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 15, 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)
Page 1 of 83 consecutively numbered pages, including exhibits.
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ITEM 5. OTHER EVENTS
Warrant Agreement
Larson Davis Incorporated (the "Company") negotiated a new agreement (the
"Warrant Agreement"), with the holders of its outstanding warrants (the "Warrant
Holders") pursuant to which the Warrant Holders agreed to exercise all of the
$3.25 A, B, C, and D Warrants (the "$3.25 Warrants") 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"). The Company has received aggregate
gross proceeds of $3,445,000 from the exercise of the $3.25 Warrants to date and
issued 1,060,000 shares of Common Stock. Under the terms of the Warrant
Agreement, the Warrant Holders will receive fewer $6.25 Warrants if they do not
exercise the remaining $3.25 Warrants for an aggregate exercise price of
$3,055,000 by May 27, 1996. If the Company receives this remaining exercise
price, it will issue the remaining 940,000 shares subject to the $3.25 Warrants.
Such shares will be issued pursuant to a exemption from the registration
requirements of federal and state securities laws and, consequently, the
certificates representing the shares will 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 prototyping, analytical evaluation of resulting data,
equipment, product refinement, manufacturing, engineering, production tooling
and design, and marketing efforts.
If the May 27 exercise commitment under the new agreement is met, the
Company will issue $6.25 Warrants to acquire an aggregate of 1,675,167 shares.
If the Company does not receive all of the exercise price by May 27, the number
of shares subject to the $6.25 Warrants would be proportionately reduced down to
1,000,000 shares unless the exercise price is not received by December 1, 1996,
in which case the Company would not have an obligation to issue $6.25 Warrants.
The $6.25 Warrants will be exercisable at any time subsequent to November
1, 1996 and prior to midnight November 1, 1998. The holders of the $6.25
Warrants will 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
ExhibitReference
Number Number Title of Document Page
1 10 Agreement to Issue Warrants to Congregation
Ahavas Tzdokah Z'Chesed....................... 6
2 10 Agreement to Issue Warrants to Ezer Mzion
Organization.................................. 25
3 10 Form of Agreement to Issue Warrants to
Laura Huberfeld and Naomi Bodner.............. 44
4 10 Form of Agreement to Issue Warrants to
Jeffrey Rubin, Lenore Katz, Robert Cohen,
Jeffrey Cohen, Allyson Cohen, and
Shawn Zimberg................................. 64
<PAGE>
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: May 20, 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 15th day of May, 1996, by and among LARSON DAVIS INCORPORATED, a Nevada
corporation (the "Company"), and CONGREGATION AHAVAS TZDOKAH Z'CHESED
("Holder"), based on the following premises.
Premises
A. Holder has the right, under certain circumstances, to receive warrants
to acquire shares of common stock of the Company, par value $0.001 per share
(the "Common Stock").
B. The Company has agreed to issue additional warrants to Holder, on the
terms and conditions set forth in this Agreement, if Holder exercised the
initial warrants in accordance with the terms hereof.
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 Committed Warrants. Holder was gifted the right to receive, if and
when issued by the Company, warrants (the "Committed Warrants") to acquire
370,208 shares of Common Stock at $3.25 per share, or an aggregate of
$1,203,176.
1.2 Exercise of Committed Warrants. The Company hereby agrees that if:
(i) Holder exercises all of the Committed Warrants on or before May 27, 1996, by
payment to the Company of the aggregate exercise price of $1,203,176 on or
before such date, the Company shall issue to Holder additional warrants (the
"$6.25 Warrants") to acquire up to 370,208 shares of Common Stock, at a per
share exercise price of $6.25, at any time subsequent to November 1, 1996 and
prior to midnight November 1, 1998 or (ii) if Holder does not exercise all of
the Committed Warrants on or before May 27, 1996 but does exercise all of the
Committed Warrants on or before December 1, 1996, by payment to the Company of
the aggregate exercise price of $1,203,176 on or before December 1, 1996, the
Company shall issue to Holder $6.25 Warrants to acquire up to 100,000 shares of
Common Stock at any time subsequent to December 1, 1996 and prior to midnight
December 1, 1997. The $6.25 Warrants shall be in the form attached hereto as
Exhibit "A." On receipt of the exercise price for the Committed Warrants, the
Company shall immediately provide irrevocable written instructions to its
transfer agent to issue certificates representing the 370,208 shares of Common
Stock acquired thereby in the name of Holder.
1.3 Terms of Committed Warrants. Nothing in this Agreement shall be
deemed to amend the terms of the Committed Warrants if such Warrants are not
exercised by the dates set forth in section 1.2. If issued, Holder shall
continue to have the right to exercise such Warrants to acquire 170,104 shares
of Common Stock at $3.25 per share at any time prior to midnight on June 30,
1997, and 200,104 shares of Common Stock at $3.25 per share at any time prior to
midnight December 31, 1997.
Article II
Representations, Covenants, and Warranties of the Company
As an inducement to, and to obtain the reliance of, Holder, 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 on
form 10-QSB for the quarters ended September 30, and December 31, 1995, 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 Holder
As an inducement to, and to obtain the reliance of the Company, Holder
represents and warrants as follows:
3.1 Binding Agreement. This Agreement is the legal, valid, and binding
obligation of Holder 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 Holder 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. 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
Holder of this Agreement and the consummation by Holder 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 Holder is a party or to which any of
its properties or assets are subject.
3.4 Information. The information concerning Holder 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 Holder. Holder agrees to jointly and severally
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
Holder expressly for use therein. Holder 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 Holder 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
Holder contained in such document or draft was furnished by Holder, indicating
the inaccuracies or omissions contained in such document or draft or indicating
the information not furnished by Holder 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 Holder from and against any and all losses, claims, damages, expenses,
liabilities, or actions to which it may become subject under applicable law
(including the Securities Act and the Exchange Act) and will reimburse it 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 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 Holder to furnish to it 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 Holder 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 Holder 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, Holder makes the following representations and warranties:
(i) Holder 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) Holder has received and read this Agreement and understand
the risks related to the consummation of the transactions herein
contemplated.
(iii) Holder has such knowledge and experience in business
and financial matters that it is capable of evaluating the Company and
its business operations.
(iv) Holder has adequate means of providing for its current needs
and possible personal contingencies and have 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. Holder 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) Holder 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. Holder's representatives,
including its legal counsel, have personally met with the officers and
directors of the Company and have investigated the intellectual
property assets of the Company. Holder and its 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 they consider material to the acquisition of the Warrants
and the shares of Common Stock issuable on exercise of the Warrants.
(vi) Holder is acquiring the Warrants and the shares of Common
Stock issuable on exercise of the Warrants for its own account and not
for resale to others.
(vii) Holder confirms that it is an "accredited investor" as
defined under rule 501 of regulation D promulgated under the
Securities Act.
(viii) Holder is a resident of the New York.
(ix) Holder 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. Holder
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, Holder 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 Holder on exercise of the Committed Warrants 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 Holder, 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 subusequent 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 declare 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 Holder pursuant to the
exercise of the $6.25 Warrants the Company elects to file a registration
statement and the resale by Holder 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 Holder notice of its intent to do so. Holder
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 it 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 Holder.
(a) Holder 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 its Warrants, Holder shall be deemed to have
confirmed at the time of such exercise the continuing accuracy of the
information respecting its status as an accredited investor and the
suitability of an investment in the Common Stock for it that is contained
herein, all except as such investors may then advise the Company in
writing. The Company may also require, as a condition precedent to
exercise, that Holder 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) Holder, 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 its
receipt of copies of the supplemented or amended prospectus contemplated by
paragraph (b) of section 5.2 or until they are 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, Holder 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 its 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 Holder 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), Holder 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 Holder shall notify the
Company of the number of securities registered which remain unsold promptly
after receipt of such notice from the Company.
(e) Holder 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 Holder in writing of such
registration or exemption and the related limitations and conditions from
time to time. Holder shall be solely responsible for its own compliance
with such limitations and conditions.
5.5 Holdback Agreement. Holder, 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 Holder 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 Holder 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 Holder comprising underwriters'
commissions, brokerage fees, transfer taxes, or the fees and expenses of any
counsel, accountant, or other representative retained by Holder.
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 Holder, will furnish it with
such information generated by the Company in the ordinary course of business as
may be reasonably necessary to enable it 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. Holder may not
participate in any underwritten piggyback registration in which it chose to have
stock included unless Holder (a) agree 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) complete and execute 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. Holder 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. Holder and the Company each 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 Holder, to: Congregation Ahavas Tzdokah Z'Chesed
3814-A 15th Avenue
Brooklyn, New York 11218
Facsimile Transmission: (212) -
---- ------
Confirmation: (212) -
---- -----
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 Holder 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
Holder:
Congregation Ahavas Tzdokah Z'Chesed
By /s/
Exhibit "A"
Warrant for the Purchase of
Shares of Common Stock, Par Value $0.001
---------
THIS WARRANT WILL BE VOID
AFTER 11:59 P.M. MOUNTAIN TIME ON 1, 199
----------- -
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 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 1 1996 and on or before 11:59 p.m. mountain time on 1,
199 (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 1, 199 , 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: Congregation Ahavas Tzdokah Z'Chesed
3814-A 15th Avenue
Brooklyn, New York 11218
Facsimile Transmission: (212) -
---- ------
Confirmation: (212) -
---- -----
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 3rd 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:
AGREEMENT TO ISSUE WARRANTS
THIS AGREEMENT TO ISSUE WARRANTS (this "Agreement") is entered into as of
this 15th day of May, 1996, by and among LARSON DAVIS INCORPORATED, a Nevada
corporation (the "Company"), and EZER MZION ORGANIZATION ("Holder"), based on
the following premises.
Premises
A. Holder has the right, under certain circumstances, to receive warrants
to acquire shares of common stock of the Company, par value $0.001 per share
(the "Common Stock").
B. The Company has agreed to issue additional warrants to Holder, on the
terms and conditions set forth in this Agreement, if Holder exercised the
initial warrants in accordance with the terms hereof.
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 Committed Warrants. Holder was gifted the right to receive, if and
when issued by the Company, warrants (the "Committed Warrants") to acquire
370,208 shares of Common Stock at $3.25 per share, or an aggregate of
$1,203,176.
1.2 Exercise of Committed Warrants. The Company hereby agrees that if:
(i) Holder exercises all of the Committed Warrants on or before May 27, 1996, by
payment to the Company of the aggregate exercise price of $1,203,176 on or
before such date, the Company shall issue to Holder additional warrants (the
"$6.25 Warrants") to acquire up to 370,208 shares of Common Stock, at a per
share exercise price of $6.25, at any time subsequent to November 1, 1996 and
prior to midnight November 1, 1998 or (ii) if Holder does not exercise all of
the Committed Warrants on or before May 27, 1996 but does exercise all of the
Committed Warrants on or before December 1, 1996, by payment to the Company of
the aggregate exercise price of $1,203,176 on or before December 1, 1996, the
Company shall issue to Holder $6.25 Warrants to acquire up to 100,000 shares of
Common Stock at any time subsequent to December 1, 1996 and prior to midnight
December 1, 1997. The $6.25 Warrants shall be in the form attached hereto as
Exhibit "A." On receipt of the exercise price for the Committed Warrants, the
Company shall immediately provide irrevocable written instructions to its
transfer agent to issue certificates representing the 370,208 shares of Common
Stock acquired thereby in the name of Holder.
1.3 Terms of Committed Warrants. Nothing in this Agreement shall be
deemed to amend the terms of the Committed Warrants if such Warrants are not
exercised by the dates set forth in section 1.2. If issued, Holder shall
continue to have the right to exercise such Warrants to acquire 170,104 shares
of Common Stock at $3.25 per share at any time prior to midnight on June 30,
1997, and 200,104 shares of Common Stock at $3.25 per share at any time prior to
midnight December 31, 1997.
Article II
Representations, Covenants, and Warranties of the Company
As an inducement to, and to obtain the reliance of, Holder, 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 on
form 10-QSB for the quarters ended September 30, and December 31, 1995, 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 Holder
As an inducement to, and to obtain the reliance of the Company, Holder
represents and warrants as follows:
3.1 Binding Agreement. This Agreement is the legal, valid, and binding
obligation of Holder 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 Holder 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. 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
Holder of this Agreement and the consummation by Holder 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 Holder is a party or to which any of
its properties or assets are subject.
3.4 Information. The information concerning Holder 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 Holder. Holder agrees to jointly and severally
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
Holder expressly for use therein. Holder 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 Holder 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
Holder contained in such document or draft was furnished by Holder, indicating
the inaccuracies or omissions contained in such document or draft or indicating
the information not furnished by Holder 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 Holder from and against any and all losses, claims, damages, expenses,
liabilities, or actions to which it may become subject under applicable law
(including the Securities Act and the Exchange Act) and will reimburse it 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 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 Holder to furnish to it 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 Holder 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 Holder 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, Holder makes the following representations and warranties:
(i) Holder 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) Holder has received and read this Agreement and understand
the risks related to the consummation of the transactions herein
contemplated.
(iii) Holder has such knowledge and experience in business
and financial matters that it is capable of evaluating the Company and
its business operations.
(iv) Holder has adequate means of providing for its 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. Holder 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) Holder 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. Holder's representatives have
personally met with the officers and directors of the Company and have
investigated the intellectual property assets of the Company. Holder
and its 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 they consider material to the
acquisition of the Warrants and the shares of Common Stock issuable on
exercise of the Warrants.
(vi) Holder is acquiring the Warrants and the shares of Common
Stock issuable on exercise of the Warrants for its own account and not
for resale to others.
(vii) Holder confirms that it is an "accredited investor" as
defined under rule 501 of regulation D promulgated under the
Securities Act.
(viii) Holder is not organized under the laws of the United
States or any of the states of the United States and was not formed by
a United States person for the purpose of investing in securities.
(ix) Holder 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. Holder
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, Holder 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 Holder on exercise of the Committed Warrants 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 Holder, 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 declare 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 Holder pursuant to the
exercise of the $6.25 Warrants the Company elects to file a registration
statement and the resale by Holder 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 Holder notice of its intent to do so. Holder
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 it 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 Holder.
(a) Holder 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 its Warrants, Holder shall be deemed to have
confirmed at the time of such exercise the continuing accuracy of the
information respecting its status as an accredited investor and the
suitability of an investment in the Common Stock for it that is contained
herein, all except as such investors may then advise the Company in
writing. The Company may also require, as a condition precedent to
exercise, that Holder 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) Holder, 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 its
receipt of copies of the supplemented or amended prospectus contemplated by
paragraph (b) of section 5.2 or until they are 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, Holder 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 its 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 Holder 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), Holder 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 Holder shall notify the
Company of the number of securities registered which remain unsold promptly
after receipt of such notice from the Company.
(e) Holder 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 Holder in writing of such
registration or exemption and the related limitations and conditions from
time to time. Holder shall be solely responsible for its own compliance
with such limitations and conditions.
5.5 Holdback Agreement. Holder, 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 Holder 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 Holder 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 Holder comprising underwriters'
commissions, brokerage fees, transfer taxes, or the fees and expenses of any
counsel, accountant, or other representative retained by Holder.
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 Holder, will furnish it with
such information generated by the Company in the ordinary course of business as
may be reasonably necessary to enable it 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. Holder may not
participate in any underwritten registration in which it chose to have stock
included unless Holder (a) agree 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) complete and execute 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. Holder 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. Holder and the Company each 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 Holder, to: Ezer Mzion Organization
16 Eshel Avraham Street
Beni-Brak, Israel
Facsimile Transmission: ( ) -
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Confirmation: ( ) -
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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 Holder 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
Holder:
Ezer Mzion Organization
By /s/
President
Exhibit "A"
LARSON DAVIS INCORPORATED
(a Nevada corporation)
Warrant for the Purchase of
Shares of Common Stock, Par Value $0.001
---------
THIS WARRANT WILL BE VOID
AFTER 11:59 P.M. MOUNTAIN TIME ON 1, 199
----------- -
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 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 1 1996 and on or before 11:59 p.m. mountain time on 1,
------- ------
199 (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 1, 199 , 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: Ezer Mzion Organization
16 Eshel Avraham Street
Beni- Brak, Israel
Facsimile Transmission: ( ) -
---- ------
Confirmation: ( ) -
---- -----
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 3rd 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:
AGREEMENT TO ISSUE WARRANTS
THIS AGREEMENT TO ISSUE WARRANTS (this "Agreement") is entered into as of
this 15th day of May, 1996, by and among LARSON DAVIS INCORPORATED, a Nevada
corporation (the "Company"), and LAURA HUBERFELD ("Huberfeld") and NAOMI BODNER
("Bodner"), based on the following premises.
Premises
A. The parties to this Agreement are parties to an Agreement dated March
6, 1996, as amended April 23, 1996 (the "Prior Agreement"), pursuant to which
Huberfeld and Bodner each hold warrants to acquire shares of common stock of the
Company, par value $0.001 per share (the "Common Stock"), and the right to
acquire, under certain circumstances, additional warrants.
B. Huberfeld and Bodner have agreed to the early exercise of the warrants
currently held by them and the warrants to which they may be entitled in
consideration of the Company's agreement to grant them 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 Existing and Committed Warrants. Under the terms of the Prior
Agreement, Huberfeld and Bodner each hold warrants to acquire 400,208 shares, or
an aggregate of 800,416, shares of Common Stock (the "Existing Warrants"),
exercisable under certain conditions as set forth in the Prior Agreement, at
$3.25 per share, or an aggregate of $2,601,352. Of this amount, Huberfeld and
Bodner have previously paid an aggregate of $500,000 to the Company. In
addition to the Existing Warrants, Huberfeld and Bodner each hold the right to
receive, under certain conditions as set forth in the Prior Agreement,
additional warrants to each acquire 30,000 shares of Common Stock at $3.25 per
share (the "Committed Warrants").
1.2 Exercise of Existing and Committed Warrants. Huberfeld and Bodner
agree to exercise the remaining Existing Warrants and all of the Committed
Warrants, on or before May 27, 1996, by the payment to the Company of the
remaining aggregate exercise price of $2,296,352. The Company agrees to
immediately provide irrevocable written instructions to its transfer agent to
issue certificates representing the 860,416 shares of Common Stock acquired
thereby, 430,208 shares to be registered in the name of Laura Huberfeld and
430,208 shares to be registered in the name of Naomi Bodner, and to deliver such
certificates to Huberfeld and Bodner.
1.3 Issuance of Additional Warrants. On exercise of the Existing and
Committed Warrants in accordance with the provisions of Section 1.2, the Company
agrees to issue warrants to Huberfeld and
Bodner to acquire an aggregate of 600,416 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
Company shall issue one $6.25 Warrant, in the form attached hereto as Exhibit
"A," to acquire 300,208 shares of Common Stock to Huberfeld and one $6.25
Warrant, in the form attached hereto as Exhibit "A," to acquire 300,208 shares
of Common Stock to Bodner.
Article II
Representations, Covenants, and Warranties of the Company
As an inducement to, and to obtain the reliance of, Huberfeld and Bodner,
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 on
form 10-QSB for the quarters ended September 30, and December 31, 1995, 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 Huberfeld and Bodner
As an inducement to, and to obtain the reliance of the Company, Huberfeld
and Bodner represent and warrant as follows:
3.1 Binding Agreement. This Agreement is the legal, valid, and binding
obligation of each of Huberfeld and Bodner 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 Huberfeld or Bodner is a party or
to which any of their 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 Huberfeld and Bodner of this Agreement and the
consummation by Huberfeld and Bodner 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 Huberfeld or Bodner is a party or to
which any of their respective properties or assets are subject.
3.4 Information. The information concerning Huberfeld or Bodner 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 Huberfeld and Bodner. Huberfeld and Bodner agree
to jointly and severally 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 Huberfeld or Bodner
expressly for use therein. Huberfeld and Bodner agree 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 Huberfeld and Bodner 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 Huberfeld and Bodner contained in such document or draft was
furnished by Huberfeld or Bodner, indicating the inaccuracies or omissions
contained in such document or draft or indicating the information not furnished
by Huberfeld or Bodner 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 Huberfeld and Bodner from and against any and all losses, claims,
damages, expenses, liabilities, or actions to which either 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 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 Huberfeld or Bodner to furnish to them 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 Huberfeld and Bodner 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 Huberfeld and Bodner
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, Huberfeld and Bodner make the following representations and
warranties:
(i) Huberfeld and Bodner acknowledge 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) Huberfeld and Bodner have received and read this Agreement
and understand the risks related to the consummation of the
transactions herein contemplated.
(iii) Huberfeld and Bodner have such knowledge and experience
in business and financial matters that each of them is capable of
evaluating the Company and its business operations.
(iv) Huberfeld and Bodner have adequate means of providing for
their current needs and possible personal contingencies and have 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. Huberfeld and Bodner are each able to bear the
economic risks of this investment, and, consequently, without limiting
the generality of the foregoing, are able to hold the Warrants and the
shares of Common Stock issuable on exercise of the Warrants for an
indefinite period of time, and have a sufficient net worth to sustain
a loss of the entire investment, in the event such loss should occur.
(v) Huberfeld and Bodner have each 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.
Huberfeld's and Bodner'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. Each of Huberfeld and Bodner and their 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 they consider material to the acquisition of the Warrants
and the shares of Common Stock issuable on exercise of the Warrants.
(vi) Each of Huberfeld and Bodner 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) Each of Huberfeld and Bodner confirms that she is an
"accredited investor" as defined under rule 501 of regulation D
promulgated under the Securities Act. Each of Huberfeld and Bodner
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) Each of Huberfeld and Bodner is a resident of the New
York.
(ix) Each of Huberfeld and Bodner 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.
Each of Huberfeld and Bodner 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, each of Huberfeld and Bodner 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 Huberfeld and Bodner on exercise of the Existing and
Committed Warrants 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 Huberfeld or Bodner,
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 declare 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 Huberfeld and Bodner
pursuant to the exercise of the $6.25 Warrants the Company elects to file a
registration statement and the resale by Huberfeld and Bodner 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 Huberfeld and Bodner
notice of its intent to do so. Huberfeld and Bodner 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 them 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 Huberfeld and Bodner.
(a) Huberfeld and Bodner 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 their Warrants, Huberfeld and Bodner shall be
deemed to have confirmed at the time of such exercise the continuing
accuracy of the information respecting their status as accredited investors
and the suitability of an investment in the Common Stock for them that is
contained herein, all except as such investors may then advise the Company
in writing. The Company may also require, as a condition precedent to
exercise, that Huberfeld or Bodner, as the case may be, 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) Huberfeld and Bodner, 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
their receipt of copies of the supplemented or amended prospectus
contemplated by paragraph (b) of section 5.2 or until they are advised in
writing (the "Advice") by the Company that the use of the prospectus may be
resumed, and have received copies of any additional or supplemental filings
which are incorporated by reference in the prospectus, and, if so directed
by the Company, Huberfeld and Bodner 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 their 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 Huberfeld and Bodner 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), Huberfeld and Bodner 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 Huberfeld and
Bodner shall notify the Company of the number of securities registered
which remain unsold promptly after receipt of such notice from the Company.
(e) Huberfeld and Bodner acknowledge 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 Huberfeld and Bodner in writing of such registration or exemption
and the related limitations and conditions from time to time. Huberfeld
and Bodner shall be solely responsible for their own compliance with such
limitations and conditions.
5.5 Holdback Agreement. Huberfeld and Bodner, if requested by the
managing underwriter or underwriters for any underwritten, registered offering
of the securities of the Company, agree 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 Huberfeld and
Bodner are 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 Huberfeld and Bodner are 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 Huberfeld and Bodner comprising
underwriters' commissions, brokerage fees, transfer taxes, or the fees and
expenses of any counsel, accountant, or other representative retained by
Huberfeld and Bodner.
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 Huberfeld or Bodner, will
furnish them with such information generated by the Company in the ordinary
course of business as may be reasonably necessary to enable them 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. Huberfeld and Bodner may
not participate in any underwritten piggyback registration in which they chose
to have stock included unless Huberfeld and Bodner (a) agree 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)
complete and execute 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. Huberfeld, Bodner, 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. Huberfeld, Bodner,
and the Company each 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 Huberfeld or Bodner, to: Ms. Laura Huberfeld
Ms. Naomi Bodner
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 Huberfeld and Bodner 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
Brian G. Larson, President
Huberfeld:
Laura Huberfeld
Address: 152 West 57th Street
New York, New York 10019
Bodner:
Naomi Bodner
Address: 152 West 57th Street
New York, New York 10019
Exhibit "A"
LARSON DAVIS INCORPORATED
(a Nevada corporation)
Warrant for the Purchase of
300,208 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 300,208 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. Laura Huberfeld
Ms. Naomi Bodner
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 3rd 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:
AGREEMENT TO ISSUE WARRANTS
THIS AGREEMENT TO ISSUE WARRANTS (this "Agreement") is entered into as of
this 20th day of May, 1996, by and among LARSON DAVIS INCORPORATED, a Nevada
corporation (the "Company"), and JEFFREY RUBIN, LENORE KATZ, ROBERT COHEN,
JEFFREY COHEN, ALLYSON COHEN, and SHAWN ZIMBERG (collectively, the "Holders"),
based on the following premises.
Premises
A. The parties to this Agreement are parties to an Agreement dated March
6, 1996, as amended April 23, 1996 (the "Prior Agreement"), pursuant to which
the Holders each hold warrants to acquire shares of common stock of the Company,
par value $0.001 per share (the "Common Stock"), and the right to acquire, under
certain circumstances, additional warrants.
B. The Holders have agreed to the early exercise of the warrants
currently held by them and the warrants to which they may be entitled in
consideration of the Company's agreement to grant them 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 Prior and Committed Warrants. Under the terms of the Prior Agreement,
the Holders held warrants to acquire an aggregate of 199,584 shares of Common
Stock (the "Prior Warrants"), exercisable under certain conditions as set forth
in the Prior Agreement, at $3.25 per share, or an aggregate exercise price of
$648,648. The Holders have exercised the Prior Warrants. In addition to the
Prior Warrants, the Holders each hold the right to receive as set forth in the
Prior Agreement, additional warrants to acquire an aggregate of 199,584 shares
of Common Stock at $3.25 per share (the "Committed Warrants").
1.2 Exercise of Prior and Committed Warrants. The Company hereby agrees
that if: (i) the Holders exercise all of the Committed Warrants on or before May
27, 1996, by payment to the Company of the aggregate exercise price of $648,648
on or before such date, the Company shall issue to the Holders additional
warrants (the "$6.25 Warrants") to acquire up to 334,337 shares of Common Stock,
at a per share exercise price of $6.25, at any time subsequent to November 1,
1996 and prior to midnight November 1, 1998 or (ii) if the Holders do not
exercise all of the Committed Warrants on or before May 27, 1996 but do exercise
such Warrants on or before December 1, 1996, by payment to the Company of the
aggregate exercise price of $648,648 on or before December 1, 1996, the Company
shall issue to the Holders $6.25 Warrants to acquire up to 199,584 shares of
Common Stock at any time subsequent to December 1, 1996 and prior to midnight
December 1, 1997. On receipt of the exercise price for the Committed Warrants,
the Company shall immediately provide irrevocable written instructions to its
transfer agent to issue certificates representing the number of shares of Common
Stock acquired thereby in the name of the Holders exercising their rights.
1.3 Issuance of Additional Warrants. On timely exercise of the Committed
Warrants as set forth in paragraph 1.2, the Company agrees to issue $6.25
Warrants to the Holders to acquire the shares of Common Stock set forth in
paragraph 1.2. The Company shall issue, to each Holder, a $6.25 Warrant, in the
form attached hereto as Exhibit "B" attached hereto and incorporated herein by
this reference, to acquire that number of shares of Common Stock set forth on
Exhibit "A."
Article II
Representations, Covenants, and Warranties of the Company
As an inducement to, and to obtain the reliance of, the Holders, 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 on
form 10-QSB for the quarters ended September 30, and December 31, 1995, 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 the Holders
As an inducement to, and to obtain the reliance of the Company, the Holders
represent and warrant as follows:
3.1 Binding Agreement. This Agreement is the legal, valid, and binding
obligation of each of the Holders 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 any of the Holders is a party or to
which any of their 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 the Holders of this Agreement and the consummation by the Holders 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 any of the Holders is a party or to
which any of their respective properties or assets are subject.
3.4 Information. The information concerning the Holders 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 the Holders. The Holders agree to jointly and
severally 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 the Holders expressly for use therein. The Holders agree 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 the Holders
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 the Holders contained in such document or draft was
furnished by the Holders, indicating the inaccuracies or omissions contained in
such document or draft or indicating the information not furnished by the
Holders 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 the Holders from and against any and all losses, claims, damages,
expenses, liabilities, or actions to which either 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 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 the Holders to furnish to them 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 the Holders 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 the Holders 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, the Holders make the following representations and warranties:
(i) The Holders acknowledge 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) The Holders have received and read this Agreement and
understand the risks related to the consummation of the transactions
herein contemplated.
(iii) The Holders have such knowledge and experience in
business and financial matters that each of them is capable of
evaluating the Company and its business operations.
(iv) The Holders have adequate means of providing for their
current needs and possible personal contingencies and have 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. The Holders are each able to bear the economic risks of
this investment, and, consequently, without limiting the generality of
the foregoing, are able to hold the Warrants and the shares of Common
Stock issuable on exercise of the Warrants for an indefinite period of
time, and have a sufficient net worth to sustain a loss of the entire
investment, in the event such loss should occur.
(v) The Holders have each 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. The Holders'
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. Each of the Holders
and their 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 they consider material to the
acquisition of the Warrants and the shares of Common Stock issuable on
exercise of the Warrants.
(vi) Each of the Holders 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) Each of the Holders confirms that she is an "accredited
investor" as defined under rule 501 of regulation D promulgated under
the Securities Act. Each of the Holders 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) Each of the Holders is a resident of the state of New
York.
(ix) Each of the Holders 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.
Each of the Holders 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, each of the Holders 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 the Holders on exercise of the Prior and Committed
Warrants 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 the Holders, 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 later 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 declare 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 the Holders pursuant to the
exercise of the $6.25 Warrants the Company elects to file a registration
statement and the resale by the Holders 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 the Holders notice of its intent to do so.
The Holders 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 them 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 the Holders.
(a) The Holders 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 their Warrants, the Holders shall be deemed to have
confirmed at the time of such exercise the continuing accuracy of the
information respecting their status as accredited investors and the
suitability of an investment in the Common Stock for them that is contained
herein, all except as such investors may then advise the Company in
writing. The Company may also require, as a condition precedent to
exercise, that the Holders 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) The Holders, 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 their
receipt of copies of the supplemented or amended prospectus contemplated by
paragraph (b) of section 5.2 or until they are advised in writing (the
"Advice") by the Company that the use of the prospectus may be resumed, and
have received copies of any additional or supplemental filings which are
incorporated by reference in the prospectus, and, if so directed by the
Company, the Holders 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 their 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 the Holders 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), the Holders 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 the Holders shall notify
the Company of the number of securities registered which remain unsold
promptly after receipt of such notice from the Company.
(e) The Holders acknowledge 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 the Holders in writing
of such registration or exemption and the related limitations and
conditions from time to time. The Holders shall be solely responsible for
their own compliance with such limitations and conditions.
5.5 Holdback Agreement. The Holders, if requested by the managing
underwriter or underwriters for any underwritten registered offering, agree 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 the Holders are 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 the Holders are 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 the Holders comprising
underwriters' commissions, brokerage fees, transfer taxes, or the fees and
expenses of any counsel, accountant, or other representative retained by the
Holders.
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 the Holders, will furnish them
with such information generated by the Company in the ordinary course of
business as may be reasonably necessary to enable them 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. The Holders may not
participate in any underwritten piggyback registration in which they chose to
have stock included unless the Holders (a) agree 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) complete and
execute 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. The Holders 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. The Holders and the
Company each 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 the Holders, to: c/o Jeffrey Rubin
1500 Hempstead Turnpike
East Meadows, New York 11554
Facsimile Transmission: (516) 465-7317
Confirmation: (516) 465-7312
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 the Holders 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
Brian G. Larson, President
The Holders:
Jeffrey Rubin
Address:1500 Hempstead Turnpike
East Meadows, New York 11554
Lenore Katz
Address:1500 Hempstead Turnpike
East Meadows, New York 11554
Robert Cohen
Address:1500 Hempstead Turnpike
East Meadows, New York 11554
Jeffrey Cohen
Address:1500 Hempstead Turnpike
East Meadows, New York 11554
Allyson Cohen
Address:1500 Hempstead Turnpike
East Meadows, New York 11554
Shawn Zimberg
Address:1500 Hempstead Turnpike
East Meadows, New York 11554
Exhibit "A"
<TABLE>
<CAPTION>
Total Number
of Shares to be Shares Shares
Remaining Issued on Subject to Subject to
Amount to be Exercise of all $6.25 Warrants $6.25 Warrants
Paid by Committed if May 27 if December 1
Name May 27, 1996 Warrants Exercise Exercise
<S> <C> <C> <C> <C>
Jeffrey Rubin $ 162,162 49,896 49,896 83,584
Lenore Katz $ 54,054 16,632 16,632 27,861
Robert Cohen $ 270,270 83,160 83,160 139,307
Jeffrey Cohen $ 54,054 16,632 16,632 27,861
Allyson Cohen $ 54,054 16,632 16,632 27,861
Shawn Zimberg $ 54,054 16,632 16,632 27,861
Totals $ 648,648 199,584 199,584 334,337
</TABLE>
Exhibit "B"
LARSON DAVIS INCORPORATED
(a Nevada corporation)
Warrant for the Purchase of
Shares of Common Stock, Par Value $0.001
----------
THIS WARRANT WILL BE VOID
AFTER 11:59 P.M. MOUNTAIN TIME ON DECEMBER 1, 1997
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 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 subsequent to November 1,1996 and prior to 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 Holders: c/o Jeffrey Rubin
1500 Hempstead Turnpike
East Meadows, New York 11554
Facsimile Transmission: (516) 465-7317
Confirmation: (516) 465-7312
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 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 , 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:
