SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Under to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): May 28, 1996
Commission File Number: 1-10013
Larson Davis Incorporated
(Exact Name of Registrant as Specified in its Charter)
Nevada 87-0429944
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1681 West 820 North, Provo, Utah 84601
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code:
(801) 375-0177
(Former name, former address, and formal fiscal year, if changed
since last report) N/A
Page 1 of 22 consecutively numbered pages, including exhibits.
ITEM 5. OTHER EVENTS
Warrant Agreement
Larson Davis Incorporated (the "Company") recently negotiated an
agreement with the principal holders of its outstanding warrants
(the "Warrant Holders") pursuant to which the Warrant Holders
agreed to exercise all of the remaining $3.25 A, B, C, and
D Warrants (the "$3.25 Warrants") held by them on or before
May 27, 1996 in exchange for the agreement of the Company to issue
new warrants exercisable at $6.25 per share (the "$6.25 Warrants").
$3.25 Warrants to acquire 2,000,000 shares of common stock of the
Company, par value $0.001 per share (the "Common Stock"), have
been exercised and the Company has issued $6.25 Warrants to
purchase an aggregate of 1,675,167 shares of Common Stock. The
Company has also entered into an agreement with the remaining holder
of $3.25 Warrants pursuant to which such holder has agreed to
exercise the $3.25 Warrants to acquire 375,000 shares of Common
Stock held by such Warrant Holder by June 17, 1996, in exchange
for the agreement of the Company to issue additional $6.25 Warrants
to acquire 375,000 shares of Common Stock to such holder. In
addition to the foregoing $6.25 Warrants, the Company has
outstanding a warrant to acquire up to 50,000 shares of Common
Stock at an exercise price of $6.25 per share at any time prior
to April 12, 1997.
Since March 31, 1996, the Company has received aggregate gross
proceeds of $6,500,000 from the exercise of the $3.25 Warrants
and issued 2,000,000 shares of Common Stock. Under the terms of
the remaining agreement, the Company currently anticipates
receiving an additional $1,218,750 on the exercise of the
remaining $3.25 Warrants to acquire 375,000 shares of Common Stock
by June 17, 1996, although there is no assurance that this
exercise will occur by such date, or will occur at all.
All of the shares issued on the exercise of the $3.25 Warrants have
been, or will be, issued pursuant to a exemption from the
registration requirements of federal and state securities laws
and, consequently, the certificates representing the shares bear
a restrictive legend. However, the Company currently has an
effective registration statement covering the resale of the
Common Stock received on the exercise of the $3.25 Warrants by
the Warrant Holders, and such shares may be sold into the trading
market for the Common Stock of the Company pursuant to the
Prospectus included in such registration statement.
The Company anticipates using the net proceeds from the exercise
of the $3.25 Warrants to fund its plan for the development of
new products specifically related to its CrossCheck and Sensar
technologies, the reduction of existing indebtedness, and working
capital. The development funds will be used for product design and
construction of prototypes, analytical evaluation of resulting data,
equipment, product refinement, manufacturing, engineering,
production tooling and design, and marketing efforts.
The $6.25 Warrants are exercisable at any time subsequent to
November 1, 1996 and prior to midnight November 1, 1998. The
holders of the $6.25 Warrants have demand registration rights
obligating the Company to file a registration statement, at its
cost, to register the resale of the Common Stock issuable on
exercise of the Warrants.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
Exhibits
The following exhibits are included as part of this report:
SEC
Exhibit Reference
Number Number Title of Document Page
1 10 Agreement to Issue Warrants entered
into between Larson Davis
Incorporated and Connie Lerner,
dated May 29, 1996 5
SIGNATURES
Pursuant to the requirements of section 13 or 15(d) of the
Securities Exchange of 1934, as amended, the Registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: June 5, 1996 LARSON DAVIS INCORPORATED
By /s/ Dan J. Johnson
Dan J. Johnson, Vice-President
Secretary/Treasurer
(Principal Financial and
Accounting Officer)
AGREEMENT TO ISSUE WARRANTS
THIS AGREEMENT TO ISSUE WARRANTS (this "Agreement") is entered into
as of this 29th day of May, 1996, by and among LARSON DAVIS
INCORPORATED, a Nevada corporation (the "Company"), and
CONNIE LERNER ("Lerner"), based on the following premises.
Premises
A. Lerner holds a warrant (the "$3.25 Warrant") to acquire up
to 375,000 shares of common stock of the Company, par value
$0.001 per share (the "Common Stock").
B. Lerner has agreed to the early exercise of the $3.25 Warrant
currently held by her in consideration of the Company's agreement
to grant her additional warrants to acquire shares of Common Stock
on the terms and conditions set forth in this Agreement.
Agreement
NOW, THEREFORE, based on the stated premises, which are
incorporated herein by reference, and for and in consideration of
the mutual covenants and agreements hereinafter set forth and the
mutual benefit to the parties to be derived therefrom, and other
good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, it is hereby agreed as follows:
Article I
Warrants
1.1 Exercise of $3.25 Warrant. Lerner agrees to exercise the
$3.25 Warrant held by her to acquire 375,000 shares of Common Stock
on or before June 17, 1996, by the payment to the Company of the
aggregate exercise price of $1,218,750. On receipt of such funds,
the Company agrees to immediately provide irrevocable written
instructions to its transfer agent to issue certificates
representing the 375,000 shares of Common Stock acquired thereby
and to deliver such certificates to Lerner.
1.2 Issuance of Additional Warrants. On timely exercise of the
$3.25 Warrant in accordance with the provisions of Section 1.1,
the Company agrees to issue warrants to Lerner to acquire up to
375,000 shares of Common Stock at an exercise price of $6.25 per
share of Common Stock at any time after November 1, 1996 and prior
to the close of business on November 1, 1998 (the "$6.25 Warrants").
The $6.25 Warrants shall be in the form attached hereto as
Exhibit "A" and incorporated herein by this reference.
Article II
Representations, Covenants, and Warranties of the Company
As an inducement to, and to obtain the reliance of, Lerner, the
Company represents and warrants as follows:
2.1 Organization of the Company. The Company is a corporation
duly organized, validly existing, and in good standing under laws
of the state of Nevada, and has the corporate power and is duly
authorized, qualified, franchised, and licensed under all
applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets and to carry
on its business in all material respects as it is now being
conducted. The execution and delivery of this Agreement does not,
and the consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof will not, violate
any provision of the Company's certificate of incorporation or
bylaws. The Company has taken all action required by law, its
certificate of incorporation, its bylaws, or otherwise to authorize
the execution and delivery of this Agreement and the consummation of
the transactions herein contemplated.
2.2 Approval of Agreement. The board of directors of the Company
has authorized the execution and delivery of this Agreement by the
Company and has approved the consummation of the transactions
contemplated hereby. This Agreement is the legal, valid, and
binding agreement of the Company enforceable between the parties
in accordance with its terms.
2.3 Financial Information. Each of the financial statements
contained in the information referred to in section 2.4 present
fairly the financial condition of the Company as of the respective
dates of such financial statements and the results of its
operations for the periods indicated. All such audited and
unaudited financial statements have been prepared in accordance
with generally accepted accounting principles consistently
applied throughout the periods involved as explained in the notes
to such financial statements and have been presented in accordance
with the requirements of the rules and regulations promulgated by
the SEC regarding the form and content of and requirements for
financial statements to be filed with the SEC.
2.4 Information. The information concerning the Company set
forth in this Agreement, the annual report on form 10-KSB filed
with the SEC for the year ended June 30, 1995, and all amendments
thereto, and the quarterly reports, as amended, on form 10-QSB for
the quarters ended September 30, and December 31, 1995, and
March 31, 1996, is, or was, as of the date of the respective
reports, complete and accurate in all material respects and did
not contain any untrue statement of a material fact or omit to
state a material fact required to make the statements made, in
light of the circumstances under which they were made, not
misleading.
2.5 Third-Party Consents. None of the contracts, agreements,
leases, or other commitments, written or oral, to which the Company
is a party or to which any of its properties or assets are subject
require the consent of any other party in order to consummate the
transactions herein contemplated, except where the failure to
obtain such consent would not have a material adverse effect on
the transactions contemplated herein. Except for the satisfaction
of requirements of federal and state securities and corporation
laws, no authorization, approval, consent, or order of, or
registration, declaration, or filing with, any court or other
governmental body is required in connection with the execution
and delivery by the Company of this Agreement and the consummation
by the Company of the transactions contemplated hereby.
2.6 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated
by this Agreement will not result in the breach of any term or
provision of, or constitute an event of default under, any
indenture, mortgage, deed of trust, lease, or other contract,
agreement, or instrument to which the Company is a party or to
which any of its properties or operations are subject and the
breach of which would have a material adverse effect on the Company.
Article III
Representations, Covenants, and Warranties of Lerner
As an inducement to, and to obtain the reliance of the Company,
Lerner represents and warrants as follows:
3.1 Binding Agreement. This Agreement is the legal, valid,
and binding obligation of Lerner enforceable in accordance with
its terms.
3.2 Third-Party Consents. None of the contracts, agreements,
leases, or other commitments, written or oral, to which Lerner is
a party or to which any of her properties or assets are subject
require the consent of any other party in order to consummate the
transactions herein contemplated, except where the failure to
obtain such consent would not have a material adverse effect on
the transactions contemplated herein. No authorization,
approval, consent, or order of, or registration, declaration,
or filing with, any court or other governmental body is required
in connection with the execution and delivery by Lerner of this
Agreement and the consummation by Lerner of the transactions
contemplated hereby.
3.3 No Conflict With Other Instruments. The execution of this
Agreement and the consummation of the transactions contemplated
hereby, will not result in the breach of any term or provision
of, constitute an event of default under, or require the consent
or approval of any third-party pursuant to, any material
contract, agreement, or instrument to which Lerner is a party or
to which any of her properties or assets are subject.
3.4 Information. The information concerning Lerner set forth in
this Agreement is complete and accurate in all material respects
and does not contain any untrue statement of a material fact or
omit to state a material fact required to make the statements
made, in light of the circumstances under which they were made,
not misleading.
Article IV
Special Covenants
4.1 Indemnification by Lerner. Lerner agrees to indemnify and
hold harmless the Company and its directors and officers, and each
person, if any, who controls the Company within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), from and
against any and all losses, claims, damages, expenses, liabilities,
or actions to which any of them may become subject under applicable
law (including the Securities Act and the Exchange Act) and will
reimburse them for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any claims
or actions, whether or not resulting in liability, insofar as such
losses, claims, damages, expenses, liabilities, or actions arise
out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any application or
statement filed with a governmental body 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 in order
to make the statements therein not misleading, but only insofar as
any such statement or omission was made in reliance upon and in
conformity with information furnished in writing by Lerner
expressly for use therein. Lerner agrees at any time upon the
request of the Company to furnish to it a written letter or
statement confirming the accuracy of the information with respect
to Lerner contained in any report or other application or
statement referred to in this Article IV, or in any draft of any
such documents, and confirming that the information with respect
to Lerner contained in such document or draft was furnished by
Lerner, indicating the inaccuracies or omissions contained in
such document or draft or indicating the information not furnished
by Lerner expressly for use therein. The indemnity agreement
contained in this section 4.1 shall remain operative and in full
force and effect, regardless of any investigation made by or on
behalf of the Company and shall survive the consummation of the
transactions contemplated by this Agreement.
4.2 Indemnification by the Company. The Company will indemnify
and hold harmless Lerner from and against any and all losses,
claims, damages, expenses, liabilities, or actions to which she
may become subject under applicable law (including the Securities
Act and the Exchange Act) and will reimburse her for any legal
or other expenses reasonably incurred by her in connection with
investigating or defending any claims or actions, whether or not
resulting in liability, insofar as such losses, claims, damages,
expenses, liabilities, or actions arise out of or are based upon
any breach of this Agreement or any untrue statement or alleged
untrue statement of a material fact contained in any application
or statement filed with a governmental body 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 in
order to make the statements therein not misleading, but only
insofar as any such statement or omission was made in reliance
upon and in conformity with information furnished in writing by
the Company expressly for use therein. The Company agrees at any
time upon the request of Lerner to furnish to her a written letter
or statement confirming the accuracy of the information with
respect to the Company contained in any report or other application
or statement referred to in this Article IV, or in any draft of any
such document, and confirming that the information with respect to
the Company contained in such document or draft was furnished by
the Company, indicating the inaccuracies or omissions contained in
such document or draft or indicating the information not furnished
by the Company expressly for use therein. The indemnity agreement
contained in this section 4.2 shall remain operative and in full
force and effect, regardless of any investigation made by or on
behalf of Lerner and shall survive the consummation of the
transactions contemplated by this Agreement.
4.3 The Acquisition of Purchased Stock. The consummation of this
Agreement and the issuance of $6.25 Warrants to Lerner contemplated
herein and the issuance of Common Stock on the exercise of such
$6.25 Warrants constitutes the offer and sale of securities as
those terms are defined under the Securities Act and applicable
state statutes. Such transactions shall be consummated in
reliance on certain exemptions from the registration requirements
of federal and state securities laws, which depend, among other
items, on the circumstances under which such securities are acquired.
(a) In order to provide documentation for reliance upon
such exemptions, Lerner makes the following representations
and warranties:
(i) Lerner acknowledges that neither the SEC nor the
securities commission of any state or other federal
agency has made any determination as to the merits of
acquiring the Warrants or the shares of Common Stock
issuable on exercise of the Warrants, and that this
transaction involves certain risks.
(ii) Lerner has received and read this Agreement and
understands the risks related to the consummation of
the transactions herein contemplated.
(iii) Lerner has such knowledge and experience in
business and financial matters that she is capable of
evaluating the Company and its business operations.
(iv) Lerner has adequate means of providing for her
current needs and possible personal contingencies and
has no need now, and anticipates no need in the
foreseeable future, to sell any of the Warrants or the
shares of Common Stock issuable on exercise of the
Warrants. Lerner is able to bear the economic risks of
this investment, and, consequently, without limiting
the generality of the foregoing, is able to hold the
Warrants and the shares of Common Stock issuable on
exercise of the Warrants for an indefinite period of
time, and has a sufficient net worth to sustain a loss
of the entire investment, in the event such loss should
occur.
(v) Lerner has been provided with all information
contained in the Company's annual report on form 10-K
for the year ended June 30, 1995, and all subsequent
interim reports filed by the Company with the Securities
and Exchange Commission. Lerner's representatives,
including their legal counsel, have personally met with
the officers and directors of the Company and have
investigated the intellectual property assets of the
Company. Lerner and her representatives have been given
the opportunity to meet with and ask questions of the
officers and directors of the Company and to obtain any
additional information she considers material to the
acquisition of the Warrants and the shares of Common
Stock issuable on exercise of the Warrants.
(vi) Lerner is acquiring the Warrants and the shares of
Common Stock issuable on exercise of the Warrants for
her own account and not for resale to others.
(vii) Lerner confirms that she is an "accredited investor"
as defined under rule 501 of regulation D promulgated
under the Securities Act. Lerner confirms that her
individual net worth, or joint net worth with her spouse,
at the time of her purchase exceeds $1,000,000, or that
she had an individual income in excess of $200,000 in
each of the two most recent years or joint income with
her spouse in excess of $300,000 in each of those years
and has a reasonable expectation of reaching the same
income level in the current year.
(viii) Lerner is a resident of the New York.
(ix) Lerner understands that none of the Warrants or
the shares of Common Stock issuable on exercise of the
Warrants has been registered, but are being acquired by
reason of a specific exemption under the Securities Act
as well as under certain state statutes for transactions
by an issuer not involving any public offering and that
any disposition of the Warrants and the shares of Common
Stock issuable on exercise of the Warrants may, under
certain circumstances, be inconsistent with this
exemption and may make the holder an "underwriter"
within the meaning of the Securities Act. Lerner
further acknowledges that the Warrants and the shares
of Common Stock issuable on exercise of the Warrants must
be held and may not be sold, transferred, or otherwise
disposed of for value unless they are subsequently
registered under the Securities Act or an exemption
from such registration is available; the Company is under
no obligation to register the Warrants or the shares of
Common Stock issuable on exercise of the Warrants under
the Securities Act or under section 12 of the Exchange
Act, except as provided in this Agreement or as may be
expressly agreed to by it in writing; if rule 144 is
available, and no assurance is given that it will be,
initially only routine sales of the Warrants and the
shares of Common Stock issuable on exercise of the
Warrants in limited amounts can be made in reliance on
rule 144 in accordance with the terms and conditions of
that rule; the Company is under no obligation to the
undersigned to make rule 144 available, except as may be
expressly agreed to by it in writing; in the event rule
144 is not available, compliance with regulation A or
some other exemption may be required before any holder
can sell, transfer, or otherwise dispose of the Warrants
or the shares of Common Stock issuable on exercise of
the Warrants without registration under the Securities
Act; the Company's registrar and transfer agent will
maintain a stop transfer order against the registration
of transfer of the Warrants and the shares of Common
Stock issuable on exercise of the Warrants; and the
certificate(s) representing the Warrants and the shares
of Common Stock issuable on exercise of the Warrants
will bear a legend in substantially the following form
so restricting the sale of the Warrants and the shares
of Common Stock issuable on exercise of the Warrants:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
ARE "RESTRICTED SECURITIES" WITHIN THE MEANING
OF RULE 144 PROMULGATED UNDER THE SECURITIES ACT.
THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT
AND MAY NOT BE SOLD OR TRANSFERRED WITHOUT
COMPLYING WITH RULE 144 IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION OR OTHER COMPLIANCE UNDER
THE SECURITIES ACT.
(b) In order to more fully document reliance on the
exemptions as provided herein, Lerner shall execute and
deliver to the Company such further letters of
representation, acknowledgment, suitability, or the like, as
the Company and its counsel may reasonably request in
connection with reliance on exemptions from registration
under such securities laws.
(c) The parties to this Agreement acknowledge that the
basis for relying on exemptions from registration or
qualification are factual, depending on the conduct of the
various parties, and that no legal opinion or other
assurance will be required or given to the effect that
the transactions contemplated hereby are in fact exempt
from registration or qualification.
Article V
Registration Rights
5.1 Current Registration Statement. The resale of the shares of
Common Stock to be received by Lerner on exercise of the $3.25
Warrant is currently included in a registration statement on
form S-3 filed by the Company and declared effective by the SEC on
March 22, 1996 (the "Current Registration Statement"). The Company
shall use its best efforts to maintain the effectiveness of the
Current Registration Statement for a period of not less than two
years from December 1, 1996, or such shorter period as will
terminate when all of the securities covered by the Current
Registration Statement have been sold or withdrawn.
5.2 Demand Registration. On the written request of Lerner, the
Company shall use its best efforts to prepare and file with the
Securities and Exchange Commission (the "SEC"), as soon as
commercially practicable subsequent to such written request, but
in no event more than 120 days subsequent to such request, a
registration statement (the "New Registration Statement") that
includes resale of the shares of Common Stock issuable on exercise
of all the $6.25 Warrants. Thereafter, the Company shall use its
best efforts to cause such New Registration Statement to become
effective as soon as is practicably possible and remain effective
as provided herein. The Company further agrees to:
(a) Prepare and file with the SEC such amendments and post-
effective amendments to the New Registration Statement as may
be necessary to keep the New Registration Statement effective
for a period of not less than two (2) years from the date of
exercise of the $6.25 Warrants, or such shorter period which
will terminate when all securities covered by such New
Registration Statement have been sold or withdrawn; cause the
prospectus which is part of the New Registration Statement to
be supplemented by any required prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 under the
Securities Act; and comply with the provisions of the
Securities Act applicable to it with respect to the
disposition of all securities covered by such New
Registration Statement during the applicable period in
accordance with the intended methods of disposition by the
sellers thereof set forth in such New Registration Statement
or supplement to the prospectus;
(b) Notify any holder of Common Stock covered by the New
Registration Statement (the "Selling Shareholders") when a
prospectus is required to be delivered under the Securities
Act, when the Company becomes aware of the happening of any
event as a result of which the prospectus included in such New
Registration Statement (as then in effect) contains any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein (in the case of the
prospectus or any preliminary prospectus, in light of the
circumstances under which they were made) not misleading and,
as promptly as practicable thereafter, prepare and file with
the SEC and furnish to Selling Shareholders a supplement or
amendment to such prospectus so that, as thereafter delivered
to the purchasers of such securities, such prospectus will not
contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading;
(c) Enter into customary agreements (including an
underwriting agreement in customary form) and take such other
actions as are reasonably required in order to expedite or
facilitate the disposition of such securities;
(d) Use its best efforts to cause all securities of Selling
Shareholders included in such New Registration Statement to
be listed, by the date of the first sale of securities
pursuant to such New Registration Statement, on each
securities or trading exchange on which the Company's
securities of the same class are then listed or proposed to
be listed, if any;
(e) On or prior to the date on which the New Registration
Statement is declared effective, use its best efforts to
register or qualify, and cooperate with Selling Shareholders,
the underwriter or underwriters, if any, and their counsel,
in connection with the registration or qualification of, the
securities of Selling Shareholders covered by the New
Registration Statement for offer and sale under the securities
or blue sky laws of each state and other jurisdiction of the
United States as Selling Shareholders or the underwriter
reasonably requests in writing, to use its best efforts to
keep each such registration or qualification effective,
including through new filings, or amendment or renewals,
during the period such New Registration Statement is required
to be keep effective and to do any and all other acts or
things necessary or advisable to enable the disposition in
all such jurisdictions of the securities of Selling
Shareholders covered by the New Registration Statement;
provided that, the Company will not be required to
(1) qualify generally to do business in any jurisdiction where
it would not otherwise be required to qualify but for this
paragraph (e), (2) consent to general service of process in
any such jurisdiction, or (3) subject itself to general
taxation in any such jurisdiction;
(f) Cooperate with Selling Shareholders and the managing
underwriter or underwriters, if any, to facilitate the
timely preparation and delivery of certificates (not bearing
any restrictive legends) representing securities to be sold
by Selling Shareholders under the New Registration Statement,
and enable such securities to be in such denominations and
registered in such names as the managing underwriter or
underwriters, if any, or Selling Shareholders may request; and
(g) Use it best efforts to cause the securities of Selling
Shareholders covered by the New Registration Statement to be
registered with or approved by such other governmental
agencies or authorities within the United States as may be
necessary to enable Selling Shareholders or the underwriter
or underwriters, if any, to consummate the disposition of
such securities.
5.3 Piggyback Registration. If at any time prior to the
date that is three years from the acquisition of Common Stock by
Lerner pursuant to the exercise of the $6.25 Warrants the Company
elects to file a registration statement and the resale by Lerner of
the Common Stock acquired on the exercise of the $6.25 Warrants is
not then covered by an effective registration statement, the
Company shall give Lerner notice of its intent to do so. Lerner
shall have ten days subsequent to such notice to elect to have
shares of Common Stock acquired on the exercise of the $6.25
Warrants then held by her included in such registration statement;
provided that, such shares shall not be included if, in the
judgment of the lead underwriter involved in the transaction, the
inclusion of such shares would adversely affect the underwriting
or the completion of the proposed financing. The provisions of
this paragraph shall not apply to a registration statement filed
on forms S-8, S-4, or similar forms.
5.4 Cooperation by Lerner.
(a) Lerner shall furnish to the Company in writing such
information and affidavits as the Company may reasonably
require in connection with any registration, qualification
or compliance with respect to such securities. It shall be a
condition precedent to the obligations of the Company to take
any action pursuant to this Agreement with respect to the
securities of any Selling Shareholder that such Selling
Shareholder shall furnish to the Company such information
regarding the Selling Shareholder, the securities to be
registered and other securities in the Company held, and
the intended method of disposition of such securities as
shall be required to effect the registration of such
securities.
(b) By exercising her Warrants, Lerner shall be deemed to
have confirmed at the time of such exercise the continuing
accuracy of the information respecting her status as an
accredited investor and the suitability of an investment in
the Common Stock for her that is contained herein, all except
as such investor may then advise the Company in writing. The
Company may also require, as a condition precedent to exercise,
that Lerner complete and deliver to the Company a suitability
letter containing representations and warranties regarding
suitability of the investment of like tenor to those contained
herein.
(c) Lerner, upon receipt of any notice from the Company of
the happening of any event of the kind described in
paragraph (b) of section 5.2, will forthwith discontinue
disposition of the securities until her receipt of copies of
the supplemented or amended prospectus contemplated by
paragraph (b) of section 5.2 or until she is advised in
writing (the "Advice") by the Company that the use of the
prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by
reference in the prospectus, and, if so directed by the
Company, Lerner will, or will request the managing underwriter
or underwriters, if any, to, deliver to the Company all
copies, other than permanent file copies then in her
possession, of the prospectus covering such securities current
at the time of receipt of such notice. In the event the
Company shall give any such notice, the time period mentioned
in paragraph (a) of section 5.2 shall be extended by the
number of days during the period from and including the date
of the giving of such notice to and including the date when
Lerner shall have received the copies of the supplemented or
amended prospectus contemplated by paragraph (b) of
section 5.2 hereof or the Advice.
(d) At the end of any period during which the Company is
obligated to keep any Registration Statement current and
effective (and any required extensions), Lerner shall
discontinue sales of securities pursuant to such Registration
Statement upon receipt of notice from the Company of its
intention to remove from registration the securities covered
by such Registration Statement which remain unsold, and
Lerner shall notify the Company of the number of securities
registered which remain unsold promptly after receipt of
such notice from the Company.
(e) Lerner acknowledges that the registration of the resale
of the securities or the availability of an exemption from
registration in certain states may impose certain limitations
and conditions on the manner and nature of such sales. The
Company shall advise Lerner in writing of such registration
or exemption and the related limitations and conditions from
time to time. Lerner shall be solely responsible for her
own compliance with such limitations and conditions.
5.5 Holdback Agreement. Lerner, if requested by the managing
underwriter or underwriters for any underwritten, registered
offering of the securities of the Company, agrees not to effect
any public sale or distribution of securities, including a sale
pursuant to Rule 144 (or any similar provision then in force)
under the Securities Act, during the 15 days prior to, and during
the 120-day period commencing on the effective date of such
registration (except as part of such registration). In the event
Lerner is prohibited from effecting a sale of securities pursuant
to this section 5.5, the time period in paragraph (a) of
section 5.2 shall be extended by the number of days Lerner is so
prohibited.
5.6 Registration and Selling Expenses. All of the costs and
expenses of registration provided for herein will be borne by the
Company, including the fees and expenses of the counsel and
accountants for the Company (including the expenses of any
special audit and "cold comfort" letters required by or incident
to such performance), and all other costs and expenses of the
Company incident to the preparation, printing, and filing under
the Securities Act of any registration statement (and all
amendments and supplements thereto) and furnishing copies thereof
and of the prospectus included therein, and the costs and expenses
incurred by the Company in connection with the qualification of
the Warrants and shares of Common Stock received on exercise of
Warrants under the state securities or blue sky laws of various
jurisdictions; provided that, the Company shall not bear the costs
and expenses of Lerner comprising underwriters' commissions,
brokerage fees, transfer taxes, or the fees and expenses of any
counsel, accountant, or other representative retained by Lerner.
5.7 Rule 144. The Company agrees that it will use its best
efforts to file in a timely manner all reports required to be filed
by it pursuant to the Exchange Act and, at any time and upon
request of Lerner, will furnish her with such information generated
by the Company in the ordinary course of business as may be
reasonably necessary to enable her to effect sales of Common Stock
received on exercise of Warrants without registration pursuant to
Rule 144 under the Securities Act. Notwithstanding the foregoing,
the Company may deregister any class of its securities under
section 12 of the Exchange Act or suspend its duty to file reports
with respect to any class of its securities pursuant to
section 15(d) of the Exchange Act if it is then permitted to do so
pursuant to the Exchange Act and the rules and regulations
thereunder.
5.8 Participation in Underwritten Registrations. Lerner may not
participate in any underwritten registration in which she chooses
to have stock included unless Lerner (a) agrees to sell shares of
Common Stock received on exercise of Warrants on the basis provided
in any underwriting arrangements approved by the Company and the
underwriter, and (b) completes and executes all questionnaires,
powers of attorney, underwriting agreements and other documents
customarily required under the terms of such underwriting
arrangements.
Article VI
Miscellaneous
6.1 No Brokers. Lerner and the Company agree that no third
person has in any way brought the parties together or been
instrumental in the negotiation, execution, or consummation of
this Agreement. Lerner and the Company agree to indemnify the
other against any claim by any third person for any commission,
brokerage, finder's fee, or other payment with respect to this
Agreement or the transactions contemplated hereby based upon any
alleged agreement or understanding between such party and such
third person, whether expressed or implied, arising from the
actions of such party. The covenants set forth in this
section 6.1 shall survive the date hereof and the consummation of
the transactions herein contemplated.
6.2 Governing Law. This Agreement shall in all respects,
including all matters of construction, validity, and performance,
be governed by, and construed and enforced in accordance with,
the laws of the state of Utah applicable to contracts entered into
in that state between citizens of that state and to be performed
wholly within that state without reference to any rules governing
conflicts of laws
6.3 Notices. All notices, demands, requests, or other
communications required or authorized hereunder shall be deemed
given sufficiently if in writing and if personally delivered; if
sent by facsimile transmission, confirmed with a written copy
thereof sent by overnight express delivery; if sent by registered
mail or certified mail, return receipt requested and postage
prepaid; or if sent by overnight express delivery:
If to the Company, to: Larson Davis Incorporated
Attn.: Brian G. Larson, President
1681 West 820 North
Provo, Utah 84601
Facsimile Transmission: (801) 375-0182
Confirmation: (801) 375-0177
With copies to: Keith L. Pope, Esq.
Kruse, Landa & Maycock, L.L.C.
Eighth Floor, Bank One Tower
50 West Broadway
Salt Lake City, Utah 84101
Facsimile Transmission: (801) 359-3954
Confirmation: (801) 531-7090
If to Lerner, to: Ms. Connie Lerner
c/o Broad Capital Associates, Inc.
152 West 57th Street, 54th Floor
New York, New York 10019
Facsimile Transmission: (212) 581-0002
Confirmation: (212) 581-0500
With copies to: Michael Solovay, Esq.
Solovay Marshall & Edlin
845 Third Avenue
New York, New York 10022
Facsimile Transmission: (212) 355-4608
Confirmation: (212) 752-1000
or such other addresses and facsimile numbers as shall be furnished
in writing by any party in the manner for giving notices hereunder,
and any such notice, demand, request, or other communication shall
be deemed to have been given as of the date personally delivered or
on the first business day after a legible copy sent by facsimile
transmission is received, three days after the date mailed by
registered or certified mail, or on the first business day after
the date sent by overnight delivery.
6.4 Attorneys' Fees. In the event that any party institutes and
prevails in any action or suit to enforce this Agreement or to
secure relief from any default hereunder or breach hereof, the
defaulting or breaching party or parties shall reimburse the
nonbreaching party or parties for all costs, including reasonable
attorneys' fees, incurred in connection therewith and in enforcing
or collecting any judgment rendered therein.
6.5 Best Knowledge. Whenever any representation is made to the
"best knowledge" of any party, it shall be deemed to be a
representation that an officer or director of such party, after
reasonable investigation, has any current actual knowledge of such
matters.
6.6 Entire Agreement. This Agreement, together with the
documents to be delivered pursuant hereto, represents the entire
agreement between the parties relating to the subject matter
hereof. There are no other courses of dealing, understanding,
agreements, representations, or warranties, written or oral,
except as set forth herein.
6.7 Survival; Termination. The representations, warranties,
and covenants of the respective parties as set forth in this
Agreement shall survive the closing and consummation of the
transactions contemplated by this Agreement for a period of two
years from the date of this Agreement. The Company's cumulative
liability to Lerner for breaches of this Agreement shall not
exceed the aggregate exercise price of the Warrants covered hereby.
6.8 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all
of which taken together shall be but a single instrument.
6.9 Amendment or Waiver. Every right and remedy provided
herein shall be cumulative with every other right and remedy,
whether conferred herein, at law, or in equity, and may be
enforced concurrently herewith, and no waiver by any party of the
performance of any obligation by the other shall be construed as
a waiver of the same or any other default then, theretofore, or
thereafter occurring or existing. This Agreement may be amended
by a writing signed by all parties hereto, with respect to any of
the terms contained herein, and any term or condition of this
Agreement may be waived or the time for performance thereof may
be extended by a writing signed by the party or parties for whose
benefit the provision is intended.
6.10 Third-Party Beneficiaries. This Agreement is solely
between the parties hereto and no director, officer, stockholder,
employee, agent, independent contractor, or any other person or
entity shall be deemed to be a third-party beneficiary of this
Agreement.
6.11 No Public Announcement. None of the parties to this
Agreement shall, without the approval of each other party, make
any press release or other public announcement concerning the
transactions contemplated by this Agreement without first providing
a copy of such press release or public announcement to the other
parties to this Agreement at least five days prior to release.
Nothing contained herein shall prohibit any party from making
any pubic disclosure or announcement which is required by law.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first above written.
The Company:
Larson Davis Incorporated
By /s/ Brian G. Larson
Brian G. Larson, President
Lerner:
/s/ Connie Lerner
Connie Lerner
Address: 152 West 57th Street
New York, New York 10019
Exhibit "A"
LARSON DAVIS INCORPORATED
(a Nevada corporation)
Warrant for the Purchase of
375,000 Shares of Common Stock, Par Value $0.001
THIS WARRANT WILL BE VOID
AFTER 11:59 P.M. MOUNTAIN TIME ON NOVEMBER 1, 1998
This Warrant has not been registered under the Securities Act of
1933, as amended (the "Securities Act"), and is a "restricted
security" within the meaning of Rule 144 promulgated under the
Securities Act. This Warrant has been acquired for investment and
may not be sold or transferred without complying with Rule 144 in
the absence of an effective registration or other compliance under
the Securities Act.
This certifies that, for value received, __________ (the "Holder"),
is entitled to subscribe for, purchase, and receive 375,000 fully
paid and nonassessable shares of common stock, par value $0.001
(the "Warrant Shares"), of Larson Davis Incorporated, a Nevada
corporation (the "Company"), at the price of $6.25 per Warrant
Share (the "Exercise Price"), at any time or from time to time
after November 1, 1996, and on or before 11:59 p.m. mountain time
on November 1, 1998 (the "Exercise Period"), on presentation and
surrender of this Warrant with the purchase form attached hereto,
duly executed, at the principal office of the Company at 1681 West
820 North, Provo, Utah 84601, and by paying in full and in lawful
money of the United States of America by cash or cashier's check,
the Exercise Price for the Warrant Shares as to which this Warrant
is exercised, on all the terms and conditions hereinafter set
forth. The number of Warrant Shares to be received on exercise
of this Warrant and the Exercise Price may be adjusted on the
occurrence of such events as described herein. If the subscription
rights represented hereby are not exercised by 11:59 p.m. mountain
time on November 1, 1998, this Warrant shall automatically become
void and of no further force or effect, and all rights represented
hereby shall cease and expire.
Subject to the terms set forth herein, this Warrant may be exercised
by the Holder in whole or in part by execution of the form of
exercise attached hereto and payment of the Exercise Price in the
manner described above.
1. Exercise of Warrants. On the exercise of all or any portion
of this Warrant in the manner provided above, the Holder exercising
the same shall be deemed to have become a holder of record of the
Warrant Shares for all purposes, and certificates for the
securities so purchased shall be delivered to the Holder within a
reasonable time, but in no event longer than ten days after this
Warrant shall have been exercised as set forth above. If this
Warrant shall be exercised in respect to only a part of the
Warrant Shares covered hereby, the Holder shall be entitled to
receive a similar Warrant of like tenor and date covering the
number of Warrant Shares with respect to which this Warrant shall
not have been exercised. On the exercise of all or any portion of
this Warrant, at the instruction of the Holder, the Company shall
offset any amounts due by it to Holder against payment of the
exercise price for the Warrants.
2. Limitation on Transfer. Subject to the restrictions set forth
in paragraph 7 hereof, this Warrant is transferable at the offices
of the Company. In the event this Warrant is assigned in the
manner provided herein, the Company, upon request and upon
surrender of this Warrant by the Holder at the principal office of
the Company accompanied by payment of all transfer taxes, if any,
payable in connection therewith, shall transfer this Warrant on
the books of the Company. If the assignment is in whole, the
Company shall execute and deliver a new Warrant or Warrants of like
tenor to this Warrant to the appropriate assignee expressly
evidencing the right to purchase the aggregate number of shares of
common stock purchasable hereunder; and if the assignment is in
part, the Company shall execute and deliver to the appropriate
assignee a new Warrant or Warrants of like tenor expressly
evidencing the right to purchase the portion of the aggregate
number of Warrant Shares as shall be contemplated by any such
transfer, and shall concurrently execute and deliver to the Holder
a new Warrant of like tenor to this Warrant evidencing the right
to purchase the remaining portion of the Warrant Shares
purchasable hereunder which have not been transferred to the
assignee.
3. Exchange of Warrants. This Warrant is exchangeable, on the
presentation and surrender hereof by the Holder at the office of
the Company, for a new Warrant or Warrants of like tenor
representing in the aggregate the right to subscribe for and
purchase the number of Warrant Shares which may be subscribed for
and purchased hereunder.
4. Fully Paid Shares. The Company covenants and agrees that
the Warrant Shares which may be issued on the exercise of the
rights represented by this Warrant will be, when issued, fully
paid and nonassessable and free from all taxes, liens, and charges
with respect to the issue thereof. The Company further covenants
and agrees that during the period within which the rights
represented by this Warrant may be exercised, the Company will
have authorized and reserved a sufficient number of shares of
common stock to provide for the exercise of the rights represented
by this Warrant.
5. Antidilution Provisions. The Warrant Price and number of
Warrant Shares purchasable pursuant to this Warrant may be subject
to adjustment from time to time as follows:
(a) If the Company shall take a record of the holders of
its common stock for the purpose of entitling them to receive
a dividend in shares, the Warrant Price in effect immediately
prior to such record date shall be proportionately decreased,
such adjustment to become effective immediately after the
opening of business on the day following such record date.
(b) If the Company shall subdivide the outstanding shares
of common stock into a greater number of shares, combine the
outstanding shares of common stock into a smaller number of
shares, or issue by reclassification any of its shares, the
Warrant Price in effect immediately prior thereto shall be
adjusted so that the Holder of this Warrant thereafter
surrendered for exercise shall be entitled to receive, after
the occurrence of any of the events described, the number of
Warrant Shares to which the Holder would have been entitled
had such Warrant been exercised immediately prior to the
occurrence of such event. Such adjustment shall become
effective immediately after the opening of business on the
day following the date on which such subdivision, combination,
or reclassification, as the case may be, becomes effective.
(c) If any capital reorganization or reclassification of the
Company's common stock, or consolidation or merger of the
Company with another corporation or the sale of all or
substantially all of its assets to another corporation shall
be effected in such a way that holders of common stock shall
be entitled to receive stock, securities, or assets with
respect to or in exchange for common stock, then, as a
condition of such reorganization, reclassification,
consolidation, merger, or sale, lawful adequate provisions
shall be made whereby the Holder of this Warrant shall
thereafter have the right to acquire and receive on exercise
hereof such shares of stock, securities, or assets as would
have been issuable or payable (as part of the reorganization,
reclassification, consolidation, merger, or sale) with respect
to or in exchange for such number of outstanding common shares
of the Company as would have been received on exercise of this
Warrant immediately before such reorganization,
reclassification, consolidation, merger, or sale.
In any such case, appropriate provision shall be made with
respect to the rights and interests of the Holder of this
Warrant to the end that the provisions hereof shall thereafter
be applicable in relation to any shares of stock, securities,
or assets thereafter deliverable on the exercise of this
Warrant. In the event of a merger or consolidation of the
Company with or into another corporation or the sale of all
or substantially all of its assets which results in the
issuance of a number of shares of common stock of the
surviving or purchasing corporation greater or less than the
number of shares of common stock of the Company outstanding
immediately prior to such merger, consolidation, or purchase
are issuable to holders of common stock of the Company, then
the Warrant Price in effect immediately prior to such merger,
consolidation, or purchase shall be adjusted in the same
manner as though there was a subdivision or combination of
the outstanding shares of common stock of the Company. The
Company will not effect any such consolidation, merger, or
sale unless prior to the consummation thereof the successor
corporation resulting from such consolidation or merger or
the corporation purchasing such assets shall assume by
written instrument mailed or delivered to the Holder hereof
at its last address appearing on the books of the Company,
the obligation to deliver to such Holder such shares of
stock, securities, or assets as, in accordance with the
foregoing provisions, such Holder may be entitled to acquire
on exercise of this Warrant.
(d) If: (i) the Company shall take a record of the holders
of its shares of common stock for the purpose of entitling
them to receive a dividend payable otherwise than in cash, or
any other distribution in respect of the shares of common
stock (including cash), pursuant to, without limitation, any
spin-off, split-off, or distribution of the Company's assets;
or (ii) the Company shall take a record of the holders of its
shares of common stock for the purpose of entitling them to
subscribe for or purchase any shares of any class or to
receive any other rights; or (iii) in the event of any
classification, reclassification, or other reorganization of
the shares which the Company is authorized to issue,
consolidation or merger of the Company with or into another
corporation, or conveyance of all or substantially all of
the assets of the Company; or (iv) in the event of the
voluntary or involuntary dissolution, liquidation, or winding
up of the Company; then, and in any such case, the Company
shall mail to the Holder of this Warrant, at least 30 days
prior thereto, a notice stating the date or expected date on
which a record is to be taken for the purpose of such
dividend, distribution or rights, or the date on which such
classification, reclassification, reorganization,
consolidation, merger, conveyance, dissolution, liquidation,
or winding up, as the case may be. Such notice shall also
specify the date or expected date, if any is to be fixed,
as of which holders of shares of common stock of record
shall be entitled to participate in such dividend,
distribution, or rights, or shall be entitled to exchange
their shares of common stock for securities or other
property deliverable upon such classification,
reclassification, reorganization, consolidation, merger,
conveyance, dissolution, liquidation, or winding up, as
the case may be.
(e) If the Company, at any time while this Warrant shall
remain unexpired and unexercised, sells shares of common
stock to an affiliate of the Company, excluding shares issued
on the exercise of options issued and outstanding as of the
date hereof and shares issued to officers and directors under
stock option plans of the Company existing as of the date
hereof, at a price lower than the Exercise Price provided
herein, as the same may from time to time be adjusted pursuant
to this section 5, then the Exercise Price of these Warrants
shall be reduced automatically to such lower price at which
the Company has sold common stock.
(f) No fraction of a share shall be issued on exercise,
but, in lieu thereof, the Company, notwithstanding any other
provision hereof, may pay therefor in cash at the fair value
of any such fractional share at the time of exercise.
6. Disposition of Warrants or Warrant Shares. The registered
owner of this Warrant, by acceptance hereof, agrees for himself
and any subsequent owner(s) that, before any disposition is made
of any Warrant Shares, the owner(s) shall give written notice to
the Company describing briefly the manner of any such proposed
disposition. No such disposition shall be made unless and until:
(a) the Company has received an opinion from counsel for
the owner(s) of the Warrant Shares stating that no
registration under the Securities Act is required with
respect to such disposition; or
(b) a registration statement or post-effective amendment to
a registration statement under the Securities Act has been
filed by the Company and made effective by the Commission
covering such proposed disposition.
7. Registration of Warrant Shares. On request of the Holder,
the Company shall use its best efforts to file a registration
statement under the Securities Act to register the resale of the
Warrant Shares issuable on the exercise of this Warrant, shall
utilize its best efforts to cause such registration statement
to become effective as soon as is commercially reasonable, and
shall maintain the effectiveness of such registration statement
for a period of two years, unless the Company's legal counsel is
of the reasonable opinion that registration is not required in
order to dispose of the Warrant Shares. The Holder(s) shall
cooperate with the Company and shall furnish such information as
the Company may request in connection with any such registration
statement hereunder, on which the Company shall be entitled to
rely.
8. Governing Law. This agreement shall be construed under and
be governed by the laws of the state of Nevada.
9. Notices. All notices, demands, requests, or other
communications required or authorized hereunder shall be deemed
given sufficiently if in writing and if personally delivered; if
sent by facsimile transmission, confirmed with a written copy
thereof sent by second day express delivery or registered mail,
return receipt requested and postage prepaid; if sent by registered
mail or certified mail, return receipt requested and postage
prepaid; or if sent by second day express delivery:
If to the Company, to: Larson Davis Incorporated
Attn.: Brian G. Larson, President
1681 West 820 North
Provo, Utah 84601
Facsimile Transmission: (801) 375-0182
Confirmation: (801) 375-0177
If to the Holder: Ms. Connie Lerner
c/o Broad Capital Associates, Inc.
152 West 57th Street, 54th Floor
New York, New York 10019
Facsimile Transmission: (212) 581-0002
Confirmation: (212) 581-0500
or other such addresses and facsimile numbers as shall be furnished
by any party in the manner for giving notices hereunder, and any
such notice, demand, request, or other communication shall be
deemed to have been given as of the date so delivered or sent by
facsimile transmission, three days after the date so mailed, or
two days after the date so sent by second day delivery.
10. Loss, Theft, Destruction, or Mutilation. Upon receipt by
the Company of reasonable evidence of the ownership of and the
loss, theft, destruction, or mutilation of this Warrant, the
Company will execute and deliver, in lieu thereof, a new Warrant
of like tenor.
11. Taxes. The Company will pay all taxes in respect of the
issue of this Warrant or the Warrant Shares issuable upon exercise
thereof.
DATED this _____ day of May, 1996.
LARSON DAVIS INCORPORATED
By
Brian G. Larson, President
Form of Assignment
(to be signed only upon assignment of Warrant)
TO: Larson Davis Incorporated
Attn.: President
1681 West 820 North
Provo, Utah 84601
FOR VALUE RECEIVED, _________________ does hereby sell, assign,
and transfer unto ____________________ the right to purchase
___________ shares of common stock of LARSON DAVIS INCORPORATED
(the "Company"), evidenced by the attached Warrant, and does
hereby irrevocably constitute and appoint _________________
attorney to transfer such right on the books of the Company with
full power of substitution in the premises.
DATED this _____ day of __________, 19___.
Signature:
Signature Guaranteed:
NOTICE: The signature to the form of 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, and must be guaranteed by a bank, other than a
savings bank, or by a trust company or by a firm having membership
on a registered national securities exchange.
Form Of Purchase
(to be signed only upon exercise of Warrant)
TO: Larson Davis Incorporated
Attn.: President
1681 West 820 North
Provo, Utah 84601
The undersigned, the owner of the attached Warrant, hereby
irrevocably elects to exercise the purchase rights represented by
the Warrant for, and to purchase thereunder, ___________ shares
of the common stock of LARSON DAVIS INCORPORATED and herewith
makes payment of $___________ therefor (at the rate of $4.50 per
share of common stock). Please issue the shares of common stock
as to which this Warrant is exercised in accordance with the
enclosed instructions and, if the Warrant is being exercised with
respect to less than all of the shares to which it pertains,
prepare and deliver a new Warrant of like tenor for the balance
of the shares of common stock purchasable under the attached
Warrant.
DATED this _____ day of __________, 19___.
Signature:
Signature Guaranteed:
