBUTION
The Selling Securityholder may sell the shares of Common Stock offered
hereby from time to time directly to purchasers, or through broker-dealers who
may receive compensation in the form of commissions or discounts from the
Selling Securityholder or purchasers. Sales of shares of Common Stock may be
effected by broker-dealers in ordinary brokerage transactions or block
transactions on The Nasdaq SmallCap Market, through sales to one or more dealers
who may resell as principals, in privately negotiated transactions or otherwise,
at the market price prevailing at the time of sale, a price related to such
prevailing market price or at a negotiated price. Usual and customary or
specifically negotiated brokerage fees may be paid by the Selling Securityholder
in connection therewith. To the Company's knowledge, the Selling Securityholder
has not entered into any underwriting arrangements for the sale of the shares of
Common Stock offered hereby.
The Selling Securityholder may be deemed to be an "underwriter" within
the meaning of the Securities Act and any profits realized by it may be deemed
to be underwriting commissions. Any broker-dealers that participate in the
distribution of the shares of Common Stock also may be deemed to be
"underwriters," as defined in the Securities Act, and any commissions or
discounts paid to them, or any profits realized by them upon the resale of any
securities purchased by them as principals, may be deemed to be underwriting
commissions or discounts under the Securities Act. The sale of the shares of
Common Stock by the Selling Securityholder is subject to the prospectus delivery
and other requirements of the Securities Act.
The shares of Common Stock offered hereby have been registered pursuant
to registration rights granted to the Selling Securityholder. All costs,
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<PAGE>
expenses and fees in connection with the registration of the shares of Common
Stock offered by the Selling Securityholder will be borne by the Company. The
Selling Securityholder is responsible for the payment of brokerage commissions
and discounts incurred in connection with the sale of its shares of Common
Stock. The Company has agreed to indemnify the Selling Securityholder against
certain liabilities, including liabilities under the Securities Act.
Under the Exchange Act and the regulations thereunder, any person
engaged in a distribution of the shares of Common Stock offered hereby may not
simultaneously engage in market-making activities with respect to the Common
Stock during the applicable "cooling off" period prescribed by Rule 101 of
Regulation M prior to the commencement of such distribution. In addition, and
without limiting the foregoing, the Selling Securityholder will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder including, without limitation, Rule 102 of Regulation M, which
provisions may limit the timing of purchases and sales of Common Stock by the
Selling Securityholder.
To the extent required, the Company will use its best efforts to file,
during any period in which offers or sales of shares of Common Stock are being
made by or on behalf of the Selling Securityholder, one or more amendments or
supplements to this Prospectus which describe any material information with
respect to the plan of distribution not previously disclosed herein, including
the name or names of any underwriters, broker-dealers or agents, if any, the
purchase price paid by any underwriter for shares of Common Stock purchased from
a Selling Securityholder, and any discounts, commissions or concessions allowed
or reallowed or paid to broker-dealers.
DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 25,000,000
shares of Common Stock, $0.001 par value per share, 2,500 shares of Series A 8%
Cumulative Convertible Preferred Stock, $0.001 par value per share (the "Series
A Preferred Stock"), 1,000 shares of Series B Preferred Stock, 1,000 shares of
Series C Preferred Stock and 4,995,500 shares of "blank check" preferred stock,
$0.001 par value per share. As of June 15, 1999, 3,734,209 shares of Common
Stock, 2,072 shares of Series A Preferred Stock, 630 shares of Series B
Preferred Stock and 250 shares of Series C Preferred Stock were issued and
outstanding.
The following are brief descriptions of the securities offered hereby
and other securities of the Company. The rights of the holders of shares of the
Company's capital stock are established by the Company's Certificate of
Incorporation, the Certificates of Designation authorizing the Series A
Preferred Stock, the Series B Preferred Stock and the Series C Preferred Stock,
the Company's By-laws and Delaware law. The following statements do not purport
to be complete or give full effect to statutory or common law, and are subject
in all respects to the applicable provisions of the Certificate of
Incorporation, the Certificates of Designation, By-laws and state law.
Common Stock. Holders of the Common Stock are entitled to one vote per
share, and subject to the rights of holders of the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock or any other series of
preferred stock, to receive dividends when, as and if declared by the Board of
Directors and to share ratably in the assets of the Company legally available
for distribution to holders of Common Stock in the event of the liquidation,
dissolution or winding up of the Company. Holders of the Common Stock do not
have subscription, redemption, conversion or preemptive rights.
17
<PAGE>
Each share of Common Stock is entitled to one vote on any matter
submitted to the holders, including the election of directors. Holders of Common
Stock do not have cumulative voting rights; therefore, holders of a majority of
the outstanding shares of Common Stock entitled to vote for the election of
Directors may elect all of the Directors to be elected, if they so choose, and
in such event, the holders of the remaining shares will not be able to elect any
of the Company's Directors. Except as otherwise required by the Delaware General
Corporation Law (the "DGCL"), all stockholder action (other than the election of
Directors, who are elected by plurality vote), is subject to approval by a
majority of the shares of Common Stock present at a stockholders' meeting at
which a quorum (a majority of the issued and outstanding shares of Common Stock)
is present in person or by proxy, or by written consent pursuant to Delaware
law.
All shares of Common Stock outstanding are fully paid and
non-assessable, and the shares of Common Stock offered hereby, when issued upon
payment of the purchase price set forth on the cover page of the Prospectus,
will be fully paid and non-assessable.
The Board of Directors is authorized to issue additional shares of
Common Stock within the limits authorized by the Company's Certificate of
Incorporation without further stockholder action.
Preferred Stock. The Company is authorized to issue up to 5,000,000
shares of "blank check" preferred stock with such designations, rights and
preferences as may be determined from time to time by the Board of Directors.
Accordingly, the Board of Directors is empowered, without further stockholder
approval, to issue preferred stock with dividend, liquidation, conversion,
voting or other rights that could decrease the amount of earnings and assets
available for distribution to holders of Common Stock or adversely affect the
voting power or other rights of the holders of the Company's Common Stock. In
the event of issuance, the preferred stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control of the Company. No shares of preferred stock are outstanding, other than
2,072 shares of Series A Preferred Stock, 630 shares of Series B Preferred Stock
and 250 shares of Series C Preferred Stock.
Series A Preferred Stock. The Board of Directors has authorized the
issuance of up to 2,500 shares of Series A Preferred Stock, of which 2,072
shares are outstanding. The terms of the Series A Preferred Stock are as
follows:
Dividend Rights. Holders of Series A Preferred Stock are entitled to
receive, prior to the payment of cash dividends on the Common Stock, cumulative
dividends at the rate of $80 per share per annum, and no more, when, as and if
declared by the Company's Board of Directors, out of funds legally available
therefor. Dividends on the Series A Preferred Stock are payable, in the sole and
absolute discretion of the Board of Directors, in cash, additional shares of
Series A Preferred Stock (based upon the liquidation value thereof), or a
combination thereof. Dividends may not be paid or declared on, and no other
distributions may be made with respect to, and no expenditure shall be made for
the purchase, redemption or retirement of, any of the Company's capital stock
junior to or in parity with the Series A Preferred Stock, unless all cumulative
dividends payable on the Series A Preferred Stock for all prior annual dividend
periods have been paid. The Company has agreed that it will not declare or pay
any cash dividends on the Series A Preferred Stock without the prior written
consent of the underwriter for Company's the initial public offering.
18
<PAGE>
Redemption. The Series A Preferred Stock is not subject to redemption.
Liquidation Rights. Subject to the prior rights of the Company's
creditors and the holders of senior securities, the holders of the Series A
Preferred Stock are entitled to receive, upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, $1,000 per share, plus
accrued and unpaid dividends. If, in any such case, the assets of the Company
are insufficient to make such payment in full, then the available assets will be
distributed among the holders of the Series A Preferred Stock and any other
series of preferred stock which is in parity with the Series A Preferred Stock,
ratably in proportion to the full amount to which each holder would be entitled.
Conversion Rights. Each share of Series A Preferred Stock is
convertible into 222.22 shares of Common Stock (the "conversion rate"), subject
to adjustment in certain events, at the option of the holder thereof commencing
April 24, 1999. The conversion rate is subject to adjustment in the event of a
stock split, stock dividend, recapitalization, merger, consolidation or certain
other events. The right of conversion with respect to the shares of the Series A
Preferred Stock called for redemption will terminate at the close of business on
the business day preceding the date fixed for redemption. Upon conversion, no
payment or allowance will be made in respect of any accrued but unpaid dividends
on the Series A Preferred Stock.
Voting Rights. Holders of Series A Preferred Stock have no voting
rights, except as may be required by law.
Series B and Series C Preferred Stock. The Board of Directors has
authorized the issuance of up to 1,000 shares of Series B Preferred Stock, of
which 630 shares are outstanding, and 1,000 shares of Series C Preferred Stock,
of which 250 shares are outstanding. The terms of the Series B Preferred Stock,
as amended February 8, 1999, are substantially identical to the terms of the
Series C Preferred Stock. The Series B Preferred Stock and the Series C
Preferred Stock rank on a parity as to dividends and upon liquidation and rank
senior to the Series A Preferred Stock. The terms of the Series B and Series C
Preferred Stock are as follows:
Dividend Rights. Holders of Series B and Series C Preferred Stock are
entitled to receive, prior to the payment of cash dividends on the Common Stock
or the Series A Preferred Stock, cumulative dividends at the rate of $50 per
share per annum, and no more, when, as and if declared by the Company's Board of
Directors, out of funds legally available therefor. Dividends on the Series B
Preferred Stock are payable, in the sole and absolute discretion of the Board of
Directors, in cash, or shares of Common Stock (based upon the value thereof).
Dividends may not be paid or declared on, and no other distributions may be made
with respect to, and no expenditure shall be made for the purchase, redemption
or retirement of, any of the Company's capital stock junior to or in parity with
the Series B Preferred Stock, unless all cumulative dividends payable on the
Series B Preferred Stock for all prior annual dividend periods have been paid.
Redemption. With respect to such shares as to which the holder thereof
has not theretofore furnished an effective conversion notice and only if the
current market price of the Common Stock is not greater than one hundred thirty
percent (130%) of the closing bid price of the Common Stock on July 27, 1998,
the Company may in whole or in part from time to time redeem in cash Series B
Preferred Stock or the Series C Preferred Stock at one hundred thirty-five
percent (135%) of the stated value thereof plus all accrued and unpaid dividends
thereon to the date of redemption.
19
<PAGE>
Liquidation Rights. Subject to the prior rights of the Company's
creditors and the holders of senior securities, the holders of the Series B and
Series C Preferred Stock are entitled to receive, upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Company, $1,000 per
share, plus accrued and unpaid dividends. If, in any such case, the assets of
the Company are insufficient to make such payment in full, then the available
assets will be distributed among the holders of the Series B and Series C
Preferred Stock and any other series of preferred stock which is in parity with
the Series B and Series C Preferred Stock, ratably in proportion to the full
amount to which each holder would be entitled.
Conversion Rights. Each share of Series B and Series C Preferred Stock
is convertible into the number of shares of Common Stock having the value of
$1,000, on the basis of the lower of (i) $1.10 per share and (ii) a price equal
to 80% of a price related to the market price for the Common Stock at the time
of conversion, as provided in and subject to the terms and conditions of the
Certificates of Designation defining the Series B and the Series C Preferred
Stock (the "conversion rate"), at the option of the holder thereof. The
conversion rate is subject to adjustment in the event of a stock split, stock
dividend, recapitalization, merger, consolidation or certain other events. The
right of conversion with respect to the shares of the Series B Preferred Stock
and the Series C Preferred Stock called for redemption will terminate at the
close of business on the business day preceding the date fixed for redemption.
Upon conversion, no payment or allowance will be made in respect of any accrued
but unpaid dividends on the Series B or the Series C Preferred Stock.
Voting Rights. Holders of Series B and Series C Preferred Stock have no
voting rights, except as may be required by law.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
the Company by Snow Becker Krauss P.C., 605 Third Avenue, New York, New York,
10158-0125.
EXPERTS
The consolidated balance sheet as of December 31, 1998, and the
consolidated statements of operations, stockholders' equity and cash flows for
each of the two years in the period ended December 31, 1998, incorporated by
reference in this Prospectus, have been incorporated herein in reliance on the
report of Most Horowitz & Company, LLP, independent accountants, given on the
authority of that firm as experts in accounting and auditing.
20
<PAGE>
========================================== ===================================
No dealer, salesman or any other person is
authorized to give any information or
to make any representations other than
those contained in this Prospectus in
connection with any offer to sell or
sale of the securities to which this 350,000 SHARES OF
Prospectus relates and, if given or COMMON STOCK
made, such information or
representations must not be relied upon
as having been authorized. Neither the
delivery of this Prospectus nor any sale
made hereunder shall, under any
circumstances, imply that there has been
no change in the facts herein set forth
since the date hereof. This Prospectus UNIVEC, INC.
does not constitute an offer to sell or
to a solicitation of any offer to buy
from any person in any state in which
any such offer or solicitation would be ----------------------
unlawful.
---------------------- Prospectus
TABLE OF CONTENTS ----------------------
Page
Available Information...............2
The Company.........................3
Risk Factors........................4
Use of Proceeds....................13
Selling Securityholder.............13
Plan of Distribution...............13
Description of Securities..........14
Legal Matters......................17
----------------------
June ___, 1999
Until ____________, 1999 (25 days
after the date of this Prospectus), all
dealers that effect transactions in
these securities, whether or not
participating in this offering, may be
required to deliver a Prospectus. This
is in addition to the obligation of
dealers to deliver a Prospectus when
acting as Underwriters and with respect
to their unsold allotments or
subscriptions.
=========================================== ===================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses which will be paid by the
Registrant in connection with the issuance and distribution of the securities
being registered hereby. With the exception of the SEC registration fee, all
amounts indicated are estimates.
SEC Registration fee........................................... $ 98
Printing expenses (other than stock certificates).............. $5,000
Legal fees and expenses........................................ $5,000
Miscellaneous.................................................. $2,500
TOTAL.......................................................... $12,598
Item 15. Indemnification of Directors and Officers.
Article 6 of the Registrant's Restated Certificate of Incorporation, in
accordance with Section 145 of the DGCL, provides that directors and officers
shall be indemnified against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement in connection with specified actions, suits
or proceedings, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation -- a "derivative action")
if they acted in good faith and in a manner they reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe their conduct
was unlawful. A similar standard of care is applicable in the case of derivative
actions, except that indemnification only extends to expenses (including
attorneys' fees) incurred in connection with the defense or settlement of such
an action. Moreover, the DGCL requires court approval before there can be any
indemnification where the person seeking indemnification has been found liable
to the corporation.
Article 6 of the Registrant's Restated Certificate of Incorporation
further provides that directors and officers are entitled to be paid by the
Registrant the expenses incurred in defending the proceedings specified above in
advance of their final disposition, provided that such payment will only be made
upon delivery to the Registrant by the indemnified party of an undertaking to
repay all amounts so advanced if it is ultimately determined that the person
receiving such payments is not entitled to be indemnified.
Article 6 of the Registrant's Restated Certificate of Incorporation
provides that a person indemnified under Article 6 of the Certificate of
Incorporation may contest any determination that a director, officer, employee
or agent has not met the applicable standard of conduct set forth in the
Restated Certificate of Incorporation by petitioning a court of competent
jurisdiction.
Article 6 of the Registrant's Restated Certificate of Incorporation
provides that the right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in the
Article will not be exclusive of any other right which any person may have or
acquire under the Restated Certificate of Incorporation, or any statute or
agreement, or otherwise.
II-1
<PAGE>
Finally, Article 6 of the Registrant's Restated Certificate of
Incorporation provides that the Registrant may maintain insurance, at its
expense, to reimburse itself and directors and officers of the Registrant and of
its direct and indirect subsidiaries against any expense, liability or loss,
whether or not the Registrant would have the power to indemnify such persons
against such expense, liability or loss under the provisions of Article 6 of the
Restated Certificate of Incorporation. The Registrant has applied for such
insurance, and expects to have such insurance in effect on the date this
Registration Statement is declared effective by the Commission.
Article 7 of the Registrant's Restated Certificate of Incorporation
eliminates the personal liability of the Registrant's directors to the
Registrant or its stockholders for monetary damages for breach of their
fiduciary duties as a director to the fullest extent provided by Delaware law.
Section 102(b)(7) of the DGCL provides for the elimination off such personal
liability, except for liability (i) for any breach of the director's duty of
loyalty to the Registrant or its stockholders, (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the DGCL or (iv) for any transaction from which
the director derived any improper personal benefit.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is therefore unenforceable.
Item 16. Exhibits.
3.1* Restated Certificate of Incorporation of the Registrant.
3.2* By-laws of the Registrant, as amended.
4.1* Agreement and Plan of Merger dated as of October 7, 1996 between the
Registrant and UNIVEC, Inc., a New York corporation.
4.2* Form of warrants between the Registrant and the underwriters of the
Registrant's initial public offering.
4.3* Form of Warrant Agreement between the Registrant and the underwriters
of the Registrant's initial public offering.
4.4* Specimen Common Stock Certificate.
4.5* Specimen Warrant Certificate (included as Exhibit A to Exhibit 4.3
herein).
4.8* Registration Rights Agreement among the Registrant and the holders of
bridge warrants.
4.09** Certificate of Designation of Series B Preferred Stock.
4.10*** Certificate of Amendment of Certificate of Designation of Series B
Preferred Stock.
4.11** Form of Warrant Agreement dated July 27, 1998, between Company and
Selling Securityholder.
4.12*** Form of Amended and Restated Warrant Agreement, amending and
restating the Warrant Agreement dated July 27, 1998, between the
Company and the Selling Securityholder.
<PAGE>
4.13** Registration Rights Agreement dated July 27, 1998, between Company
and Selling Securityholder.
4.14*** Registration Rights Agreement, dated February 8, 1999, between the
Company and the Selling Securityholder.
4.15*** Certificate of Designation of Series C Preferred Stock.
II-2
<PAGE>
4.16*** Form of Warrant Agreement dated February 8, 1999, between the Company
and Selling Securityholder.
5.1*** Opinion of Snow Becker Krauss P.C., counsel to the Company.
23.1*** Consent of Snow Becker Krauss P.C. is included in Exhibit 5.1 to this
Registration Statement.
23.2*** Consent of accountants.
24.1**** Power of Attorney dated March 9, 1999
24.2*** Power of Attorney dated June 29, 1999
- ---------------------------------------------
* Incorporated by reference from the Registrant's Registration Statement on
Form SB-2 (File No. 333-20187) declared effective on April 24, 1997.
** Incorporated by reference from the Registrant's Registration Statement on
Form S-3 (File No. 333-62261) declared effective on December 11, 1999.
*** Filed herewith.
**** Previously filed.
Item 17. Undertakings.
(a) Rule 415 Offering
The undersigned small business issuer hereby undertakes that it will:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to:
(i) Include any prospectus required by section 10(a)(3) of
the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change
in the information set forth in the registrant
statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the
total dollar value of securities offered would not
exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
(iii) Include any additional or changed material information
on the plan of distribution;
(2) For determining any liability under the Securities Act, treat
each post-effective amendment as a new registration statement
relating to the securities offered, and the offering of such
securities at that time to be the initial bona fide offering
thereof;
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<PAGE>
(3) Remove from registration by means of a post-effective
amendment any of the securities that remain unsold at the
termination of the offering.
(e) Request for Acceleration of Effective Date.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the small
business issuer pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of the expenses incurred or
paid by a director, officer, or controlling person of the small business issuer
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Farmingdale, State of New York, on June 29, 1999.
UNIVEC, INC.
<TABLE>
<CAPTION>
<S> <C>
By Joel Schoenfeld By Marla Manowitz
------------------------------------- -------------------------------------------
Joel Schoenfeld Marla Manowitz
Chief Executive Officer and Director Chief Financial Officer
(Principal Executive Officer) (Principal Financial and Accounting Officer)
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Joel Schoenfeld
- ---------------------------------------------------
Joel Schoenfeld
Chief Executive Officer and Director
(Principal Executive Officer)
Alan H. Gold*
- ---------------------------------------------------
Alan H. Gold
Chairman of the Board of Directors and Director
Marla Manowitz
- ---------------------------------------------------
Marla Manowitz
Chief Financial Officer
(Principal Financial and Accounting Officer)
John Frank*
- ---------------------------------------------------
John Frank
Director
Richard Mintz
- ---------------------------------------------------
Richard Mintz
Director
David Jay*
- ---------------------------------------------------
David Jay
Director
*By: /s/ Joel Schoenfeld
- ------------------------------
Joel Schoenfeld
(Attorney-In-Fact)
II-5
<PAGE>
Exhibit 4.10
FIRST CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF DESIGNATION
OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
UNIVEC, INC.
----------------
Pursuant to Section 242 of the
General Corporation Law of the State of Delaware
----------------
1. The name of the corporation (hereinafter called the "corporation") is
UNIVEC, INC.
2. The Certificate of Designation of Series B Convertible Preferred Stock
of Univec, Inc., which was filed by the Secretary of State of Delaware on July
27, 1998, as corrected by a Certificate of Correction which was filed with the
Secretary of State of Delaware on July 28, 1998, is hereby amended in the
following respects:
(i) Section 3.1 of the Certificate of Designation is hereby
amended to read in its entirety as follows:
"SECTION 3.1 The Series B Preferred Stock shall rank
(i) prior to the Common Stock; (ii) prior to the Corporation's
Series A 8% Cumulative Convertible Preferred Stock; (iii)
prior to any class or series of capital stock of the
Corporation hereafter created other than "Pari Passu
Securities" (collectively, with the Common Stock, "Junior
Securities"); and (iv) pari passu with the Series C 5%
Convertible Preferred Stock and any class or series of capital
stock of the Corporation hereafter created specifically
ranking on parity with the Series B Preferred Stock ("Pari
Passu Securities")".
(ii) The figure "$1.92" appearing in the first paragraph of
Section 6.1 of the Certificate of Designation is hereby deleted and
there is substituted therefor the figure "$1.10."
(iii) Subparagraphs (a) and (b) of the first paragraph of
Section 6.1 of the Certificate of Designation are hereby deleted in
their entirety and there is substituted therefor the following new
subparagraphs (a) and (b):
"(a) notwithstanding anything herein to the contrary, the
Holder shall not have the right, and the Company shall not have
the obligation, to convert all or any
1
<PAGE>
portion of the Series B Preferred Stock (and the Company
shall not have the right to pay dividends on the Series B
Preferred Stock in shares of common stock) if and to the extent
that the issuance to the Holder of shares of common stock upon
such conversion (or payment of dividends) would result in the
Holder being deemed the "beneficial owner" of 5% or more of the
then outstanding shares of Common Stock within the meaning of
Section 13(d) of the Securities Exchange Act of 1934, as amended,
and the rules promulgated thereunder. If any court of competent
jurisdiction shall determine that the foregoing limitation is
ineffective to prevent a Holder from being deemed the beneficial
owner of 5% or more of the then outstanding shares of Common
Stock, then the Corporation shall redeem so many of such Holder's
shares (the "Redemption Shares") of Series B Preferred Stock as
are necessary to cause such Holder to be deemed the beneficial
owner of not more than 5% of the then outstanding shares of
Common Stock (a "Mandatory Redemption"). Upon such determination
by a court of competent jurisdiction, the Redemption Shares shall
immediately and without further action be deemed returned to the
status of authorized but unissued shares of Series B Preferred
Stock and the Holder shall have no interest in or rights under
such Redemption Shares. Any and all dividends paid on or prior to
the date of such determination shall be deemed dividends paid on
the remaining shares of Series B Preferred Stock held by the
Holder. Such redemption shall be for cash at a redemption price
equal to the sum of (i) the Stated Value of the Redemption Shares
and (ii) any accrued and unpaid dividends to the date of such
redemption; and
"(b) unless the Corporation shall have obtained the approval
of its voting stockholders to such issuance in accordance with
the rules of the NASDAQ or such other stock market with which the
Corporation shall be required to comply, the Corporation shall
not issue shares of Common Stock (i) upon conversion of any
shares of Series B Preferred Stock or (ii) as a dividend on the
Series B Preferred Stock, if such issuance of Common Stock, when
added to the number of shares of Common Stock previously issued
by the Corporation (i) upon conversion of shares of the Series B
Preferred Stock, (ii) upon exercise of the Warrants issued
pursuant to the terms of the Securities Purchase Agreement and
(iii) in payment of dividends on the Series B Preferred Stock,
would be in excess of 19.99% of the number of shares of the
Corporation's Common Stock which were issued and outstanding on
the Closing Date (the "Maximum Issuance Amount"). In the event
that a properly executed Conversion Notice is received by the
Corporation which would require the Corporation to issue shares
of Common Stock equal to or in excess of the Maximum Issuance
Amount, the Corporation shall honor such conversion request by
(i) converting the number of shares of Series B Preferred Stock
stated in the Conversion Notice not in excess of the Maximum
Issuance Amount and (ii) redeeming the number of shares of Series
B Preferred Stock stated in the Conversion Notice equal to or in
excess of the Maximum Issuance Amount in cash at a price equal to
one hundred and twenty-five percent (125%) of the Stated Value of
the shares of Series B Preferred Stock to be so redeemed,
together with the fair market value of all accrued and unpaid
dividends thereon. In the event that the Corporation shall elect
to pay a dividend in shares of Common Stock which would require
the Corporation to issue shares of Common Stock equal to or in
excess of the Maximum Issuance Amount, the Corporation shall pay
(i) a dividend in shares of Common Stock equal to one less than
an amount which would result in the Corporation issuing shares
equal to the Maximum Issuance
2
<PAGE>
Amount and (ii) the balance of the dividend in cash."
(iv) Section 6.8 of the Certificate of Designation is hereby
amended as follows:
(A) The phrase "optional Redemption Price" appearing
in the second sentence of Section 6.8 of the Certificate of
Designation is hereby amended to read "Optional Redemption
Price;" and
(B) The last sentence of Section 6.8 of the
Certificate of Designation is hereby deleted in its entirety
and there is substituted therefor the following:
"If payment of such redemption price is not made in
full by the Redemption Date, then the Holder shall again
have the right to convert the Series B Preferred Stock as
provided in Article 6 hereof."
(v) Section 6.9 of the Certificate of Designation is hereby
deleted in its entirety and there is substituted therefor a new Section
6.9 reading as follows:
"SECTION 6.9 Mandatory Conversion. On the second
anniversary of the filing of the First Certificate of
Amendment of the Certificate of Designation (the "Mandatory
Conversion Date"), the Corporation shall convert all Series B
Preferred Stock outstanding at the Conversion Price.
Notwithstanding the previous sentence, in no event shall the
Corporation convert that portion of the Series B Preferred
Stock to the extent that the issuance of Common Shares upon
conversion of such Series B Preferred Stock, when combined
with shares of Common Shares received upon other conversions
of Series B Preferred Stock by such Holder and any other
holders of Series B Preferred Stock and Warrants, would exceed
19.99% of the Common Stock outstanding on the Closing Date,
unless the Corporation's shareholders approve the issuance of
an amount of the Corporation's Common Stock in excess of the
19.99% threshold. Within ten (10) Business Days after the
Mandatory Conversion Date, the Corporation may either (i)
redeem those outstanding shares of Series B Preferred Stock in
excess of the 19.99% threshold at one hundred and thirty-five
percent (135%) of the Stated Value thereof, together with all
accrued and unpaid dividends thereon, in cash, to the date of
redemption or (ii) extend the Mandatory Conversion Date for a
period of one year."
3. The amendments of the certificate of incorporation herein certified
have been duly adopted and written consent has been given in accordance with the
provisions of Sections 228 and 242 of the General Corporation Law of the State
of Delaware.
3
<PAGE>
IN WITNESS WHEREOF, the corporation has caused this certificate of
amendment to be signed by its duly authorized officer on this 5th day of
February 1999.
UNIVEC, INC.
By/s/ Flora Schoenfeld
-----------------------
Name: Flora Schoenfeld
Title: Treasurer
4
<PAGE>
Exhibit 4.12
THIS COMMON STOCK PURCHASE WARRANT AND THE SECURITIES
REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT,
THE RULES AND REGULATIONS THEREUNDER OR THE
PROVISIONS OF THIS COMMON STOCK PURCHASE WARRANT.
Number of Shares of Common Stock: 112,500
Warrant No.1
AMENDED AND RESTATED
COMMON STOCK PURCHASE WARRANT
To Purchase Common Stock of
Univec, Inc.
The original Common Stock Purchase Warrant No. 1 issued by
Univec, Inc. to The Shaar Fund Ltd. on July 27, 1998 is hereby amended and
restated in its entirety as follows:
THIS IS TO CERTIFY THAT The Shaar Fund Ltd., or registered
assigns, is entitled, at any time from the Closing Date (as hereinafter defined)
to the Expiration Date (as hereinafter defined), to purchase from Univec, Inc.,
a Delaware corporation (the "Company"), 112,500 shares of Common Stock (as
hereinafter defined and subject to adjustment as provided herein), in whole or
in part, including fractional parts, at a purchase price equal to $1.92 per
share, all on the terms and conditions and pursuant to the provisions
hereinafter set forth.
1. DEFINITIONS
As used in this Common Stock Purchase Warrant (this
"Warrant"), the following terms have the respective meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company after the Closing Date, other than Warrant
Stock.
"Book Value" shall mean, in respect of any share of Common
Stock on any date herein specified, the consolidated book value of the Company
as of the last day of any month immediately preceding such date, divided by the
number of Fully Diluted Outstanding shares of Common Stock as determined in
accordance with GAAP (assuming the payment of the exercise prices for such
shares) by Richard A. Eisner & Company, LLP or any other firm of independent
-1-
<PAGE>
certified public accountants of recognized national standing selected by the
Company and reasonably acceptable to the Holder.
"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in the
State of New York.
"Closing Date" shall have the meaning set forth in the
Securities Purchase Agreement.
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency then administering the Securities Act and other
federal securities laws.
"Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock, par value $.001, of the Company as constituted on
the Closing Date, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include (i) capital stock of the Company
of any other class (regardless of how denominated) issued to the holders of
shares of Common Stock upon any reclassification thereof which is also not
preferred as to dividends or assets over any other class of stock of the Company
and which is not subject to redemption and (ii) shares of common stock of any
successor or acquiring corporation received by or distributed to the holders of
Common Stock of the Company in the circumstances contemplated by Section 4.4.
"Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable,
with or without payment of additional consideration in cash or property, for
shares of Common Stock, either immediately or upon the occurrence of a specified
date or a specified event.
"Current Warrant Price" shall mean, in respect of a share of
Common Stock at any date herein specified, the price at which a share of Common
Stock may be purchased pursuant to this Warrant on such date.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any successor federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect from time to time.
"Exercise Period" shall mean the period during which this
Warrant is exercisable pursuant to Section 2.1.
"Expiration Date" shall mean February 8, 2002.
"Fully Diluted Outstanding" shall mean, when used with
reference to Common Stock, at any date as of which the number of shares thereof
is to be determined, all shares of Common Stock Outstanding at such date and all
shares of Common Stock issuable in respect of this Warrant, outstanding on such
date, and other options or warrants to purchase, or securities convertible into,
shares of Common Stock outstanding on such date which would be deemed out
standing in accordance with GAAP for purposes of determining book value or net
income per share.
-2-
<PAGE>
"GAAP" shall mean generally accepted accounting principles in
the United States of America as from time to time in effect.
"Holder" shall mean the Person in whose name the Warrant or
Warrant Stock set forth herein is registered on the books of the Company
maintained for such purpose.
"Other Property" shall have the meaning set forth in Section
4.4.
"Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all issued shares of Common Stock, except shares then owned or held by or for
the account of the Company or any subsidiary thereof, and shall include all
shares issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, incorporated organization, association,
corporation, institution, public benefit corporation, entity or government
(whether federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).
"Registration Rights Agreement" shall mean the Registration
Rights Agreement dated a date even herewith by and between the Company and The
Shaar Fund Ltd., as it may be amended from time to time.
"Restricted Common Stock" shall mean shares of Common Stock
which are, or which upon their issuance on the exercise of this Warrant would
be, evidenced by a certificate bearing the restrictive legend set forth in
Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Securities Purchase Agreement" shall mean the Securities
Purchase Agreement dated as of a date even herewith by and between the Company
and The Shaar Fund, Ltd. as it may be amended from time to time.
"Transfer" shall mean any disposition of any Warrant or
Warrant Stock or of any interest in either thereof, which would constitute a
sale thereof within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section
9.2.
"Warrants" shall mean this Warrant and all warrants issued
upon transfer, division or combination of, or in substitution for, any thereof.
All Warrants shall at all times be identical as to terms and conditions and
date, except as to the number of shares of Common Stock for which they may be
exercised.
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<PAGE>
"Warrant Price" shall mean an amount equal to (i) the number
of shares of Common Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1, multiplied by (ii) the Current Warrant Price as of the date of
such exercise.
"Warrant Stock" shall mean the shares of Common Stock
purchased by the holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
2.1 Manner of Exercise. From and after the Closing Date and until 5:00
P.M., New York time, on the Expiration Date, Holder may exercise this Warrant,
on any Business Day, for all or any part of the number of shares of Common Stock
purchasable hereunder.
In order to exercise this Warrant, in whole or in part, Holder
shall deliver to the Company at its principal office at 22 Dubon Court,
Farmingdale, New York 11735, or at the office or agency designated by the
Company pursuant to Section 12, (i) a written notice of Holder's election to
exercise this Warrant, which notice shall specify the number of shares of Common
Stock to be purchased, (ii) payment of the Warrant Price in cash or by wire
transfer or cashier's check drawn on a United States bank and (iii) this
Warrant. Such notice shall be substantially in the form of the subscription form
appearing at the end of this Warrant as Exhibit A, duly executed by Holder or
its agent or attorney. Upon receipt of the items referred to in clauses (i),
(ii) and (iii) above, the Company shall, as promptly as practicable, and in any
event within five (5) Business Days thereafter, execute or cause to be executed
and deliver or cause to be delivered to Holder a certificate or certificates
representing the aggregate number of full shares of Common Stock issuable upon
such exercise, together with cash in lieu of any fraction of a share, as
hereinafter provided. The stock certificate or certificates so delivered shall
be, to the extent possible, in such denomination or denominations as Holder
shall request in the notice and shall be registered in the name of Holder or,
subject to Section 9, such other name as shall be designated in the notice. This
Warrant shall be deemed to have been exercised and such certificate or
certificates shall be deemed to have been issued, and Holder or any other Person
so designated to be named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the notice, together with
the cash or check or checks and this Warrant, is received by the Company as
described above and all taxes required to be paid by Holder, if any, pursuant to
Section 2.2 prior to the issuance of such shares have been paid. if this Warrant
shall have been exercised in part, the Company shall, at the time of delivery of
the certificate or certificates representing Warrant Stock, deliver to Holder a
new Warrant evidencing the rights of Holder to purchase the unpurchased shares
of Common Stock called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of Holder,
appropriate notation may be made on this Warrant and the same returned to
Holder. Notwithstanding any provision herein to the contrary, the Company shall
not be required to register shares in the name of any Person who acquired this
Warrant (or part hereof) or any Warrant Stock otherwise than in accordance with
this Warrant.
2.2 Payment of Taxes and Charges. All shares of Common Stock issuable
upon the exercise of this Warrant pursuant to the terms hereof shall be validly
issued, fully paid and nonassessable, freely tradeable and without any
preemptive rights. The Company shall pay all expenses in connection with, and
all taxes and other governmental charges that may be imposed with
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<PAGE>
respect to, the issue or delivery thereof, unless such tax or charge is imposed
by law upon Holder, in which case such taxes or charges shall be paid by Holder.
The Company shall not be required, however, to pay any tax or other charge
imposed in connection with any transfer involved in the issue of any certificate
for shares of Common Stock issuable upon exercise of this Warrant in any name
other than that of Holder, and in such case the Company shall not be required to
issue or deliver any stock certificate until such tax or other charge has been
paid or it has been established to the satisfaction of the Company that no such
tax or other charge is due.
2.3 Fractional Shares. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of any Warrant. As to any
fraction of a share which Holder would otherwise be entitled to purchase upon
such exercise, the Company shall pay a cash adjustment in respect of such final
fraction in an amount equal to the same fraction of the Current Warrant Price
per share of Common Stock as of the Closing Date.
2.4 Continued Validity. A holder of shares of Common Stock issued upon
the exercise of this Warrant, in whole or in part (other than a holder who
acquires such shares after the same have been publicly sold pursuant to a
Registration Statement under the Securities Act or sold pursuant to Rule 144
thereunder), shall continue to be entitled with respect to such shares to all
rights to which it would have been entitled as Holder under Sections 9, 10 and
14 of this Warrant. The Company will, at the time of exercise of this Warrant,
in whole or in part, upon the request of Holder, acknowledge in writing, in form
reasonably satisfactory to Holder, its continuing obligation to afford Holder
all such rights; provided, however, that if Holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to Holder all such rights.
3. TRANSFER, DIVISION AND COMBINATION
3.1 Transfer. Subject to compliance with Section 9, transfer of this
Warrant and all rights hereunder, in whole or in part, shall be registered on
the books of the Company to be maintained for such purpose, upon surrender of
this Warrant at the principal office of the Company referred to in Section 2.1
or the office or agency designated by the Company pursuant to Section 12,
together with a written assignment of this Warrant substantially in the form of
Exhibit B hereto duly executed by Holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, the Company shall, subject
to Section 9, execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A
Warrant, if properly assigned in compliance with Section 9, may be exercised by
a new Holder for the purchase of shares of Common Stock without having a new
warrant issued.
3.2 Division and Combination. Subject to Section 9, this Warrant may be
divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to compliance with Section
3.1 and with Section 9, as to any transfer which may be involved in such
division or
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combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
3.3 Expenses. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.
3.4 Maintenance of Books. The Company agrees to maintain, at its
aforesaid office or agency, books for the registration and the registration of
transfer of the Warrants.
4. ADJUSTMENTS
The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to time as set forth in
this Section 4. The Company shall give Holder notice of any event described
below which requires an adjustment pursuant to this Section 4 at the time of
such event.
4.1 Stock Dividends, Subdivisions and Combinations. If at any time the
Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a larger
number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Current Warrant Price
shall be adjusted to equal (A) the Current Warrant Price multiplied by the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the adjustment divided by (B) the number of shares for
which this Warrant is exercisable immediately after such adjustment.
4.2 Certain Other Distributions. If at any time the Company shall take
a record of the holders of its Common Stock for the purpose of entitling them to
receive any dividend or other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any shares of its stock or
any other securities or property of any nature whatsoever (other than
cash, Convertible Securities or Additional Shares of Common Stock), or
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(c) any warrants or other rights to subscribe for or purchase any
evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash,
Convertible Securities or Additional Shares of Common Stock),
then Holder shall be entitled to receive such dividend or distribution as if
Holder had exercised the Warrant. A reclassification of the Common Stock (other
than a change in par value, or from par value to no par value or from no par
value to par value) into shares of Common Stock and shares of any other class of
stock shall be deemed a distribution by the Company to the holders of its Common
Stock of such shares of such other class of stock within the meaning of this
Section 4.2 and, if the outstanding shares of Common Stock shall be changed into
a larger or smaller number of shares of Common Stock as a part of such
reclassification, such change shall be deemed a subdivision or combination, as
the case may be, of the outstanding shares of Common Stock within the meaning of
Section 4.1.
4.3 Other Provisions Applicable to Adjustments under this Section. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Current Warrant Price provided for in this Section 4:
(a) When Adjustments to Be Made. The adjustments required by this
Section 4 shall be made whenever and as often as any specified event
requiring an adjustment shall occur. For the purpose of any adjustment,
any specified event shall be deemed to have occurred at the close of
business on the date of its occurrence.
(b) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into
account to the nearest 1/10th of a share.
(c) When Adjustment Not Required. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or distribution or subscription or purchase
rights and shall, thereafter and before the distribution to
stockholders thereof, legally abandon its plan to pay or deliver such
dividend, distribution, subscription or purchase rights, then
thereafter no adjustment shall be required by reason of the taking of
such record and any such adjustment previously made in respect thereof
shall be rescinded and annulled.
(d) Challenge to Good Faith Determination. Whenever the Board of
Directors of the Company shall be required to make a determination in
good faith of the fair value of any item under this Section 4, such
determination may be challenged in good faith by the Holder, and any
dispute shall be resolved by an investment banking firm of recognized
national standing selected by the Company and acceptable to the Holder.
4.4 Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation
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and, pursuant to the terms of such reorganization, reclassification, merger,
consolidation or disposition of assets, shares of common stock of the successor
or acquiring corporation, or any cash, shares of stock or other securities or
property of any nature whatsoever (including warrants or other subscription or
purchase rights) in addition to or in lieu of common stock of the successor or
acquiring corporation ("Other Property"), are to be received by or distributed
to the holders of Common Stock of the Company, then Holder shall have the right
thereafter to receive, upon exercise of the Warrant, the number of shares of
common stock of the successor or acquiring corporation or of the Company, if it
is the surviving corporation, and Other Property receivable upon or as a result
of such reorganization, reclassification, merger, consolidation or disposition
of assets by a holder of the number of shares of Common Stock for which this
Warrant is exercisable immediately prior to such event. In case of any such
reorganization, reclassification, merger, consolidation or disposition of
assets, the successor or acquiring corporation (if other than the Company) shall
expressly assume the due and punctual observance and performance of each and
every covenant and condition of this Warrant to be performed and observed by the
Company and all the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined by resolution of the
Board of Directors of the Company) in order to provide for adjustments of shares
of Common Stock for which this Warrant is exercisable which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section 4. For
purposes of this Section 4.4, "common stock of the successor or acquiring
corporation" shall include stock of such corporation of any class which is not
preferred as to dividends or assets over any other class of stock of such
corporation and which is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 4.4 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.
4.5 Other Action Affecting Common Stock. In case at any time or from
time to time the Company shall take any action in respect of its Common Stock,
other than any action described in this Section 4, which would have a materially
adverse effect upon the rights of the Holder, the number of shares of Common
Stock and/or the purchase price thereof shall be adjusted in such manner as may
be equitable in the circumstances, as determined in good faith by the Board of
Directors of the Company.
4.6 Certain Limitations. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any transaction which, by reason
of any adjustment hereunder, would cause the Current Warrant Price to be less
than the par value per share of Common Stock.
5. NOTICES TO HOLDER
5.1 Notice of Adjustments. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at which a
share of such Common Stock may be purchased upon exercise of the Warrants, shall
be adjusted pursuant to Section 4, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the Company setting
forth, in reasonable detail, the event requiring the adjustment and the method
by which such adjustment was calculated (including a description of the basis on
which the Board of Directors of
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<PAGE>
the Company determined the fair value of any evidences of indebtedness, shares
of stock, other securities or property or warrants or other subscription or
purchase rights referred to in Section 4.2), specifying the number of shares of
Common Stock for which this Warrant is exercisable and (if such adjustment was
made pursuant to Section 4.4 or 4.5) describing the number and kind of any other
shares of stock or Other Property for which this warrant is exercisable, and any
change in the purchase price or prices thereof, after giving effect to such
adjustment or change. The Company shall promptly cause a signed copy of such
certificate to be delivered to the Holder in accordance with Section 14.2. The
Company shall keep at its office or agency designated pursuant to Section 12
copies of all such certificates and cause the same to be available for
inspection at said office during normal business hours by the Holder or any
prospective purchaser of a Warrant designated by the Holder.
5.2 Notice of Corporate Action. If at any time
(a) the Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences
of its indebtedness, any shares of stock of any class or any other
securities or property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger of the Company with, or any
sale, transfer or other disposition of all or substantially all the
property, assets or business of the Company to, another corporation, or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 30 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, at least 30 days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also shall specify
(i) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common Stock
shall be entitled to any such dividend, distribution or right, and the amount
and character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to Holder
at the last address of Holder appearing on the books of the Company and
delivered in accordance with Section 14.2.
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<PAGE>
6. NO IMPAIRMENT
The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of Holder
against impairment. Without limiting the generality of the foregoing, the
Company will (a) not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (b) take all
such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock
upon the exercise of this warrant, and (c) use its best efforts to obtain all
such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to perform
its obligations under this Warrant.
Upon the request of Holder, the Company will at any time during the
period this Warrant is outstanding acknowledge in writing, in form satisfactory
to Holder, the continuing validity of this Warrant and the obligations of the
Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK
From and after the Closing Date, the Company shall at all times reserve
and keep available for issue upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants. All shares of Common Stock
which shall be so issuable, when issued upon exercise of any Warrant and payment
therefor in accordance with the terms of such Warrant, shall be duly and validly
issued and fully paid and nonassessable, and not subject to preemptive rights.
Before taking any action which would cause an adjustment reducing the
Current Warrant Price below the then par value, if any, of the shares of Common
Stock issuable upon exercise of the Warrants, the Company shall take any
corporate action which may be necessary in order that the Company may validly
and legally issue fully paid and non-assessable shares of such Common Stock at
such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock for which this Warrant is exercisable or in the
Current Warrant Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
In the case of all dividends or other distributions by the Company to
the holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such holders, the Company will in each such
case take such a record and will take such record as of the close of business on
a Business Day. The Company will not at any time, except upon dissolution,
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liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.
9. RESTRICTIONS ON TRANSFERABILITY
The Warrants and the Warrant Stock shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
Section 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any Warrant or
any Warrant Stock. Holder, by acceptance of this Warrant, agrees to be bound by
the provisions of this Section 9.
9.1 Restrictive Legend. (a) The Holder by accepting this Warrant and
any Warrant Stock agrees that this Warrant and the Warrant Stock issuable upon
exercise hereof may not be assigned or otherwise transferred unless and until
(i) the Company has received an opinion of counsel for the Holder that such
securities may be sold pursuant to an exemption from registration under the
Securities Act of 1933, as amended (the "Securities Act") or (ii) a registration
statement relating to such securities has been filed by the Company and declared
effective by the Commission.
Each certificate for Warrant Stock issuable hereunder shall bear a
legend as follows unless such securities have been sold pursuant to an effective
registration statement under the Securities Act:
"These securities have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or the
securities laws of any state, and are being offered and sold
pursuant to an exemption from the registration requirements of the
Securities Act and such laws. These securities may not be sold or
transferred except pursuant to an effective registration statement
under the Securities Act or pursuant to an available exemption from
the registration requirements of the Securities Act or such other
laws."
(b) Except as otherwise provided in this Section 9, the Warrant
shall be stamped or otherwise imprinted with a legend in substantially the
following form:
"This Warrant and the securities represented hereby have not been
registered under the Securities Act of 1933, as amended, and may
not be transferred in violation of such Act, the rules and
regulations thereunder or the provisions of this Warrant."
9.2 Notice of Proposed Transfers. Prior to any Transfer or attempted
Transfer of any Warrants or any shares of Restricted Common Stock, the Holder
shall give ten days, prior written notice (a "Transfer Notice") to the Company
of Holder's intention to effect such Transfer, describing the manner and
circumstances of the proposed Transfer, and obtain from counsel to Holder who
shall be reasonably satisfactory to the Company, an opinion that the proposed
Transfer of such Warrants or such Restricted Common Stock may be effected
without registration under the Securities Act. After receipt of the Transfer
Notice and opinion, the Company shall, within five days thereof, notify
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the Holder as to whether such opinion is reasonably satisfactory and, if so,
such holder shall thereupon be entitled to Transfer such Warrants or such
Restricted Common Stock, in accordance with the terms of the Transfer Notice.
Each certificate, if any, evidencing such shares of Restricted Common Stock
issued upon such Transfer shall bear the restrictive legend set forth in Section
9.1(a), and the Warrant issued upon such Transfer shall bear the restrictive
legend set forth in Section 9.1(b), unless in the opinion of such counsel such
legend is not required in order to ensure compliance with the Securities Act.
The Holder shall not be entitled to Transfer such Warrants or such Restricted
Common Stock until receipt of notice from the Company under this Section 9.2(a)
that such opinion is reasonably satisfactory.
9.3 Required Registration. Pursuant to the terms and conditions set
forth in the Registration Rights Agreement, the Company shall prepare and file
with the Commission not later than the 30th day after the Closing Date, a
Registration Statement relating to the offer and sale of the Common Stock
issuable upon exercise of the Warrants and shall use its best efforts to cause
the Commission to declare such Registration Statement effective under the
Securities Act as promptly as practicable but no later than one hundred fifty
(150) days after the Closing Date.
9.4 Termination of Restrictions. Notwithstanding the foregoing
provisions of Section 9, the restrictions imposed by this Section upon the
transferability of the Warrants, the Warrant Stock and the Restricted Common
Stock (or Common Stock issuable upon the exercise of the Warrants) and the
legend requirements of Section 9.1 shall terminate as to any particular Warrant
or share of Warrant Stock or Restricted Common Stock (or Common Stock issuable
upon the exercise of the warrants) (i) when and so long as such security shall
have been effectively registered under the Securities Act and disposed of
pursuant thereto or (ii) when the Company shall have received an opinion of
counsel reasonably satisfactory to it that such shares may be transferred
without registration thereof under the Securities Act. Whenever the restrictions
imposed by Section 9 shall terminate as to this Warrant, as hereinabove
provided, the Holder hereof shall be entitled to receive from the Company upon
written request of the Holder, at the expense of the Company, a new Warrant
bearing the following legend in place of the restrictive legend set forth
hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE
WITHIN WARRANT CONTAINED IN SECTION 9 HEREOF
TERMINATED ON , 19__, AND ARE OF NO
FURTHER FORCE AND EFFECT."
All Warrants issued upon registration of transfer, division or combination of,
or in substitution for, any Warrant or Warrants entitled to bear such legend
shall have a similar legend endorsed thereon. Whenever the restrictions imposed
by this Section shall terminate as to any share of Restricted Common Stock, as
hereinabove provided, the holder thereof shall be entitled to receive from the
Company, at the Company's expense, a new certificate representing such Common
Stock not bearing the restrictive legend set forth in Section 9.1(a).
9.5 Listing on Securities Exchange. If the Company shall list any
shares of Common Stock on any securities exchange, it will, at its expense, list
thereon, maintain and, when necessary, increase such listing of, all shares of
Common Stock issued or, to the extent permissible under the
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applicable securities exchange rules, issuable upon the exercise of this Warrant
so long as any shares of Common Stock shall be so listed during any such
Exercise Period.
10. SUPPLYING INFORMATION
The Company shall cooperate with Holder in supplying such information
as may be reasonably necessary for Holder to complete and file any information
reporting forms presently or hereafter required by the Commission as a condition
to the availability of an exemption from the Securities Act for the sale of any
Warrant or Restricted Common Stock.
11. LOSS OR MUTILATION
Upon receipt by the Company from Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and indemnity reasonably satisfactory to it (it being
understood that the written agreement of the Holder shall be sufficient
indemnity), and in case of mutilation upon surrender and cancellation hereof,
the Company will execute and deliver in lieu hereof a new Warrant of like tenor
to Holder; provided, in the case of mutilation, no indemnity shall be required
if this Warrant in identifiable form is surrendered to the Company for
cancellation.
12. OFFICE OF THE COMPANY
As long as any of the Warrants remain outstanding, the Company shall
maintain an office or agency (which may be the principal executive offices of
the Company) where the Warrants may be presented for exercise, registration of
transfer, division or combination as provided in this Warrant.
13. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by Holder to
purchase shares of Common Stock, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of Holder for the
purchase price of any Common Stock or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the Company.
14. MISCELLANEOUS
14.1 Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies.
If the Company fails to make, when due, any payments provided for hereunder, or
fails to comply with any other provision of this Warrant, the Company shall pay
to Holder such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys' fees, including those of
appellate proceedings, incurred by Holder in collecting any amounts due pursuant
hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
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14.2 Notice Generally. Except as may be otherwise provided herein, any
notice or other communication or delivery required or permitted hereunder shall
be in writing and shall be delivered personally or sent by certified mail,
postage prepaid, or by a nationally recognized overnight courier service, and
shall be deemed given when so delivered personally or by overnight courier
service, or, if mailed, three (3) days after the date of deposit in the United
States mails, as follows:
(1) if to the Company, to:
Univec, Inc.
22 Dubon Court
Farmingdale, New York 11735
Attention: Joel Schoenfeld
Telephone: (516) 777-2000
Facsimile: (516) 777-2786
With a copy to:
Snow Becker Krauss P.C.
605 Third Avenue
New York, New York 10158-0125
Attention: Jack Becker, Esq.
Telephone: (212) 687-3860
Facsimile: (212) 947-7052
(2) if to the Holder, to:
THE SHAAR FUND LTD.,
c/o SHAAR ADVISORY SERVICES LTD.
62 King George Street, Apartment 4F
Jerusalem, Israel
Attention: Samuel Levinson
With a copy to:
Herrick, Feinstein LLP
2 Park Avenue
New York, New York 10016
Attention: Irwin A. Kishner, Esq.
Telephone: (212) 592-1435
Facsimile: (212) 889-7577
The Company or the Holder may change the foregoing address by notice given
pursuant to this Section 14.2.
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<PAGE>
14.3 Indemnification. The Company agrees to indemnify and hold harmless
Holder from and against any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses
and disbursements of any kind which may be imposed upon, incurred by or asserted
against Holder in any manner relating to or arising out of any failure by the
Company to perform or observe in any material respect any of its covenants,
agreements, undertakings or obligations set forth in this Warrant; provided,
however, that the Company will not be liable hereunder to the extent that any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, attorneys' fees, expenses or disbursements are found in a final
non-appealable judgment by a court to have resulted from Holder's gross
negligence, bad faith or willful misconduct in its capacity as a stockholder or
warrantholder of the Company.
14.4 Remedies. 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 Section 9 of this Warrant. 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 Section 9 of this
Warrant and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
14.5 Successors and Assigns. Subject to the provisions of Sections 3.1
and 9, this Warrant and the rights evidenced hereby shall inure to the benefit
of and be binding upon the successors of the Company and the successors and
assigns of Holder. The provisions of this Warrant are intended to be for the
benefit of all Holders from time to time of this Warrant and, with respect to
Section 9 hereof, holders of Warrant Stock, and shall be enforceable by any such
Holder or holder of Warrant Stock.
14.6 Amendment. This Warrant and all other Warrants may be modified or
amended or the provisions hereof waived with the written consent of the Company
and the Holder.
14.7 Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
14.8 Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
14.9 Governing Law. This Warrant shall be governed by the laws of the
State of New York, without regard to the provisions thereof relating to conflict
of laws.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed and its corporate seal to be impressed hereon and attested by its
Secretary or an Assistant Secretary.
Dated: February 8, 1999
UNIVEC, INC.
By: s/ Flora Schoenfeld
-----------------------------------------------
Name: Flora Schoenfeld
Title: Secretary/Treasurer
Attest:
By: -----------------------------
Name:
Title:
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<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this warrant for the purchase of ________ Shares of Common Stock of
Univec, Inc. and herewith makes payment therefor, all at the price and on the
terms and conditions specified in this Warrant and requests that certificates
for the shares of Common Stock hereby purchased (and any securities or other
property issuable upon such exercise) be issued in the name of and delivered to
____________________ whose address is ___________________ and, if such shares of
Common Stock shall not include all of the shares of Common Stock issuable as
provided in this Warrant, that a new Warrant of like tenor and date for the
balance of the shares of Common Stock issuable hereunder be delivered to the
undersigned.
(Name of Registered owner)
(Signature of Registered Owner)
(Street Address)
(city) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of
Common Stock
and does hereby irrevocably constitute and appoint attorney-in-fact
to register such transfer on the books of maintained for the
purpose, with full power of substitution in the premises.
Dated: Print Name:
Signature:
Witness:
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
<PAGE>
Exhibit 4.14
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated this 8th day of February
1999 (this "Agreement") , between Univec, Inc., a Delaware corporation, with
principal executive offices located at 22 Dubon Court, Farmingdale, New York
11735 (the "Company"), and the undersigned (the "Initial Investor").
W I T N E S S E T H :
WHEREAS, upon the terms and subject to the conditions of the
Securities Purchase Agreement dated as of February 8, 1999, between the Initial
Investor and the Company (the "Securities Purchase Agreement") , the Company has
agreed to issue and sell to the Initial Investor (i) 250 shares of Series C 5%
Convertible Preferred Stock, par value $.001 (the "Preferred Shares") which,
upon the terms of and subject to the conditions of the Company's Certificate of
Designation to the Company's Articles of Incorporation (the "Certificate of
Designation"), are convertible into shares of the Company's common stock, par
value $.001 (the "Common Stock") and (ii) Common Stock Purchase Warrants (the
"Warrants") to purchase 37,500 shares of Common Stock; and
WHEREAS, to induce the Initial Investor to execute and deliver
the Securities Purchase Agreement, the Company has agreed to provide with
respect to the Common Stock issued or issuable in lieu of cash dividend payments
on the Preferred Shares, upon conversion of the Preferred Shares and exercise of
the Warrants certain registration rights under the Securities Act;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Definitions.
(a) As used in this Agreement, the following terms shall have
the meanings:
(i) "Affiliate", of any specified Person means any
other Person who directly, or indirectly through one or more intermediaries, is
in control of, is controlled by, or is under common control with, such specified
Person. For purposes of this definition, control of a Person means the power,
directly or indirectly, to direct or cause the direction of the management and
policies of such Person whether by contract, securities, ownership or otherwise;
and the terms "controlling" and "controlled" have the respective meanings
correlative to the foregoing.
(ii) "Closing Date" means the date and time of the
issuance and sale of the Preferred Shares.
(iii) "Commission" means the Securities and Exchange
Commission.
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(iv) "Current Market Price" on any date of
determination means the closing bid price of a share of the Common Stock on such
day as reported on the Nasdaq Stock Market ("Nasdaq"), or, if such security is
not listed or admitted to trading on the Nasdaq, on the principal national
security exchange or quotation system on which such security is quoted or listed
or admitted to trading, or, if not quoted or listed or admitted to trading on
any national securities exchange or quotation system, the closing bid price of
such security on the over-the-counter market on the day in question as reported
by the National Quotation Bureau Incorporated, or a similar generally accepted
reporting service, or if not so available, in such manner as furnished by any
Nasdaq member firm of the National Association of Securities Dealers, Inc.
selected from time to time by the Board of Directors of the Company for that
purpose, or a price determined in good faith by the Board of Directors of the
Company as being equal to the fair market value thereof, as the case may be.
(v) "Exchange Act" means the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Commission thereunder,
or any similar successor statute.
(vi) "Investors" means the Initial Investor and any
transferee or assignee of Registrable Securities who agrees to become bound by
all of the terms and provisions of this Agreement in accordance with Section 8
hereof.
(vii) "Public Offering" means an offer registered
with the Commission and the appropriate state securities commissions by the
Company of its Common Stock and made pursuant to the Securities Act.
(viii) "Person" means any individual, partnership,
corporation, limited liability company, joint stock company, association, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.
(ix) "Prospectus" means the prospectus (including,
without limitation, any preliminary prospectus and any final prospectus filed
pursuant to Rule 424(b) under the Securities Act, including any prospectus that
discloses information previously omitted from a prospectus filed as part of an
effective registration statement in reliance on Rule 430A under the Securities
Act) included in the Registration Statement, as amended or supplemented by any
prospectus supplement with respect to the terms of the offering of any portion
of the Registrable Securities covered by the Registration Statement and by all
other amendments and supplements to such prospectus, including all material
incorporated by reference in such prospectus and all documents filed after the
date of such prospectus by the Company under the Exchange Act and incorporated
by reference therein.
(x) "Registrable Securities" means the Common Stock
issued or issuable (i) in lieu of cash dividend payments on the Preferred
Shares, (ii) upon conversion of the Preferred Shares or (iii) upon exercise of
the Warrants; provided, however, a share of Common Stock shall
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cease to be a Registrable Security for purposes of this Agreement when it no
longer is a Restricted Security.
(xi) "Registration Statement" means a registration
statement of the Company filed on an appropriate form under the Securities Act
providing for the registration of, and the sale on a continuous or delayed basis
by the holders of, all of the Registrable Securities pursuant to Rule 415 under
the Securities Act, including the Prospectus contained therein and forming a
part thereof, any amendments to such registration statement and supplements to
such Prospectus, and all exhibits and other material incorporated by reference
in such registration statement and Prospectus.
(xii) "Restricted Security" means any share of Common
Stock issued or issuable in lieu of cash dividend payments on the Preferred
Shares, upon conversion of the Preferred Shares or exercise of the Warrants
except any such share that (i) has been registered pursuant to an effective
registration statement under the Securities Act and sold in a manner
contemplated by the Prospectus included in the Registration Statement, (ii) has
been transferred in compliance with the resale provisions of Rule 144 under the
Securities Act (or any successor provision thereto) or is transferable pursuant
to paragraph (d) of Rule 144 under the Securities Act (or any successor
provision thereto), or (iii) otherwise has been transferred and a new share of
Common Stock not subject to transfer restrictions under the Securities Act has
been delivered by or on behalf of the Company.
(xiii) "Securities Act" means the Securities Act of
1933, as amended, and the rules and regulations of the Commission thereunder, or
any similar successor statute.
(b) All capitalized terms used and not defined herein have the
respective meaning assigned to them in the Securities Purchase Agreement.
2. Registration.
(a) Filing and Effectiveness of Registration Statement. The
Company shall prepare and file with the Commission not later than 30 days after
the Closing Date, a Registration Statement relating to the offer and sale of the
Registrable Securities and shall use its best efforts to cause the Commission to
declare such Registration Statement effective under the Securities Act as
promptly as practicable but not later than May 1, 1999, assuming for purposes
hereof a Conversion Price under the Certificate of Designation of $0.80 per
share. The Company shall not include any other securities in the Registration
Statement relating to the offer and sale of the Registrable Securities. The
Company shall notify the Initial Investor by written notice that such
Registration Statement has been declared effective by the Commission within 24
hours of such declaration by the Commission.
(b) Registration Default. If the Registration Statement
covering the Registrable Securities or the Additional Registrable Securities (as
defined in Section 2(d) hereof) required to be filed by the Company pursuant to
Section 2 (a) or (2d) hereof, as the case may be, is not (i) filed with the
Commission not later than thirty (30) days after the Closing Date or (ii)
declared effective by the
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Commission on or before May 1, 1999 (either of which, without duplication, an
"Initial Date"), then the Company shall make the payments to the Initial
Investor as provided in the next sentence as liquidated damages and not as a
penalty. The amount to be paid by the Company to the Initial Investor shall be
determined as of each Computation Date (as defined below), and such amount shall
be equal to 2% (the "Liquidated Damage Rate") of the Purchase Price (as defined
in the Securities Purchase Agreement) from the Initial Date to the first
Computation Date and for each Computation Date thereafter, calculated on a pro
rata basis to the date on which the Registration Statement is filed with (in the
event of an Initial Date pursuant to (c)(i) above) or declared effective by (in
the event of an Initial Date pursuant to (c) (ii) above) the Commission (the
"Periodic Amount") provided, however, that in no event shall the Liquidated
Damages be less than $25,000. The full Periodic Amount shall be paid by the
Company to the Initial Investor by wire transfer of immediately available funds
within three days after each Computation Date.
As used in this Section 2(b) , "Computation Date" means the
date which is 30 days after the Initial Date and, if the Registration Statement
required to be filed by the Company pursuant to Section 2(a) has not theretofore
been declared effective by the Commission, each date which is 30 days after the
previous Computation Date until such Registration Statement is so declared
effective.
Notwithstanding the above, if the Registration Statement
covering the Registrable Securities or the Additional Registrable Securities (as
defined in Section 2(d) hereof) required to be filed by the Company pursuant to
Section 2(a) or 2(d) hereof, as the case may be, is not filed with the
Commission by the thirtieth (30th) day after the Closing Date, the Company shall
be in default of this Registration Rights Agreement.
(c) Eligibility for Use of Form S-3. The Company agrees that
at such time as it meets all the requirements for the use of Securities Act
Registration Statement on Form S-3 it shall file all reports and information
required to be filed by it with the Commission in a timely manner and take all
such other action so as to maintain such eligibility for the use of such form.
(d) In the event the Current Market Price declines to $0.90,
the Company shall, to the extent required by the Securities Act (because the
additional shares were not covered by the Registration Statement filed pursuant
to Section 2(a)), as reasonably determined by the Initial Investor, file an
additional Registration Statement with the Commission for such additional number
of Registrable Securities as would be issuable upon conversion of the Preferred
Shares and exercise of the Warrants (the "Additional Registrable Securities") in
addition to those previously registered, assuming a Conversion Price of $0.40
per share. The Company shall, to the extent required by the Securities Act, as
reasonably determined by the Initial Investor, prepare and file with the
Commission not later than the 30th day thereafter, a Registration Statement
relating to the offer and sale of such Additional Registrable Securities and
shall use its best efforts to cause the Commission to declare such Registration
Statement effective under the Securities Act as promptly as practicable but not
later than 60 days thereafter. The Company shall not include any other
securities in the Registration Statement relating to the offer and sale of such
additional Registrable Securities.
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(e) (i) If the Company proposes to register any of its
warrants, Common Stock or any other shares of common stock of the Company under
the Securities Act (other than a registration (A) on Form S-8 or S-4 or any
successor or similar forms, (B) relating to Common Stock or any other shares of
common stock of the Company issuable upon exercise of employee share options or
in connection with any employee benefit or similar plan of the Company or (C) in
connection with a direct or indirect acquisition by the Company of another
Person or any transaction with respect to which Rule 145 (or any successor
provision) under the Securities Act applies), whether or not for sale for its
own account, it will each such time, give prompt written notice at least 20 days
prior to the anticipated filing date of the registration statement relating to
such registration to the Initial Investor, which notice shall set forth such
Initial Investor's rights under this Section 3(e) and shall offer the Initial
Investor the opportunity to include in such registration statement such number
of Registrable Shares as the Initial Investor may request. Upon the written
request of an Initial Investor made within ten (10) days after the receipt of
notice from the Company (which request shall specify the number of Registrable
Shares intended to be disposed of by such Initial Investor), the Company will
use its best efforts to effect the registration under the Securities Laws of all
Registrable Shares that the Company has been so requested to register by the
Initial Investor, to the extent requisite to permit the disposition of the
Registrable Shares so to be registered; provided, however, that (A) if such
registration involves a Public Offering, the Initial Investor must sell their
Registrable Shares to the underwriters selected as provided in Section 3(b)
hereof on the same terms and conditions as apply to the Company and (B) if, at
any time after giving written notice of its intention to register any
Registrable Shares pursuant to this Section 3 and prior to the effective date of
the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register such Registrable Shares,
the Company shall give written notice to the Initial Investor and, thereupon,
shall be relieved of its obligation to register any Registrable Shares in
connection with such registration. The Company's obligations under this Section
2(e) shall terminate on the date that the registration statement to be filed in
accordance with Section 2(a) is declared effective by the Commission.
(ii) If a registration pursuant to this Section 2(e)
involves a Public Offering and the managing underwriter thereof advises the
Company that, in its view, the number of shares of Common Stock, Warrants or
other shares of Common Stock that the Company and the Initial Investor intend to
include in such registration exceeds the largest number of shares of Common
Stock or Warrants (including any other shares of Common Stock or Warrants of the
Company) that can be sold without having an adverse effect on such Public
Offering (the "Maximum Offering Size"), the Company will include in such
registration, only that number of shares of Common Stock or Warrants, as
applicable, such that the number of Registrable Shares registered does not
exceed the Maximum Offering Size, with the difference between the number of
shares in the Maximum Offering Size and the number of shares to be issued by the
Company to be allocated (after including all shares to be issued and sold by the
Company) among the Company and the Initial Investor pro rata on the basis of the
relative number of Registrable Shares offered for sale under such registration
by each of the Company and the Initial Investor.
If as a result of the proration provisions of this
Section 2 (e) (ii) , any Initial Investor is not entitled to include all such
Registrable Shares in such registration, such Initial
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Investor may elect to withdraw its request to include any Registrable Shares in
such registration. With respect to registrations pursuant to this Section 2(e),
the number of securities required to satisfy any underwriters' over-allotment
option shall be allocated pro rata among the Company and the Initial Investor on
the basis of the relative number of securities otherwise to be included by each
of them in the registration with respect to which such over-allotment option
relates.
3. Obligations of the Company. In connection with the registration of
the Registrable Securities, the Company shall:
(a) Promptly (i) prepare and file with the Commission such
amendments (including post-effective amendments) to the Registration Statement
and supplements to the Prospectus as may be necessary to keep the Registration
Statement continuously effective and in compliance with the provisions of the
Securities Act applicable thereto so as to permit the Prospectus forming part
thereof to be current and useable by Investors for resales of the Registrable
Securities for a period of two years from the date on which the Registration
Statement is first declared effective by the Commission (the "Effective Time")
or such shorter period that will terminate when all the Registrable Securities
covered by the Registration Statement have been sold pursuant thereto in
accordance with the plan of distribution provided in the Prospectus, transferred
pursuant to Rule 144 under the Securities Act or otherwise transferred in a
manner that results in the delivery of new securities not subject to transfer
restrictions under the Securities Act (the "Registration Period") and (ii) take
all lawful action such that each of (A) the Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, not misleading and
(B) the Prospectus forming part of the Registration Statement, and any amendment
or supplement thereto, does not at any time during the Registration Period
include an untrue statement of a material fact or omit to state a 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.
Notwithstanding the foregoing provisions of this Section 3(a), the Company may,
during the Registration Period, suspend the use of the Prospectus for a period
not to exceed 60 days (whether or not consecutive) in any 12-month period if the
Board of Directors of the Company determines in good faith that because of valid
business reasons, including pending mergers or other business combination
transactions, the planned acquisition or divestiture of assets, pending material
corporate developments and similar events, it is in the best interests of the
Company to suspend such use, and prior to or contemporaneously with suspending
such use the Company provides the Investors with written notice of such
suspension, which notice need not specify the nature of the event giving rise to
such suspension. At the end of any such suspension period, the Company shall
provide the Investors with written notice of the termination of such suspension.
(b) During the Registration Period, comply with the provisions
of the Securities Act with respect to the Registrable Securities of the Company
covered by the Registration Statement until such time as all of such Registrable
Securities have been disposed of in accordance with the intended methods of
disposition by the Investors as set forth in the Prospectus forming part of the
Registration Statement;
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(c) (i) Prior to the filing with the Commission of any
Registration Statement (including any amendments thereto) and the distribution
or delivery of any Prospectus (including any supplements thereto) , provide
draft copies thereof to the Investors and reflect in such documents all such
comments as the Investors (and their counsel) reasonably may propose and (ii)
furnish to each Investor whose Registrable Securities are included in the
Registration Statement and its legal counsel identified to the Company, (A)
promptly after the same is prepared and publicly distributed, filed with the
Commission, or received by the Company, one copy of the Registration Statement,
each Prospectus, and each amendment or supplement thereto, and (B) such number
of copies of the Prospectus and all amendments and supplements thereto and such
other documents, as such Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor;
(d) (i) Register or qualify the Registrable Securities covered
by the Registration Statement under such securities or "blue sky" laws of such
jurisdictions as the Investors who hold a majority-in-interest of the
Registrable Securities being offered reasonably request, (ii) prepare and file
in such jurisdictions such amendments (including post-effective amendments) and
supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof at all times during the Registration Period,
(iii) take all such other lawful actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the Registration
Period, and (iv) take all such other lawful actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (A) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
Section 3(d), (B) subject itself to general taxation in any such jurisdiction or
(C) file a general consent to service of process in any such jurisdiction;
(e) As promptly as practicable after becoming aware of such
event, notify each Investor of the occurrence of any event, as a result of which
the Prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omits to state a 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, and
promptly prepare an amendment to the Registration Statement and supplement to
the Prospectus to correct such untrue statement or omission, and deliver a
number of copies of such supplement and amendment to each Investor as such
Investor may reasonably request;
(f) As promptly as practicable after becoming aware of such
event, notify each Investor who holds Registrable Securities being sold (or, in
the event of an underwritten offering, the managing underwriters) of the
issuance by the Commission of any stop order or other suspension of the
effectiveness of the Registration Statement at the earliest possible time and
take all lawful action to effect the withdrawal, recession or removal of such
stop order or other suspension;
(g) Cause all the Registrable Securities covered by the
Registration Statement to be listed on the principal national securities
exchange, and included in an inter-dealer quotation
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system of a registered national securities association, on or in which
securities of the same class or series issued by the Company are then listed or
included;
(h) Maintain a transfer agent and registrar, which may be a
single entity, for the Registrable Securities not later than the effective date
of the Registration Statement;
(i) Cooperate with the Investors who hold Registrable
Securities being offered to facilitate the timely preparation and delivery of
certificates for the Registrable Securities to be offered pursuant to the
Registration Statement and enable such certificates for the Registrable
Securities to be in such denominations or amounts, as the case may be, as the
Investors reasonably may request and registered in such names as the Investor
may request; and, within three business days after a Registration Statement
which includes Registrable Securities is declared effective by the Commission,
deliver and cause legal counsel selected by the Company to deliver to the
transfer agent for the Registrable Securities (with copies to the Investors
whose Registrable Securities are included in such Registration Statement) an
appropriate instruction and, to the extent necessary, an opinion of such
counsel;
(j) Take all such other lawful actions reasonably necessary to
expedite and facilitate the disposition by the Investors of their Registrable
Securities in accordance with the intended methods therefor provided in the
Prospectus which are customary under the circumstances;
(k) Make generally available to its security holders as soon
as practicable, but in any event not later than three (3) months after (i) the
effective date (as defined in Rule 158(c) under the Securities Act) of the
Registration Statement, and (ii) the effective date of each post-effective
amendment to the Registration Statement, as the case may be, an earnings
statement of the Company and its subsidiaries complying with Section 11(a) of
the Securities Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);
(l) In the event of an underwritten offering, promptly include
or incorporate in a Prospectus supplement or post-effective amendment to the
Registration Statement such information as the managers reasonably agree should
be included therein and to which the Company does not reasonably object and make
all required filings of such Prospectus supplement or post-effective amendment
as soon as practicable after it is notified of the matters to be included or
incorporated in such Prospectus supplement or post-effective amendment;
(m) (i) Make reasonably available for inspection by Investors,
any underwriter participating in any disposition pursuant to the Registration
Statement, and any attorney, accountant or other agent retained by such
Investors or any such underwriter all relevant financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries, and (ii) cause the Company's officers, directors and employees to
supply all information reasonably requested by such Investors or any such
underwriter, attorney, accountant or agent in connection with the Registration
Statement, in each case, as is customary for similar due diligence examinations;
provided, however, that all records, information and documents that are
designated in writing by the Company, in good faith, as confidential,
proprietary or containing any material nonpublic
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information shall be kept confidential by such Investors and any such
underwriter, attorney, accountant or agent (pursuant to an appropriate
confidentiality agreement in the case of any such holder or agent), unless such
disclosure is made pursuant to judicial process in a court proceeding (after
first giving the Company an opportunity promptly to seek a protective order or
otherwise limit the scope of the information sought to be disclosed) or is
required by law, or such records, information or documents become available to
the public generally or through a third party not in violation of an
accompanying obligation of confidentiality; and provided further that, if the
foregoing inspection and information gathering would otherwise disrupt the
Company's conduct of its business, such inspection and information gathering
shall, to the maximum extent possible, be coordinated on behalf of the Investors
and the other parties entitled thereto by one firm of counsel designed by and on
behalf of the majority in interest of Investors and other parties;
(n) In connection with any underwritten offering, make such
representations and warranties to the Investors participating in such
underwritten offering and to the managers, in form, substance and scope as are
customarily made by the Company to underwriters in secondary underwritten
offerings;
(o) In connection with any underwritten offering, obtain
opinions of counsel to the Company (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to the managers) addressed to
the underwriters, covering such matters as are customarily covered in opinions
requested in secondary underwritten offerings (it being agreed that the matters
to be covered by such opinions shall include, without limitation, as of the date
of the opinion and as of the Effective Time of the Registration Statement or
most recent post-effective amendment thereto, as the case may be, the absence
from the Registration Statement and the Prospectus, including any documents
incorporated by reference therein, of an untrue statement of a material fact or
the omission of a material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, subject to customary
limitations);
(p) In connection with any underwritten offering, obtain "cold
comfort" letters and updates thereof from the independent public accountants of
the Company (and, if necessary, from the independent public accountants of any
subsidiary of the Company or of any business acquired by the Company, in each
case for which financial statements and financial data are, or are required to
be, included in the Registration Statement), addressed to each underwriter
participating in such underwritten offering (if such underwriter has provided
such letter, representations or documentation, if any, required for such cold
comfort letter to be so addressed), in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection with
secondary underwritten offerings;
(q) In connection with any underwritten offering, deliver such
documents and certificates as may be reasonably required by the managers, if
any; and
(r) In the event that any broker-dealer registered under the
Exchange Act shall be an "Affiliate" (as defined in Rule 2729(b)(1) of the rules
and regulations of the National
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Association of Securities Dealers, Inc. (the "NASD Rules") (or any successor
provision thereto)) of the Company or has a "conflict of interest" (as defined
in Rule 2720(b)(7) of the NASD Rules (or any successor provision thereto)) and
such broker-dealer shall underwrite, participate as a member of an underwriting
syndicate or selling group or assist in the distribution of any Registrable
Securities covered by the Registration Statement, whether as a holder of such
Registrable Securities or as an underwriter, a placement or sales agent or a
broker or dealer in respect thereof, or otherwise, the Company shall assist such
broker-dealer in complying with the requirements of the NASD Rules, including,
without limitation, by (A) engaging a "qualified independent underwriter" (as
defined in Rule 2720(b) (15) of the NASD Rules (or any successor provision
thereto)) to participate in the preparation of the Registration Statement
relating to such Registrable Securities, to exercise usual standards of due
diligence in respect thereof and to recommend the public offering price of such
Registrable Securities, (B) indemnifying such qualified independent underwriter
to the extent of the indemnification of underwriters provided in Section 5
hereof, and (C) providing such information to such broker-dealer as may be
required in order for such broker-dealer to comply with the requirements of the
NASD Rules.
4. Obligations of the Investors. In connection with the registration of
the Registrable Securities, the Investors shall have the following obligations:
(a) It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. As least seven
days prior to the first anticipated filing date of the Registration Statement,
the Company shall notify each Investor of the information the Company requires
from each such Investor (the "Requested Information") if such Investor elects to
have any of its Registrable Securities included in the Registration Statement.
If at least two business days prior to the anticipated filing date the Company
has not received the Requested Information from an Investor (a "Non-Responsive
Investor") , then the Company may file the Registration Statement without
including Registrable Securities of such Non-Responsive Investor and have no
further obligations to the Non-Responsive Investor;
(b) Each Investor by its acceptance of the Registrable
Securities agrees to cooperate with the Company in connection with the
preparation and filing of the Registration Statement hereunder, unless such
Investor has notified the Company in writing of its election to exclude all of
its Registrable Securities from the Registration Statement; and
(c) Each Investor agrees that, upon receipt of any notice from
the Company of the occurrence of any event of the kind described in Section 3(e)
or 3(f), it shall immediately discontinue its disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Investor's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 3(e) and, if so directed by the
Company, such Investor
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shall deliver to the Company (at the expense of the Company) or destroy (and
deliver to the Company a certificate of destruction) all copies in such
Investor's possession, of the Prospectus covering such Registrable Securities
current at the time of receipt of such notice.
5. Expenses of Registration. All expenses, other than underwriting
discounts and commissions, incurred in connection with registrations, filings or
qualifications pursuant to Section 3, but including, without limitation, all
registration, listing, and qualifications fees, printing and engraving fees,
accounting fees, and the fees and disbursements of counsel for the Company, and
the reasonable fees of one firm of counsel to the holders of a majority in
interest of the Registrable Securities shall be borne by the Company.
6. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each
Investor and each underwriter, if any, which facilitates the disposition of
Registrable Securities, and each of their respective officers and directors and
each person who controls such Investor or underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act (each such
person being sometimes hereinafter referred to as an "Indemnified Person") from
and against any losses, claims, damages or liabilities, joint or several, to
which such Indemnified Person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement or
an omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, not misleading, or
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Prospectus or an omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and the Company hereby agrees to
reimburse such Indemnified Person for all reasonable legal and other expenses
incurred by them in connection with investigating or defending any such action
or claim as and when such expenses are incurred; provided, however, that the
Company shall not be liable to any such Indemnified Person in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon (i) an untrue statement or alleged untrue statement made in, or an
omission or alleged omission from, such Registration Statement or Prospectus in
reliance upon and in conformity with written information furnished to the
Company by such Indemnified Person expressly for use therein or (ii) in the case
of the occurrence of an event of the type specified in Section 3(e), the use by
the Indemnified Person of an outdated or defective Prospectus after the Company
has provided to such Indemnified Person an updated Prospectus correcting the
untrue statement or alleged untrue statement or omission or alleged omission
giving rise to such loss, claim, damage or liability.
(b) Indemnification by the Investors and Underwriters. Each
Investor agrees, as a consequence of the inclusion of any of its Registrable
Securities in a Registration Statement, and each underwriter, if any, which
facilitates the disposition of Registrable Securities shall agree, as a
consequence of facilitating such disposition of Registrable Securities,
severally and not jointly, to
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<PAGE>
(i) indemnify and hold harmless the Company, its directors (including any person
who, with his or her consent, is named in the Registration Statement as a
director nominee of the Company), its officers who sign any Registration
Statement and each person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act,
against any losses, claims, damages or liabilities to which the Company or such
other persons may become subject, under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in such Registration Statement or Prospectus or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein (in light of the circumstances under which they were made, in
the case of the Prospectus), not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by such holder or underwriter
expressly for use therein; provided, however, that no Investor or underwriter
shall be liable under this Section 6(b) for any amount in excess of the net
proceeds paid to such Investor or underwriter in respect of shares sold by it,
and (ii) reimburse the Company for any legal or other expenses incurred by the
Company in connection with investigating or defending any such action or claim
as such expenses are incurred.
(c) Notice of Claims, etc. Promptly after receipt by a party
seeking indemnification pursuant to this Section 6 (an "Indemnified Party") of
written notice of any investigation, claim, proceeding or other action in
respect of which indemnification is being sought (each, a "Claim"), the
Indemnified Party promptly shall notify the party against whom indemnification
pursuant to this Section 6 is being sought (the "Indemnifying Party") of the
commencement thereof; but the omission to so notify the Indemnifying Party shall
not relieve it from any liability that it otherwise may have to the Indemnified
Party, except to the extent that the Indemnifying Party is materially prejudiced
and forfeits substantive rights and defenses by reason of such failure. In
connection with any Claim as to which both the Indemnifying Party and the
Indemnified Party are parties, the Indemnifying Party shall be entitled to
assume the defense thereof. Notwithstanding the assumption of the defense of any
Claim by the Indemnifying Party, the Indemnified Party shall have the right to
employ separate legal counsel and to participate in the defense of such Claim,
and the Indemnifying Party shall bear the reasonable fees, out-of-pocket costs
and expenses of such separate legal counsel to the Indemnified Party if (and
only if): (x) the Indemnifying Party shall have agreed to pay such fees, costs
and expenses, (y) the Indemnified Party and the Indemnifying Party shall
reasonably have concluded that representation of the Indemnified Party by the
Indemnifying Party by the same legal counsel would not be appropriate due to
actual or, as reasonably determined by legal counsel to the Indemnified Party,
potentially differing interests between such parties in the conduct of the
defense of such Claim, or if there may be legal defenses available to the
Indemnified Party that are in addition to or disparate from those available to
the Indemnifying Party, or (z) the Indemnifying Party shall have failed to
employ legal counsel reasonably satisfactory to the Indemnified Party within a
reasonable period of time after notice of the commencement of such Claim. If the
Indemnified Party employs separate legal counsel in circumstances other than as
described in clauses (x) , (y) or (z) above, the fees, costs and expenses of
such legal counsel shall be borne exclusively by the Indemnified Party. Except
as provided above,
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<PAGE>
the Indemnifying Party shall not, in connection with any Claim in the same
jurisdiction, be liable for the fees and expenses of more than one firm of
counsel for the Indemnified Party (together with appropriate local counsel). The
Indemnifying Party shall not, without the prior written consent of the
Indemnifying Party (which consent shall not unreasonably be withheld), settle or
compromise any Claim or consent to the entry of any judgment that does not
include an unconditional release of the Indemnifying Party from all liabilities
with respect to such Claim or judgment.
(d) Contribution. If the indemnification provided for in this
Section 6 is unavailable to or insufficient to hold harmless an Indemnified
Person under subsection (a) or (b) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein, then
each Indemnifying Party shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and the Indemnified Party in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by
such Indemnified Party or by such Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The parties hereto agree that it would not be just
and equitable if contribution pursuant to this Section 6(d) were determined by
pro rata allocation (even if the Investors or any underwriters were treated as
one entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in this Section 6 (d) .
The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
shall be deemed to include any legal or other fees or expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. 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. The obligations of the Investors and any underwriters in this
Section 6(d) to contribute shall be several in proportion to the percentage of
Registrable Securities registered or underwritten, as the case may be, by them
and not joint.
(e) Notwithstanding any other provision of this Section 6, in
no event shall any (i) Investor be required to undertake liability to any person
under this Section 6 for any amounts in excess of the dollar amount of the
proceeds to be received by such Investor from the sale of such Investor's
Registrable Securities (after deducting any fees, discounts and commissions
applicable thereto) pursuant to any Registration Statement under which such
Registrable Securities are to be registered under the Securities Act and (ii)
underwriter be required to undertake liability to any Person hereunder for any
amounts in excess of the aggregate discount, commission or other compensation
payable to such underwriter with respect to the Registrable Securities
underwritten by it and distributed pursuant to the Registration Statement.
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<PAGE>
(f) The obligations of the Company under this Section 6 shall
be in addition to any liability which the Company may otherwise have to any
Indemnified Person and the obligations of any Indemnified Person under this
Section 6 shall be in addition to any liability which such Indemnified Person
may otherwise have to the Company. The remedies provided in this Section 6 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to an indemnified party at law or in equity.
7. Rule 144. With a view to making available to the Investors the
benefits of Rule 144 under the Securities Act or any other similar rule or
regulation of the Commission that may at any time permit the Investors to sell
securities of the Company to the public without registration ("Rule 144"), the
Company agrees to use its best efforts to:
(a) comply with the provisions of paragraph (c) (1) of
Rule 144; and
(b) file with the Commission in a timely manner all reports
and other documents required to be filed by the Company pursuant to Section 13
or 15(d) under the Exchange Act; and, if at any time it is not required to file
such reports but in the past had been required to or did file such reports, it
will, upon the request of any Holder, make available other information as
required by, and so long as necessary to permit sales of, its Registrable
Securities pursuant to Rule 144.
8. Assignment. The rights to have the Company register Registrable
Securities pursuant to this Agreement shall be automatically assigned by the
Investors to any permitted transferee of all or any portion of such securities
(or all or any portion of any Preferred Shares or Warrant of the Company which
is convertible into such securities) of Registrable Securities only if: (a) the
Investor agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment, (b) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of (i) the
name and address of such transferee or assignee and (ii) the securities with
respect to which such registration rights are being transferred or assigned, (c)
immediately following such transfer or assignment, the securities so transferred
or assigned to the transferee or assignee constitute Restricted Securities, and
(d) at or before the time the Company received the written notice contemplated
by clause (b) of this sentence the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions contained herein.
9. Amendment and Waiver. Any provision of this Agreement may be amended
and the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively) , only with the written
consent of the Company and Investors who hold a majority-in-interest of the
Registrable Securities. Any amendment or waiver effected in accordance with this
Section 9 shall be binding upon each Investor and the Company.
10. Miscellaneous.
(a) A person or entity shall be deemed to be a holder of
Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives
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<PAGE>
conflicting instructions, notices or elections from two or more persons or
entities with respect to the same Registrable Securities, the Company shall act
upon the basis of instructions, notice or election received from the registered
owner of such Registrable Securities.
(b) If, after the date hereof and prior to the Commission
declaring the Registration Statement to be filed pursuant to Section 2(a)
effective under the Securities Act, the Company grants to any Person any
registration rights with respect to any Company securities which are more
favorable to such other Person than those provided in this Agreement, then the
Company forthwith shall grant (by means of an amendment to this Agreement or
otherwise) identical registration rights to all Investors hereunder.
(c) Except as may be otherwise provided herein, any notice or
other communication or delivery required or permitted hereunder shall be in
writing and shall be delivered personally or sent by certified mail, postage
prepaid, or by a nationally recognized overnight courier service, and shall be
deemed given when so delivered personally or by overnight courier service, or,
if mailed, three (3) days after the date of deposit in the United States mails,
as follows:
(1) if to the Company, to:
Univec, Inc.
22 Dubon Court
Farmingdale, New York 11735
Attention: Joel Schoenfeld
Telephone: (516) 777-2000
Facsimile: (516) 777-2786
With a copy to:
Snow Becker Krauss P.C.
605 Third Avenue
New York, New York 10158-0125
Attention: Jack Becker, Esq.
Telephone: (212) 687-3860
Facsimile: (212) 947-7052
(2) if to the Initial Investor, to:
THE SHAAR FUND LTD.,
c/o SHAAR ADVISORY SERVICES LTD.
62 King George Street, Apartment 4F
Jerusalem, Israel
Attention: Samuel Levinson
with a copy to:
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<PAGE>
Herrick, Feinstein LLP
2 Park Avenue
New York, New York 10016
Attention: Irwin A. Kishner, Esq.
Telephone: (212) 592-1435
Facsimile: (212) 889-7577
(3) if to any other Investor, at such address as such Investor shall have
provided in writing to the Company.
The Company, the Initial Investor or any Investor may change the foregoing
address by notice given pursuant to this Section 10(c).
(d) Failure of any party to exercise any right or remedy under
this Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
(e) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York. Each of the parties consents
to the jurisdiction of the federal courts whose districts encompass any part of
the City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection including
any objection based on forum non conveniens, to the bringing of any such
proceeding in such jurisdictions.
(f) The remedies provided in this Agreement are cumulative and
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provision, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.
(g) The Company shall not enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
holders of Registrable Securities in this Agreement or otherwise conflicts with
the provisions hereof. The Company is not currently a party to any agreement
granting any registration rights with respect to any of its securities to any
person which conflicts with the Company's obligations hereunder or gives any
other party the right to include any securities in any Registration Statement
filed pursuant hereto, except for such rights and conflicts as have been
irrevocably waived. Without limiting the generality of the foregoing, without
the written consent of the Holders of a majority in interest of the Registrable
Securities, the Company shall not grant to any person the right to request it to
register any of its securities under the Securities
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<PAGE>
Act unless the rights so granted are subject in all respect to the prior rights
of the holders of Registrable Securities set forth herein, and are not otherwise
in conflict or inconsistent with the provisions of this Agreement. The
restrictions on the Company's rights to grant registration rights under this
paragraph shall terminate on the date the Registration Statement to be filed
pursuant to Section 2(a) is declared effective by the Commission.
(h) This Agreement, the Securities Purchase Agreement, the
Escrow Instructions, dated as of the date hereof (the "Escrow Instructions"),
between the Company, the Initial Investor and Herrick, Feinstein LLP, the
Preferred Shares and the Warrants constitute the entire agreement among the
parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement, the Securities Purchase Agreement, the
Escrow Instructions, the Certificate of Designation and the Warrants supersede
all prior agreements and undertakings among the parties hereto with respect to
the subject matter hereof.
(i) Subject to the requirements of Section 8 hereof, this
Agreement shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties hereto.
(j) All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
(k) The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning thereof.
(l) The Company acknowledges that any failure by the Company
to perform its obligations under Section 3, or any delay in such performance
could result in direct damages to the Investors and the Company agrees that, in
addition to any other liability the Company may have by reason of any such
failure or delay, the Company shall be liable for all direct damages caused by
such failure or delay.
(m) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same agreement. A facsimile transmission of this signed
Agreement shall be legal and binding on all parties hereto.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.
UNIVEC, INC.
By: /s/ Flora Schoenfeld
------------------------
Name: Flora Schoenfeld
Title: Secretary/Treasurer
THE SHAAR FUND LTD.
By: INTERCARIBBEAN SERVICES, LTD.
By: /s/ [illegible]
------------------------
Name:
Title:
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<PAGE>
Exhibit 4.15
CERTIFICATE OF DESIGNATION
OF
SERIES C CONVERTIBLE PREFERRED STOCK
OF
UNIVEC, INC.
--------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
--------------------
Univec, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), hereby
certifies that the following resolutions were adopted by the Board of Directors
of the Corporation on January 20, 1999 pursuant to authority of the Board of
Directors as required by Section 151 of the General Corporation Law of the State
of Delaware:
RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors of this Corporation (the "Board of Directors" or the
"Board") in accordance with the provisions of its Certificate of Incorporation,
the Board of Directors hereby authorizes a series of the Corporation's
previously authorized Preferred Stock, par value $0.001 per share (the
"Preferred Stock"), and hereby states the designation and number of shares, and
fixes the relative rights, preferences, privileges, powers and restrictions
thereof as follows:
Series C 5% Convertible Preferred Stock:
ARTICLE 1
DEFINITIONS
SECTION 1.1 Definitions. The terms defined in this Article whenever
used in this Certificate of Designation have the following respective meanings:
(a) "Additional Capital Shares" has the meaning set forth in
Section 6.1(c).
(b) "Affiliate" has the meaning ascribed to such term in Rule
12b-2 under the Securities Exchange Act of 1934, as amended.
(c) "Business Day" means a day other than Saturday, Sunday or
any day on which banks located in the State of New York are authorized or
obligated to close.
(d) "Capital Shares" means the Common Shares and any other
shares of any other class or series of common stock, whether now or hereafter
authorized and however designated, which have the right to participate in the
distribution of earnings and assets (upon dissolution, liquidation or
winding-up) of the Corporation.
<PAGE>
(e) "Closing Date" means February 5, 1999.
(f) "Common Shares" or "Common Stock" means shares of common
stock, $.001 par value, of the Corporation.
(g) "Common Stock Issued at Conversion" when used with
reference to the securities issuable upon conversion of the Series C Preferred
Stock, means all Common Shares now or hereafter Outstanding and securities of
any other class or series into which the Series C Preferred Stock hereafter
shall have been changed or substituted, whether now or hereafter created and
however designated.
(h) "Conversion Date" means any day on which all or any
portion of shares of the Series C Preferred Stock is converted in accordance
with the provisions hereof.
(i) "Conversion Notice" has the meaning set forth in Section
6.2.
(j) "Conversion Price" means on any date of determination the
applicable price for the conversion of shares of Series C Preferred Stock into
Common Shares on such day as set forth in Section 6.1.
(k) "Conversion Ratio" means on any date of determination the
applicable percentage of the Market Price for conversion of shares of Series C
Preferred Stock into Common Shares on such day as set forth in Section 6.1.
(l) "Corporation" means Univec, Inc., a Delaware corporation,
and any successor or resulting corporation by way of merger, consolidation, sale
or exchange of all or substantially all of the Corporation's assets, or
otherwise.
(m) "Current Market Price" means on any date of determination
the closing bid price of a Common Share on such day as reported on the Nasdaq
SmallCap Market ("NASDAQ").
(n) "Default Dividend Rate" shall be equal to the Preferred
Stock Dividend Rate plus an additional 5% per annum.
(o) "Holder" means The Shaar Fund Ltd., any successor thereto,
or any Person to whom the Series C Preferred Stock is subsequently transferred
in accordance with the provisions hereof.
(p) "Market Disruption Event" means any event that results in
a material suspension or limitation of trading of Common Shares on NASDAQ.
(q) "Market Price" per Common Share means the arithmetic mean
of the three (3) lowest closing bid prices of the Common Shares as reported on
NASDAQ for three (3) Trading Days any Valuation Period, it being understood that
such three (3) Trading Days during any Valuation Period need not be consecutive.
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<PAGE>
(r) "Maximum Rate" has the meaning set forth in Section
7.3(b).
(s) "Outstanding" when used with reference to Common Shares or
Capital Shares (collectively, "Shares"), means, on any date of determination,
all issued and outstanding Shares, and includes all such Shares issuable in
respect of outstanding scrip or any certificates representing fractional
interests in such Shares; provided, however, that any such Shares directly or
indirectly owned or held by or for the account of the Corporation or any
Subsidiary of the Corporation shall not be deemed "Outstanding" for purposes
hereof.
(t) "Person" means an individual, a corporation, partnership,
an association, a limited liability company, unincorporated business
organization, a trust or other entity or organization, and any government or
political subdivision or any agency or instrumentality thereof.
(u) "Registration Rights Agreement" means that certain
Registration Rights Agreement dated a date even herewith between the Corporation
and The Shaar Fund Ltd.
(v) "SEC" means the United States Securities and Exchange
Commission.
(w) "Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the SEC thereunder, all as in effect
at the time.
(x) "Securities Purchase Agreement" means that certain
Securities Purchase Agreement dated a date even herewith between the Corporation
and The Shaar Fund Ltd.
(y) "Series C Preferred Stock" means the Series C 5%
Convertible Preferred Stock of the Corporation or such other convertible
Preferred Stock exchanged therefor as provided in Section 2.1.
(z) "Stated Value" has the meaning set forth in Article 2.
(aa) "Subsidiary" means any entity of which securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are owned
directly or indirectly by the Corporation.
(bb) "Trading Day" means any day on which purchases and sales
of securities authorized for quotation on NASDAQ are reported thereon and on
which no Market Disruption Event has occurred.
(cc) "Valuation Event" has the meaning set forth in Section
6.1.
(dd) "Valuation Period" means the twenty Trading Day period
immediately preceding the Conversion Date.
All references to "cash" or "$" herein means currency of the
United States of America.
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<PAGE>
ARTICLE 2
DESIGNATION AND AMOUNT
SECTION 2.1
The designation of this series, which consists of 1,000 shares
of Preferred Stock, is Series C 5% Convertible Preferred Stock (the "Series C
Preferred Stock") and the stated value shall be One Thousand Dollars ($1,000)
per share (the "Stated Value").
ARTICLE 3
RANK
SECTION 3.1
The Series C Preferred Stock shall rank (i) prior to the
Common Stock; (ii) prior to the Corporation's Series A 8% Cumulative Convertible
Preferred Stock; (iii) prior to any class or series of capital stock of the
Corporation hereafter created other than "Pari Passu, Securities" (collectively,
with the Common Stock, "Junior Securities"); and (iv) pari passu with the
Corporation's Series B 5% Convertible Preferred Stock and any class or series of
capital stock of the Corporation hereafter created specifically ranking on
parity with the Series C Preferred Stock ("Pari Passu Securities").
ARTICLE 4
DIVIDENDS
SECTION 4.1
(a) (i) The Holder shall be entitled to receive, and the Board
of Directors shall be required to declare, out of funds legally available for
the payment of dividends, dividends (subject to Sections 4(a)(ii) hereof) at the
rate of 5% per annum (computed on the basis of a 360-day year) (the "Dividend
Rate") on the Liquidation Value (as defined below) of each share of Series C
Preferred Stock on and as of the most recent Dividend Payment Due Date (as
defined below) with respect to each Dividend Period (as defined below).
Dividends on the Series C Preferred Stock shall be cumulative from the date of
issue, whether or not declared for any reason, including if such declaration is
prohibited under any outstanding indebtedness or borrowings of the Corporation
or any of its Subsidiaries, or any other contractual provision binding on the
Corporation or any of its Subsidiaries, and whether or not there shall be funds
legally available for the payment thereof.
(ii) Each dividend shall be payable in equal
quarterly amounts on each March 31, June 30, September 30 and December 31 of
each year (each, a "Dividend Payment Due Date"), commencing March 31, 1999, to
the holders of record of shares of the Series C Preferred Stock, as they appear
on the stock records of the Corporation at the close of business on any record
date, not more than 60 days or less than 10 days preceding the payment dates
thereof, as shall be fixed by the Board of Directors. For the purposes hereof,
"Dividend Period" means the quarterly period commending on and including the day
after the immediately preceding Dividend Payment Date and ending on and
including the immediately subsequent Dividend Payment Date. Accrued and unpaid
dividends for any past Dividend Period may be declared and paid at any time,
without reference to any Dividend Payment Due Date, to holders of record on such
date, not more than 15 days preceding the payment date thereof, as may be fixed
by the Board of Directors.
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<PAGE>
(iii) At the option of the Corporation, the dividend
shall be paid in cash or through the issuance of duly and validly authorized and
issued, fully paid and nonassessable, freely tradeable shares of the Common
Stock valued at the Market Price. The Common Stock to be issued in lieu of cash
payments shall be registered for resale in the Registration Statement (as
defined in the Registration Rights Agreement) to be filed by the Corporation to
register the Common Stock issuable upon conversion of the shares of Series C
Preferred Stock and exercise of the Warrants as set forth in the Registration
Rights Agreement. Notwithstanding the foregoing, until such Registration
Statement (as defined in the Registration Rights Agreement) has been declared
effective under the Securities Act by the SEC, payment of dividends on the
Series C Preferred Stock shall be in cash.
(b) The Holder shall not be entitled to any dividends in
excess of the cumulative dividends, as herein provided, on the Series C
Preferred Stock. Except as provided in this Article 4, no interest, or sum of
money in lieu of interest, shall be payable in respect of any dividend payment
or payments on the Series C Preferred Stock that may be in arrears.
(c) So long as any shares of the Series C Preferred Stock are
outstanding, no dividends, except as described in the next succeeding sentence,
shall be declared or paid or set apart for payment on Pari Passu Securities for
any period unless full cumulative dividends required to be paid in cash have
been or contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof set apart for such payment on the Series C Preferred
Stock for all Dividend Periods terminating on or prior to the date of payment of
the dividend on such class or series of Pari Passu Securities. When dividends
are not paid in full or a sum sufficient for such payment is not set apart, as
aforesaid, all dividends declared upon shares of the Series C Preferred Stock
and all dividends declared upon any other class or series of Pari Passu
Securities shall be declared ratably in proportion to the respective amounts of
dividends accumulated and unpaid on the Series C Preferred Stock and accumulated
and unpaid on such Pari Passu Securities.
(d) So long as any shares of the Series C Preferred Stock are
outstanding, no dividends shall be declared or paid or set apart for payment or
other distribution declared or made upon Junior Securities, nor shall any Junior
Securities be redeemed, purchased or otherwise acquired (other than a
redemption, purchase or other acquisition of shares of Common Stock made for
purposes of an employee incentive or benefit plan (including a stock option
plan) of the Corporation or any subsidiary, (all such dividends, distributions,
redemptions or purchases being hereinafter referred to as a "Junior Securities
Distribution") for any consideration (or any moneys be paid to or made available
for a sinking fund for the redemption of any shares of any such stock) by the
Corporation, directly or indirectly, unless in each case (i) the full cumulative
dividends required to be paid in cash on all outstanding shares of the Series C
Preferred Stock and any other Pari Passu Securities shall have been paid or set
apart for payment for all past Dividend Periods with respect to the Series C
Preferred Stock and all past dividend periods with respect to such Pari Passu
Securities, and (ii) sufficient funds shall have been paid or set apart for the
payment of the dividend for the current Dividend Period with respect to the
Series C Preferred Stock and the current dividend period with respect to such
Pari Passu Securities.
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ARTICLE 5
LIQUIDATION PREFERENCE
SECTION 5.1
(a) If the Corporation shall commence a voluntary case under
the Federal bankruptcy laws or any other applicable Federal or State bankruptcy,
insolvency or similar law, or consent to the entry of an order for relief in an
involuntary case under any law or to the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or other similar official) of the
Corporation or of any substantial part of its property, or make an assignment
for the benefit of its creditors, or admit in writing its inability to pay its
debts generally as they become due, or if a decree or order for relief in
respect of the Corporation shall be entered by a court having jurisdiction in
the premises in an involuntary case under the Federal bankruptcy laws or any
other applicable Federal or state bankruptcy, insolvency or similar law
resulting in the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, and any such decree or order shall be unstayed and in effect for a
period of thirty (30) consecutive days and, on account of any such event, the
Corporation shall liquidate, dissolve or wind up, or if the Corporation shall
otherwise liquidate, dissolve or wind up (each such event being considered a
"Liquidation Event"), no distribution shall be made to the holders of any shares
of capital stock of the Corporation upon liquidation, dissolution or winding up
unless prior thereto, the holders of shares of Series C Preferred Stock, subject
to Article 5, shall have received the Liquidation Preference (as defined in
Article 5(c)) with respect to each share. If upon the occurrence of a
Liquidation Event, the assets and funds available for distribution among the
holders of the Series C Preferred Stock and holders of Pari Passu Securities
shall be insufficient to permit the payment to such holders of the preferential
amounts payable thereon, then the entire assets and funds of the Corporation
legally available for distribution to the Series C Preferred Stock and the Pari
Passu Securities shall be distributed ratably among such shares in proportion to
the ratio that the Liquidation Preference payable on each such share bears to
the aggregate liquidation Preference payable on all such shares.
(b) At the option of each Holder, the sale, conveyance of
disposition of all or substantially all of the assets of the Corporation, the
effectuation by the Corporation of a transaction or series of related
transactions in which more than 50% of the voting power of the Corporation is
disposed of, or the consolidation, merger or other business combination of the
Corporation with or into any other Person (as defined below) or Persons when the
Corporation is not the survivor shall either: (i) be deemed to be a liquidation,
dissolution or winding up of the Corporation pursuant to which the Corporation
shall be required to distribute, upon consummation of and as a condition to,
such transaction an amount equal to one hundred percent (100%) of the
Liquidation Preference with respect to each outstanding share of Series C
Preferred Stock in accordance with and subject to the terms of this Article 5 or
(ii) be treated pursuant to Article 5(c)(iii) hereof; provided, that all holders
of Series C Preferred Stock shall be deemed to elect the option set forth in
clause (i) hereof if at least a majority in interest of such holders elect such
option.
(c) For purposes hereof, the "Liquidation Preference" with
respect to a share of the Series C Preferred Stock shall mean an amount equal to
the sum of (i) the Stated Value thereof, plus (ii) the aggregate of all accrued
and unpaid dividends on such share of Series C Preferred Stock until the most
recent Dividend Payment Due Date; provided that, in the event of an actual
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liquidation, dissolution or winding up of the Corporation, the amount referred
to in clause (iii) above shall be calculated by including accrued and unpaid
dividends to the actual date of such liquidation, dissolution or winding up,
rather than the Dividend Payment Due Date referred to above.
ARTICLE 6
CONVERSION OF PREFERRED STOCK
SECTION 6.1 Conversion; Conversion Price. At the option of the Holder,
the shares of Preferred Stock may be converted, either in whole or in part, into
Common Shares (calculated as to each such conversion to the nearest 1/100th of a
share), at any time, and from time to time following the date of issuance of the
Series C Preferred Stock (the "Issue Date") at a Conversion Price per share of
Common Stock equal to the lesser of: (i) $1.10, or (ii) 80% of the Market Price,
provided, that if the Corporation's Common Stock is delisted on NASDAQ, for any
reason, then any remaining unconverted Series C Preferred Stock may be
converted, at the sole option of the Holder, at a Conversion Price per share of
Common Stock equal to 75% of the Market Price; provided, however, that:
(a) notwithstanding anything herein to the contrary, the
Holder shall not have the right, and the Company shall not have the obligation,
to convert all or any portion of the Series C Preferred Stock (and the Company
shall not have the right to pay dividends on the Series C Preferred Stock in
shares of common stock) if and to the extent that the issuance to the Holder of
shares of common stock upon such conversion (or payment of dividends) would
result in the Holder being deemed the "beneficial owner" of 5% or more of the
then outstanding shares of Common Stock within the meaning of Section 13(d) of
the Securities Exchange Act of 1934, as amended, and the rules promulgated
thereunder. If any court of competent jurisdiction shall determine that the
foregoing limitation is ineffective to prevent a Holder from being deemed the
beneficial owner of 5% or more of the then outstanding shares of Common Stock,
then the Corporation shall redeem so many of such Holder's shares (the
"Redemption Shares") of Series C Preferred Stock as are necessary to cause such
Holder to be deemed the beneficial owner of not more than 5% of the then
outstanding shares of Common Stock. Upon such determination by a court of
competent jurisdiction, the Redemption Shares shall immediately and without
further action be deemed returned to the status of authorized but unissued
shares of Series C Preferred Stock and the Holder shall have no interest in or
rights under such Redemption Shares. Any and all dividends paid on or prior to
the date of such determination shall be deemed dividends paid on the remaining
shares of Series C Preferred Stock held by the Holder. Such redemption shall be
for cash at a redemption price equal to the sum of (i) the Stated Value of the
Redemption Shares and (ii) any accrued and unpaid dividends to the date of such
redemption; and
(b) unless the Corporation shall have obtained the approval of
its voting stockholders to such issuance in accordance with the rules of the
NASDAQ or such other stock market with which the Corporation shall be required
to comply, the Corporation shall not issue shares of Common Stock (i) upon
conversion of any shares of Series C Preferred Stock or (ii) as a dividend on
the Series C Preferred Stock, if such issuance of Common Stock, when added to
the number of shares of Common Stock previously issued by the Corporation (i)
upon conversion of shares of the Series C Preferred Stock, (ii) upon exercise of
the Warrants issued pursuant to the terms of the Securities Purchase Agreement
and (iii) in payment of dividends on the Series C Preferred Stock, would be in
excess of 19.99% of the number of shares of the Corporation's Common Stock which
were issued and outstanding on the Closing Date (the "Maximum Issuance Amount").
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In the event that a properly executed Conversion Notice is received by the
Corporation which would require the Corporation to issue shares of Common Stock
equal to or in excess of the Maximum Issuance Amount, the Corporation shall
honor such conversion request by (i) converting the number of shares of Series C
Preferred Stock stated in the Conversion Notice not in excess of the Maximum
Issuance Amount and (ii) redeeming the number of shares of Series C Preferred
Stock stated in the Conversion Notice equal to or in excess of the Maximum
Issuance Amount in cash at a price equal to one hundred twenty-five percent
(125%) of the Stated Value of the shares of Series C Preferred Stock to be so
redeemed, together with all accrued and unpaid dividends thereon. In the event
that the Corporation shall elect to pay a dividend in shares of Common Stock
which would require the Corporation to issue shares of Common Stock equal to or
in excess of the Maximum Issuance Amount, the Corporation shall pay (i) a
dividend in shares of Common Stock equal to one less than an amount which would
result in the Corporation issuing shares equal to the Maximum Issuance Amount
and (ii) the balance of the dividend in cash.
On or at any time after the Closing Date the Holder of the
Series C Preferred Stock may exercise its right of conversion of 100% of the
aggregate number of Series C Preferred Shares issued to the Holder.
The number of shares of Common Stock due upon conversion of
Series C Preferred Stock shall be (i) the number of shares of Series C Preferred
Stock to be converted, multiplied by (ii) the Stated Value and divided by (iii)
the applicable Conversion Price.
Within two (2) Business Days of the occurrence of a Valuation
Event, the Corporation shall send notice (the "Valuation Event Notice") of such
occurrence to the Holder. Notwithstanding anything to the contrary contained
herein, if a Valuation Event occurs during any Valuation Period, a new Valuation
Period shall begin on the Trading Day immediately following the occurrence of
such Valuation Event and end on the Conversion Date; provided that, if a
Valuation Event occurs on the fifth day of any Valuation Period, then the
Conversion Price shall be the Current Market Price of the Common Shares on such
day; and provided, further, that the Holder may, in its discretion, postpone
such Conversion Date to a Trading Day which is no more than five (5) Trading
Days after the occurrence of the latest Valuation Event by delivering a
notification to the Corporation within two (2) Business Days of the receipt of
the Valuation Event Notice. In the event that the Holder deems the Valuation
Period to be other than the five (5) Trading Days immediately prior to the
Conversion Date, the Holder shall give written notice of such fact to the
Corporation in the related Conversion Notice at the time of conversion.
For purposes of this Section 6.1, a "Valuation Event" shall mean an event in
which the Corporation at any time during a Valuation Period takes any of the
following actions:
(a) subdivides or combines its Capital Shares;
(b) makes any distribution of its Capital Shares;
(c) issues any additional Capital Shares (the "Additional
Capital Shares"), otherwise than as provided in the foregoing Sections 6.1(a)
and 6.1(b) above, at a price per share less, or for other consideration lower,
than the Current Market Price in effect immediately prior to such issuances, or
without consideration, except for issuances under employee benefit plans
consistent with those presently in effect and issuances under presently
outstanding warrants, options or convertible securities;
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(d) Issues any warrants, options or other rights to subscribe
for or purchase any Additional Capital Shares and the price per share for which
Additional Capital Shares may at any time thereafter be issuable pursuant to
such warrants, options or other rights shall be less than the Current Market
Price in effect immediately prior to such issuance;
(e) issues any securities convertible into or exchangeable or
exercisable for Capital Shares and the consideration per share for which
Additional Capital Shares may at any time thereafter be issuable pursuant to the
terms of such convertible, exchangeable or exercisable securities shall be less
than the Current Market Price in effect immediately prior to such issuance;
(f) makes a distribution of its assets or evidences of
indebtedness to the holders of its Capital Shares as a dividend in liquidation
or by way of return of capital or other than as a dividend payable out of
earnings or surplus legally available for the payment of dividends under
applicable law or any distribution to such holders made in respect of the sale
of all or substantially all of the Corporation's assets (other than under the
circumstances provided for in the foregoing Sections 6.1(a) through 6.1(e)); or
(g) takes any action affecting the number of Outstanding
Capital Shares, other than an action described in any of the foregoing Sections
6.1(a) through 6.1(f) hereof, inclusive, which in the opinion of the
Corporation's Board of Directors, determined in good faith, would have a
material adverse effect upon the rights of the Holder at the time of a
conversion of the Preferred Stock.
SECTION 6.2 Exercise of Conversion Privilege. (a) Conversion of the
Series C Preferred Stock may be exercised, in whole or in part, by the Holder by
telecopying an executed and completed notice of conversion in the form annexed
hereto as Annex I (the "Conversion Notice") to the Corporation. Each date on
which a Conversion Notice is telecopied to and received by the Corporation in
accordance with the provisions of this Section 6.2 shall constitute a Conversion
Date. The Corporation shall convert the Preferred Stock and issue the Common
Stock Issued at Conversion effective as of the Conversion Date. The Conversion
Notice also shall state the name or names (with addresses) of the persons who
are to become the holders of the Common Stock Issued at Conversion in connection
with such conversion. The Holder shall deliver the shares of Series C Preferred
Stock to the Corporation by express courier within 30 days following the date on
which the telecopied Conversion Notice has been transmitted to the Corporation.
Upon surrender for conversion, the Preferred Stock shall be accompanied by a
proper assignment thereof to the Corporation or be endorsed in blank. As
promptly as practicable after the receipt of the Conversion Notice as aforesaid,
but in any event not more than five Business Days after the Corporation's
receipt of such Conversion Notice, the Corporation shall (i) issue the Common
Stock issued at Conversion in accordance with the provisions of this Article 6,
and (ii) cause to be mailed for delivery by overnight courier to the Holder (X)
a certificate or certificate(s) representing the number of Common Shares to
which the Holder is entitled by virtue of such conversion, (Y) cash, as provided
in Section 6.3, in respect of any fraction of a Share issuable upon such
conversion and (Z) cash in the amount of accrued and unpaid dividends as of the
Conversion Date. Such conversion shall be deemed to have been effected at the
time at which the Conversion Notice indicates so long as the Preferred Stock
shall have been surrendered as aforesaid at such time, and at such time the
rights of the Holder of the Preferred Stock, as such, shall cease and the Person
and Persons in whose name or names the Common Stock Issued at Conversion shall
be issuable shall be deemed to have become the holder or holders of record of
the Common Shares represented thereby. The Conversion Notice shall constitute a
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contract between the Holder and the Corporation, whereby the Holder shall be
deemed to subscribe for the number of Common Shares which it will be entitled to
receive upon such conversion and, in payment and satisfaction of such
subscription (and for any cash adjustment to which it is entitled pursuant to
Section 6.4), to surrender the Preferred Stock and to release the Corporation
from all liability thereon. No cash payment aggregating less than $1.00 shall be
required to be given unless specifically requested by the Holder.
(b) If, at any time (i) the Corporation challenges, disputes
or denies the right of the Holder hereof to effect the conversion of the
Preferred Stock into Common Shares or otherwise dishonors or rejects any
Conversion Notice delivered in accordance with this Section 6.2 or (ii) any
third party who is not and has never been an Affiliate of the Holder commences
any lawsuit or proceeding or otherwise asserts any claim before any court or
public or governmental authority which seeks to challenge, deny, enjoin, limit,
modify, delay or dispute the right of the Holder hereof to effect the conversion
of the Preferred Stock into Common Shares, then the Holder shall have the right,
by written notice to the Corporation, to require the Corporation to promptly
redeem the Series C Preferred Stock for cash at a redemption price equal to one
hundred twenty percent (120%) of the Stated Value thereof together with all
accrued and unpaid dividends thereon (the "Mandatory Purchase Amount"). Under
any of the circumstances set forth above, the Corporation shall be responsible
for the payment of all costs and expenses of the Holder, including reasonable
legal fees and expenses, as and when incurred in disputing any such action or
pursuing its rights hereunder (in addition to any other rights of the Holder).
SECTION 6.3 Fractional Shares. No fractional Common Shares or scrip
representing fractional Common Shares shall be issued upon conversion of the
Series C Preferred Stock. Instead of any fractional Common Shares which
otherwise would be issuable upon conversion of the Series C Preferred Stock, the
Corporation shall pay a cash adjustment in respect of such fraction in an amount
equal to the same fraction. No cash payment of less than $1.00 shall be required
to be given unless specifically requested by the Holder.
SECTION 6.4 Reclassification, Consolidation, Merger or Mandatory Share
Exchange. At any time while the Series C Preferred Stock remains outstanding and
any shares thereof has not been converted, in case of any reclassification or
change of Outstanding Common Shares issuable upon conversion of the Series C
Preferred Stock (other than a change in par value, or from par value to no par
value per share, or from no par value per share to par value or as a result of a
subdivision or combination of outstanding securities issuable upon conversion of
the Series C Preferred Stock) or in case of any consolidation, merger or
mandatory share exchange of the Corporation with or into another corporation
(other than a merger or mandatory share exchange with another corporation in
which the Corporation is a continuing corporation and which does not result in
any reclassification or change, other than a change in par value, or from par
value to no par value per share, or from no par value per share to par value, or
as a result of a subdivision or combination of Outstanding Common Shares upon
conversion of the Series C Preferred Stock), or in the case of any sale or
transfer to another corporation of the property of the Corporation as an
entirety or substantially as an entirety, the Corporation, or such successor,
resulting or purchasing corporation, as the case may be, shall, without payment
of any additional consideration therefor, execute a new Series C Preferred Stock
providing that the Holder shall have the right to convert such new Series C
Preferred Stock (upon terms and conditions not less favorable to the Holder than
those in effect pursuant to the Series C Preferred Stock) and to receive upon
such exercise, in lieu of each Common Share theretofore issuable upon conversion
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of the Series C Preferred Stock, the kind and amount of shares of stock, other
securities, money or property receivable upon such reclassification, change,
consolidation, merger, mandatory share exchange, sale or transfer by the holder
of one Common Share issuable upon conversion of the Series C Preferred Stock had
the Series C Preferred Stock been converted immediately prior to such
reclassification, change, consolidation, merger, mandatory share exchange or
sale or transfer. The provisions of this Section 6.4 shall similarly apply to
successive reclassifications, changes, consolidations, mergers, mandatory share
exchanges and sales and transfers.
SECTION 6.5 Adjustments to Conversion Ratio. For so long as any shares
of the Series C Preferred Stock are outstanding, if the Corporation (i) issues
and sells pursuant to an exemption from registration under the Securities Act
(A) Common Shares at a purchase price on the date of issuance thereof that is
lower than the Conversion Price, (B) warrants or options with an exercise price
representing a percentage of the Current Market Price with an exercise price on
the date of issuance of the warrants or options that is lower than the agreed
upon exercise price for the Holder, except for employee stock option agreements
or stock incentive agreements of the Corporation, or (C) convertible,
exchangeable or exercisable securities with a right to exchange at lower than
the Current Market Price on the date of issuance or conversion, as applicable,
of such convertible, exchangeable or exercisable securities, except for stock
option agreements or stock incentive agreements; and (ii) grants the right to
the purchaser(s) thereof to demand that the Corporation register under the
Securities Act such Common Shares issued or the Common Shares for which such
warrants or options may be exercised or such convertible, exchangeable or
exercisable securities may be converted, exercised or exchanged, then the
Conversion Ratio shall be reduced to equal the lowest of any such lower rates.
SECTION 6.6 Optional Redemption Under Certain Circumstances. At anytime
after the date of issuance of the Series C Preferred Stock until the Mandatory
Conversion Date (as defined below), the Corporation, upon notice delivered to
the Holder as provided in Section 6.7, may redeem in whole or in part from time
to time, in cash, the Series C Preferred Stock (but only with respect to such
shares as to which the Holder has not theretofore furnished a Conversion Notice
in compliance with Section 6.2), at one hundred thirty-five percent (135%) of
the Stated Value thereof (the "Optional Redemption Price"), together with all
accrued and unpaid dividends thereon to the date of redemption (the "Redemption
Date"); provided, however, that the Corporation may only redeem the Series C
Preferred Stock under this Section 6.6 if the Current Market Price is not
greater than one hundred thirty percent (130%) of the Current Market Price on
the Closing Date. Except as set forth in this Section 6.6, the Corporation shall
not have the right to prepay or redeem the Series C Preferred Stock.
SECTION 6.7 Notice of Redemption. Notice of redemption pursuant to
Section 6.6 shall be provided by the Corporation to the Holder in writing (by
registered mail or overnight courier at the Holder's last address appearing in
the Corporation's security registry) not less than ten (10) nor more than
fifteen (15) days prior to the Redemption Date, which notice shall specify the
Redemption Date and refer to Section 6.6 (including, a statement of the Market
Price per Common Share) and this Section 6.7.
SECTION 6.8 Surrender of Preferred Stock. Upon any redemption of the
Series C Preferred Stock pursuant to Sections 6.6 or 6.7, the Holder shall
either deliver the Series C Preferred Stock by hand to the Corporation at its
principal executive offices or surrender the same to the Corporation at such
address by express courier. Payment of the Optional Redemption Price specified
in Section 6.6 shall be made by the Corporation to the Holder against receipt of
the Series C Preferred Stock (as provided in this Section 6.8) by wire transfer
of immediately available funds to such account(s) as the Holder shall
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specify to the Corporation. If payment of such redemption price is not made in
full by the Redemption Date, then, the Holder shall again have the right to
convert the Series C Preferred Stock as provided in Article 6 hereof.
SECTION 6.9 Mandatory Conversion. On the second anniversary of the date
of this Agreement (the "Mandatory Conversion Date"), the Corporation shall
convert all Series C Preferred Stock outstanding at the Conversion Price.
Notwithstanding the previous sentence, in no event shall the Corporation convert
that portion of the Series C Preferred Stock to the extent that the issuance of
Common Shares upon conversion of such Series C Preferred Stock, when combined
with shares of Common Shares received upon other conversions of Series C
Preferred Stock by such Holder and any other holders of Series B Preferred Stock
and Warrants, would exceed 19.99% of the Common Stock outstanding on the Closing
Date, unless the Corporation's shareholders approve the issuance of an amount of
the Corporation's Common Stock in excess of the 19.99% threshold. Within ten
(10) Business Days after the Mandatory Conversion Date, the Corporation may
either (i) redeem those outstanding shares of Series C Preferred Stock in excess
of the 19.99% threshold at one hundred and thirty-five percent (135%) of the
Stated Value thereof, together with all accrued and unpaid dividends thereon, in
cash, to the date of redemption or (ii) extend the Mandatory Conversion Date for
a period of one year.
ARTICLE 7
VOTING RIGHTS
The holders of the Series C Preferred Stock have no voting
power, except as otherwise provided by the General Corporation Law of the State
of Delaware ("DGCL"), in this Article 7, and in Article 8 below.
Notwithstanding the above, the Corporation shall provide each
holder of Series C Preferred Stock with prior notification of any meeting of the
shareholders (and copies of proxy materials and other information sent to
shareholders). In the event of any taking by the Corporation of a record of its
shareholders for the purpose of determining shareholders who are entitled to
receive payment of any dividend or other distribution, any right to subscribe
for, purchase or otherwise acquire (including by way of merger, consolidation or
recapitalization) any share of any class or any other securities or property, or
to receive any other right, or for the purpose of determining shareholders who
are entitled to vote in connection with any proposed liquidation, dissolution or
winding up of the Corporation, the Corporation shall mail a notice to each
holder, at least thirty (30) days prior to the consummation of the transaction
or event, whichever is earlier), of the date on which any such acting is to be
taken for the purpose of such dividend, distribution, right or other event, and
a brief statement regarding the amount and character of such dividend,
distribution, right or other event to the extent known at such time.
To the extent that under the DGCL the vote of the holders of
the Series C Preferred Stock, voting separately as a class or series as
applicable, is required to authorize a given action of the Corporation, the
affirmative vote or consent of the holders of at least a majority of the shares
of the Series C Preferred Stock represented at a duly held meeting at which a
quorum is present or by written consent of a majority of the shares of Series C
Preferred Stock (except as otherwise may be required under the DGCL) shall
constitute the approval of such action by the class. To the extent that under
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the DGCL holders of the Series C Preferred Stock are entitled to vote on a
matter with holders of Common Stock, voting together as one class, each share of
Series C Preferred Stock shall be entitled to a number of votes equal to the
number of shares of Common Stock into which it is then convertible using the
record date for the taking of such vote of shareholders as the date as of which
the Conversion Price is calculated. Holders of the Series C Preferred Stock
shall be entitled to notice of all shareholder meetings or written consents (and
copies of proxy materials and other information sent to shareholders) with
respect to which they would be entitled tonight, which notice would be provided
pursuant to the Corporation's bylaws and the DGCL.
ARTICLE 8
PROTECTIVE PROVISIONS
So long as shares of Series C Preferred Stock are outstanding,
the Corporation shall not, without first obtaining the approval (by vote or
written consent, as provided by the DGCL) of the holders of at least a majority
of the then outstanding shares of Series C Preferred Stock:
(a) alter or change the rights, preferences or privileges of
the Series C Preferred Stock;
(b) create any new class or series of capital stock having a
preference over the Series C Preferred Stock as to distribution of assets upon
liquidation, dissolution or winding up of the Corporation ("Senior Securities")
or alter or change the rights, preferences or privileges of any Senior
Securities so as to affect adversely the Series C Preferred Stock;
(c) increase the authorized number of shares of Series C
Preferred Stock; or
(d) do any act or thing not authorized or contemplated by this
Certificate of Designation which would result in taxation of the holders of
shares of the Series C Preferred Stock under Section 305 of the Internal Revenue
Code of 1986, as amended (or any comparable provision of the Internal Revenue
Code as hereafter from time to time amended).
In the event holders of at least a majority of the then
outstanding shares of Series C Preferred Stock agree to allow the Corporation to
alter or change the rights, preferences or privileges of the shares of Series C
Preferred Stock, pursuant to subsection (a) above, so as to affect the Series C
Preferred Stock, then the Corporation will deliver notice of such approved
change to the holders of the Series C Preferred Stock that did not agree to such
alteration or change (the "Dissenting Holders") and Dissenting Holders shall
have the right for a period of thirty (30) days to convert pursuant to the terms
of this Certificate of Designation as they exist prior to such alteration or
change or continue to hold their shares of Series C Preferred Stock.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1 Loss, Theft, Destruction of Preferred Stock. Upon receipt
of evidence satisfactory to the Corporation of the loss, theft, destruction or
mutilation of shares of Series C Preferred Stock and, in the case of any such
loss, theft or destruction, upon receipt of indemnity or security reasonably
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satisfactory to the Corporation, or, in the case of any such mutilation, upon
surrender and cancellation of the Series C Preferred Stock, the Corporation
shall make, issue and deliver, in lieu of such lost, stolen, destroyed or
mutilated shares of Series C Preferred Stock, new shares of Series C Preferred
Stock of like tenor. The Series C Preferred Stock shall be held and owned upon
the express condition that the provisions of this Section 9.1 are exclusive with
respect to the replacement of mutilated, destroyed, lost or stolen shares of
Series C Preferred Stock and shall preclude any and all other rights and
remedies notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement of negotiable instruments or other
securities without the surrender thereof.
SECTION 9.2 Who Deemed Absolute Owner. The Corporation may deem the
Person in whose name the Series C Preferred Stock shall be registered upon the
registry books of the Corporation to be, and may treat it as, the absolute owner
of the Series C Preferred Stock for the purpose of receiving payment of
dividends on the Series C Preferred Stock, for the conversion of the Series C
Preferred Stock and for all other purposes, and the Corporation shall not be
affected by any notice to the contrary. All such payments and such conversion
shall be valid and effectual to satisfy and discharge the liability upon the
Series C Preferred Stock to the extent of the sum or sums so paid or the
conversion so made.
SECTION 9.3 Notice of Certain Events. In the case of the occurrence of
any event described in Sections 6.1, 6.6 or 6.7 of this Certificate of
Designation, the Corporation shall cause to be mailed to the Holder of the
Series C Preferred Stock at its last address as it appears in the Corporation's
security registry, at least twenty (20) days prior to the applicable record,
effective or expiration date hereinafter specified (or, if such twenty (20) days
notice is not possible, at the earliest possible date prior to any such record,
effective or expiration date), a notice stating (x) the date on which a record
is to be taken for the purpose of such dividend, distribution, issuance or
granting of rights, options or warrants, or if a record is not to be taken, the
date as of which the holders of record of Series C Preferred Stock to be
entitled to such dividend, distribution, issuance or granting of rights, options
or warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up is
expected to become effective, and the date as of which it is expected that
holders of record of Series C Preferred Stock will be entitled to exchange their
shares for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale transfer, dissolution, liquidation
or winding-up.
SECTION 9.4 Register. The Corporation shall keep at its principal
office a register in which the Corporation shall provide for the registration of
the Series C Preferred Stock. Upon any transfer of the Series C Preferred Stock
in accordance with the provisions hereof, the Corporation shall register such
transfer on the Series C Preferred Stock register.
The Corporation may deem the person in whose name the Series C
Preferred Stock shall be registered upon the registry books of the Corporation
to be, and may treat it as, the absolute owner of the Series C Preferred Stock
for the purpose of receiving payment of dividends on the Series C Preferred
Stock, for the conversion of the Series C Preferred Stock and for all other
purposes, and the Corporation shall not be affected by any notice to the
contrary. All such payments and such conversions shall be valid and effective to
satisfy and discharge the liability upon the Series C Preferred Stock to the
extent of the sum or sums so paid or the conversion or conversions so made.
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<PAGE>
SECTION 9.5 Withholding. To the extent required by applicable law, the
Corporation may withhold amounts for or on account of any taxes imposed or
levied by or on behalf of any taxing authority in the United States having
jurisdiction over the Corporation from any payments made pursuant to the Series
C Preferred Stock.
SECTION 9.6 Headings. The headings of the Articles and Sections of this
Certificate of Designation are inserted for convenience only and do not
constitute a part of this Certificate of Designation.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this
Certificate of Designation to be signed by its duly authorized officers on this
5th day of February, 1999.
UNIVEC, INC.
By: /s/ Flora Schoenfeld
----------------------------------
Name: Flora Schoenfeld
Title: Secretary/Treasurer
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<PAGE>
ANNEX I
FORM OF CONVERSION NOTICE
TO:
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The undersigned owner of this Series C 5% Convertible
Preferred Stock (the "Series C Preferred Stock") issued by Univec, Inc. (the
"Corporation") hereby irrevocably exercises its option to convert shares of the
Series C Preferred Stock into _______ shares of the common stock, $.001 par
value, of the Corporation ("Common Stock"), in accordance with the terms of the
Certificate of Designation. The undersigned hereby instructs the Corporation to
convert the number of shares of the Series C Preferred Stock specified above
into Shares of Common Stock Issued at Conversion in accordance with the
provisions of Article 6 of the Certificate of Designation. The undersigned
directs that the Common Stock issuable and certificates therefor deliverable
upon conversion, the Series C Preferred Stock recertificated, if any, not being
surrendered for conversion hereby, together with any check in payment for
fractional Common Stock, be issued in the name of and delivered to the
undersigned unless a different name has been indicated below. All capitalized
terms used and not defined herein have the respective meanings assigned to them
in the Certificate of Designation.
Dated:
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Signature
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Fill in for registration of Series C Preferred Stock:
Please print name and address (including zip code number):
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<PAGE>
Exhibit 4.16
THIS COMMON STOCK PURCHASE WARRANT AND THE SECURITIES
REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE TRANSFERRED IN VIOLATION OF SUCH ACT,
THE RULES AND REGULATIONS THEREUNDER OR THE
PROVISIONS OF THIS COMMON STOCK PURCHASE
WARRANT.
Number of Shares of Common Stock: 37,500
Warrant No.2
COMMON STOCK PURCHASE WARRANT
To Purchase Common Stock of
Univec, Inc.
THIS IS TO CERTIFY THAT The Shaar Fund Ltd., or registered
assigns, is entitled, at any time from the Closing Date (as hereinafter defined)
to the Expiration Date (as hereinafter defined), to purchase from Univec, Inc.,
a Delaware corporation (the "Company"), 37,500 shares of Common Stock (as
hereinafter defined and subject to adjustment as provided herein), in whole or
in part, including fractional parts, at a purchase price equal to $1.92 per
share, all on the terms and conditions and pursuant to the provisions
hereinafter set forth.
1. DEFINITIONS
-----------
As used in this Common Stock Purchase Warrant (this
"Warrant"), the following terms have the respective meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by the Company after the Closing Date, other than Warrant
Stock.
"Book Value" shall mean, in respect of any share of Common
Stock on any date herein specified, the consolidated book value of the Company
as of the last day of any month immediately preceding such date, divided by the
number of Fully Diluted Outstanding shares of Common Stock as determined in
accordance with GAAP (assuming the payment of the exercise prices for such
shares) by Richard A. Eisner & Company, LLP or any other firm of independent
certified public accountants of recognized national standing selected by the
Company and reasonably acceptable to the Holder.
<PAGE>
"Business Day" shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in the
State of New York.
"Closing Date" shall have the meaning set forth in the
Securities Purchase Agreement.
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency then administering the Securities Act and other
federal securities laws.
"Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock, par value $.001, of the Company as constituted on
the Closing Date, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include (i) capital stock of the Company
of any other class (regardless of how denominated) issued to the holders of
shares of Common Stock upon any reclassification thereof which is also not
preferred as to dividends or assets over any other class of stock of the Company
and which is not subject to redemption and (ii) shares of common stock of any
successor or acquiring corporation received by or distributed to the holders of
Common Stock of the Company in the circumstances contemplated by Section 4.4.
"Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable,
with or without payment of additional consideration in cash or property, for
shares of Common Stock, either immediately or upon the occurrence of a specified
date or a specified event.
"Current Warrant Price" shall mean, in respect of a share of
Common Stock at any date herein specified, the price at which a share of Common
Stock may be purchased pursuant to this Warrant on such date.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any successor federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect from time to time.
"Exercise Period" shall mean the period during which this
Warrant is exercisable pursuant to Section 2.1.
"Expiration Date" shall mean February 8, 2002.
"Fully Diluted Outstanding" shall mean, when used with
reference to Common Stock, at any date as of which the number of shares thereof
is to be determined, all shares of Common Stock Outstanding at such date and all
shares of Common Stock issuable in respect of this Warrant, outstanding on such
date, and other options or warrants to purchase, or securities convertible into,
shares of Common Stock outstanding on such date which would be deemed out
standing in accordance with GAAP for purposes of determining book value or net
income per share.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as from time to time in effect.
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<PAGE>
"Holder" shall mean the Person in whose name the Warrant or
Warrant Stock set forth herein is registered on the books of the Company
maintained for such purpose.
"Other Property" shall have the meaning set forth in Section
4.4.
"Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all issued shares of Common Stock, except shares then owned or held by or for
the account of the Company or any subsidiary thereof, and shall include all
shares issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, incorporated organization, association,
corporation, institution, public benefit corporation, entity or government
(whether federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).
"Registration Rights Agreement" shall mean the Registration
Rights Agreement dated a date even herewith by and between the Company and The
Shaar Fund Ltd., as it may be amended from time to time.
"Restricted Common Stock" shall mean shares of Common Stock
which are, or which upon their issuance on the exercise of this Warrant would
be, evidenced by a certificate bearing the restrictive legend set forth in
Section 9.1(a).
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Securities Purchase Agreement" shall mean the Securities
Purchase Agreement dated as of a date even herewith by and between the Company
and The Shaar Fund, Ltd. as it may be amended from time to time.
"Transfer" shall mean any disposition of any Warrant or
Warrant Stock or of any interest in either thereof, which would constitute a
sale thereof within the meaning of the Securities Act.
"Transfer Notice" shall have the meaning set forth in Section
9.2.
"Warrants" shall mean this Warrant and all warrants issued
upon transfer, division or combination of, or in substitution for, any thereof.
All Warrants shall at all times be identical as to terms and conditions and
date, except as to the number of shares of Common Stock for which they may be
exercised.
"Warrant Price" shall mean an amount equal to (i) the number
of shares of Common Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1, multiplied by (ii) the Current Warrant Price as of the date of
such exercise.
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<PAGE>
"Warrant Stock" shall mean the shares of Common Stock
purchased by the holders of the Warrants upon the exercise thereof.
2. EXERCISE OF WARRANT
-------------------
2.1 Manner of Exercise. From and after the Closing Date and until 5:00
P.M., New York time, on the Expiration Date, Holder may exercise this Warrant,
on any Business Day, for all or any part of the number of shares of Common Stock
purchasable hereunder.
In order to exercise this Warrant, in whole or in part, Holder
shall deliver to the Company at its principal office at 22 Dubon Court,
Farmingdale, New York 11735, or at the office or agency designated by the
Company pursuant to Section 12, (i) a written notice of Holder's election to
exercise this Warrant, which notice shall specify the number of shares of Common
Stock to be purchased, (ii) payment of the Warrant Price in cash or by wire
transfer or cashier's check drawn on a United States bank and (iii) this
Warrant. Such notice shall be substantially in the form of the subscription form
appearing at the end of this Warrant as Exhibit A, duly executed by Holder or
its agent or attorney. Upon receipt of the items referred to in clauses (i),
(ii) and (iii) above, the Company shall, as promptly as practicable, and in any
event within five (5) Business Days thereafter, execute or cause to be executed
and deliver or cause to be delivered to Holder a certificate or certificates
representing the aggregate number of full shares of Common Stock issuable upon
such exercise, together with cash in lieu of any fraction of a share, as
hereinafter provided. The stock certificate or certificates so delivered shall
be, to the extent possible, in such denomination or denominations as Holder
shall request in the notice and shall be registered in the name of Holder or,
subject to Section 9, such other name as shall be designated in the notice. This
Warrant shall be deemed to have been exercised and such certificate or
certificates shall be deemed to have been issued, and Holder or any other Person
so designated to be named therein shall be deemed to have become a holder of
record of such shares for all purposes, as of the date the notice, together with
the cash or check or checks and this Warrant, is received by the Company as
described above and all taxes required to be paid by Holder, if any, pursuant to
Section 2.2 prior to the issuance of such shares have been paid. if this Warrant
shall have been exercised in part, the Company shall, at the time of delivery of
the certificate or certificates representing Warrant Stock, deliver to Holder a
new Warrant evidencing the rights of Holder to purchase the unpurchased shares
of Common Stock called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant, or, at the request of Holder,
appropriate notation may be made on this Warrant and the same returned to
Holder. Notwithstanding any provision herein to the contrary, the Company shall
not be required to register shares in the name of any Person who acquired this
Warrant (or part hereof) or any Warrant Stock otherwise than in accordance with
this Warrant.
2.2 Payment of Taxes and Charges. All shares of Common Stock issuable
upon the exercise of this Warrant pursuant to the terms hereof shall be validly
issued, fully paid and nonassessable, freely tradeable and without any
preemptive rights. The Company shall pay all expenses in connection with, and
all taxes and other governmental charges that may be imposed with respect to,
the issue or delivery thereof, unless such tax or charge is imposed by law upon
Holder, in which case such taxes or charges shall be paid by Holder. The Company
shall not be required, however, to pay any tax or other charge imposed in
connection with any transfer involved in the issue of any certificate for shares
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<PAGE>
of Common Stock issuable upon exercise of this Warrant in any name other than
that of Holder, and in such case the Company shall not be required to issue or
deliver any stock certificate until such tax or other charge has been paid or it
has been established to the satisfaction of the Company that no such tax or
other charge is due.
2.3 Fractional Shares. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of any Warrant. As to any
fraction of a share which Holder would otherwise be entitled to purchase upon
such exercise, the Company shall pay a cash adjustment in respect of such final
fraction in an amount equal to the same fraction of the Current Warrant Price
per share of Common Stock as of the Closing Date.
2.4 Continued Validity. A holder of shares of Common Stock issued upon
the exercise of this Warrant, in whole or in part (other than a holder who
acquires such shares after the same have been publicly sold pursuant to a
Registration Statement under the Securities Act or sold pursuant to Rule 144
thereunder), shall continue to be entitled with respect to such shares to all
rights to which it would have been entitled as Holder under Sections 9, 10 and
14 of this Warrant. The Company will, at the time of exercise of this Warrant,
in whole or in part, upon the request of Holder, acknowledge in writing, in form
reasonably satisfactory to Holder, its continuing obligation to afford Holder
all such rights; provided, however, that if Holder shall fail to make any such
request, such failure shall not affect the continuing obligation of the Company
to afford to Holder all such rights.
3. TRANSFER, DIVISION AND COMBINATION
----------------------------------
3.1 Transfer. Subject to compliance with Section 9, transfer of this
Warrant and all rights hereunder, in whole or in part, shall be registered on
the books of the Company to be maintained for such purpose, upon surrender of
this Warrant at the principal office of the Company referred to in Section 2.1
or the office or agency designated by the Company pursuant to Section 12,
together with a written assignment of this Warrant substantially in the form of
Exhibit B hereto duly executed by Holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, the Company shall, subject
to Section 9, execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A
Warrant, if properly assigned in compliance with Section 9, may be exercised by
a new Holder for the purchase of shares of Common Stock without having a new
warrant issued.
3.2 Division and Combination. Subject to Section 9, this Warrant may be
divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to compliance with Section
3.1 and with Section 9, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
3.3 Expenses. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.
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<PAGE>
3.4 Maintenance of Books. The Company agrees to maintain, at its
aforesaid office or agency, books for the registration and the registration of
transfer of the Warrants.
4. ADJUSTMENTS
-----------
The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to time as set forth in
this Section 4. The Company shall give Holder notice of any event described
below which requires an adjustment pursuant to this Section 4 at the time of
such event.
4.1 Stock Dividends, Subdivisions and Combinations. If at any time the
Company shall:
(a) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or other
distribution of, Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Current Warrant Price
shall be adjusted to equal (A) the Current Warrant Price multiplied by the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the adjustment divided by (B) the number of shares for
which this Warrant is exercisable immediately after such adjustment.
4.2 Certain Other Distributions. If at any time the Company shall take
a record of the holders of its Common Stock for the purpose of entitling them to
receive any dividend or other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any shares of its stock
or any other securities or property of any nature whatsoever (other
than cash, Convertible Securities or Additional Shares of Common
Stock), or
(c) any warrants or other rights to subscribe for or purchase
any evidences of its indebtedness, any shares of its stock or any other
securities or property of any nature whatsoever (other than cash,
Convertible Securities or Additional Shares of Common Stock),
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<PAGE>
then Holder shall be entitled to receive such dividend or distribution as if
Holder had exercised the Warrant. A reclassification of the Common Stock (other
than a change in par value, or from par value to no par value or from no par
value to par value) into shares of Common Stock and shares of any other class of
stock shall be deemed a distribution by the Company to the holders of its Common
Stock of such shares of such other class of stock within the meaning of this
Section 4.2 and, if the outstanding shares of Common Stock shall be changed into
a larger or smaller number of shares of Common Stock as a part of such
reclassification, such change shall be deemed a subdivision or combination, as
the case may be, of the outstanding shares of Common Stock within the meaning of
Section 4.1.
4.3 Other Provisions Applicable to Adjustments under this Section. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Current Warrant Price provided for in this Section 4:
(a) When Adjustments to Be Made. The adjustments required by
this Section 4 shall be made whenever and as often as any specified
event requiring an adjustment shall occur. For the purpose of any
adjustment, any specified event shall be deemed to have occurred at the
close of business on the date of its occurrence.
(b) Fractional Interests. In computing adjustments under this
Section 4, fractional interests in Common Stock shall be taken into
account to the nearest 1/10th of a share.
(c) When Adjustment Not Required. If the Company shall take a
record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or distribution or subscription or purchase
rights and shall, thereafter and before the distribution to
stockholders thereof, legally abandon its plan to pay or deliver such
dividend, distribution, subscription or purchase rights, then
thereafter no adjustment shall be required by reason of the taking of
such record and any such adjustment previously made in respect thereof
shall be rescinded and annulled.
(d) Challenge to Good Faith Determination. Whenever the Board
of Directors of the Company shall be required to make a determination
in good faith of the fair value of any item under this Section 4, such
determination may be challenged in good faith by the Holder, and any
dispute shall be resolved by an investment banking firm of recognized
national standing selected by the Company and acceptable to the Holder.
4.4 Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
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<PAGE>
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then Holder shall have the right thereafter to receive, upon
exercise of the Warrant, the number of shares of common stock of the successor
or acquiring corporation or of the Company, if it is the surviving corporation,
and Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined by resolution of the Board of Directors of
the Company) in order to provide for adjustments of shares of Common Stock for
which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 4. For purposes of
this Section 4.4, "common stock of the successor or acquiring corporation" shall
include stock of such corporation of any class which is not preferred as to
dividends or assets over any other class of stock of such corporation and which
is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions of
this Section 4.4 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.
4.5 Other Action Affecting Common Stock. In case at any time or from
time to time the Company shall take any action in respect of its Common Stock,
other than any action described in this Section 4, which would have a materially
adverse effect upon the rights of the Holder, the number of shares of Common
Stock and/or the purchase price thereof shall be adjusted in such manner as may
be equitable in the circumstances, as determined in good faith by the Board of
Directors of the Company.
4.6 Certain Limitations. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any transaction which, by reason
of any adjustment hereunder, would cause the Current Warrant Price to be less
than the par value per share of Common Stock.
5. NOTICES TO HOLDER
-----------------
5.1 Notice of Adjustments. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at which a
share of such Common Stock may be purchased upon exercise of the Warrants, shall
be adjusted pursuant to Section 4, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the Company setting
forth, in reasonable detail, the event requiring the adjustment and the method
by which such adjustment was calculated (including a description of the basis on
which the Board of Directors of the Company determined the fair value of any
evidences of indebtedness, shares of stock, other securities or property or
warrants or other subscription or purchase rights referred to in Section 4.2),
specifying the number of shares of Common Stock for which this Warrant is
exercisable and (if such adjustment was made pursuant to Section 4.4 or 4.5)
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<PAGE>
describing the number and kind of any other shares of stock or Other Property
for which this warrant is exercisable, and any change in the purchase price or
prices thereof, after giving effect to such adjustment or change. The Company
shall promptly cause a signed copy of such certificate to be delivered to the
Holder in accordance with Section 14.2. The Company shall keep at its office or
agency designated pursuant to Section 12 copies of all such certificates and
cause the same to be available for inspection at said office during normal
business hours by the Holder or any prospective purchaser of a Warrant
designated by the Holder.
5.2 Notice of Corporate Action. If at any time
(a) the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or
other distribution, or any right to subscribe for or purchase any
evidences of its indebtedness, any shares of stock of any class or any
other securities or property, or to receive any other right, or
(b) there shall be any capital reorganization of the Company,
any reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger of the Company with, or any
sale, transfer or other disposition of all or substantially all the
property, assets or business of the Company to, another corporation, or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i) at
least 30 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, at least 30 days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also shall specify
(i) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common Stock
shall be entitled to any such dividend, distribution or right, and the amount
and character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to Holder
at the last address of Holder appearing on the books of the Company and
delivered in accordance with Section 14.2.
6. NO IMPAIRMENT
-------------
The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
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<PAGE>
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of Holder
against impairment. Without limiting the generality of the foregoing, the
Company will (a) not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (b) take all
such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock
upon the exercise of this warrant, and (c) use its best efforts to obtain all
such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to perform
its obligations under this Warrant.
Upon the request of Holder, the Company will at any time during the
period this Warrant is outstanding acknowledge in writing, in form satisfactory
to Holder, the continuing validity of this Warrant and the obligations of the
Company hereunder.
7. RESERVATION AND AUTHORIZATION OF COMMON STOCK
---------------------------------------------
From and after the Closing Date, the Company shall at all times reserve
and keep available for issue upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants. All shares of Common Stock
which shall be so issuable, when issued upon exercise of any Warrant and payment
therefor in accordance with the terms of such Warrant, shall be duly and validly
issued and fully paid and nonassessable, and not subject to preemptive rights.
Before taking any action which would cause an adjustment reducing the
Current Warrant Price below the then par value, if any, of the shares of Common
Stock issuable upon exercise of the Warrants, the Company shall take any
corporate action which may be necessary in order that the Company may validly
and legally issue fully paid and non-assessable shares of such Common Stock at
such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment in the
number of shares of Common Stock for which this Warrant is exercisable or in the
Current Warrant Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.
8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS
--------------------------------------------------
In the case of all dividends or other distributions by the Company to
the holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such holders, the Company will in each such
case take such a record and will take such record as of the close of business on
a Business Day. The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.
-10-
<PAGE>
9. RESTRICTIONS ON TRANSFERABILITY
-------------------------------
The Warrants and the Warrant Stock shall not be transferred,
hypothecated or assigned before satisfaction of the conditions specified in this
Section 9, which conditions are intended to ensure compliance with the
provisions of the Securities Act with respect to the Transfer of any Warrant or
any Warrant Stock. Holder, by acceptance of this Warrant, agrees to be bound by
the provisions of this Section 9.
9.1 Restrictive Legend. (a) The Holder by accepting this Warrant and
any Warrant Stock agrees that this Warrant and the Warrant Stock issuable upon
exercise hereof may not be assigned or otherwise transferred unless and until
(i) the Company has received an opinion of counsel for the Holder that such
securities may be sold pursuant to an exemption from registration under the
Securities Act of 1933, as amended (the "Securities Act") or (ii) a registration
statement relating to such securities has been filed by the Company and declared
effective by the Commission.
Each certificate for Warrant Stock issuable hereunder shall
bear a legend as follows unless such securities have been sold pursuant to an
effective registration statement under the Securities Act:
"These securities have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or
the securities laws of any state, and are being offered and
sold pursuant to an exemption from the registration
requirements of the Securities Act and such laws. These
securities may not be sold or transferred except pursuant to
an effective registration statement under the Securities Act
or pursuant to an available exemption from the registration
requirements of the Securities Act or such other laws."
(b) Except as otherwise provided in this Section 9, the
Warrant shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"This Warrant and the securities represented hereby have not
been registered under the Securities Act of 1933, as amended,
and may not be transferred in violation of such Act, the rules
and regulations thereunder or the provisions of this Warrant."
9.2 Notice of Proposed Transfers. Prior to any Transfer or attempted
Transfer of any Warrants or any shares of Restricted Common Stock, the Holder
shall give ten days, prior written notice (a "Transfer Notice") to the Company
of Holder's intention to effect such Transfer, describing the manner and
circumstances of the proposed Transfer, and obtain from counsel to Holder who
shall be reasonably satisfactory to the Company, an opinion that the proposed
Transfer of such Warrants or such Restricted Common Stock may be effected
without registration under the Securities Act. After receipt of the Transfer
Notice and opinion, the Company shall, within five days thereof, notify the
Holder as to whether such opinion is reasonably satisfactory and, if so, such
holder shall thereupon be entitled to Transfer such Warrants or such Restricted
Common Stock, in accordance with the terms of the Transfer Notice. Each
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<PAGE>
certificate, if any, evidencing such shares of Restricted Common Stock issued
upon such Transfer shall bear the restrictive legend set forth in Section
9.1(a), and the Warrant issued upon such Transfer shall bear the restrictive
legend set forth in Section 9.1(b), unless in the opinion of such counsel such
legend is not required in order to ensure compliance with the Securities Act.
The Holder shall not be entitled to Transfer such Warrants or such Restricted
Common Stock until receipt of notice from the Company under this Section 9.2(a)
that such opinion is reasonably satisfactory.
9.3 Required Registration. Pursuant to the terms and conditions set
forth in the Registration Rights Agreement, the Company shall prepare and file
with the Commission not later than the 30th day after the Closing Date, a
Registration Statement relating to the offer and sale of the Common Stock
issuable upon exercise of the Warrants and shall use its best efforts to cause
the Commission to declare such Registration Statement effective under the
Securities Act as promptly as practicable but no later than one hundred fifty
(150) days after the Closing Date.
9.4 Termination of Restrictions. Notwithstanding the foregoing
provisions of Section 9, the restrictions imposed by this Section upon the
transferability of the Warrants, the Warrant Stock and the Restricted Common
Stock (or Common Stock issuable upon the exercise of the Warrants) and the
legend requirements of Section 9.1 shall terminate as to any particular Warrant
or share of Warrant Stock or Restricted Common Stock (or Common Stock issuable
upon the exercise of the warrants) (i) when and so long as such security shall
have been effectively registered under the Securities Act and disposed of
pursuant thereto or (ii) when the Company shall have received an opinion of
counsel reasonably satisfactory to it that such shares may be transferred
without registration thereof under the Securities Act. Whenever the restrictions
imposed by Section 9 shall terminate as to this Warrant, as hereinabove
provided, the Holder hereof shall be entitled to receive from the Company upon
written request of the Holder, at the expense of the Company, a new Warrant
bearing the following legend in place of the restrictive legend set forth
hereon:
"THE RESTRICTIONS ON TRANSFERABILITY OF THE
WITHIN WARRANT CONTAINED IN SECTION 9 HEREOF
TERMINATED ON ___________________________, 19__,
AND ARE OF NO FURTHER FORCE AND EFFECT."
All Warrants issued upon registration of transfer, division or combination of,
or in substitution for, any Warrant or Warrants entitled to bear such legend
shall have a similar legend endorsed thereon. Whenever the restrictions imposed
by this Section shall terminate as to any share of Restricted Common Stock, as
hereinabove provided, the holder thereof shall be entitled to receive from the
Company, at the Company's expense, a new certificate representing such Common
Stock not bearing the restrictive legend set forth in Section 9.1(a).
9.5 Listing on Securities Exchange. If the Company shall list any
shares of Common Stock on any securities exchange, it will, at its expense, list
thereon, maintain and, when necessary, increase such listing of, all shares of
Common Stock issued or, to the extent permissible under the applicable
securities exchange rules, issuable upon the exercise of this Warrant so long as
any shares of Common Stock shall be so listed during any such Exercise Period.
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<PAGE>
10. SUPPLYING INFORMATION
---------------------
The Company shall cooperate with Holder in supplying such information
as may be reasonably necessary for Holder to complete and file any information
reporting forms presently or hereafter required by the Commission as a condition
to the availability of an exemption from the Securities Act for the sale of any
Warrant or Restricted Common Stock.
11. LOSS OR MUTILATION
------------------
Upon receipt by the Company from Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and indemnity reasonably satisfactory to it (it being
understood that the written agreement of the Holder shall be sufficient
indemnity), and in case of mutilation upon surrender and cancellation hereof,
the Company will execute and deliver in lieu hereof a new Warrant of like tenor
to Holder; provided, in the case of mutilation, no indemnity shall be required
if this Warrant in identifiable form is surrendered to the Company for
cancellation.
12. OFFICE OF THE COMPANY
---------------------
As long as any of the Warrants remain outstanding, the Company shall
maintain an office or agency (which may be the principal executive offices of
the Company) where the Warrants may be presented for exercise, registration of
transfer, division or combination as provided in this Warrant.
13. LIMITATION OF LIABILITY
-----------------------
No provision hereof, in the absence of affirmative action by Holder to
purchase shares of Common Stock, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of Holder for the
purchase price of any Common Stock or as a stockholder of the Company, whether
such liability is asserted by the Company or by creditors of the Company.
14. MISCELLANEOUS
-------------
14.1 Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies.
If the Company fails to make, when due, any payments provided for hereunder, or
fails to comply with any other provision of this Warrant, the Company shall pay
to Holder such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys' fees, including those of
appellate proceedings, incurred by Holder in collecting any amounts due pursuant
hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.
14.2 Notice Generally. Except as may be otherwise provided herein, any
notice or other communication or delivery required or permitted hereunder shall
be in writing and shall be delivered personally or sent by certified mail,
postage prepaid, or by a nationally recognized overnight courier service,
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<PAGE>
and shall be deemed given when so delivered personally or by overnight courier
service, or, if mailed, three (3) days after the date of deposit in the United
States mails, as follows:
(1) if to the Company, to:
Univec, Inc.
22 Dubon Court
Farmingdale, New York 11735
Attention: Joel Schoenfeld
Telephone: (516) 777-2000
Facsimile: (516) 777-2786
With a copy to:
Snow Becker Krauss P.C.
605 Third Avenue
New York, New York 10158-0125
Attention: Jack Becker, Esq.
Telephone: (212) 687-3860
Facsimile: (212) 947-7052
(2) if to the Holder, to:
THE SHAAR FUND LTD.,
c/o SHAAR ADVISORY SERVICES LTD.
62 King George Street, Apartment 4F
Jerusalem, Israel
Attention: Samuel Levinson
With a copy to:
Herrick, Feinstein LLP
2 Park Avenue
New York, New York 10016
Attention: Irwin A. Kishner, Esq.
Telephone: (212) 592-1435
Facsimile: (212) 889-7577
The Company or the Holder may change the foregoing address by notice given
pursuant to this Section 14.2.
14.3 Indemnification. The Company agrees to indemnify and hold harmless
Holder from and against any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses
and disbursements of any kind which may be imposed upon, incurred by or asserted
against Holder in any manner relating to or arising out of any failure by the
-14-
<PAGE>
Company to perform or observe in any material respect any of its covenants,
agreements, undertakings or obligations set forth in this Warrant; provided,
however, that the Company will not be liable hereunder to the extent that any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, attorneys' fees, expenses or disbursements are found in a final
non-appealable judgment by a court to have resulted from Holder's gross
negligence, bad faith or willful misconduct in its capacity as a stockholder or
warrantholder of the Company.
14.4 Remedies. 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 Section 9 of this Warrant. 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 Section 9 of this
Warrant and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
14.5 Successors and Assigns. Subject to the provisions of Sections 3.1
and 9, this Warrant and the rights evidenced hereby shall inure to the benefit
of and be binding upon the successors of the Company and the successors and
assigns of Holder. The provisions of this Warrant are intended to be for the
benefit of all Holders from time to time of this Warrant and, with respect to
Section 9 hereof, holders of Warrant Stock, and shall be enforceable by any such
Holder or holder of Warrant Stock.
14.6 Amendment. This Warrant and all other Warrants may be modified or
amended or the provisions hereof waived with the written consent of the Company
and the Holder.
14.7 Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.
14.8 Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
14.9 Governing Law. This Warrant shall be governed by the laws of the
State of New York, without regard to the provisions thereof relating to conflict
of laws.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
-15-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed and its corporate seal to be impressed hereon and attested by its
Secretary or an Assistant Secretary.
Dated: February 8, 1999
UNIVEC, INC.
By: /s/ Flora Schoenfeld
-----------------------------------
Name: Flora Schoenfeld
Title: Aecretary/Treasurer
Attest:
By:
------------------------------------
Name:
Title:
-16-
<PAGE>
EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this warrant for the purchase of _______________ Shares of Common
Stock of Univec, Inc. and herewith makes payment therefor, all at the price and
on the terms and conditions specified in this Warrant and requests that
certificates for the shares of Common Stock hereby purchased (and any securities
or other property issuable upon such exercise) be issued in the name of and
delivered to ______________________________ whose address is ___________________
___________ and, if such shares of Common Stock shall not include all of the
shares of Common Stock issuable as provided in this Warrant, that a new Warrant
of like tenor and date for the balance of the shares of Common Stock issuable
hereunder be delivered to the undersigned.
(Name of Registered owner)
(Signature of Registered Owner)
(Street Address)
(city) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of
- ---------------------------- ----------------
Common Stock
------------
and does hereby irrevocably constitute and appoint ____________________________
attorney-in-fact to register such transfer on the books of maintained for the
purpose, with full power of substitution in the premises.
Dated: Print Name:
Signature:
Witness:
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT 5.1
SNOW BECKER KRAUSS P.C.
Attorneys at Law
605 Third Avenue
New York, New York 10158
----------
(212) 687-3860
June 28, 1998
Board of Directors
UNIVEC, Inc.
999 Franklin Avenue
Garden City, NY 11530
Ladies and Gentlemen:
You have requested our opinion, as counsel for UNIVEC, Inc., a Delaware
corporation (the "Company"), in connection with the registration statement on
Form S-3 (No. 333-74199) (the "Registration Statement"), under the Securities
Act of 1933 (the "Act"), filed by the Company with the Securities and Exchange
Commission.
The Registration Statement relates to an offering by a certain selling
securityholder of up to 350,000 shares (the "Shares") of common stock, par value
$0.001 ("Common Stock"), of the Company.
We have examined such records and documents and made such examinations of
law as we have deemed relevant in connection with this opinion. It is our
opinion that when there has been compliance with the Act and the applicable
state securities laws:
(1) The Shares have been duly authorized and, when issued, delivered and
paid for in the manner described in the form of Certificate of
Designation filed as Exhibit 4.15 or the Warrant Agreement filed as
Exhibit 4.16 to the Registration Statement, will be legally issued,
fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Registration Statement. In so doing, we do not admit that we are
in the category of persons whose consent is required under Section 7 of the Act
or the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.
Very truly yours,
/s/ Snow Becker Krauss P.C.
---------------------------
SNOW BECKER KRAUSS P.C.
<PAGE>
Most Horowitz & Company, LLP
Certified Public Accountants
1133 Avenue of the Americas
New York, New York 10036
Tel: (212)764-4910
Fax: (212)575-2017
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in Amendment No. 2 to the Registration Statement on
Form S-3 of Univec, Inc. of our report, dated May 19, 1999, included in Univec's
Anuual Report on Form 10-KSB for the fiscal year ended December 31, 1998,
previously filed with the Securities and Exchange Commission and to all
references to our firm included in this Registration Statement.
s/ Most Horowitz & Company, LLP
- ------------------------------------
Most Horowitz & Company, LLP
New York, New York
June 24, 1999
<PAGE>
EXHIBIT 24.2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Joel Schoenfeld and Marla Manowitz,
acting singly, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacitates, to sign this Registration Statement and any and all
amendments (including post-effective amendments) hereto, and any Registration
Statement filed pursuant to Rule 462(b) promulgated by the Commission under the
Securities Act of 1933, and to file the same and all exhibits thereto, and all
documents in connection therewith, with the Commission, granting said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in about the premises, as
full to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
June 29, 1999
s/ Joel Schoenfeld
- ---------------------------------------------
Joel Schoenfeld
Chairman of the Board of Directors,
Chief Executive Officer and Director
- ---------------------------------------------
Alan H. Gold
Director
s/ Marla Manowitz
- ---------------------------------------------
Marla Manowitz
Chief Financial Officer and Director
- ---------------------------------------------
John Frank
Director
s/ Richard Mintz
- ---------------------------------------------
Richard Mintz
Director
- ---------------------------------------------
David Jay
Director
