As filed with the Securities and Exchange Commission on November 17, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
RESEARCH FRONTIERS INCORPORATED
(Exact name of the Company as specified in its charter)
Delaware 2899 11-2103466
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification Number)
organization)
240 Crossways Park Drive
Woodbury, New York 11797-2033
(516) 364-1902
(Address, including zip code, and telephone number, including area code, of the
registrant's principal executive offices)
Robert L. Saxe, President
Research Frontiers Incorporated
240 Crossways Park Drive
Woodbury, New York 11797-2033
(516) 364-1902
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Joseph M. Harary, Vice President and General Counsel
Research Frontiers Incorporated
240 Crossways Park Drive
Woodbury, New York 11797-2033
(516) 364-1902
Approximate date of commencement of the proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest investment plans, please check the following box [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous pursuant to Rule 415 under the Securities Act of 1933
other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]______________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Title of each Proposed maximum Proposed maximum Amount of
class of securities Amount to offering price aggregate registra-
to be registered be registered per Warrant offering price tion fee
Redeemable Prepaid $5,000,000(1) $5,000,000.00 $5,000,000.00 $1,515.15
Warrant and Common
Stock, $0.0001 par
value issuable upon
exercise of
Redeemable Prepaid
Warrant and warrants
issuable upon
redemption of the
Redeemable Prepaid
Warrant
Total $5,000,000.00 $5,000,000.00 $5,000,000.00 $1,515.15
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457(g) under the Securities Act of 1933, as
amended, based on the aggregate exercise price of Redeemable Prepaid Warrant
pursuant to which such shares may be issued by the Registrant. The actual number
of shares of Common Stock into which the Redeemable Prepaid Warrant (and
warrants issuable to the Selling Stockholders upon certain redemptions thereof
by the Company) are exercisable will depend upon future market conditions. Based
upon current market conditions, as of November 14, 1997, the outstanding
warrants being registered hereunder would be exercisable into approximately
699,362 shares of Common Stock. In accordance with Rule 416 under the Securities
Act of 1933, Common Stock offered hereby shall also be deemed to cover an
indeterminate number of securities to be offered or issued to prevent dilution
resulting from stock splits, stock dividends or similar transactions, as
well as an indeterminate number of securities issuable upon exercise of the
Redeemable Prepaid Warrant (and warrants issuable to the Selling Stockholders
upon certain redemptions thereof by the Company) to purchase Common Stock, and
is deemed to include any additional shares of Common Stock that may be issuable
upon such exercise as a result of the antidilution provisions thereof or as a
result of any adjustment to the exercise price.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.<PAGE>
PROSPECTUS RESEARCH FRONTIERS INCORPORATED
COMMON STOCK ISSUABLE UPON EXERCISE OF
$5,000,000 REDEEMABLE PREPAID WARRANT
AND WARRANTS ISSUABLE UPON CERTAIN
REDEMPTIONS THEREOF
This Prospectus relates to the sale from time to time by certain
stockholders (the "Selling Stockholders") of Research Frontiers
Incorporated, a Delaware corporation (the "Company") of an indeterminate
number of shares of common stock, $0.0001 par value per share, of the
Company issuable upon exercise of a $5,000,000 Redeemable Prepaid
Warrant and warrants issuable to the Selling Stockholders upon certain
redemptions thereof by the Company (the "Shares"). The actual number of
shares of Common Stock into which the Redeemable Prepaid Warrant (and
warrants issuable to the Selling Stockholders upon certain redemptions
thereof by the Company) are exercisable will depend upon future market
conditions. Based upon current market conditions, as of the date of this
Prospectus, such warrants would be exercisable into approximately
[xxx,xxx] shares of Common Stock.
It is anticipated that the Shares will be offered from time to time in
brokerage transactions (which may include block transactions), in the over-
the-counter market or negotiated transactions at prices and terms prevailing
at the times of such sales, at prices related to such market prices or at
negotiated prices. Such shares may be sold directly to purchasers, through
broker-dealers acting as agents for the Selling Stockholders or to broker-
dealers who may purchase the Selling Stockholder's Shares as principals
and thereafter sell the Shares from time to time in the over-the-counter
market, in negotiated transactions or otherwise, or by a combination of
these methods. Broker-dealers who effect these transactions may receive
compensation in the form of discounts or commissions from the Selling
Stockholders or from the purchasers of the Shares for whom the broker-
dealers may act as an agent or to whom they may sell as a principal, or
both. See "SELLING STOCKHOLDERS" and "PLAN OF DISTRIBUTION".
The Company has received $5,000,000 from the Selling Stockholders
upon issuance of the Redeemable Prepaid Warrant, which amount will be
credited toward payment of the exercise price of the Redeemable Prepaid
Warrant, and the Company may receive in the future the exercise price of
any warrants issuable to the Selling Stockholders upon certain redemptions
by the Company of the Redeemable Prepaid Warrant, if any. The
Company will not receive any proceeds from the sale of Common Stock
by the Selling Stockholders. Broker-dealers, if any, acting in connection
with such sales, might be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act of 1933, as amended (the "Securities
Act") and any commission received by them and any profit on the resale
of such securities might be deemed to be underwriting discounts and
commissions under the Securities Act. The Company has agreed to bear
all of the expenses in connection with the registration and sale of the
Shares (other than selling commissions and fees), estimated to be $18,500.
The Company has also agreed to indemnify the Selling Stockholders
against certain liabilities, including liabilities arising under the Securities
Act.
The Company's Common Stock trades on the Nasdaq SmallCap
Market under the symbol "REFR". On [November 14, 1997] as reported
by Nasdaq, the last sales price of a share of Common Stock was [$8.50].
THE COMMON STOCK OFFERED BY THIS PROSPECTUS
ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH A PURCHASE OF THE COMMON STOCK.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is [November __, 1997.]<PAGE>
AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
in accordance therewith, files reports, proxy statements and other
information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information
may be inspected and copied at the public reference facilities maintained
by the Commission at Room 1204, Judiciary Plaza, 450 Fifth Street, N.W.
Washington, D.C. 20549, and at the following Regional Offices of the
Commission: Suite 1400, 500 West Madison Street, Chicago, Illinois,
60661-2511 and Suite 1300, Seven World Trade Center, New York, New
York, 10048. Copies of such material can be obtained at prescribed rates
from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission also maintains a Web
site that contains reports, proxy and information statements and other
information regarding registrants, such as the Company, that file
electronically with the Commission and the address of such site is
http://www.sec.gov.
The Company has filed with the Commission a Registration
Statement on Form S-3 (including all amendments thereto, the
"Registration Statement"), with respect to the securities offered hereby. As
permitted by the rules and regulations of the Commission, this Prospectus
does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto. The statements
contained in this Prospectus as to the contents of any contract or any other
document are not necessarily complete, and in each instance reference is
made to the copy of such contract or document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects
by such reference. For further information about the Company and the
securities offered hereby, reference is made to the Registration Statement
and the exhibits thereto, which may be examined without charge at the
public reference facilities maintained by the Commission at Room 1024 at
Judiciary Plaza, 450 Fifth Street, N.W. Washington, D.C. 20549, and
copies of all or any part thereof may be obtained from the Commission's
Public Reference Section at the same address upon payment of the
prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
are incorporated herein by reference and shall be deemed to be a part
hereof: (a) Annual Report on Form 10-K for the fiscal year ended
December 31, 1996: (b) Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1997, June 30, 1997 and September 30, 1997; (c)
Current Report on Form 8-K dated March 3, 1997, and (d) all other reports
filed by the Company pursuant to Section 13(a) or 15(d) of the Exchange
Act since the end of the fiscal year ended December 31, 1996.
All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior
to the termination of the offering of the securities shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from
the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
A copy of any or all of the documents incorporated herein by
reference (other than exhibits unless such exhibits are specifically
incorporated by reference in any such document) will be provided without
charge to any person, including a beneficial owner, to whom a copy of this
Prospectus is delivered upon written or oral request. Requests for such
copies should be addressed to the Company at its principal executive
offices: 240 Crossways Park Drive, Woodbury, New York 11797-2033,
Attention: Investor Relations (Telephone: (516) 364-1902).
No person has been authorized to give any information or to make
any representation not contained in or incorporated by reference in this
Prospectus or in any supplement to this Prospectus and, if given or made,
such information or representation must not be relied upon as having been
authorized by the Company or by the Selling Stockholders. Neither the
delivery of this Prospectus or any supplement to this Prospectus nor any
sale made hereunder or thereunder shall under any circumstances create an
implication that there has been no change in the affairs of the Company
since their respective dates. This Prospectus and any supplement to this
Prospectus do not constitute an offer to sell or a solicitation of an offer to
buy any Common Stock offered hereby to any person, or by anyone, in any
jurisdiction in which such offer or solicitation may not lawfully be made.<PAGE>
RISK FACTORS
An investment in the Shares described herein entails a number of
significant risks. Because of these risks, funds should only be invested by
persons who are able to bear the risk of and withstand the loss of their
entire investment. Prospective investors should also consider the following
before making an investment decision.
History of Operating Losses and Accumulated Deficit. Since
inception, the Company has been primarily engaged in research and
development activities. To date, the Company's revenues have been
insufficient to fund operating expenses, and operating losses can be
expected for the foreseeable future. There can be no assurance the
Company will ever be profitable, or that if additional funding is necessary
to fund the Company's operations, that additional funding will be
available when needed, or if available, that its terms will be favorable or
acceptable to the Company.
Need for Additional Funds. The Company has been dependent upon
the proceeds of equity financings to fund operations. The Company
expects to use its cash and short-term investments to fund its research and
development of SPD light valves and for other working capital purposes.
The Company's working capital and capital requirements depend upon
numerous factors, including the results of research and development
activities, competitive and technological developments, the timing and cost
of patent filings, and the development of new licensees and changes in the
Company's relationships with its existing licensees. The degree of
dependence of the Company's working capital requirements on each of the
foregoing factors cannot be quantified; increased research and development
activities and related costs would increase such requirements; the addition
of new licensees may provide additional working capital or working capital
requirements, and changes in relationships with existing licensees would
have a favorable or negative impact depending upon the nature of such
changes. Based upon existing levels of expenditures, assumed ten percent
annual increases therein, existing cash reserves and budgeted revenues, the
Company believes that it would not require additional funding for at least
the next four years. There can be no assurance that expenditures will not
exceed the anticipated amounts or that additional financing, if required,
will be available when needed or, if available, that its terms will be
favorable or acceptable to the Company. Eventual success of the Company
and generation of positive cash flow will be dependent upon the
commercialization of products using the Company's technology by the
Company's licensees and payments of continuing royalties on account
thereof.
Research and Development Company; Unproven Technology. The
Company is subject to all of the risks inherent in the development of new
technologies and products. There can be no assurance that the Company's
future operations will generate significant revenues or be profitable. The
likelihood of the Company's success must be considered in light of the
problems, expenses and delays frequently encountered in the
commercialization and marketing of new technologies and the competitive
environment in which the Company operates.
All Products Being Developed Depend on Viability of the Company's
Light Valve Technology. All products being developed by the Company's
licensees depend on the viability of the Company's light valve technology.
No commercial products have yet been produced for sale. The Company
has not developed any other technology. Thus, if commercially acceptable
products cannot be developed from the Company's light valve technology,
the Company will not be successful.
Absence of Manufacturing and Marketing Capability. The
Company's light valve technology is currently licensed to eight companies
and is being evaluated by others for possible exploitation in various
commercial applications. In the past, some entities have evaluated the
Company's technology without proceeding to enter into further
negotiations or agreements with the Company. The Company intends to
continue to exploit its light valve technology by licensing it to
manufacturers of end products and to one or more other companies to
manufacture the Company's light-controlling films. The Company
anticipates that its licensee(s) would have primary responsibility for
marketing and manufacturing activities. There can be, however, no
assurance that any definitive future agreements or arrangements will
materialize. To date, neither the Company nor any of its licensees has
produced a commercial product incorporating the Company's light valve
technology. The Company cannot control the activities of its licensees.
There can be no assurance as to when or whether the licensees will produce
any commercial product using the Company's light valve technology or,
if produced, that such product will become commercially viable.
Dependence on Key Personnel. The success of the Company is
dependent on, among other things, the services of its senior management,
the loss of whose services could have a material adverse effect upon the
prospects of the Company.
Competition with Proven Technologies. The Company's light valve
technology will compete with other light control and display technologies
which are being commercially exploited with great success, such as LEDs,
plasma displays, and LCDs. Companies with liquid crystal, electrochromic
and possibly other technologies are now competing or probably will
compete against the Company in the field of so-called "smart windows."
In general, the companies which will compete against the Company have
substantially greater financial, marketing, technical and other resources and
name recognition than the Company. There can be no assurance that the
Company's light valves (whose performance and long-term reliability have
not yet been fully ascertained) will be able to displace other devices being
used commercially or otherwise find a niche for commercial application.
Technological Obsolescence. While the Company believes that its
light valves will have certain advantages over some existing display
devices, other types of so-called "smart windows" and photochromic
eyeglasses, there can be no assurance that one or more of the numerous
existing companies which manufacture or may manufacture such products,
or any company formed after the date hereof, will not be able to develop
products using alternative technologies that would render the Company's
products difficult to market or technologically or otherwise obsolete.
Uncertain Patent Protection. Although aspects of the Company's
technology are covered by 19 United States patents, 2 pending patent
applications in the United States, 24 foreign patents, and 66 foreign patent
applications, a number of those patents cover earlier versions and features
of the Company's light valves which the Company does not intend to
exploit. Moreover, the issuance of a patent does not carry any certainty of
successful application or commercial success. There can be no assurance
that these patents will be upheld if the Company seeks to enforce its patent
rights against an infringer or that the Company will have sufficient
resources to prosecute its rights. The Company also relies, to a lesser
extent, on trade secrets and confidential disclosure agreements to protect
its technology. Neither the issuance of patents nor the use of trade secrets
will necessarily protect the Company from other persons using
technologies similar to those covered by the Company's patents or trade
secrets. In addition, there can be no assurance that any particular aspect of
the Company's technology will not be found to infringe the claims of other
existing patents.
No Cash Dividends. The Company has never paid any cash
dividends and does not anticipate paying any cash dividends for the
foreseeable future.
Volatility of Stock Price. Since the initial public offering of the
Company's securities in July 1986, the market for the Company's
securities has been volatile. The trading price of the Company's securities
may continue to fluctuate significantly based on, among other things,
announcements by the Company and its competitors and price and volume
fluctuations relating to high-technology companies generally.
No Use of Proceeds. The Company will not receive any proceeds
from the sale of Common Stock by the Selling Stockholders will only
receive the $5,000,000 aggregate exercise price of the Redeemable Prepaid
Warrant being registered hereunder which has already been received by
the Company, or the exercise price of any warrants issuable to the Selling
Stockholders in the event the Company makes certain redemptions thereof,
if any.
Authorization of Additional Securities. The Company is authorized
to issue 100,000,000 shares of Common Stock. As of the date of this
prospectus, there were [10,229,510] shares of Common Stock issued and
outstanding. The Company's Board of Directors has the power to issue any
and all unissued shares without stockholder approval. To the extent that
additional shares of Common Stock are issued, dilution to the interests of
the Company's stockholders will occur. See "DESCRIPTION OF SECURITIES."
THE COMPANY
General
Research Frontiers Incorporated (the "Company") was incorporated
in New York in 1965 and reincorporated in Delaware in 1989. Since its
inception, the Company has primarily engaged in the development and
licensing of suspended particle technology and devices to control the
transmission of light. Such suspended particle devices, often referred to
as "SPDs" or "light valves" use a suspension of microscopic particles that
is either in the form of a liquid suspension or a film, which is usually
enclosed between two conductively-coated glass or plastic plates, at least
one of which is transparent. When an electrical voltage is applied, the
microscopic particles are aligned, thereby permitting a range of
transparency within which light transmission can be rapidly varied to any
degree desired depending upon the voltage applied. The first light valve
of this type was invented by Dr. Edwin Land of Polaroid Corporation in
1934. Since its incorporation the Company has developed its own
technology embodied in patents, trade secrets and know how. Light valves
using the Company's proprietary suspensions and related technology may
have wide commercial applications in devices of many types where
variable light transmission is desired, such as "smart" windows, variable
light transmission eyewear and goggles, self-dimmable automotive
sunroofs, sun visors and mirrors, and flat panel information displays for
use in computers, televisions, telephones and other electronic instruments.
DIVIDENDS
The Company has never paid any cash dividends and does not
anticipate paying any cash dividends for the foreseeable future.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of
Common Stock by the Selling Stockholders and will only receive the
$5,000,000 aggregate exercise price of the Redeemable Prepaid Warrant
which has already been received by the Company, or the exercise price of
any warrants issuable to the Selling Stockholders in the event that the
Company makes certain redemptions thereof, if any. The Company expects
that any net proceeds from the exercise of the warrants will be used for
working capital and general corporate purposes, including research and
development. Pending utilization, the Company intends to invest such
funds in money market funds and other interest-bearing obligations.
SELLING STOCKHOLDERS
The following table sets forth certain information regarding
beneficial ownership of the Company's Common Stock as of [November
__, 1997], adjusted to reflect the sale of the Common Stock by each Selling
Stockholder. The persons named in the table have sole voting and
investment power with respect to all Common Stock shown as beneficially
owned by them, subject to community property laws where applicable. The
information given assumes that all Common Stock received upon exercise
of the warrants described herein which are held by the Selling Stockholders
are sold. The Common Stock offered by the Selling Stockholders may be
offered for sale from time to time at market prices prevailing at the time of
sale or at negotiated prices, and without payment of any underwriting
discounts or commissions except for usual and customary selling
commissions paid to brokers or dealers. The Selling Stockholders may sell
all, a part, or none of the number of Common Stock offered by this
Prospectus. None of the Selling Stockholders has any position, office or
other material relationship with the company (or had any such position,
office or material relationship within the past three (3) years). Because the
number of Shares into which the Redeemable Prepaid Warrant (and
warrants issuable to the Selling Stockholders upon certain redemptions
thereof by the Company) are exercisable into depends upon the market
price of the Company's common stock from time to time, it is not possible
to calculate the number of shares of Common Stock which will be
ultimately issued upon exercise of the Redeemable Prepaid Warrant.
Therefore, the aggregate exercise price of the Redeemable Prepaid Warrant
subscribed for by each Selling Stockholder is listed below in place of the
number of shares beneficially owned by such Selling Stockholder prior to
this offering and in place of the number of shares offered by such Selling
Stockholder. Because of this, it is not possible to calculate the percentage
of the Company's outstanding Common Stock beneficially owned by each
Selling Stockholder.
Aggregate Shares Beneficially
Warrant Owned After Offering
Exercise by Selling Stockholders
Beneficial Owner Price Number %
Ramius Capital Group, L.L.C. $1,500,000 0 0
Leonardo, L.P. $1,400,000 0 0
AG Super Fund International
Partners, L.P. $ 300,000 0 0
Raphael, L.P. $ 400,000 0 0
Ramius Fund, Ltd. $ 400,000 0 0
Heracles Fund $ 500,000 0 0
Themis Partners, L.P. $ 500,000 0 0
========== = =
$5,000,000 0 0
DESCRIPTION OF SECURITIES
Common Stock
The Company is authorized to issue 100,000,000 shares of Common
Stock, $0.0001 par value per share, of which 10,229,510 shares were
outstanding as of [November __, 1997]. Because the number of Shares into
which the Redeemable Prepaid Warrant (and warrants issuable to the
Selling Stockholders upon certain redemptions thereof by the Company)
are exercisable into depends upon the market price of the Company's
common stock from time to time, it is not possible to calculate the number
of shares of Common Stock which will be ultimately issued upon exercise
of the Redeemable Prepaid Warrant.
Holders of Common Stock are entitled (i) to receive ratable
dividends from funds legally available for distribution when and if
declared by the board of directors; (ii) to share ratably in all of the
Company's assets available for distribution upon liquidation, dissolution
or winding up of the Company after all obligations to the holders of
Redeemable Prepaid Warrant have been satisfied; and (iii) to one vote for
each share held of record on each matter submitted to a vote of
stockholders. All outstanding shares of Common Stock are fully paid for
and non-assessable. Holders of Common Stock do not have cumulative
voting rights; therefore, a minority stockholder may be less able to gain
representation on the Board of Directors of the Company. The Common
Stock has no preemptive or similar rights.
On October 29, 1997, the Company sold pursuant to a private
placement to the Selling Stockholders who are all accredited investors,
Redeemable Prepaid Warrant with the aggregate exercise price of
$5,000,000 which was paid to the Company at the closing. The
Redeemable Prepaid Warrant is exercisable for a period of five years
(which period may be extended under certain circumstances). The exercise
price of the Redeemable Prepaid Warrant is the lesser of (a) 110% of the
average of the high and low trading prices of the Company's Common
Stock for the seven trading days prior to the closing date, and (b) 82%
(subject to adjustment under certain circumstances) of the average of the
high and low trading prices of the Company's Common Stock for the five
trading days prior to any exercise date. The holder of a Redeemable
Prepaid Warrant may not exercise such warrant at any time that the
exercise price is less than or equal to $5.10 (the "Floor Price"); provided,
however, that in the event that the closing price of the Company's
Common Stock is less than or equal to the Floor Price for 60 consecutive
calendar days, the foregoing prohibition on exercise will, upon the
expiration of such 60-day period, be inoperative, subject to reinstatement
in the event that subsequently the exercise price is equal to or greater than
$8.37 for a period of ten consecutive trading days. Also, if the closing bid
price of the Company's Common Stock is less than or equal to $3.00 on an
exercise date, in lieu of issuing the shares of Common Stock to which the
warrant holder is entitled, the Company has the option to pay the warrant
holder an amount equal to the product of (x) the closing bid price of the
Common Stock on the exercise date and (y) the number of shares which
would have been issued upon such exercise. In addition, if the closing
price per share of Common Stock is less than or equal to $6.00 for fifteen
(15) consecutive trading days , the Company may redeem the warrant, in
whole or in part, at a redemption price equal to 105% of the then
outstanding amount of the warrants being redeemed payable in cash,
together with one new five year Common Stock purchase warrant for every
three shares of Common Stock underlying the unexercised portion of such
redeemed warrant, with such new warrant having an exercise price of
115% of the bid price for the Common Stock on the day of redemption. If
the closing price per share of Common Stock is greater than or equal to
$14.00 for any fifteen (15) consecutive trading days after the registration
statement of which this Prospectus is a part shall be declared effective, the
Company may redeem the warrant, in whole or in part, at a redemption
price equal to 100% of the then outstanding amount of the warrants (unless
exercised by the Selling Stockholders prior to redemption) being redeemed
upon 120 days' notice, such notice not to be given earlier than October 29,
1999. The Company is obligated to register the issuance of all shares of
Common Stock issuable upon exercise of the Redeemable Prepaid Warrant
(and warrants issuable to the Selling Stockholders upon certain
redemptions thereof by the Company). Also, under certain circumstances,
the Company may be required to redeem the outstanding warrants at a
premium over the then outstanding amount, which amount shall equal
115% of the then outstanding amount in the event of a merger,
consolidation, spin off or other extraordinary corporate action, and at an
amount equal to 125% of the then outstanding amount if the Company
defaults on certain obligations to the Selling Stockholders. Under the
terms of their agreement with the Company, at no time will a Selling
Stockholder and their affiliates own in excess of 4.9% of the total issued
and outstanding shares of the Common Stock.
PLAN OF DISTRIBUTION
The Selling Stockholders are entitled to distribute from time to time
the Common Stock issuable upon exercise of the Redeemable Prepaid
Warrant (and warrants issuable to the Selling Stockholders upon certain
redemptions thereof by the Company). Based upon current market
conditions, as of [November __, 1997], the outstanding warrants being
registered hereunder would be exercisable into approximately [xxx,xxx]
shares of Common Stock, representing approximately [x.x%] of the issued
and outstanding Common Stock of the Company after taking into account
the issuance of such Common Stock upon exercise of such warrants.
The Company will not receive any proceeds from the sale of
Common Stock by the Selling Stockholders who hold Redeemable Prepaid
Warrant and will only receive the $5,000,000 aggregate exercise price of
the Redeemable Prepaid Warrant being registered hereunder which has
already been received by the Company, or the exercise price of any
warrants issuable to the Selling Stockholders upon certain redemptions
thereof by the Company, if any. The distribution of the Common Stock by
the Selling Stockholders may be effected from time to time in one or more
transactions (which may involve block transactions) on NASDAQ, on any
exchange on which the Common Stock may then be listed, in the over-the-
counter market, in negotiated transactions, through the writing of options
on shares, or a combination of such methods of sale, at market prices
prevailing prices or at negotiated prices. The Selling Stockholders may
effect such transactions by selling shares to or through broker-dealers, and
such broker-dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the Selling Stockholders
and/or purchasers of Common Stock for whom they may act as agent
(which compensation may be in excess of customary commissions).
Participating brokers and dealers may be deemed to be "underwriters"
within the meaning of the Securities Act, and any commissions received
by them and any profit on the resale of the Common Stock purchased by
them may be deemed to be underwriting commissions or discounts under
the Securities Act.
To comply with certain states' securities laws, if applicable, the
Common Stock will not be offered or sold in a particular state unless the
Common Stock has been registered or qualified for sale in such state or an
exemption from registration or qualification is available and complied
with.
EXPERTS
The financial statements of the Company included in the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996,
and incorporated by reference in this Prospectus have been incorporated by
reference in reliance upon the reports of KPMG Peat Marwick LLP
(Jericho, New York), independent accountants, given on the authority of
that firm as experts in accounting and auditing.
LEGAL MATTERS
The legality of the securities offered hereby has been passed upon by
Joseph M. Harary, Esq., the Company's Vice President and General
Counsel. Mr. Harary holds Common Stock and options to purchase
Common Stock granted pursuant to the Company's 1992 Stock Option
Plan aggregating 197,824 shares.
No dealer, salesperson or other individual has been authorized to give
any information or make any representations other than those contained in
this Prospectus and, if given or made, such information or representations
must not be relied upon as having been authorized by the Company This
Prospectus does not constitute an offer by the Company to sell, or a
solicitation of an offer to buy, the securities offered hereby in any
jurisdiction where, or to any person to whom, it is unlawful to make an
offer or solicitation. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create an implication that
there has been any change in the affairs of the Company since the date
hereof or that the information contained herein is correct or complete as of
any time subsequent to the date hereof. The information set forth herein
and in all publicly disseminated information about the Company, includes
"forward-looking statements" within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended, and is subject to the safe
harbor created by that section. Readers are cautioned not to place undue
reliance on these forward-looking statements as they speak only as of the
date hereof and are not guaranteed.<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 13. Disclosure of Commission Position on Indemnification for
Securities Act Liabilities.
As described in Item 15, the Articles of Company provide for the
indemnification of certain persons. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 (the "Act") may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the Certificate of Incorporation or By-Laws of the Company,
or otherwise, the registrant has been informed that in the opinion of the
Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 14. Other Expenses of Issuance and Distribution.
Estimated expenses relating to the distribution of the Common Stock
registered herein are set forth below. Such expenses will be paid by the
Company.
Registration Fee under the Securities Act of 1933 $ 1,515.15
Printing and engraving expenses . . . . . . . . . $ 500.00
Accounting fees and expenses . . . . . . . . . . $ 5,000.00
Transfer agent and registrar fees . . . . . . . . $ 1,000.00
Legal Fees and Expenses . . . . . . . . . . . . . $ 10,000.00
Miscellaneous Expenses. . . . . . . . . . . . . . $ 484.85
Total . . . . . . . . . . . . . . . . . . . . . . $ 18,500.00
All of the amounts set forth above, except for the filing fees for the
Securities and Exchange Commission, are estimated and subject to future
contingencies.
Item 15. Indemnification of Directors and Officers.
Article EIGHTH of the Company's Certificate of Incorporation
provides for the indemnification of the Company's officers and directors
to the fullest extent permitted by Section 145 of the Delaware General
Corporation Law (the "GCL").
Section 145 of the GCL provides as follows:
145 Indemnification of Officers, Directors, Employees and Agents;
Insurance
(a) A corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. The termination of any action,
suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner
which he reasonably believed to be in or not opposed to the best interests
of the corporation, and, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in
which such action or suit was brought shall determine upon application
that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other
court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of
any action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification
of the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made
(1) by the board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (2) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (3) by the stockholders.
(e) Expenses (including attorneys' fees) incurred by an officer or
director in defending any civil, criminal, administrative or investigative
action, suit or proceeding may be paid by the corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this section. Such expenses
(including attorneys' fees) incurred by other employees and agents may be
so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.
(f) The indemnification and advancement of expenses provided by,
or granted pursuant to, the other subsections of this section shall not be
deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
(g) A corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation would have
the power to indemnify him against such liability under this section.
(h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
or other enterprise, shall stand in the same position under this section with
respect to the resulting or surviving corporation as he would have with
respect to such constituent corporation if its separate existence had
continued.
(i) For purposes of this section references to "other enterprises" shall
include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such
director, officer, employee, or agent with respect to an employee benefit
plan, its participants or beneficiaries; and a person who acted in good faith
and in a manner he reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed
to have acted in a manner "not opposed to the best interests of the
corporation" as referred to in this section.
(j) The indemnification and advancement of expenses provided by,
or granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Article NINTH of the Company's Certificate of Incorporation
provides for the elimination of any personal liability for monetary damages
of directors to the Corporation or its stockholders for breach of fiduciary
duty, for negligence or for taking or omitting to take any action to the
fullest extent permitted by Section 102(b) (7) of the GCL.
Section 102(b) (7) of the GCL provides as follows:
(b) In addition to the matters required to be set forth in the certificate
of incorporation by subsection (a) of this section, the certificate of
incorporation may also contain any or all of the following matters:
(7) A provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, provided that such provision shall
not eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) under section 174 of this Title or (iv) for
any transaction from which the director derived an improper personal
benefit. No such provision shall eliminate or limit the liability of a director
for any act or omission occurring prior to the date when such provision
becomes effective. All references in this subsection to a director shall also
be deemed to refer to a member of the governing body of a corporation
which is not authorized to issue capital stock.
Item 16. Exhibits.
4.1 Subscription Agreement between the Company and the Selling
Stockholders dated as of October 29, 1997. (Filed herewith)
4.2 Redeemable Prepaid Warrant between the Company and the Selling
Stockholders dated as of October 29, 1997. (Filed herewith)
4.3 Registration Rights Agreement between the Company and the Selling
Stockholders dated as of October 29, 1997. (Filed herewith)
5.1 Opinion re legality of the Common Stock and issuance thereof. (To
be filed by amendment)
23.1 Consent of KPMG Peat Marwick LLP (To be filed by amendment).
23.2 Consent of Joseph M. Harary (included in Exhibit 5.1)
24. Power of Attorney. Included as part of signature page to this
Registration Statement on Form S-3.
Item 17. Undertakings.
The undersigned registrant undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change
to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to section 13(a) or section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of
any employee benefit plan's annual report pursuant to section 15(d) of the
Securities Act of 1934) that is incorporated by reference in the registration
statement shall be to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Woodbury, State of New York,
on November 14, 1997.
RESEARCH FRONTIERS INCORPORATED
(Registrant)
By:/s/ Robert L. Saxe
Robert L. Saxe, President,
Treasurer, Principal Executive,
Financial and Accounting Officer.
POWER OF ATTORNEY
We the undersigned directors of Research Frontiers Incorporated
hereby severally constitute and appoint Robert L. Saxe and Joseph M.
Harary, each individually as our true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for us and in our stead,
in any and all capacities, to sign any and all amendments (including post-
effective amendments) to this registration statement and all documents
relating thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing necessary or
advisable to be done in and about the premises, as fully to all intents and
purposes as he could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent or his substitute or substitutes may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Robert L. Saxe Chairman of the Board, President November 14, 1997
Robert L. Saxe Treasurer and Director (Principal
Executive, Financial and Accounting Officer)
/s/ Robert M. Budin Director November 14, 1997
Robert M. Budin
/s/ Bernard D. Gold Director November 14, 1997
Bernard D. Gold
/s/ Joseph M. Harary Director November 14, 1997
Joseph M. Harary
/s/ Robert I. Thompson Director November 14, 1997
Robert I. Thompson
EXHIBIT 4.1
SUBSCRIPTION AGREEMENT
This Subscription Agreement (the "Agreement") dated as of October
29, 1997 has been executed by the undersigned (the "Subscriber") in
connection with the offering (the "Offering") of securities issuable
pursuant to the Common Stock Prepaid Warrant (the "Warrants"), of
Research Frontiers Incorporated, a Delaware corporation (the "Company"),
exercisable into shares of Common Stock, par value $.0001 per share (the
"Common Stock"), of the Company. The aggregate purchase price of the
Warrants is $5,000,000. The form of the Warrants, including the terms on
which the Warrants may be exercised into Common Stock, is attached
hereto as EXHIBIT A. The solicitation of this Agreement and, if accepted
by the Company, the offer and sale of the Warrants, are being made in
reliance upon the provisions of Regulation D ("Regulation D")
promulgated by the Securities and Exchange Commission (the "SEC")
under the United States Securities Act of 1933, as amended (the "Securities
Act"). The Warrants and the Common Stock issuable upon exercise
thereof, the Redemption Warrants (as defined in the Warrants) and the
shares of Common Stock issuable upon exercise thereof are sometimes
collectively referred to in this Agreement as the "Securities." The
Common Stock issuable upon exercise of the Warrants and upon the
exercise of the Redemption Warrants is sometimes referred to as the
"Underlying Stock." Upon the terms and subject to the conditions set forth
herein, the Subscriber hereby agrees to purchase, and the Company hereby
agrees to issue and sell, the Warrants at the aggregate purchase price set
forth in Section 14. In consideration of the mutual promises,
representations, warranties and conditions set forth herein, and intending
to be legally bound hereby, the Company and the Subscriber hereby agree
as follows:
1. Agreement to Subscribe; the Subscriber
1.1 Purchase and Issuance of Warrants. The Subscriber hereby
subscribes for the Warrants at the aggregate purchase price set forth
on the signature page hereof. The closing of the purchase (the
"Closing") shall occur on October 29, 1997 (the "Closing Date");
provided that (i) the purchase price has been delivered by the
Subscriber to the Company, a mutually acceptable escrow agent or
as otherwise agreed between the parties (in same day funds via a
wire transfer pursuant to instructions previously delivered for such
purpose), (ii) the Warrants subscribed for hereby shall have been
executed and delivered by the Company to the Subscriber, a
mutually acceptable escrow agent or as otherwise agreed between
the parties, and (iii) the other conditions precedent to the obligations
of the Subscriber set forth herein shall have been satisfied.
1.2 Nature of the Subscriber. The Subscriber is either purchasing the
Warrants for its own account or as an agent for a principal (under a
discretionary or similar account), in which case all of the representations,
warranties, covenants and agreements of the Subscriber herein shall be
deemed to apply to such principal and not the Subscriber and to have been
made by such principal and not by the Subscriber. In such case, the
Subscriber so acting as agent represents and warrants that (a) its principals
have confirmed to the Subscriber the accuracy of such representations and
warranties with respect to its principals, and (b) the Subscriber has full
authority to act on behalf of its principal in executing and delivering this
Agreement and consummating the transactions contemplated hereby.
1.3 Conditions Precedent to the Obligation of the Company to Sell
the Warrants. The obligation hereunder of the Company to sell the
Warrants to the Subscriber is subject to the satisfaction, at or before the
Closing, of each of the conditions set forth below, each of which is for the
Company's sole benefit and may be waived by the Company at any time in
its sole discretion.
(a) Accuracy of the Subscriber's Representations and
Warranties. The representations and warranties of the
Subscriber shall be true and correct in all material
respects as of the Closing Date as though made at such
time.
(b) Performance by the Subscriber. The Subscriber shall
have performed, satisfied and complied in all material
respects all covenants, agreements and conditions
required by this Agreement to be performed, satisfied or
complied with by the Subscriber at or prior to the
Closing.
(c) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court
or governmental authority of competent jurisdiction
which prohibits the consummation of any of the
transactions contemplated by this Agreement, and no
proceeding shall have been commenced which may have
the effect of prohibiting or adversely affecting any of the
transactions contemplated hereby.
1.4 Conditions Precedent to the Obligation of the Subscriber to
Purchase the Warrants. The obligation of the Subscriber hereunder to
acquire and pay for the Warrants is subject to the satisfaction, at or before
the Closing, of each of the following conditions, each of which is for the
Subscriber's sole benefit and may be waived by the Subscriber at any time
in its sole discretion.
(a) Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company shall be
true and correct in all material respects as of the Closing Date
as though made at such time.
(b) Performance by the Company. The Company shall have
performed, satisfied and complied in all material respects all
covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the
Company at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court
or governmental authority of competent jurisdiction
which prohibits or adversely affects any of the
transactions contemplated by this Agreement, and no
proceeding shall have been commenced which may have
the effect of prohibiting or adversely affecting any of the
transactions contemplated hereby.
(d) Adverse Changes. For the period from July 31, 1997
until the Closing, except as publicly disclosed since June
30, 1997 in Company filings made by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) under the
Securities Exchange Act of 1934 (the "Exchange Act")
prior to the date hereof and listed on Schedule 1.4(d) (the
"Exchange Act Reports"), no event shall have occurred or
be threatened to occur which has had or is likely to have
a Material Adverse Effect. The Company shall have
received and delivered to the Subscriber (i) the consent of
all applicable lenders to the issuance of the Warrants and
(ii) the waiver of any and all pending events of default (or
pending events which with lapse of time or notice or both
would constitute an event of default) thereunder.
"Material Adverse Effect" means any material adverse
effect on the business, operations, properties, prospects or
financial condition of the Company and its subsidiaries
taken as a whole and/or any condition or situation which
would prohibit or otherwise adversely interfere with the
ability of the Company to enter into and perform its
obligations under this Agreement, the Warrants, the
Redemption Warrants or the Registration Rights
Agreement contemplated by Section 5.1.
(e) No Suspension of Trading in or Delisting of Common
Stock. The trading in securities generally shall not have
been suspended by the National Association of Securities
Dealers, Inc. (the "NASD") and trading in the Common
Stock shall not have been suspended by the SEC or the
NASD; the Common Stock shall not have been delisted
from the Nasdaq SmallCap Market or the Nasdaq
National Market; and trading in securities generally as
reported by the New York Stock Exchange shall not have
been limited or minimum prices shall not have been
established on securities whose trades are reported by the
NYSE.
(f) Legal Opinion. The Company shall have delivered to the
Subscriber an opinion of Solovay Marshall & Edlin,
independent counsel to the Company, in form and
substance reasonably satisfactory to the Subscriber.
(g) Officer's Certificate. The Company shall have delivered
to the Subscriber a certificate, in form and substance
reasonably satisfactory to the Subscriber, executed by an
executive officer of the Company, to the effect that all the
conditions to the Closing shall have been satisfied.
(h) Registration Rights Agreement. The Company and the
Subscriber shall have entered into the Registration Rights
Agreement contemplated by Section 5. 1.
2. Representations and Warranties of the Subscriber
The Subscriber represents and warrants to the Company that:
2.1. No Government Recommendation or Approval. The Subscriber
understands that no United States federal or state agency or similar
agency of any other country has passed upon or made any
recommendation or endorsement of the Company or the offering of
the Securities.
2.2 Intent. The Subscriber is purchasing the Securities for its own
account and not with a view towards distribution and the Subscriber
has no present arrangement to sell the Warrants or the Underlying
Stock to or through any person or entity; provided, however, that by
making the representation herein, the Subscriber does not agree to
hold the Securities for any minimum or other specific term and
reserves the right to dispose of the Securities at any time in
accordance with federal and state securities laws applicable to such
disposition. The Subscriber understands that the Securities must be
held indefinitely unless such Securities are subsequently registered
under the Securities Act or an exemption from registration is
available. The Subscriber has been advised or is aware of the
provisions of Rule 144 promulgated under the Securities Act.
2.3. Sophisticated Investor. The Subscriber is an accredited investor (as
defined in Rule 501 of Regulation D promulgated under the
Securities Act ("Regulation D")), and Subscriber has such
experience in business and financial matters that it is capable of
evaluating the merits and risks of an investment in the Securities.
The Subscriber acknowledges that the Securities are speculative and
involve a high degree of risk.
2.4. Independent Investigation. The Subscriber, in making the decision
to purchase the Securities subscribed for hereunder, has relied upon
an independent investigation made by it and/or its representatives
and has not relied on any information or representations made by
third parties or on any oral or written representations or assurances
from the Company or any representative or agent of the Company
other than as set forth in this Agreement and the Exchange Act
Reports. Subscriber has had a reasonable opportunity to ask
questions of and receive answers from the Company concerning the
Company and the Offering and has received complete and
satisfactory answers to all inquiries it has made with respect to the
Company and the Securities. The Subscriber acknowledges that the
price and terms of the Securities offered hereby has been
determined by negotiation based in part on the market price for the
Common Stock, which does not necessarily bear any relationship
to the assets, book value or potential performance of the Company
or any other recognized criteria of value.
2.5. Authority. This Agreement has been duly authorized and validly
executed and delivered by the Subscriber and is a valid and binding
agreement enforceable against the Sub-scriber in accordance with
its terms, subject to general principles of equity and to bankruptcy
or other laws affecting the enforcement of creditors' rights
generally.
2.6. No Legal Advice from Company. The Subscriber acknowledges
that it has had the opportunity to review this Agreement and the
transactions contemplated by this Agreement with its own legal
counsel and investment and tax advisors. Except for any statements
or representations of the Company made in this Agreement and the
legal opinion required by Section 1.4 hereof, the Subscriber is
relying solely on such counsel and advisors and not on any
statements or representations of the Company or any of its
representatives or agents for legal, tax or investment advice with
respect to this investment, the transactions contemplated by this
Agreement or the securities laws of any jurisdiction.
2.7. No Brokers. The Subscriber has taken no action which would give
rise to any claim by any person for brokerage commissions, finder's
fees or similar payments by the Company relating to this Agreement
or the transactions contemplated hereby.
2.8. Not an Affiliate. The Subscriber is not an officer, director or
Affiliate (as that term is defined in Rule 405 of Securities Act) of
the Company.
2.9. Reliance on Representation and Warranties. The Subscriber
understands that the Securities are being offered and sold to it in
reliance on specific provisions of United States federal and state
securities laws and that the Company is relying upon the truth and
accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Subscriber set forth in
this Agreement in order to determine the applicability of such
provisions.
3. Representations and Warranties of the Company
The Company represents and warrants to the Subscriber that:
3.1. Company Status. The Company has registered the Common Stock
pursuant to Section 12(b) or 12(g) of the Exchange Act, is in full
compliance with all reporting requirements of the Exchange Act,
and has maintained all requirements for the continued inclusion of
the Common Stock, and the Common Stock is currently included,
in the Nasdaq SmallCap Market. The Company is eligible to use
Form S-3 under the Securities Act.
3.2. Current Public Information. Schedule 1.4(d) includes all of the
filings made by the Company since June 30, 1997 pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act.
3.3. No Directed Selling Efforts or General Solicitation in Regard to this
Transaction. The Company has not conducted any general
solicitation (as that term is used in Regulation D) with respect to
any of the Securities, nor has it made any offers or sales of any
security or solicited any offers to buy any security, under
circumstances that would require registration of the Securities under
the Securities Act.
3.4. Valid Issuance of Warrants and Common Stock. The Company has
an authorized capitalization consisting of 100,000,000 shares of
Common Stock, par value $.0001 per share. The Company has
issued and outstanding 10,289,510 shares of Common Stock on the
date hereof and no shares of Common Stock are held in treasury.
All of the issued and outstanding shares of Common Stock have
been duly and validly authorized and issued and are fully paid and
nonassessable; prior to the Closing Date, the authorized
capitalization shall include the Securities; upon issuance of the
Securities, the Securities will be duly and validly authorized and
issued and fully paid and non-assessable; the shares of Common
Stock issuable upon exercise of the Warrants and the Redemption
Warrants, when issued and delivered in accordance with the terms
of the Warrants and the Redemption Warrants, will be duly and
validly authorized and issued and fully paid and non-assessable; and
the holders of outstanding capital stock of the Company are not and
shall not be entitled to preemptive or other rights afforded by the
Company to subscribe for the capital stock or other securities of the
Company as a result of the sale of the Securities or the issuance of
Common Stock upon the exercise thereof.
3.5. Organization and Qualification. The Company is a corporation
duly incorporated and validly existing in good standing under the
laws of the State of Delaware and has the requisite corporate power
to own its properties and to carry on its business as now being
conducted and as proposed to be conducted. The Company does
not have any subsidiaries except as listed in Exhibit B hereto. The
Company and each such subsidiary, if any, is duly qualified as a
foreign corporation to do business and is in good standing in every
jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, other than
those in which the failure so to qualify would not have a Material
Adverse Effect.
3.6. Authorization; Enforcement. (i) The Company has the requisite
corporate power and authority to enter into and perform this
Agreement and the Registration Rights Agreement and to issue the
Securities in accordance with the terms hereof and thereof, (ii) the
execution, delivery and performance of this Agreement, the
Registration Rights Agreement, the Warrants and the Redemption
Warrants by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action, and no further consent
or authorization of the Company or its Board of Directors or
stockholders is required, (iii) this Agreement has been, and on the
Closing Date the Registration Rights Agreement, the Warrants and
the Redemption Warrants will be, duly executed and delivered by
the Company and (iv) this Agreement constitutes, and upon
execution and delivery thereof the Registration Rights Agreement,
the Warrants and the Redemption Warrants will be, valid and
binding obligations of the Company enforceable against the
Company in accordance with their terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of
general application.
3.7. Corporate Documents. The Company has furnished or made
available to the Subscriber true and correct copies of the Company's
Certificate of Incorporation, as in effect on the date hereof (the
"Certificate of Incorporation"), and the Company's By-Laws, as in
effect on the date hereof (the "By-Laws"), certified in each case by
the Assistant Secretary of the Company.
3.8. No Conflicts. The execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the Warrants
(including the exercise thereof) and the Redemption Warrants by
the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not and will not
(i) result in a violation of the Certificate of Incorporation or By-
Laws or (ii) conflict with, or constitute a default (or an event which
with notice or lapse of time or both would become a default) under,
or give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries are bound, or result in a
violation of any federal, state, local or foreign law, rule, regulation,
order, judgment or decree (including federal and state securities
laws and regulations) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or
any of its subsidiaries is bound or affected; provided that, for
purposes of such representation as to federal, state, local or foreign
law, rule or regulation, no representation is made herein with
respect to any of the same applicable solely to the Subscriber and
not to the Company. The business of the Company and its
subsidiaries is not being conducted in violation of any law,
ordinance or regulation of any governmental entity. The Company
is not required under federal, state or local law, rule or regulation
in the United States to obtain any consent, authorization or order of,
or make any filing or registration with, any court or governmental
agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or the Registration Rights
Agreement or issue and sell the Securities in accordance with the
terms hereof and thereof (other than any SEC, NASD or state
securities filings which may be required to be made by the
Company subsequent to the Closing, and any registration statement
which may be filed pursuant hereto); provided that, for purposes of
the representation made in this sentence, the Company is assuming
and relying upon the accuracy of the relevant representations and
agreements of the Subscriber herein.
3.9. Exchange Act Reports. The Company has delivered or made
available to the Subscriber true and complete copies of the
Exchange Act Reports. The Company has not provided to the
Subscriber any information which, according to applicable law, rule
or regulation, should have been disclosed publicly by the Company
but which has not been so disclosed. As of their respective dates,
the Exchange Act Reports complied (and as of its effective date, the
Registration Statement defined in Section 5.1 will comply) in all
material respects with the requirements of the Exchange Act (or in
the case of such Registration Statement, the Securities Act) and the
rules and regulations of the SEC promulgated thereunder and other
applicable federal, state and local laws, rules and regulations, and
none of the Exchange Act Reports contained (and, as of its effective
date, such Registration Statement will not contain) any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements of the
Company included (or to be included) in the Exchange Act Reports
and the Registration Statement comply as to form in all material
respects with applicable accounting requirements and the published
rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financial statements have
been (or will be) prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the
periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of
unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly
present (or will fairly present) the consolidated financial position of
the Company as of the dates thereof and the consolidated results of
operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal year-end audit
adjustments).
3.10. No Material Adverse Change. Since June 30, 1997, except as
disclosed in the Exchange Act Reports, no Material Adverse Effect
has occurred or exists.
3.11. No Violation of Creditor Covenants. No event of default has
occurred and is continuing (or event which with lapse of time or
notice or both would constitute such an event) under any of the
revolving credit facilities or other financing arrangements of the
Company or its subsidiaries.
3.12. No Undisclosed Liabilities. The Company and its subsidiaries have
no liabilities or obligations not disclosed in the Exchange Act
Reports, other than those incurred in the ordinary course of the
Company's or its subsidiaries' respective businesses since June 30,
1997, and which, individually or in the aggregate, do not or would
not have a Material Adverse Effect.
3.13. No Undisclosed Events or Circumstances.. No event or
circumstance has occurred or exists with respect to the Company or
its subsidiaries or their respective business, properties, prospects,
operations or financial condition, which, under applicable law, rule
or regulation, requires public disclosure or announcement by the
Company but which has not been so publicly announced or
disclosed.
3.14. No Integrated Offering. Neither the Company nor any of its
Affiliates, nor any person acting on its or their behalf has, directly
or indirectly, made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would
require registration of the Securities under the Securities Act.
3.15. No Brokers. The Company has taken no action which would give
rise to any claim by any person for brokerage commissions, finder's
fees or similar payments by the Subscriber relating to this
Agreement or the transactions contemplated hereby, except for
dealings with DJ Ltd., whose commissions and fees will be paid for
by the Company.
3.16. Effectiveness of SEC Filings. The SEC has not issued any stop
order or other order suspending the effectiveness of any registration
involving the Company or its subsidiaries.
3.17. No Material Litigation Proceedings. Neither the Company nor any
of its subsidiaries is a party to or the subject of any litigation,
arbitration or other proceeding which if adversely determined
would singly or in the aggregate have a Material Adverse Effect.
4. Covenants of the Subscriber
4.1 Resales. The Subscriber will not make any offers or sales of the
Securities other than pursuant to a registration statement under the
Securities Act or pursuant to an exemption from registration under
the Securities Act. The Subscriber will comply with applicable
prospectus delivery requirements under the Exchange Act.
4.2 Low Trades. The Subscriber will not, directly or through any
Affiliate, (i) create the lowest reported sales price on the NASDAQ
SmallCap Market (or the NASDAQ National Market, if the
Common Stock is included therein) for the Common Stock on any
trading day or (ii) offer to sell shares of Common Stock at a price
lower than the then prevailing bid price for the Common Stock on
the NASDAQ SmallCap Market (or the NASDAQ National Market,
if the Common Stock is included therein).
4.3 Short Position. The Subscriber, and any person acting in concert
with the Subscriber, currently has no existing short position, and
during the last 90 trading days had no short position, with respect
to the Common Stock and agrees not to enter into any short sales
(except exempt short sales) or other hedging transactions with
respect to any securities of the Company at any time during a
Valuation Period (as hereinafter defined).
5. Covenants of the Company
5.1 Registration Rights. The Company will file and use its best efforts
to cause to become effective, as promptly as possible, a registration
statement ("Registration Statement") on Form S-3 under the
Securities Act (or in the event that the Company is ineligible to use
such form, such other form as the Company is eligible to use under
the Securities Act) covering the resale of the Underlying Stock and
shall take all action necessary to qualify the Underlying Stock under
all applicable state "blue sky" laws, in accordance with terms of the
Registration Rights Agreement (the "Registration Rights
Agreement") in the form of EXHIBIT C hereto, which the
Company and the Subscriber shall enter into at the Closing.
5.2. Reservation of Common Stock. As of the date hereof, the
Company has reserved and the Company shall continue to reserve
and keep available at all times, free of preemptive rights, shares of
Common Stock for the purpose of enabling the Company to satisfy
any obligation to issue shares of Common Stock upon exercise of
the Warrants and the Redemption Warrants; provided, however,
that the number of shares so reserved shall at all times be at least
1,000,000 shares. The number of shares so reserved may be
reduced by the number of shares actually delivered pursuant to
exercise of the Warrants (provided that in no event shall the number
of shares so reserved be less than the number required to satisfy the
remaining exercise rights on the outstanding Warrants and the
Redemption Warrants) and the number of shares so reserved shall
be increased to reflect stock splits and stock dividends and
distributions.
5.3. Listing of Underlying Shares. The Company hereby agrees,
promptly following the Closing of the transactions contemplated by
this Agreement, to take such action to cause the Underlying Stock
to be included in the Nasdaq SmallCap Market as promptly as
possible but no later than the effective date of the Registration
Statement. The Company further agrees, if the Company applies to
have the Common Stock traded on any other principal stock
exchange or market, to include in such application the Underlying
Stock and to take such other action as is necessary to cause the
Underlying Stock to be listed on such other exchange or market as
promptly as possible.
5.4 Exchange Act Registration. The Company will cause its Common
Stock to continue to be registered under Section 12(g) or 12(b) of
the Exchange Act, will comply in all respects with its reporting and
filing obligations under the Exchange Act, and will not take any
action or file any document (whether or not permitted by the
Exchange Act or the rules thereunder) to terminate or suspend such
registration or to terminate or suspend its reporting and filing
obligations under Exchange Act. The Company will take all action
necessary to continue the inclusion of the Common Stock in the
Nasdaq SmallCap Market (or the Nasdaq National Market) and will
comply in all respects with the Company's reporting, filing and
other obligations under the bylaws or rules of the NASD.
5.5. Legends. The Underlying Stock and certificates evidencing the
same shall at all times be free of legends (except as provided in
Section 6.1 below), "stop transfers", "stock transfer restrictions" or
other restrictions, upon the effectiveness of the Registration
Statement.
5.6. Corporate Existence. The Company will take all steps necessary to
preserve and continue its corporate existence.
5.7. Right of First Refusal. In the event that at any time or from time to
time during the twelve (12) month period immediately following
the Closing Date, (i) the Company proposes to issue or sell any
shares of Common Stock or any of its securities which are
convertible into or exchangeable for Common Stock or any
convertible security, or any warrants or other rights to subscribe for
or to purchase or any options for the purchase of Common Stock
(other than shares or options issued or which may be issued
pursuant to the Company's employee, officer, director or consultant
stock or option or similar equity-based compensation plans or
shares issued upon exercise of options, warrants or rights
outstanding on the Closing Date consisting of warrants to purchase
326,728 shares of Common Stock which are currently outstanding,
options to purchase 1,072,694 shares of Common Stock which are
currently issued and outstanding or available for grant, securities
issued pursuant to any future stock option or equity plan approved
by the Company's stockholders, and securities issued in a registered
public offering or as part of an investment by any licensee,
prospective licensee, director, officer, or employee of the Company
or members of their immediate families, or options or warrants
which are not issued in connection with the raising of capital),
whether singly or together with other securities at an effective
purchase price per share of Common Stock which is at a discount
to the lowest reported sales price per share of Common Stock on the
date of valuation and (ii) the Outstanding Amount of Warrants is
greater than or equal to $1,000,000, then the Company shall give
written notice (the "Proposal Notice") to the Subscriber of such
proposed issuance, specifying the terms thereof in reasonable detail,
and the Subscriber shall have the right, exercisable by written notice
delivered within 30 days of the date of receipt by the Subscriber of
the Proposal Notice, to subscribe for and purchase all (or such
lesser portion as the Subscriber shall specify in writing) of the
Common Stock or other securities proposed to be issued, on terms
and conditions no less favorable to the Subscriber than those
specified in the Proposal Notice.
6. Legends; Subsequent Transfer of Securities; Denominations
6.1 Legend. The Company will issue one or more Warrants in the
name of the Subscriber and in such denominations to be specified
by the Subscriber prior to (or from time to time subsequent to) the
Closing. The Warrants, and any shares of Common Stock issued
upon exercise thereof prior to the effectiveness of the Registration
Statement, will bear the following legend (the "Legend"):
THESE SECURITIES HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR ANY
STATE SECURITIES LAWS, AND MAY NOT BE SOLD
OR OFFERED FOR SALE EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM
SUCH REGISTRATION REQUIREMENTS.
Following the effectiveness of the Registration
Statement, the Company will promptly instruct its transfer agent, upon
surrender of the Warrants and/or Underlying Stock, to remove the Legend
from any of the Underlying Stock. In addition, and if applicable, the
Company shall reissue certificates representing the Securities without the
legend set forth above at such time as (i) the Holder thereof is permitted to
dispose of such Securities pursuant to Rule 144(k) under the Securities Act
or (ii) the Securities are sold to a purchaser or purchasers in a transaction
exempt from registration under the Securities Act, as evidenced by an
opinion of counsel to the transferor delivered to and reasonably satisfactory
to the Company.
6.2 No Other Legend or Stock Transfer Instructions. No legend has
been or shall be placed on the share certificates representing the
Securities and no stock transfer instructions have been or shall be
given to the Company's transfer agent with respect thereto other
than as set forth in this Section 6.
6.3 Subscriber's Compliance. Nothing in this section shall affect the
Subscriber's obligations and agreement to comply with all
applicable securities laws upon resale of the Securities.
6.4 Other Restrictions on Transfer. The Subscriber shall not transfer
the Warrants or the Redemption Warrants to any party not
constituting an Affiliate of Ramius Capital Group, L.L.C.,
Promethean Investment Group, L.L.C. or Angelo, Gordon & Co.,
L.P. without the prior written consent of the Company, which
consent shall not be unreasonably withheld or delayed.
7. Governing Law; Jurisdiction; Waiver of Jury Trial
This Agreement shall be governed by and construed in accordance
with the laws of the State of New York without regard to principles
of conflicts of law or choice of law. The Company and the
Subscriber hereby agree that all actions or proceedings arising
directly or indirectly from or in connection with this Agreement
shall be litigated only in the Supreme Court of the State of New
York or the United States District Court for the Southern District of
New York located in New York County, New York. To the extent
permitted by applicable law, the Company and Subscriber consent
to the jurisdiction and venue of the foregoing courts and consent
that any process or notice of motion or other application to either of
said courts or a judge thereof may be served inside or outside the
State of New York or the Southern District of New York by
registered mail, return receipt requested, directed to such party at its
address set forth in this Agreement (and service so made shall be
deemed complete five (5) days after the same has been posted as
aforesaid) or by personal service or in such other manner as may be
permissible under the rules of said courts. The parties hereto
hereby waive any right to a jury trial in connection with any
litigation pursuant to this Agreement.
8. Assignment, Entire Agreement, Amendment
8.1 Assignment. Neither this Agreement nor any rights of the
Subscriber hereunder may be assigned by either party to any other
person. Notwithstanding the foregoing, the provisions of this
Agreement, the Warrants, the Redemption Warrants and the
Registration Rights Agreement shall inure to the benefit of, and be
enforceable by, any permitted transferee of any of the Securities
purchased by the Subscriber hereunder with respect to the
Securities held by such person.
8.2. Entire Agreement; Amendment. This Agreement, the Warrants, the
Redemption Warrants, the Registration Rights Agreement and the
other documents delivered pursuant hereto constitute the full and
entire understanding and agreement between the parties with regard
to the subjects hereof and thereof, and no party shall be liable or
bound to any other party in any manner by any warranties,
representations or covenants except as specifically set forth herein
or therein. Except as expressly provided in this Agreement, neither
this Agreement nor any term hereof may be amended, waived,
discharged or terminated other than by a written instrument signed
by the party against whom enforcement of any such amendment,
waiver, discharge or termination is sought.
9. Publicity
The Company agrees that it will not disclose, and will not include
in any public announcement, the name of the Subscriber without its
prior written consent, unless and until such disclosure is required by
law or applicable regulation, and then only to the extent of such
requirement. Except as may be required by law, the Company and
the Subscriber shall consult with each other before issuing any press
release or otherwise making any public statements with respect to
this Agreement and shall not issue any such press release or make
any such public statement prior to such consultation.
10. Notices, Etc.; Expenses; Indemnity
10.1 Notices. Any notice, demand or request required or permitted to be
given by either the Company or the Subscriber pursuant to the
terms of this Agreement shall be in writing and shall be deemed
given when delivered personally or by facsimile, with a hard copy
to follow by overnight or two day courier addressed to the parties
at the addresses of the parties set forth at the end of this Agreement
or such other address as a party may request by notifying the other
in writing. Copies of all notices to the Subscriber shall be sent to
its designee or representative.
10.2 Costs and Expenses. The Company shall be responsible for the
Subscriber's costs and expenses, due and payable at Closing
(including legal fees and expenses) incurred in entering into this
Agreement and the transactions contemplated hereby and in
conducting a due diligence examination in connection with the
transactions contemplated hereby, but not to exceed $20,000.
10.3. Indemnification. Each party shall indemnify the other against any
loss, cost or damages (including reasonable attorney's fees and
expenses) incurred as a result of such parties' breach of any
representation, warranty, covenant or agreement in this Agreement.
11. Counterparts
This Agreement may be executed in any number of counterparts, each of
which shall be enforceable against the parties actually executing
such counterparts, and all of which together shall constitute one
instrument.
12. Survival; Severability
The representations, warranties, covenants and agreements of the parties
hereto shall survive the Closing notwithstanding any due diligence
investigation conducted by or on behalf of the Subscriber. In the
event that any provision of this Agreement becomes or is declared
by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement shall continue in full force and effect without
said provision, unless the absence of such provision materially
changes the economic benefit of this Agreement to any party.
13. Titles and Subtitles
The titles and subtitles used in this Agreement are used for convenience
only and are not to be considered in construing or interpreting this
Agreement.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
Aggregate Purchase Price $1,500,000
Name of the Subscriber:
RAMIUS CAPITAL GROUP, L.L.C.
By: _/s/ Jeffrey M. Solomon
Jeffrey M. Solomon
Principal
Date of Subscription: October 29, 1997
Place of Execution: New York
Place of Organization or Citizenship:
Place of Residency and/or
Principal Place of Business
Attn:
(Telephone): _________________
(Fax):________________
Registration instructions:
(Name) (Please Print)___________________
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE 29th
DAY OF OCTOBER 1997.
RESEARCH FRONTIERS INCORPORATED
By: /s/ Robert L. Saxe
Name: Robert L. Saxe
Title: President
Address: 240 Crossways Park Drive
Woodbury, New York
11797-2033
-17-
<PAGE>
Aggregate Purchase Price $1,400,000
Name of the Subscriber:
LEONARDO, L.P.
By: ANGELO, GORDON & CO., L.P.
General Partner
By: _/s/ Michael Gordon
Michael Gordon
Chief Operating Officer
Date of Subscription: October 29, 1997
Place of Execution: New York
Place of Organization or Citizenship: Cayman Island
Place of Residency and/or
Principal Place of Business
Attn: Gary Wolf
(Telephone): 212-692-2058
(Fax): 212-867-6449
Registration instructions:
(Name) (Please Print) Leonardo, LP
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE 29th
DAY OF OCTOBER 1997.
RESEARCH FRONTIERS INCORPORATED
By: /s/ Robert L. Saxe
Name: Robert L. Saxe
Title: President
Address: 240 Crossways Park Drive
Woodbury, New York
11797-2033
<PAGE>
Aggregate Purchase Price $300,000
Name of the Subscriber:
AG SUPER FUND INTERNATIONAL PARTNERS, L.P.
By: ANGELO, GORDON & CO., L.P.
General Partner
By: /s/ Michael Gordon
Michael Gordon
Chief Operating Officer
Date of Subscription: October 29, 1997
Place of Execution: New York
Place of Organization or Citizenship: Cayman Islands
Place of Residency and/or
Principal Place of Business
Attn: Gary Wolf
(Telephone): 212-692-2058
(Fax): 212-867-6449
Registration instructions: AG SUPER FUND INTERNATIONAL PARTNERS, L.P.
(Name) (Please Print)
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE 29th
DAY OF OCTOBER 1997.
RESEARCH FRONTIERS INCORPORATED
By:/s/ Robert L Saxe
Name: Robert L. Saxe
Title: President
Address: 240 Crossways Park Drive
Woodbury, New York
11797-2033
<PAGE>
Aggregate Purchase Price $400,000
Name of the Subscriber:
RAPHAEL, L.P.
By: /s/ Michael Gordon
Michael Gordon
Chief Operating Officer
Date of Subscription: October 29, 1997
Place of Execution: New York
Place of Organization or Citizenship: Cayman Islands
Place of Residency and/or
Principal Place of Business
Attn: Gary Wolf
(Telephone): 212-692-2058
(Fax): 212-867-6449
Registration instructions:
(Name) (Please Print) Raphael LP
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE 29th
DAY OF OCTOBER 1997.
RESEARCH FRONTIERS INCORPORATED
By: /s/ Robert L Saxe
Name: Robert L. Saxe
Title: President
Address: 240 Crossways Park Drive
Woodbury, New York
11797-2033
<PAGE>
Aggregate Purchase Price $400,000
Name of the Subscriber:
RAMIUS FUND, LTD.
By: AG Ramius Partners, L.L.C.
Investment Advisor
By: /s/ Michael L. Gordon
Michael L. Gordon
Managing Officer
Date of Subscription: October 29, 1997
Place of Execution: New York
Place of Organization or Citizenship: Bermuda
Place of Residency and/or
Principal Place of Business
Attn: Gary Wolf
(Telephone): 212-692-2058
(Fax):_212-867-5449
Registration instructions:
(Name) (Please Print) Ramius Fund Ltd.
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE 29th
DAY OF OCTOBER 1997.
RESEARCH FRONTIERS INCORPORATED
By: /s/ Robert L Saxe
Name: Robert L. Saxe
Title: President
Address: 240 Crossways Park Drive
Woodbury, New York
11797-2033
<PAGE>
Aggregate Purchase Price $500,000
Name of the Subscriber:
HERACLES FUND
By: Promethean Investment Group, L.L.C.
Investment Manager
By: /s/ Brian Yeh
Brian Yeh
Managing Member
Date of Subscription: October 29, 1997
Place of Execution: New York
Place of Organization or Citizenship:
Place of Residency and/or
Principal Place of Business
40 West 57th Street, Suite 1520
New York, NY 10019
Attn:
(Telephone): ______212-698-0588___________
(Fax):212-698-0505
Registration instructions:
(Name) (Please Print) Heracles Fund
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE 29th
DAY OF OCTOBER 1997.
RESEARCH FRONTIERS INCORPORATED
By: /s/ Robert L Saxe
Name: Robert L. Saxe
Title: President
Address: 240 Crossways Park Drive
Woodbury, New York
11797-2033
<PAGE>
Aggregate Purchase Price $500,000
Name of the Subscriber:
THEMIS PARTNERS, L.P.
By: Promethean Investment Group, L.L.C.
Investment Manager
By: /s/ Brian Yeh
Brian Yeh
Managing Member
Date of Subscription: October 29, 1997
Place of Execution: New York
Place of Organization or Citizenship:
Place of Residency and/or
Principal Place of Business
40 West 57th Street, Suite 1520
NY, NY 10019
Attn:
(Telephone): 212-698-0588_________________
(Fax): 212-698-0505
Registration instructions:
(Name) (Please Print) Themis Partners LP
THIS SUBSCRIPTION IS ACCEPTED BY THE COMPANY ON THE 29th
DAY OF OCTOBER 1997.
RESEARCH FRONTIERS INCORPORATED
By:/s/ Robert L Saxe
Name: Robert L. Saxe
Title: President
Address: 240 Crossways Park Drive
Woodbury, New York
11797-2033
<PAGE>
EXHIBIT A
FORM OF COMMON STOCK PREPAID WARRANT
<PAGE>
EXHIBIT B
SUBSIDIARIES OF THE COMPANY
None
<PAGE>
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
<PAGE>
SCHEDULE 1.4(d)
EXCHANGE ACT REPORTS
<PAGE>
EXHIBIT 4.2
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS.
THEY MAY NOT BE SOLD OR OFFERED FOR SALE EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS
TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION
FROM SUCH REGISTRATION REQUIREMENTS.
Right to Purchase Shares of Common
Stock of Research Frontiers
Incorporated
_____________________________
Common Stock Prepaid Warrant
Research Frontiers Incorporated, a Delaware corporation having
an address at 240 Crossways Park Drive, Woodbury, New York 11797-
2033 (the "Company"), hereby certifies that the entity listed below or any
other Warrant Holder is entitled, on the terms and conditions set forth
below, to purchase from the Company at any time after the date hereof and
ending sixty (60) months after the date hereof (as such period may be
extended pursuant to Section 5A of the Registration Rights Agreement)
(the "Termination Date") fully paid and nonassessable shares of Common
Stock, $.0001 par value, of the Company together with any associated
Common Stock purchase rights issued under the Stockholder Rights Plan
dated February 16, 1993 or any similar stockholder rights plan of the
Company adopted after the date hereof (the "Common Stock"). The
aggregated purchase price of the Warrants is $5,000,000 (the "Outstanding
Amount").
1. Definitions.
(a) the term "Exercise Price" shall mean the lesser of (i)
the Initial Exercise Price or (ii) 82% of the average of the high
and low trading prices on the Nasdaq SmallCap Market (or the
Nasdaq National Market if the Common Stock is included
therein) for each of the previous five trading days as of the date
of exercise (the "Valuation Period"); provided, however, that
in the event that the Registration Statement referred to in
Section 2(b) of the Registration Rights Agreement is not
declared effective by the Commission by the 120th day
following the Closing Date, the Initial Exercise Price shall be
reduced by 2% for each month or portion thereof that the
Registration Statement shall not be declared effective, such
reduction pursuant to this proviso not to exceed 8% or, in lieu
of such reduction, the Company may elect, by irrevocable
notice to the Warrant Holder received not later than the 120th
day following the Closing Date, to pay the Warrant Holder an
amount equal to 2% of the Outstanding Amount in shares of
Common Stock for each month or portion thereof that the
Registration Statement shall not be declared effective, such
shares of Common Stock to be valued at the average of the high
and low trading prices on the Nasdaq SmallCap Market (or the
Nasdaq National Market if the Common Stock is included
therein) for each of the five trading days immediately preceding
the end of each such month (or, if the Registration Statement is
declared effective during such month, for each of the five
trading days immediately preceding the date the Registration
Statement is declared effective) and to be issued within five (5)
days after the end of each such month or effective date, as the
case may be.
(b) the term "Initial Exercise Price" shall mean $10.21.
(c) the term "Warrant Holder" shall mean the Purchaser
or any permitted assignee under the Subscription Agreement of
all or any portion of this Warrant at any given time.
(d) the term "Warrant Shares" shall mean the shares of
Common Stock or other securities issuable upon exercise of
this Warrant.
(e) other terms used herein which are defined in the
Subscription Agreement, dated as of October 29, 1997 (the
"Agreement"), or the Registration Rights Agreement, dated as
of October 29, 1997 (the "Registration Rights Agreement"),
shall have the same meanings herein as therein.
2. Exercise at the Option of the Warrant Holder. The
Holder of this Warrant shall have the following exercise rights.
(a) Holder's Right to Exercise. This Warrant shall be
exercisable at any time after the Closing Date, in whole or in
part, at the option of the Warrant Holder, into fully paid,
validly issued and nonassessable shares of Common Stock. If
this Warrant is exercised in part, the portion of this Warrant not
so exercised shall remain entitled to the exercise rights
provided herein.
(b) Exercise Price. Except as stated in paragraphs 2(d)
and 9 of this Warrant, the Outstanding Amount of this Warrant
that is exercised into shares of Common Stock at the option of
the Holder shall be exercised into the number of shares of
Common Stock which results from application of the
following formula:
P
==============
Exercise Price
P = Outstanding Amount of this Warrant submitted for
exercise
The number of shares of Common Stock into which the Outstanding
Amount of this Warrant hereto may be exercised pursuant to this Section
2 is hereinafter referred to as the "Exercise Rate."
(c) Paragraph 4 Transaction Redemption. In the event
that there is a definitive agreement executed for a Paragraph 4
Transaction (as hereinafter defined) the Company shall notify
the Warrant Holder in writing of the execution of such a
definitive agreement, and the Warrant Holder may elect at any
time up to 5 days prior to the effective date of such Paragraph
4 Transaction to cause the Company to redeem this Warrant, in
whole or in part, at a redemption price equal to 115% of the
Outstanding Amount at the time of election.
(d) Soft Floor Provision. The Warrant Holder may not
exercise this Warrant at any time that the Exercise Price is less
than or equal to $5.10 (the "Floor Price"); provided, however,
that in the event that the closing price of the Common Stock on
the Nasdaq SmallCap Market (or the Nasdaq National Market
if the Common Stock is included therein) is less than or equal
to the Floor Price for sixty (60) consecutive calendar days, the
prohibition on exercise set forth in this Section 2(d) will, upon
the expiration of such sixty (60) day period, be inoperative,
subject to reinstatement in the event that the Exercise Price is
equal to or greater than $8.37 for a period of ten (10)
consecutive trading days.
(e) Mechanics of Exercise. In order to exercise this
Warrant (in whole or in part) into full shares of Common
Stock, the Warrant Holder shall surrender this Warrant, duly
endorsed, by either overnight or 2-day courier, to the principal
office of the Company, and shall give written notice in the form
of EXHIBIT 1 hereto (the "Notice of Exercise") by facsimile
(with the original of the Notice of Exercise forwarded with the
foregoing courier) to the Company at such office (by 12:00
noon on the Holder Exercise Date (defined below) if the
trading price of the Common Stock is less than or equal to
$3.00 at such time) that the Holder elects to exercise the
Outstanding Amount specified therein, which Notice of
Exercise and election shall be irrevocable by the Holder;
provided, however, that the Company shall not be obligated to
issue certificates evidencing the shares of Common Stock
issuable upon such exercise unless either the Warrant
evidencing the Outstanding Amount is delivered to the
Company as provided above, or the Warrant Holder notifies the
Company that such Warrant(s) have been lost, stolen or
destroyed and executes an agreement reasonably satisfactory to
the Company to indemnify the Company from any loss
incurred by it in connection with such Warrants.
The Company shall use its best efforts to issue and
deliver within three business days after delivery to the
Company of such Warrant(s), or after receipt of such agreement
and indemnification, to such Warrant Holder at the address of
the Warrant Holder, or to its designee, a certificate or
certificates for the number of shares of Common Stock to
which the Warrant Holder shall be entitled as aforesaid,
together with a calculation of the Exercise Rate and a Warrant
or Warrants for the Outstanding Amount not submitted for
exercise. The effective date of exercise (the "Holder Exercise
Date") shall be deemed to be the date on which the Company
receives by facsimile the Notice of Exercise, and the person or
persons entitled to receive the shares of Common Stock
issuable upon such exercise shall be treated for all purposes as
the record holder or holders of such shares of Common Stock
on such date.
(f) Company Cash Election. Notwithstanding the
provisions of this Section 2, in the event that the closing bid
price of the Common Stock on the Nasdaq SmallCap Market
(or the Nasdaq National Market if the Common Stock is
included therein) is less than or equal to $3.00 on the Holder
Exercise Date, in lieu of issuing the shares of Common Stock
to which the Warrant Holder is entitled pursuant to this Section
2, the Company shall have the option, upon irrevocable notice
received by the Warrant Holder by facsimile not later than 1:00
p.m. on the Holder Exercise Date, to pay the Warrant Holder an
amount (the "Cash Election Amount") equal to the product of
(x) the closing bid price of the Common Stock on the Holder
Exercise Date and (y) the number of shares of Common Stock
to which the Warrant Holder would have been entitled pursuant
to this Section 2 but for the provisions of this Section 2(f).
3. Exercise on Termination Date.
At the Termination Date, the then Outstanding Amount of
Warrants shall be automatically exercised for Common Stock in
accordance with the terms of this Warrant without notice. The Company
shall use its best efforts to issue and deliver within three business days after
delivery to the Company of this Warrant, or after receipt of the agreement
and indemnification described in paragraph 2(e) above, to the Warrant
Holder at the address of the Warrant Holder, or to its designee, a certificate
or certificates for the number of shares of Common Stock to which the
Warrant Holder shall be entitled hereunder. The person or persons entitled
to receive the shares of Common Stock issuable upon such exercise shall
be treated for all purposes as the record holder or holders of such shares of
Common Stock on the Termination Date. The Termination Date shall be
a "Holder Exercise Date" for purposes of this Warrant.
4. Paragraph 4 Transactions.
If at any time (i) there occurs any consolidation or merger of the
Company with or into any other corporation or other entity or person
(whether or not the Company is the surviving corporation) or there occurs
any other corporate reorganization or transaction or series of related
transactions, and as a result thereof the stockholders of the Company
pursuant to such merger, consolidation, reorganization or other transaction
shall own in the aggregate less than 50% of the voting power and common
equity of Company or the ultimate parent corporation or other entity
surviving or resulting from such merger, consolidation, reorganization or
other transaction, (ii) the Company transfers all or substantially all of the
Company's assets to another corporation or other entity or person or (iii)
the Company shall fix a record date for the declaration of a material
distribution or dividend (x) payable in securities or assets (other than
shares of Common Stock) or (y) payable in cash but other than out of the
surplus of the Company in accordance with the Delaware General
Corporation Law (each a "Paragraph 4 Transaction"), then, if the Warrant
Holder shall not have elected pursuant paragraph 2(c) hereof to cause this
Warrant to be redeemed by the Company, the Warrant Holder may (by
exercising this Warrant pursuant to paragraph 2 hereof) participate in any
such Transaction as a class with holders of Common Stock on the same
basis as if this Warrant had been exercised one day prior to the effective
date (or record date for such distribution or dividend) of such Transaction
and the Company shall make provision for the rights of the Warrant Holder
specified in this paragraph 4 in any such Paragraph 4 Transaction.
5. Redemption at the Option of the Company. This
Warrant may not be redeemed at the option of the Company except in
accordance with the terms of this Section 5.
(a) To the extent the Company shall have funds legally
available for such payment, the Company may, provided the
closing price per share of Common Stock is less than or equal
to $6.00 for fifteen (15) consecutive trading days immediately
prior to the date of redemption, redeem this Warrant, in whole
or in part, at a redemption price equal to 105% of the then
Outstanding Amount of the Warrants being redeemed upon 30
days' notice and payable in cash, together with one new five
year Common Stock Purchase Warrant containing the same
terms and conditions as this Warrant for every three shares of
Common Stock underlying the unexercised portion of such
redeemed Warrant, with an exercise price of 115% of the bid
price for the Common Stock on the Nasdaq SmallCap Market
(or the Nasdaq National Market if the Common Stock is
included therein) on the day of redemption (the "Redemption
Warrant"), such Redemption Warrants, as a condition to such
redemption, to be reasonably satisfactory to the Warrant
Holder.
(b) To the extent the Company shall have funds legally
available for such payment, the Company may, provided the
closing price per share of Common Stock is greater than or
equal to $14.00 for any fifteen (15) consecutive trading days
after the Registration Statement shall be declared effective,
redeem this Warrant, in whole or in part, at a redemption price
equal to 100% of the then Outstanding Amount of the Warrants
being redeemed upon 120 days' notice, such notice not to be
given earlier than the second anniversary of the Closing Date
and payable in cash, provided that the Registration Statement
shall be effective on the date of redemption.
(c) Upon irrevocable notice to the Warrant Holder of
the redemption of this Warrant, this Warrant shall be redeemed
by the Company at the redemption price herein specified. In
the event that less than the Outstanding Amount of this Warrant
is redeemed, then the Company shall issue and deliver within
three (3) business days after delivery to the Company of this
Warrant, to such Warrant Holder at the address of the Warrant
Holder, a Warrant for the Outstanding Amount of this Warrant
not redeemed by the Company.
6. Delivery of Stock Certificates.
(a) Subject to the terms and conditions of this Warrant,
as soon as practicable after the exercise of this Warrant in full
or in part, and in any event within three (3) trading days
thereafter, the Company at its expense (including, without
limitation, the payment by it of any applicable issue taxes) will
cause to be issued in the name of and delivered to the Warrant
Holder, or as the Warrant Holder (upon payment by the
Warrant Holder of any applicable transfer taxes) may lawfully
direct, a certificate or certificates for the number of fully paid
and non-assessable shares of Common Stock to which the
Warrant Holder shall be entitled on such exercise, together with
any other stock or other securities or property (including cash,
where applicable) to which the Warrant Holder is entitled upon
such exercise.
7. Fractional Shares.
No fractional shares of Common Stock or scrip representing
fractional shares of Common Stock shall be issuable hereunder. In lieu
thereof, the number of shares of Common Stock that are issuable upon any
exercise shall be rounded up or down to the nearest whole share.
8. Covenants of the Company.
(a) The Company will not take any action specified in
paragraph 4(iii) (y) hereof without the Warrant Holder's prior
written consent.
(b) The Company shall use its reasonable best efforts to
insure that a Registration Statement under the Act covering the
issuance of the Warrant Shares and the resale or other
disposition thereof by the Warrant Holder is effective as
provided in the Registration Rights Agreement.
(c) The Company shall take all necessary actions and
proceedings as may be required and permitted by applicable
law, rule and regulation, including, without limitation, those of
the NASD, for the legal and valid issuance of this Warrant and
the Warrant Shares to the Warrant Holder under this Warrant.
(d) From the date hereof through the Termination Date,
the Company shall take all steps reasonably necessary to insure
that the Common Stock remains included in the Nasdaq
SmallCap Market (or the Nasdaq National Market if the
Common Stock is included therein).
(e) The Company shall not amend its Certificate of
Incorporation or Bylaws so as to constitute a breach of the
Company's obligations hereunder.
(f) The Company shall at all times reserve and keep
available, solely for issuance and delivery as Warrant Shares
hereunder, such shares of Common Stock as shall from time to
time be issuable as Warrant Shares; provided, however, that the
number of shares so reserved shall at all times be at least
1,000,000 shares. The number of shares so reserved may be
reduced by the number of shares actually delivered pursuant to
exercise of the Warrants (provided that in no event shall the
number of shares so reserved be less than the number required
to satisfy the remaining exercise rights on the outstanding
Warrants and the Redemption Warrants) and the number of
shares so reserved shall be increased to reflect stock splits and
stock dividends and distributions.
(g) The Warrant Shares, when issued in accordance
with the terms hereof, will be duly authorized, validly issued,
fully paid and non-assessable. The Company has authorized
and reserved for issuance to the Warrant Holder the requisite
number of shares of Common Stock to be issued pursuant to
this Warrant.
(h) With a view to making available to the Warrant
Holder the benefits of Rule 144 promulgated under the Act and
any other rule or regulation of the SEC that may at any time
permit the Warrant Holder to sell securities of the Company to
the public without registration, the Company agrees to use its
reasonable best efforts to:
(i) make and keep public information available,
as those terms are understood and defined in Rule 144, at
all times;
(ii) file with the SEC in a timely manner all
reports and other documents required of the Company
under the Act and the Exchange Act; and
(iii) furnish to any Warrant Holder forthwith upon
request a written statement by the Company that it has
complied with the reporting requirements of Rule 144 and
of the Act and the Exchange Act, a copy of the most
recent annual or quarterly report of the Company, and
such other reports and documents so filed by the
Company as may be reasonably requested to permit any
such Warrant Holder to take advantage of any rule or
regulation of the SEC permitting the selling of any such
securities without registration.
9. Adjustment of Exercise Price and Number of Shares.
The number of, and kind of, securities purchasable upon
exercise of this Warrant and the Exercise Price shall be subject to
adjustment from time to time if:
(a) Subdivisions, Combinations and Other Issuances.
The Company shall subdivide its outstanding securities as to
which exercise rights under this Warrant exist, by split-up,
spin-off, or otherwise, or combine its outstanding securities as
to which exercise rights under this Warrant exist. In such
event, the number of Warrant Shares as to which this Warrant
is exercisable as of the date of such subdivision, split-up, spin-
off or combination shall be proportionately increased in the
case of a subdivision, or proportionately decreased in the case
of a combination.
(b) Stock Dividend. The Company declares a dividend
or other distribution on Common Stock payable in Common
Stock or other securities or rights convertible into Common
Stock ("Common Stock Equivalents") without payment of any
consideration by holders of Common Stock for the additional
shares of Common Stock or Common Stock Equivalents
(including the additional shares of Common Stock issuable
upon exercise or conversion thereof). In such event, the
number of shares of Common Stock for which this Warrant
may be exercised shall be increased as of the record date (or the
date of such dividend distribution if no record date is set) for
determining which holders of Common Stock shall be entitled
to receive such dividends, in proportion to the increase in the
number of outstanding shares (and shares of Common Stock
issuable upon conversion of all such securities convertible into
Common Stock) of Common Stock as a result of such dividend,
and the Exercise Price shall be adjusted so that the aggregate
number of all the Warrant Shares issuable hereunder
immediately after the record date (or on the date of such
distribution, if applicable), for such dividend shall equal the
aggregate number so issuable immediately before such record
date (or on the date of such distribution, if applicable).
(c) Other Distributions. The Company distributes to
holders of its Common Stock, other than as part of its
dissolution, liquidation or the winding up of its affairs, any
shares of its capital stock, any evidence of indebtedness or any
of its assets (other than cash, Common Stock or securities
exercisable into Common Stock). In such event, the Exercise
Price of this Warrant shall be adjusted in good faith by the
Company's Board of Directors to reflect the value distributed
on each share of Common Stock.
(d) Merger, etc. There shall be, through any means, a
merger or consolidation of the Company with or into or,
through any means, a transfer of all or substantially all of the
assets of the Company to another entity. In such event, the
Warrant Holder shall be entitled to receive upon such transfer,
merger or consolidation becoming effective, the number of
shares or other securities or property of the Company or of the
successor corporation resulting from such merger or
consolidation, which would have been received by the Warrant
Holder for the shares of stock subject to this Warrant had this
Warrant been exercised just prior to such transfer, merger or
consolidation becoming effective or to the applicable record
date thereof, as the case may be.
(e) Reclassification etc. There shall be, through any
means, a reorganization or reclassification of the securities as
to which exercise rights under this Warrant exist into the same
or a different number of securities of any other class or classes.
In such event, the Warrant Holder shall thereafter be entitled to
receive upon exercise of this Warrant the number of shares or
other securities or property resulting from such reorganization
or reclassification, which would have been received by the
Warrant Holder for the shares of stock subject to this Warrant
had this Warrant at such time been exercised.
10. Reservation of Stock Issuable Upon Exercise.
(a) Reservation Requirement. The Company shall
reserve and keep available at all times, free of preemptive
rights, shares of Common Stock for the purpose of enabling the
Company to satisfy any obligation to issue shares of Common
Stock upon exercise of all of the Warrants pursuant hereto.
(b) Default. If the Company does not have a sufficient
number of shares of Common Stock available to satisfy the
Company's obligations to a Warrant Holder upon receipt of a
Notice of Exercise or is otherwise unable to issue such shares
of Common Stock in accordance with the terms of this Warrant
and such condition shall remain unremedied for a period of
forty-five (45) days after the Company's receipt of a Notice of
Exercise (an "Exercise Default"), then from and after the fifth
(5th) day following an Exercise Default, the Company shall be
obligated to pay each Warrant Holder 2% per month of the then
Outstanding Amount of this Warrant for which an Exercise
Notice has been sent (the "Default Charge") in cash on or prior
to the fifth day after the end of the month for which the Default
Charge is payable. In addition, in the event that an Exercise
Default is not cured within 180 days after the date of the Notice
of Exercise or the Default Charge is not paid within 5 days
after the end of each month for which it is due, this Warrant
may, at the Warrant Holder's option, be redeemed in whole or
in part at a redemption price equal to 125% of the Outstanding
Amount thereof, together with any unpaid Default Charge.
11. No Reissuance of Warrants.
No Warrants acquired by the Company by reason by
redemption, purchase, exercise or otherwise shall be reissued, and all such
Warrants shall be retired.
12. Holder's Rights if Shares are Delisted or if Trading in
Common Stock is Suspended.
In the event that at any time on or after the date hereof, and
prior to the Termination Date, trading in the shares of the Common Stock
is suspended on the Nasdaq SmallCap Market (or the Nasdaq National
Market if the Common Stock is included therein) for a period of five
consecutive trading days, other than as a result of the suspension of trading
in securities in general, or if such shares are delisted from the Nasdaq
SmallCap Market (or the Nasdaq National Market if the Common Stock is
included thereon) then, at the Warrant Holder's option, upon notice to the
Company, the Company shall redeem such Holder's Warrants at a
redemption date designated by such Holder, and at the redemption price
equal to 125% of the then Outstanding Amount of the Warrant.
13. Limitations on Holder's Right to Exercise.
Notwithstanding anything to the contrary contained herein, each
Exercise Notice shall be deemed to contain a representation that, after
giving effect to the shares of the Common Stock to be issued pursuant to
such Exercise Notice, the total number of shares of the Common Stock
deemed beneficially owned by the Warrant Holder, together with all shares
of the Common Stock deemed beneficially owned by the Warrant Holder's
"affiliates" as defined in Rule 144 of the Act, will not exceed 4.9% of the
total issued and outstanding shares of the Common Stock.
14. Registration Suspension.
In the event that at any time or from time to time any
registration statement with respect to the Common Stock issuable upon
conversion of this Warrant is suspended or trading in the Common Stock
on the Nasdaq SmallCap Market (or the Nasdaq National Market if the
Common Stock is included therein) is suspended for a period of time
("Blackout Period"), the Termination Date hereunder shall be extended for
a period equal to 1.5 times the number of days in such Blackout Period.
Furthermore, additional provisions pertaining to the suspension of
effectiveness of such registration statement set forth in Paragraph 5A of the
Registration Rights Agreement, shall be applicable in the event of a
Blackout Period, and are specifically incorporated by reference herein.
15. Payment of Expenses.
The Company agrees to pay all reasonable fees and expenses,
including reasonable attorneys' fees, which may be incurred by the Warrant
Holder in enforcing the provisions of this Warrant, the Subscription
Agreement or the Registration Rights Agreement (as defined in the
Subscription Agreement).
16. Defaults.
The following shall constitute "Events of Default":
(a) The Company refuses at any time to honor any
Notice of Exercise issued in accordance with the terms of
Paragraph 2 hereof; or
(b) Any of the representations or warranties made by
the Company herein, in the Subscription Agreement, or in any
certificate or financial or other statements heretofore or
hereafter furnished by or on behalf of the Company in
connection with the execution and delivery of this Warrant or
the Subscription Agreement shall be false or misleading in any
material respect and such condition (to the extent capable of
being cured) shall continue uncured for a period of ten (10)
business days after the Company has become aware thereof or,
in the exercise of reasonable care, should have become aware
thereof; or
(c) The Company shall fail to perform or observe in any
material respect any covenant or agreement in the Subscription
Agreement, or any other covenant, term, provision, condition,
agreement or obligation of the Company under this Warrant
(except Section 10(a) hereof) and such failure shall continue
uncured for a period of ten (10) business days after the
Company has become aware thereof or, in the exercise of
reasonable case, should have become aware thereof; or
(d) The Company shall (1) become insolvent; (2) admit
in writing its inability to pay its debts generally as they mature;
(3) make an assignment for the benefit of creditors or
commence proceedings for its dissolution; or (4) apply for or
consent to the appointment of a trustee, liquidator or receiver
for it or for a substantial part of its property or business; or
(e) A trustee, liquidator or receiver shall be appointed
for the Company or for a substantial part of its property or
business without its consent and shall not be discharged within
ninety (90) days after such appointment; or
(f) Any governmental agency or any court of competent
jurisdiction at the instance of any governmental agency shall
assume custody or control of the whole or any substantial
portion of the properties or assets of the Company and shall not
be dismissed within ninety (90) days thereafter; or
(g) Any money judgment (including any arbitration
award, but only if reduced to a judgment), writ or warrant of
attachment, or similar process in excess of Two Hundred and
Fifty Thousand Dollars ($250,000) in the aggregate shall be
entered or filed against the Company or any of its properties or
other assets and shall remain unpaid, unvacated, unbonded or
unstayed for a period of sixty (60) days or in any event later
than ten (10) days prior to the date of any proposed sale
thereunder; and
(h) Bankruptcy, reorganization, insolvency or
liquidation proceedings or other similar proceedings, or relief
under any bankruptcy law or any law for the relief of debt,
shall be instituted by or against the Company and, if instituted
against the Company, shall not be dismissed within sixty (60)
days after such institution or the Company shall by any action
or answer approve of, consent to, or acquiesce in any such
proceedings or admit to any allegations of, or default in
answering a petition filed in any such proceeding.
Unless an Event of Default shall have been waived in writing by the
Warrant Holder (which waiver shall not be deemed to be a waiver of any
subsequent default) at the option of and on notice by the Warrant Holder
and in the Warrant Holder's sole discretion, this Warrant shall be redeemed
at a redemption price equal to 125% of the Outstanding Amount of the
Warrant, the Company's obligation to redeem this Warrant having arisen
immediately prior to the occurrence of such Event of Default.
17. Bankruptcy.
The Company and the Warrant Holder agree that the rights of
the Warrant Holder under this Warrant shall, upon the occurrence of any
Event of Default specified in paragraph 16(d), (e), (f) or (h) or upon any
voluntary or involuntary liquidation, dissolution or winding up of the
Company, rank prior and in preference to the rights of the holders of
Common Stock.
18. No Impairment.
The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of
any of the terms of this Warrant, but will at all times in good faith assist in
the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the
Warrant Holder against impairment. Without limiting the generality of the
foregoing, the Company (a) will not increase the par value of any Warrant
Shares above the amount payable therefor on such exercise, (b) will take
all such action as may be reasonably necessary or appropriate in order that
the Company may validly and legally issue fully paid and nonassessable
Warrant Shares on the exercise of this Warrant and (c) comply fully with
all of the provisions of this Warrant, including but not limited to the non-
impairment provisions of paragraphs 4 and 9(a)-(e).
19. Notice of Adjustments; Notices.
Whenever the Exercise Price shall be adjusted pursuant to the
terms hereof, the Company shall execute and deliver to the Warrant Holder
a certificate setting forth, in reasonable detail, the event requiring the
adjustment, the amount of the adjustment, the method by which such
adjustment was calculated and the Exercise Price hereunder after giving
effect to such adjustment, and shall cause a copy of such certificate to be
mailed (by first class mail, postage prepaid) to the Warrant Holder.
20. Rights as Stockholder.
Prior to exercise of this Warrant, the Warrant Holder shall not
be entitled to any rights as a stockholder of the Company with respect to
the Warrant Shares, including without limitation, the right to vote such
shares, receive dividends or other distributions thereon or be notified of
stockholder meetings. However, in the event of any taking by the
Company of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right, the
Company shall mail to each Warrant Holder, at least 10 days prior to the
date specified therein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or right.
21. Replacement of Warrant.
On receipt of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of this Warrant and, in the case
of any such loss, theft or destruction of this Warrant, on delivery of an
indemnity agreement or security reasonably satisfactory in form and
amount to the Company or, in the case of any such mutilation, on surrender
and cancellation of such Warrant, the Company at its expense will execute
and deliver, in lieu thereof, a new Warrant of like tenor.
22. Specific Enforcement; Consent to Jurisdiction; Waiver
of Jury Trial.
(a) The Company and the Warrant Holder acknowledge
and agree that irreparable damage would occur in the event that
any of the provisions of this Warrant were not performed in
accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Warrant and to enforce
specifically the terms and provisions hereof, this being in
addition to any other remedy to which either of them may be
entitled by law or equity.
(b) Each of the Company and the Warrant Holder
hereby (i) agree that all actions or proceedings arising directly
or indirectly from or in connection with this Warrant shall be
litigated only in the Supreme Court of the State of New York
or the United States District Court for the Southern District of
New York located in New York County, New York and (ii) to
the extent permitted by applicable law, consent to the
jurisdiction and venue of the foregoing courts and consent that
any process or notice of motion or other application to either of
said courts or a judge thereof may be served inside or outside
the State of New York or the Southern District of New York by
registered-mail, return receipt requested, directed to such party
at its address set forth in this Warrant (and service so made
shall be deemed complete five (5) days after the same has been
posted as aforesaid) or by personal service or in such other
manner as may be permissible under the rules of said courts.
The parties hereto hereby waive any right to a jury trial in
connection with any litigation pursuant to this Warrant.
23. Entire Agreement; Amendments.
This Warrant, the Exhibits hereto and the provisions contained
in the Subscription Agreement or the Registration Rights Agreement and
incorporated into this Warrant and the Warrant Shares contain the entire
understanding of the parties with respect to the matters covered hereby and
thereby and except as specifically set forth herein and therein, neither the
Company nor the Warrant Holder makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be waived or amended other than by a written instrument
signed by the party against whom enforcement of any such amendment or
waiver is sought.
24. Restricted Securities.
The provisions of the Subscription Agreement are incorporated
herein by reference and hereby made a part hereof.
25. Notices.
Any notice or other communication required or permitted to be
given hereunder shall be in writing and shall be effective (a) upon hand
delivery or delivery by telex (with correction answer back received),
telecopy or facsimile at the address or number designated below (if
delivered on a business day during normal business hours where such
notice is to be received), or the first business day following such delivery
(if delivered other than on a business day during normal business hours
where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall
be:
to the Company:
Research Frontiers Incorporated
240 Crossways Park Drive
Woodbury, New York 11797-2033
Attention: Robert L. Saxe
President
to the Warrant Holder:
Leondardo, L.P.
AG Super Fund International Partners, L.P.
Raphael, L.P.
Ramius Fund, Ltd.
c/o Angelo, Gordon & Co., L.P.
245 Park Avenue, 26th Floor
New York, NY 10167
Attention: Gary Wolf
Heracles Fund
Themis Partners, L.P.
Promethean Investment Group
40 West 57th Street, 15th Floor
New York, NY 10019
Attention: James O'Brien
Ramius Capital Group, L.L.C.
757 Third Avenue, 27th Floor
New York, NY 10017
Attention: Jeffrey M. Solomon
Either party hereto may from time to time change its address for
notices under this Section 25 by giving at least 10 days prior written notice
of such changed address to the other party hereto.
26. Miscellaneous.
This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or
termination is sought. This Warrant shall be construed and enforced in
accordance with and governed by the laws of the State of New York. The
headings in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity
or enforceability of any other provisions.
27. Expiration.
Subject to the provisions of paragraph 3 of this Warrant and
Section 5A of the Registration Rights Agreement, the right to exercise this
Warrant shall expire sixty (60) months after the date hereof.
Dated: October 29, 1997 RESEARCH FRONTIERS INCORPORATED
By: /s/ Robert L. Saxe
Robert L. Saxe
Title: President
[CORPORATE SEAL]
Attest:
By: /s/ Joseph M. Harary
Joseph M. Harary
Its: Assistant Secretary
RAMIUS CAPITAL GROUP, L.L.C.
By: /s/ Jeffrey M. Solomon
Jeffrey M. Solomon
Principal
Outstanding Amount Subscribed
for: $1,500,000
LEONARDO, L.P.
By: Angelo Gordon & Co., L.P.
General Partner
By: /s/ Michael L. Gordon
Michael L. Gordon
Chief Operating Officer
Outstanding Amount Subscribed
for: $1,400,000
AG SUPER FUND INTERNATIONAL PARTNERS, L.P.
By: By: Angelo Gordon & Co., L.P.
General Partner
By: /s/ Michael L. Gordon
Michael L. Gordon
Chief Operating Officer
Outstanding Amount Subscribed
for: $300,000
RAPHAEL, L.P.
By: /s/ Michael L. Gordon
Michael L. Gordon
Chief Operating Officer
Outstanding Amount Subscribed
for: $400,000
RAMIUS FUND, LTD.
By: AG Ramius Partners, L.L.C.
Investment Advisor
By: /s/ Michael L. Gordon
Michael L. Gordon
Managing Officer
Outstanding Amount Subscribed
for: $400,000
HERACLES FUND
By: Promethean Investment Group, L.L.C.
Investment Manager
By: /s/ Brian Yeh
Brian Yeh
Managing Member
Outstanding Amount Subscribed
for: $500,000
THEMIS PARTNERS, L.P.
By: Promethean Investment Group, L.L.C.
Its: General Partner
By: /s/ Brian Yeh
Brian Yeh
Managing Member
Outstanding Amount Subscribed
for: $500,000
<PAGE>
FORM OF WARRANT EXERCISE
(To be signed only on exercise of Warrant)
TO . . . . . . . . .
The undersigned, the holder of the within Warrant, hereby irrevocably
elects to exercise $__________ of the Outstanding Amount of this
Warrant for shares of Common Research Frontiers Incorporated, a
Delaware corporation (the "Company"), and requests that the certificates
for such shares of Common Stock be issued in the name of, and
delivered to _______________________, whose address is
______________.
Dated: . . . . . . . . . . . . . .
(Signature must conform to name of holder as
specified on the face of the Warrant)
. . . . . . . . . . . . . . . . .
(Address)
<PAGE>
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns and transfers
unto ___________________ the right represented by the within Warrant
to purchase shares of Common Stock of Research Frontiers
Incorporated, a Delaware corporation, in the Outstanding Amount of
$____________.
Dated: . . . . . . . . . . . . . . .
(Signature must conform to name of
holder as specified on the face of the
Warrant)
(Address)
Signed in the presence of:<PAGE>
EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT
("Registration Rights Agreement"), entered into as of October 29, 1997,
between the entities listed below (each, a "Purchaser"), and
RESEARCH FRONTIERS INCORPORATED, a Delaware corporation
with offices at 240 Crossways Park Drive, Woodbury, New York
11797-2033 (the "Company").
W I T N E S S E T H:
WHEREAS, pursuant to a Subscription Agreement, dated as
of October 29, 1997 (the "Agreement"), by and between the Company
and the Purchaser, the Company has agreed to sell and the Purchaser
and the other purchasers named therein have agreed to purchase U.S.
$5,000,000 of the Company's Common Stock Prepaid Warrants (the
"Warrants") exercisable into shares of the Company's Common Stock,
$.0001 par value (the "Shares");
WHEREAS, upon certain circumstances as described in
paragraph 5 of the Warrants, the Company has agreed to issue
Redemption Warrants (the "Redemption Warrants");
WHEREAS, pursuant to the terms of, and in partial
consideration for, Purchaser's purchase of the Warrants, the Company
has agreed to provide the Purchaser with certain registration rights with
respect to the Shares issuable upon exercise of the Warrants and
exercise of the Redemption Warrants as set forth in this Registration
Rights Agreement;
NOW, THEREFORE, in consideration of the mutual
promises, representations, warranties, covenants and conditions set forth
in the Agreement and this Registration Rights Agreement, the Company
and the Purchaser agree as follows:
1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the
Securities Act.
"Registrable Securities" shall mean any Shares or other
securities issued or issuable to Purchaser or any Holder pursuant to the
terms of or upon the exercise or exchange of any Warrants, Redemption
Warrants or Shares or issued to Purchaser pursuant to Section 5A of this
Agreement.
The terms "register", "registered" and "registration"
shall refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses to be
incurred by the Company in connection with Purchaser's exercise of its
registration rights under this Agreement, including, without limitation,
all registration and filing fees, printing expenses, fees and disbursements
of counsel for the Company, blue sky fees and expenses, reasonable fees
and disbursements of counsel to Holder for a "due diligence"
examination of the Company and review of the Registration Statement
and related documents (which fees and disbursements shall be subject to
Section 10.2 of the Agreement), and the expense of any special audits
incident to or required by any such registration (but excluding the
compensation of regular employees of the Company, which shall be
paid in any event by the Company). With respect to the "due diligence"
examination of the Company, the Registration Expenses shall include
only fees and disbursements for one (1) designated counsel for all the
Holders of Warrants.
"Selling Expenses" shall mean all underwriting
discounts and selling commissions applicable to the sale of Registrable
Securities and all fees and disbursements of counsel for Holders not
included with "Registration Expenses".
"Holder" shall include the Purchaser and any transferee
of Warrants, Redemption Warrants, Shares or Registrable Securities
which have not been sold to the public to whom the registration rights
conferred by this Agreement have been transferred in compliance with
Section 10 of this Agreement.
"Registration Statement" shall have the meaning set
forth in Section 2(a) herein.
"Regulation D" shall mean Regulation D as
promulgated pursuant to the Securities Act, and as amended from time
to time.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
2. Registration Requirements. The Company shall use its
diligent best efforts to effect the registration of the Registrable
Securities contemplated by the Agreement (including, without
limitation, the execution of an undertaking to file post-effective
amendments, appropriate qualification under applicable blue sky or
other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act) as would permit or facilitate
the sale or distribution of all the Registrable Securities in the manner
(including manner of sale) and in all states reasonably requested by the
Holder for purposes of maximizing the proceeds realizable by the
Holder for such sale or distribution. Such best efforts by the Company
shall include without limitation the following:
(a) The Company shall, as soon as practicable
after the date hereof but in no event later than thirty (30) days after the
date hereof, file (i) a registration statement with the Commission
pursuant to Rule 415 under the Securities Act on Form S-3 under the
Securities Act (or in the event that the Company is ineligible to use such
form, such other form as the Company is eligible to use under the
Securities Act) covering the Registrable Securities so requested to be
registered by the Holder ("Registration Statement"); (ii) such blue sky
filings as shall have been requested by the Holder; and (iii) any required
filings with the National Association of Securities Dealers, Inc. or
exchange or market where the Shares are traded. Thereafter the
Company shall use its best efforts to have such Registration Statement
and other filings declared effective as promptly as practicable.
(b) (i) If the Company fails to file a Registration
Statement complying with the requirements of this Registration Rights
Agreement within 30 days from the date hereof or if such Registration
Statement has not become effective within 270 days from the Closing
Date, the Holder shall have, in addition to and without limiting any
other rights it may have at law, in equity or under the Warrants, the
Agreement or this Registration Rights Agreement (including the right to
specific performance), the right to receive, as liquidated damages, the
payments as provided in subparagraph (ii) of this section.
(ii) If after 270 days from the Closing
Date the Registration Statement has not been declared
effective by the Commission, then upon demand of such
Holder, the Company shall redeem all the Warrants held by
such Holder at a redemption price equal to 115% of the
Outstanding Amount of the Warrants.
(c) The Company shall enter into such
customary agreements and take all such other reasonable actions in
connection therewith in order to expedite or facilitate the disposition of
such Registrable Securities and, in such connection:
(i) make such representations and
warranties to the Holder as the Holder may reasonably
request;
(ii) cause to be delivered to the sellers of
Registrable Securities opinions of counsel to the Company,
dated the effective date of the Registration Statement (which
counsel, and opinions (in form, scope and substance), shall
be reasonably satisfactory to the appointed representative or
counsel of the Holder), addressed to the Holder covering the
matters customarily covered in opinions requested in
secondary underwritten offerings; and
(iii) the Company shall deliver such
documents and certificates as may be reasonably requested
by the Holder to evidence compliance with clause (i) above
and with any customary conditions contained in any
agreement entered into by the Company in connection
herewith;
the foregoing in this paragraph 2(c) shall be done at each closing as and
to the extent required thereunder; provided, however, the foregoing in
paragraph 2(c) shall not be required on more than two (2) occasions.
(d) The Company shall make available for
inspection by a representative or representatives of the Holder and any
attorney or accountant retained by such Holder, all financial and other
records customary for such purposes, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors
and employees to supply all information reasonably requested by any
such representative, attorney or accountant in connection with such
Registration Statement. The Holder will agree to keep all non-public
information supplied to it confidential until such information is included
in the Registration Statement.
3. Expenses of Registration. Subject to the provisions of
Section 10.2 of the Agreement, all Registration Expenses incurred in
connection with any registration, qualification or compliance with
registration pursuant to this Agreement shall be borne by the Company,
and all Selling Expenses shall be borne by the Holder.
4. Registration on Form S-3. The Company shall use its
best efforts to qualify for registration on Form S-3 or any comparable or
successor form or forms, or in the event that the Company is ineligible
to use such form, such form as the Company is eligible to use under the
Securities Act. The foregoing is not intended to require the Company to
pay dividends in order to use Form S-3.
5. Registration Procedures. In the case of each
registration effected by the Company pursuant to this Agreement, the
Company will keep the Holder advised in writing as to the initiation of
each registration and as to the completion thereof. At its expense, the
Company will use its best efforts to:
(a) Keep such registration effective for the
period ending sixty (60) months, as extended pursuant to Section 5A
hereof, after the Date of Issue (in the case of the Registration Statement
for the Shares issuable upon exercise of the Warrants) or until the
Holder has completed the distribution of the Shares issuable upon
exercise of the Warrants, whichever first occurs.
(b) Furnish such number of prospectuses,
amendments and supplements thereto, and other documents incident-
thereto, as the Holder from time to time may reasonably request.
(c) Prepare and file with the Commission such
amendments and posteffective amendments to a Registration Statement
as may be necessary to keep such Registration Statement effective for
the applicable period; cause the related Prospectus 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 Registration Statement
during the applicable period in accordance with the intended methods of
disposition by the sellers thereof set forth in such Registration Statement
or supplement to such Prospectus;
(d) Notify each Holder of Registrable Securities
included in the Registration Statement and their counsel and (if
requested by any such Person) confirm such notice (a "Notice") in
writing, (1) when a Prospectus or any Prospectus supplement or post-
effective amendment has been filed, and, with respect to a Registration
Statement or any post-effective amendment, when the same has become
effective, (2) of any request by the Commission for amendments or
supplements to a Registration Statement or related Prospectus or for
additional information, (3) of the issuance by the Commission of any
stop order suspending the effectiveness of a Registration Statement or
the initiation of any proceedings for that purposes, (4) if at any time the
representations and warranties of the Company contained in agreements
contemplated by Section 2(c) cease to be true and correct, (5) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose, (6) of the happening of any event as a result of which
the Prospectus included in the Registration Statement (as then in effect)
contains any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus or any preliminary
Prospectus, in light of the circumstances under which they were made)
not misleading and (7) of the Company's reasonable determination that a
post-effective amendment to a Registration Statement would be
appropriate or that there exist circumstances not yet disclosed to the
public which make further sales under such Registration Statement
inadvisable pending such disclosure and post-effective amendment;
(e) Upon the occurrence of any event
contemplated by Section 5(d)(2)-(7) and immediately upon the
expiration of any Blocking Period (as defined in Section 5A), prepare, if
the occurrence of such event or period requires such preparation, a
supplement or post-effective amendment to the Registration Statement
or related Prospectus or any document incorporated therein by reference
or file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities being sold thereunder, such
Prospectus will not contain an untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein
not misleading;
(f) Make every reasonable effort to obtain the
withdrawal of any order suspending the effectiveness of the Registration
Statement, or the lifting of any suspension of the qualification of any of
the Registrable Securities for sale in any jurisdiction, at the earliest
possible moment;
(g) Insure that all Registrable Securities subject
to the Registration Statement shall at all times be registered or qualified
for offer and sale under the securities or blue sky laws of such
jurisdictions as any Holder reasonably requests in writing; use its best
efforts to keep each such registration or qualification effective,
including through new filings or amendments or renewals, during the
period such Registration Statement is required to be kept effective and
do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by
the applicable Registration Statement; provided, however, that the
Company will not be required to qualify to do business or take any
action that would subject it to taxation or general service of process in
any jurisdiction where it is not then so qualified or subject;
(h) Use its best efforts to cause the Registrable
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate the
disposition of such Registrable Securities in accordance with the chosen
method or methods of distribution; and
(i) Cause all Registrable Securities included in
such Registration Statement to be listed, by the date of first sale of
Registrable Securities pursuant to such Registration Statement, on the
principal securities exchange or automated interdealer system on which
the same type of securities of the Company are then listed or traded.
5A. Suspension of Effectiveness. The
Company may suspend dispositions under the Registration Statement
and notify the Holder that it may not sell the Registrable Securities
pursuant to any Registration Statement or Prospectus (a "Blocking
Notice") if the Company's management determines in its reasonable
good faith judgment that the Company's obligation to ensure that such
Registration Statement and Prospectus are current and complete would
require the Company to take actions that might reasonably be expected
to have a materially adverse detrimental effect on the Company and its
stockholders; provided that such suspension pursuant to a Blocking
Notice or the Notice described below or as a result of the circumstances
described in 5(d)(2)-(7) may not exceed sixty (60) days (whether or not
consecutive) in any twelve (12) month period. The Holder agrees by
acquisition of the Registrable Securities that, upon receipt of a Blocking
Notice or "Notice" from the Company of the existence of any fact of the
kind described in the following sentence, such Holder shall not dispose
of, sell or offer for sale the Registrable Securities pursuant to the
Registration Statement until such Holder receives (i) copies of the
supplemented or amended Prospectus, or until counsel for the Company
shall have determined that such disclosure is not required due to
subsequent events, (ii) notice in writing (the "Advice") from the
Company that the use of the Prospectus may be resumed and (iii) copies
of any additional or supplemental filings that are incorporated by
reference in the Prospectus. Pursuant to the immediately preceding
sentence, the Company may provide such Notice to the Holder upon the
determination by the Company of the existence of any fact or the
happening or any event that makes any statement of a material fact made
in the Registration Statement, the Prospectus, any amendment or
supplement thereto, or any document incorporated by reference therein
untrue in any material respect, or that requires the making of any
additions to or changes in the Registration Statement or the Prospectus,
in order to make the statements therein not misleading in any material
respect. If so directed by the Company in connection with any such
notice, each Holder will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Registrable
Securities that was current immediately prior to the time of receipt of
such notice. In the event the Company shall give any such Blocking
Notice or Notice, the time regarding the effectiveness of such
Registration Statement set forth in Section 5(a) and the final exercise
date of the Warrant shall be extended by one and one-half (1-1/2) times
the number of days during the period from and including the date of the
giving of such Blocking Notice or Notice to and including the date when
the Holder shall have received the copies of the supplemented or
amended Prospectus, the Advice and any additional or supplemental
filings that are incorporated by reference in the Prospectus. Delivery of
a Blocking Notice or Notice and the related suspension of any
Registration Statement shall not constitute a default under this
Agreement and shall not create any obligation to pay liquidated damages
under Section 2 hereof. However, if the Holder's ability to sell under
the Registration Statement is suspended for more than the 60 day
periods described above (an "Excess Blocking Period"), then the
Company shall pay to the Investor two percent (2%) of the Outstanding
Amount of the Warrants for each 30 day period commencing on the first
day of the thirty (30) day period (or part thereof) following the
beginning of an Excess Blocking Period until the Excess Blocking
Period terminates. Such payment will be payable at the option of the
Company made upon irrevocable notice to the Investor not later than the
first day following the beginning of a Excess Blocking Period, either in
cash or in Shares valued at the average of the high and low trading
prices of the Shares on the Nasdaq Small Cap Market (or the Nasdaq
National Market if the Shares are included therein) for each of the five
trading days immediately preceding the first day following the
beginning of the Excess Blocking Period, in each case within five (5)
business days of the end of each 30 day period. In addition, if the
Excess Blocking Period continues for more than an aggregate of 180
days in any 360-day period, or the payment is not made within 5
business days of the end of each 30 day period, then at Holder's option,
the Company shall redeem Holder's Warrants at a redemption price
equal to 125% of the Outstanding Amount of the Warrants together with
all payments due under this paragraph and under the Warrant and the
Agreement.
6. Indemnification.
(a) Company Indemnity. The Company will
indemnify the Holder, each of its officers, directors and partners, and
each person controlling Holder, within the meaning of Section 15 of the
Securities Act and the rules and regulations thereunder with respect to
which registration, qualification or compliance has been effected
pursuant to this Agreement, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance, or based
on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, or any violation by the Company of the Securities Act
or any state securities law or, in either case, any rule or regulation
thereunder applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration,
qualification or compliance, and will reimburse the Holder, each of its
officers, directors and partners, and each person controlling such
Holder, for any legal and any other expenses reasonably incurred in
connection with investigating and defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable
in any such case to the extent that any such claim, loss, damage, liability
or expense arises out of or is based on any untrue statement or omission
(or alleged untrue statement or omission) that is made in reliance upon
and in conformity with written information furnished to the Company
by the Holder and stated to be specifically for use therein. In addition to
any other information furnished in writing to the Company by the
Holder, the information in the Registration Statement concerning the
Holder under the captions "Selling Shareholders" (or any similarly
captioned section containing the information required pursuant to Item
507 of Regulation S-K promulgated pursuant to the Securities Act) and
"Plan of Distribution" (or any similarly captioned section containing
information required pursuant to Item 508 of Regulation S-K) shall be
deemed information furnished in writing to the Company by the Holder
to the extent it conforms to information actually supplied in writing by
the Holder. The indemnity agreement contained in this Section 6(a)
shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the
consent of the Company (which consent will not be unreasonably
withheld).
(b) Holder Indemnity. The Holder will, if
Registrable Securities held by it are included in the securities as to
which such registration, qualification or compliance is being effected,
indemnify the Company, each of its directors, officers, partners, each
person who controls the Company within the meaning of Section 15 of
the Securities Act and the rules and regulations thereunder, each other
Holder (if any), and each of their officers, directors and partners, and
each person controlling such other Holder against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the
statement therein not misleading, and will reimburse the Company and
such other Holders and their directors, officers and partners, or control
persons for any legal or any other expenses reasonably incurred in
connection with investigating and defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus or other document in reliance upon and in conformity with
written information furnished to the Company by the Holder and stated
to be specifically for use therein, and provided that no Holder shall be
liable under this indemnity for an amount in excess of the proceeds
received by the Holder from the sale of the Registrable Securities
pursuant to such registration statement. In addition to any other
information furnished in writing to the Company by the Holder, the
information in the Registration Statement concerning the Holder under
the captions "Selling Shareholders" (or any similarly captioned section
containing the information required pursuant to Item 507 of Regulation
S-K promulgated pursuant to the Securities Act) and "Plan of
Distribution" (or any similarly captioned section containing information
required pursuant to Item 508 of Regulation S-K) shall be deemed
information furnished in writing to the Company by the Holder to the
extent it conforms to information actually supplied in writing by the
Holder. The indemnity agreement contained in this Section 6(b) shall
not apply to amounts paid in settlement of any such claims, losses,
damages or liabilities if such settlement is effected without the consent
of the Holder (which consent shall not be unreasonably withheld).
(c) Procedure. Each party entitled to
indemnification under this Article (the "Indemnified Party") shall give
notice to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has actual
knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim
in any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified
Party (whose approval shall not be unreasonably withheld), and the
Indemnified Party may participate in such defense at such party's
expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying
Party of its obligations under this Article except to the extent that the
Indemnifying Party is materially and adversely affected by such failure
to provide notice. The Indemnifying Party shall not, in connection with
any one such action or proceeding or separate but substantially similar
or related actions or proceedings in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) at any time for such
Indemnified Party, provided, however, that if separate firm(s) of
attorneys are required due to a conflict of interest, then the Indemnifying
Party shall be liable for the reasonable fees and expenses of each such
separate firm. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. Each Indemnified Party
shall furnish such information regarding itself or the claim in question as
an Indemnifying Party may reasonably request in writing and as shall be
reasonably required in connection with the defense of such claim and
litigation resulting therefrom.
7. Contribution. If the indemnification provided for in
Section 6 herein is unavailable to the Indemnified Parties in respect of
any losses, claims, damages or liabilities referred to herein (other than
by reason of the exceptions provided therein), then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified
Party as a result of such losses, claims, damages or liabilities in such
proportion as is appropriate to reflect the relative fault of the Company
and of the Holder in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations.
The relative benefits received by the Company on the one
hand and the Holder on the other shall be deemed to be in the same
proportion as the proceeds from the offering (net of discounts and
commissions but before deducting expenses) received by the Company
from the initial sale of the Registrable Securities by the Company to the
Holder pursuant to this Registration Rights Agreement bear to the
proceeds received by the Holder from the sale of Registrable Securities
pursuant to the registration statement. The relative fault of the
Company on the one hand and of the Holder, on the other shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company, by the Holder or by the underwriters.
In no event shall the obligation of any Indemnifying Party to
contribute under this Section 7 exceed the amount that such
Indemnifying Party would have been obligated to pay by way of
indemnification if the indemnification provided for under Sections 6(a)
or 6(b) hereof had been available under the circumstances.
The Company and the Holder agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined
by pro rata allocation or by any other method of allocation which does
not take account of the equitable considerations referred to in the
immediately preceding paragraphs. The amount paid or payable by an
Indemnified Party as a result of the losses, claims, damages and
liabilities referred to in the immediately preceding paragraphs shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section, no Holder shall be
required to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities offered by such Holder
and distributed to the public, or offered to the public, exceed the amount
paid by such Holder for the underlying Warrants converted into such
shares of Common Stock. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
8. Survival. The indemnity and contribution
agreements contained in Sections 6 and 7 and the representations
and warranties of the Company contained herein shall remain
operative and in full force and effect regardless of (i) any
termination of the Agreement or any underwriting agreement, (ii)
any investigation made by or on behalf of any Indemnified Party
or by or on behalf of the Company and (iii) the consummation of
the sale or successive resales of the Registrable Securities.
9. Information by Holder. The Holder shall
promptly furnish to the Company such information regarding such
Holder and the distribution proposed by such Holder as the
Company may reasonably request in writing and as shall be
reasonably required in connection with any registration,
qualification or compliance referred to in this Agreement. All
information provided to the Company by the Holder shall be
accurate and complete in all material respects and the Holder shall
promptly notify the Company if any such information becomes
incorrect or incomplete. If the Holder does not timely provide all
such reasonably requested information, the Holder shall not be
entitled to the liquidated damages contemplated by paragraph
2(b)(ii) to the extent that such delay in the Registration Statement
becoming effective is caused by such failure to timely provide
information unless such Holder shall be able to demonstrate to the
Company's reasonable satisfaction that such failure to timely
provide did not proportionately contribute to the event giving rise
to the indemnity obligation.
10. Transfer or Assignment of Registration Rights.
The rights granted to the Purchaser by the Company under this
Registration Rights Agreement to cause the Company to register
Registrable Securities may be transferred or assigned to a
transferee or assignee of not less than $500,000 in Outstanding
Amount of the Warrants or any permitted transferee or assignee of
the Warrants, provided that the Company is given written notice
by the Holder at the time of or within a reasonable time after said
transfer or assignment, stating the name and address of said
transferee or assignee and identifying the securities with respect to
which such registration rights are being transferred or assigned;
and provided that the transferee or assignee of such rights agrees
to be bound by this Registration Rights Agreement.
11. Miscellaneous.
(a) Entire Agreement. This Registration Rights
Agreement contains the entire understanding and agreement of the
parties, and may not be modified or terminated except by a written
agreement signed by both parties.
(b) Notices. Any notice or other
communication given or permitted under this Agreement shall be in
writing and shall be deemed to have been duly given if personally
delivered or sent by registered or certified mail, return receipt requested,
postage prepaid or by air courier, (a) if to Purchaser, at its address set
forth in the Warrants, (b) if to the Company, to Research Frontiers
Incorporated, at its address hereinabove set forth, and (c) if to a Holder
other than Purchaser, at the address thereof furnished by like notice to
the Company, or (d) to any such addresses at such other address or
addresses as shall be so furnished to the other parties by like notice.
(c) Gender of Terms. All terms used herein
shall be deemed to include the feminine and the neuter, and the singular
and the plural, as the context requires.
(d) Governing Law, Consent of Jurisdiction;
Waiver of Tax-Trial. This Registration Rights Agreement and the
validity and performance of the terms hereof shall be governed by and
construed in accordance with the laws of the State of New York without
regard to principles of conflicts of law or choice of law, except to the
extent that the law of Delaware regulates the Company's issuance of
securities. The parties hereto hereby agree that all actions or
proceedings arising directly or indirectly from or in connection with this
Registration Rights Agreement shall be litigated only in the Supreme
Court of the State of New York or the United States District Court for
the Southern District of New York located in New York County, New
York. To the extent permitted by applicable law, the parties hereto
consent to the jurisdiction and venue of the foregoing courts and consent
that any process or notice of motion or other application to either of said
courts or a judge thereof may be served inside or outside the State of
New York or the Southern District of New York by registered mail,
return receipt requested, directed to the such party at its address set forth
in this Registration Rights Agreement (and service so made shall be
deemed complete five (5) days after the same has been posted as
aforesaid) or by personal service or in such other manner as may be
permissible under the rules of said courts. The parties hereto hereby
waive any right to a jury trial in connection with any litigation arising
out of this Registration Rights Agreement.
(e) Limitation of Registration Rights.
Notwithstanding anything to the contrary contained in this Agreement,
the Company shall not be required to include in any registration
statement filed pursuant to this Agreement any Registrable Securities
held by a Holder if, in the opinion of counsel to the Company concurred
in by counsel to such Holder, all of such Registrable Securities may be
sold by such Holder pursuant to Rule 144(k) under the Securities Act
(or any successor rule) within a period of not more than 30 days from
the date of such opinion.
Titles. The titles used in this Registration Rights Agreement
are used for convenience only and are not to be considered in construing
or interpreting this Registration Rights Agreement.
IN WITNESS WHEREOF, the parties hereto have caused
this Registration Rights Agreement to be duly executed as of the date
first above written.
PURCHASERS
RAMIUS CAPITAL GROUP, L.L.C.
By: /s/ Jeffrey M. Solomon
Jeffrey M. Solomon,
Principal
LEONARDO, L.P.
By: Angelo Gordon & Co., L.P.
General Partner
By: /s/ Michael L. Gordon
Michael L. Gordon
Chief Operating Officer
A.G. SUPER FUND INTERNATIONAL
PARTNERS, L.P.
By: Angelo Gordon & Co., L.P.
General Partner
By: /s/ Michael L. Gordon
Michael L. Gordon
Chief Operating Officer
RAPHAEL, L.P.
By: /s/ Michael L. Gordon
Michael L. Gordon
Chief Operating Officer
RAMIUS FUND, LTD.
By: AG Ramius Partners, L.L.C.
Investment Adviser
By: /s/ Michael L. Gordon
Michael L. Gordon
Managing Officer
HERACLES FUND
By: Promethean Investment Group, L.L.C.
Investment Manager
By: /s/ Brian Yeh
Brian Yeh
Managing Member
THEMIS PARTNERS, L.P.
By: Promethean Investment Group, L.L.C.
Investment Manager
By: /s/ Brian Yeh
Brian Yeh
Managing Member
RESEARCH FRONTIERS INCORPORATED
a Delaware Corporation
By: /s/ Robert L. Saxe
Name: Robert L. Saxe
Title: President
