As filed with the Securities and Exchange Commission on October 1, 1998
Registration No. 333-XXXXX
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
Class A Warrant $15,000,000(1) $15,000,000.00 $15,000,000.00 $4,425.00
Class B Warrant 131,000 shares $ 1,080,000.00 $ 1,080,000.00 $ 318.60
and Common Stock, $0.0001 par
value per share issuable upon
exercise of such Warrants
Total $16,080,000 $16,080,000.00 $16,080,000.00 $4,743.60
(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 the Class A Warrant and Class
B Warrant (the "Warrants"). The actual number of shares of Common Stock into
which the Class A Warrant is exercisable will depend upon whether the Company
requires the holder of the Class A Warrant to exercise all of part of such Class
A Warrant and will also depend upon future market conditions. If the Company
required the holder of the Class A Warrant to fully exercise such warrant, based
upon current market conditions, as of September 30, 1998, the Class A Warrant
being registered hereunder would be exercisable into approximately [2,248,876]
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 shares of Common Stock issuable upon exercise of the
Class A Warrant, 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
CLASS A WARRANT AND CLASS B WARRANT (THE "WARRANTS")
This Prospectus relates to the sale from time to time by the selling
stockholder (the "Selling Stockholder") of an indeterminate number of
shares of common stock, $0.0001 par value per share (the "Common
Stock"), of Research Frontiers Incorporated, a Delaware corporation (the
"Company") issuable upon exercise of a Class A Warrant and 131,000
shares of Common Stock warrants issuable ) issuable upon exercise of a
Class B Warrant (collectively, the "Shares"). The actual number of shares
of Common Stock into which the Class A Warrant is exercisable will
depend upon whether the Company requires the holder of the Class A
Warrant to exercise all of part of such Class A Warrant and will also
depend upon future market conditions. If the Company requires the holder
of the Class A Warrant to fully exercise such warrant, based upon current
market conditions, as of the date of this Prospectus, such Class A Warrant
would be exercisable into approximately [x,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 Stockholder 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
Stockholder 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 Stockholder" and "PLAN OF DISTRIBUTION".
The Company may receive in the future the exercise price of the
Warrants. The Company will not receive any proceeds from the sale of
Common Stock by the Selling Stockholder. 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 $50,000. The Company has also agreed to indemnify
the Selling Stockholder against certain liabilities, including liabilities
arising under the Securities Act.
The Company's Common Stock trades on the Nasdaq National
Market System under the symbol "REFR". On September 30, 1998 as
reported by Nasdaq, the last sales price of a share of Common Stock was
$6.9375.
THE SECURITIES 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 THESE SECURITIES.
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 [October __, 1998.]<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, 1997; (b) Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1998 and June 30, 1998; and (c) 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, 1997.
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: General Counsel (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 Stockholder. 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 securities 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 securities 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 the proceeds from maturities of its investments
to fund its research and development of SPD (suspended particle device)
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 three 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, 3 pending patent
applications in the United States, 32 foreign patents, and 59 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 Stockholder. The Company
will only receive the aggregate exercise price of the Warrants if such
Warrants are exercised by the Selling Stockholder. Such exercise may
depend upon whether the Company requires the Selling Stockholder to
exercise all of part of the Class A Warrant issued to it, and will also depend
upon future market conditions.
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 [11,007,468] 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 such as goggles and
sunglasses, 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 Stockholder. The Company will only
receive the aggregate exercise price of the Warrants if such Warrants are
exercised by the Selling Stockholder. Such exercise may depend upon
whether the Company requires the Selling Stockholder to exercise all of
part of the Class A Warrant issued to it, and will also depend upon future
market conditions. The Company expects that any net proceeds from the
exercise of the Warrants will be used for research and development,
working capital, acquisitions, and for general corporate purposes, in such
amounts as the Company, in its discretion, deems appropriate. Pending
utilization, the Company intends to invest such funds in money market
funds and other interest-bearing obligations.
Selling Stockholder
The following table sets forth certain information regarding
beneficial ownership of the Company's Common Stock as of the date of
this Prospectus, adjusted to reflect the sale of the Common Stock by the
Selling Stockholder. The Selling Stockholder named in the table has sole
voting and investment power with respect to all Common Stock shown as
beneficially owned by it. The information given assumes that all Common
Stock received upon exercise of the Warrants described herein which are
held by the Selling Stockholder are sold. The Common Stock offered by
the Selling Stockholder 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
Stockholder may sell all, a part, or none of the number of shares of
Common Stock offered by this Prospectus. The Selling Stockholder has
not held 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
Class A Warrant are exercisable into depends upon whether the Company
requires the Selling Stockholder to exercise all of part of the Class A
Warrant issued to it, and will also depend 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 Class A Warrant. Therefore, the aggregate exercise
price of the Class A Warrant subscribed for by the 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 the Selling Stockholder. Under the
terms of the Class A Warrant, the total number of shares of Common Stock
of the Company deemed beneficially owned by the Selling Stockholder,
together with all shares of the common stock of the Company deemed
beneficially owned by the Selling Stockholder's "affiliates" as defined in
Rule 144 of the Securities Act of 1933, as amended, may never exceed
4.9% of the total issued and outstanding shares of the Common Stock of
the Company.
Aggregate Warrant Shares Beneficially
Exercise Price ($) or Owned After Offering
Number of Shares Under- by Selling Stockholder
Beneficial Owner lying Class B Warrant Number %
Ailouros Ltd. (Class A Warrant) $15,000,000 0 0
Ailouros Ltd. (Class B Warrant) 131,000 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 [11,007,468] shares were
outstanding as of the date of this Prospectus.
On October 1, 1998, the Company sold the Class A Warrant and the
Class B Warrant pursuant to a private placement to the Selling Stockholder
which is an accredited investor. The Company is obligated to register the
issuance of all shares of Common Stock issuable upon exercise of the
Warrants. 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.
The Class A Warrant, which expires on December 31, 2001, entitles
the Selling Stockholder to purchase from the Company at the Exercise
Price a certain number of Shares based upon an amount set by the
Company from time to time over the life of the Class A Warrant. Before
the beginning of each of a series of three-month periods specified by the
Company, the Company determines the amount of Common Stock that the
Company wishes to issue to the Selling Stockholder during such three
month period. The Company also sets the minimum or "floor" price per
share at which such Common Stock is to be issued. The amount of
Common Stock and the floor price can be reset by the Company in its sole
discretion prior to the beginning of any such three month period.
Therefore, at the beginning of each three month period , it is within the
Company's control the aggregate amount of Common Stock to be issued
pursuant to the Class A Warrant (which can range from $0 to $1.5 million
during such three month period), and the minimum price per Share for such
issuance. The Company may also choose not to issue any shares of
Common Stock pursuant to the Class A Warrant. If the Company does
decide to require the Selling Stockholder to purchase the amount specified
by the Company, the Selling Stockholder may then exercise the Class A
Warrant during such three month period into the number of Shares which
equals the amount specified by the Company divided by the applicable
Exercise Price. On a date or dates during such three month period in which
the Selling Stockholder wishes to exercise all or part of the Class A
Warrant, the Selling Stockholder is required to send a Notice of Exercise
to the Company. The "Exercise Price" per share shall mean the lesser of
(i) $15.00 or (ii) 92% of the average of the high and low trading prices on
the Nasdaq National Market (or other exchange or market if the Shares are
traded thereon) for each of the seven trading days preceding the date that
a Notice of Exercise is given. The Exercise Price in effect during any three
month period specified by the Company may never be lower than the floor
price specified by the Company prior to the beginning of such three month
period, and the Selling Stockholder's obligation to exercise the Class A
Warrant during such three month period shall be suspended for so long as
the Exercise Price is lower than the floor price specified by the Company.
Unless otherwise agreed to by the Company and the Selling Stockholder,
no more than $15 million may be raised by the Company pursuant to the
exercise of the Class A Warrant. Because the number of Shares into which
the Class A Warrant are exercisable into depends upon whether the
Company requires the Selling Stockholder to exercise all of part of the
Class A Warrant issued to it, and will also depend 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 Class A Warrant.
The Class B Warrant is initially exercisable into 65,500 Shares. If
the Company has not sent the Selling Stockholder at least three Put Notices
(as that term is defined in the Class A Warrant) by December 31, 2001,
under certain circumstances the Class B Warrant will be exercisable into
an additional 65,500 Shares. The Class B Warrant expires on September
30, 2008. The exercise price per Share of the Class B Warrant is $8.25
which represents 120% of average of the closing bid and ask price on the
closing date on the date of the Class B Warrant's issuance.
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; 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.
PLAN OF DISTRIBUTION
The Selling Stockholder is entitled to distribute from time to time the
Common Stock issuable upon exercise of the Warrants. Based upon
current market conditions, as of the date of this Prospectus, the outstanding
Warrants would be exercisable for an aggregate exercise price of
$16,080,000 into approximately [x,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 the Warrants.
The Company will not receive any proceeds from the sale of
Common Stock by the Selling Stockholder. The Company will only
receive the aggregate exercise price of the Warrants if such Warrants are
exercised by the Selling Stockholder. Such exercise may depend upon
whether the Company requires the Selling Stockholder to exercise all of
part of the Class A Warrant issued to it, and will also depend upon future
market conditions. The distribution of the Common Stock by the Selling
Stockholder 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 Stockholder 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 Stockholder 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 as of December 31, 1997
and 1996, and for each of the years in the three-year period ended
December 31, 1997, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said 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 and 1998 Stock Option Plan aggregating 294,324 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 Certificate of Incorporation of the
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 $ 4,743.60
Nasdaq Listing Fee . . . . . . . . . . . . . . . $ 17,500.00
Accounting fees and expenses . . . . . . . . . $ 2,000.00
Legal and due diligence fees and expenses . . . . $ 25,000.00
Miscellaneous expenses. . . . . . . . . . . . . $ 756.40
Total. . . . . . . . . . . . . . . . . . $ 50,000.00
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
Stockholder dated as of October 1, 1998. (Filed herewith)
4.2 Class A Warrant between the Company and the Selling Stockholder
dated as of October 1, 1998. (Filed herewith)
4.3 Class B Warrant between the Company and the Selling Stockholder
dated as of October 1, 1998. (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 October 1, 1998.
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 October 1,1998
Robert L. Saxe Treasurer and Director (Principal
Executive, Financial and Accounting Officer)
/s/ Robert M. Budin Director October 1, 1998
Robert M. Budin
/s/ Bernard D. Gold Director October 1, 1998
Bernard D. Gold
/s/ Joseph M. Harary Director October 1, 1998
Joseph M. Harary
<PAGE>
INDEX TO EXHIBITS
Exhibit Sequentially
Number Exhibit Numbered Page
4.1 Subscription Agreement between the Company and the Selling Stockholder
dated as of October 1, 1998. (Filed herewith)
4.2 Class A Warrant between the Company and the Selling Stockholder dated as
of October 1, 1998. (Filed herewith)
4.3 Class B Warrant between the Company and the Selling Stockholder dated as
of October 1, 1998. (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.
<PAGE>
EXHIBIT 4.1
RESEARCH FRONTIERS INCORPORATED
SUBSCRIPTION AGREEMENT
October 1, 1998
Research Frontiers Incorporated
240 Crossways Park Drive
Woodbury, New York 11797-2033
Attention: Robert L. Saxe, President
Gentlemen:
This Subscription Agreement is made by and between Research
Frontiers Incorporated, a Delaware corporation (the "Company"), and
the undersigned (the "Subscriber"), in connection with the offering (the
"Offering") of certain warrants to purchase shares of common stock of
the Company, $.0001 par value per share (the "Shares") pursuant to
Regulation D ("Regulation D") promulgated under the Securities Act of
1933, as amended (the "Securities Act").
A. Subscription
1. Subscriber hereby irrevocably subscribes to purchase the Class
A 1998 Warrants and the Class B 1998 Warrants (collectively, the
"Warrants") in the form attached hereto as Exhibits B and C
respectively for a price equal to $10,000 (the "Subscription Price").
2. As part of the subscription, Subscriber herewith tenders:
(a) two copies of this Agreement duly completed and executed
by Subscriber.
(b) payment of the Subscription Price made by wire transfer of
immediately available funds in U.S. Dollars to the account of
Research Frontiers Incorporated at Chase Manhattan Bank,
1064 Old Country Road, Plainview, New York 11803,
Account No.: 904-709361, ABA Wire Code No.: 021 000
021.
3. Subscriber understands and agrees that the subscription
contained herein shall not be deemed binding upon the Company until it
is accepted by the Company and that the subscription may be rejected by
the Company in its sole discretion for any reason. Subscriber further
acknowledges and agrees that, subject to applicable law, this
subscription is irrevocable.
4. If this subscription is not accepted by the Company, all
Subscription Funds and the documents herewith delivered to the
Company by Subscriber will be returned promptly to Subscriber. In
such event, all proceeds theretofore received by the Company from the
Subscriber will be refunded in full, without interest or deduction.
5. If this subscription is accepted by the Company, then the
Company shall promptly countersign both copies of this Agreement and
return one fully executed copy to Subscriber. All Subscription Funds of
Subscriber shall be applied to the purchase of the Warrants which
Warrants shall then be delivered to the Subscriber. All Subscription
Funds of Subscriber shall be used for research and development,
working capital, acquisitions, and for general corporate purposes in such
amounts as the Company, in its discretion, deems appropriate. The
Company may also, in its discretion, apply such Subscription Funds
towards the development of products using the Company's technology
through an investment by the Company in one or more joint ventures
with third parties set up for such purposes, or may directly apply
Subscription Funds to product development.
B. Investor Representations
6. In order to induce the Company to accept the subscription
hereby made, and recognizing that the Company will be relying thereon
in determining whether to accept such subscription, Subscriber hereby
represents and warrants to the Company as of the date of this
subscription as follows:
(a) Subscriber understands that the Warrants are a highly
speculative investment and that Subscriber's financial
situation is such that (i) Subscriber can afford to hold the
Warrants for an indefinite period of time and to sustain a
complete loss of its investment, and (ii) Subscriber has
adequate means of providing for Subscriber's current needs
and possible contingencies and has no need for liquidity in
this investment in the Company.
(b) Subscriber has received and carefully read the Company's
1997 Annual Report; the Company's Proxy Statement dated
April 30, 1998; the Company's Annual Report on Form 10-K
for the fiscal year ending December 31, 1997; and the
Company's Quarterly Reports on Form 10-Q for the fiscal
quarters ending March 31, 1998 and June 30, 1998
(collectively, the "Reports"). The Company has also made
available to Subscriber all other documents and information
that Subscriber has requested relating to an investment in the
Company.
(c) By virtue of Subscriber's knowledge and experience in
financial and business matters, Subscriber is capable of
evaluating the merits and risks of an investment in the
Warrants. Subscriber has taken full cognizance of and
understands all the risk factors related to the purchase of the
Warrants, including, but not limited to, those set forth in the
Company's reports and registration statements filed with the
Securities and Exchange Commission or attached hereto as
Exhibit A.
(d) Subscriber understands that the Warrants are being offered
and sold to Subscriber in reliance on specific provisions of
federal and state securities laws of the United States of
America and that the Company is relying upon the truth and
accuracy of the representations, warranties, agreements,
acknowledgments and understandings of Subscriber set forth
herein in order to determine the applicability of such
provisions. Accordingly, Subscriber agrees to notify the
Company of any events which would cause the
representation and warranties of Subscriber to be untrue or
breached at any time after the execution of this Agreement
by Subscriber. Subscriber understands that certificates
representing the Warrants, and until the effectiveness of the
Registration Statement, Shares issuable pursuant to the
exercise of the Warrants, shall be stamped or otherwise
imprinted with a legend substantially in the following form
(in addition to any legend required under any applicable state
securities laws):
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED
PURSUANT TO THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, HYPOTHECATED OR
OTHERWISE DISPOSED OF UNLESS THERE IS A
REGISTRATION STATEMENT THEN IN EFFECT
COVERING SUCH SECURITIES OR AN
EFFECTIVE EXEMPTION FROM SUCH
REGISTRATION OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT
UNDER THE CIRCUMSTANCES REGISTRATION
IS NOT NECESSARY.
(e) Subscriber is an "accredited investor" as defined in Rule 501
promulgated under the Securities Act of 1933, as amended.
(f) Subscriber, and any person acting in concert with Subscriber,
currently has no existing short position, and during the last
20 trading days had no short position, with respect to the
common stock of the Company and agrees not to enter into
any short sales or other hedging transactions with respect to
any securities of the Company at any time after the
execution of this Agreement by Subscriber and so long as
any Warrants are held by or for the benefit of Subscriber or
its affiliates or persons acting in concert with Subscriber or
its affiliates or any Warrants are outstanding.
(g) In evaluating the suitability of an investment in the
Company, Subscriber has not relied upon any representations
or other information (whether oral or written) from the
Company, and its officers, directors, agents, employees or
representatives, other than as set forth in the Reports. With
respect to tax and other economic considerations of this
investment, Subscriber is not relying for advice on the
Company, or any officers, directors, employees or agents
thereof.
(h) Subscriber understands that Subscriber's subscription
hereunder is not transferable or assignable, either before or
after acceptance thereof by the Company, and that Warrants
will only be issued in the name of Subscriber and may not be
assigned without the consent of the Company.
(i) The Warrants will be acquired for Subscriber's own account,
for investment purposes only, and not with a view to
distribution, assignment or resale to others.
(j) Subscriber understands that no federal or state agency has
made any finding or determination as to the fairness of this
offering or any recommendation or endorsement relating to
the Warrants.
(k) The address heretofore provided to the Company by the
Subscriber is the true and correct residence of the Subscriber,
and Subscriber has no present intention of becoming a
resident of any other state or jurisdiction. (If a corporation,
trust or partnership, the Subscriber has its principal place of
business at the address set forth below and was not organized
for the specific purpose of acquiring the Warrants).
(l) Subscriber acknowledges that any delivery of offering
materials relating to the Warrants prior to the determination
by the Company of Subscriber's suitability as an investor
shall not constitute an offer of Warrants until such
determination of suitability shall be made.
(m) This Agreement has been duly authorized, validly executed,
and delivered on behalf of Subscriber and is a valid and
binding agreement enforceable in accordance with its terms,
subject to general principles of equity and to bankruptcy or
other laws affecting the enforcement of creditors' rights
generally.
(n) Subscriber has not taken any action that would cause the
Company to be subject to any claim for commission or other
fee or remuneration by any broker, finder, or other person
and Subscriber hereby indemnifies the Company, and its
officers, directors, shareholders and representatives, and each
of their affiliates against any such claim caused by the
actions of Subscriber or any of its employees or agents.
(o) Subscriber will not make any offers or sales of the Shares
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, and with all applicable securities laws upon
resale of the Shares.
(p) Subscriber will not, directly or through any affiliate or
person acting in concert with Subscriber, (i) create the lowest
reported sales price on the NASDAQ National Market, (or
other exchange or market if the Shares are traded thereon)
for the common stock of the Company on any trading day or
(ii) offer to sell shares of such common stock at a price lower
than the then prevailing bid price for the common stock on
such market.
(q) Subscriber hereby agrees to indemnify and hold harmless the
Company, its directors, officers, agents, representatives, and
each of their affiliates against any and all loss, liability,
claim, damage and expense (including reasonable fees of
attorneys and experts) as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements
or omissions, made in the Registration Statement (or any
amendment thereto), in reliance upon and in conformity with
information furnished to the Company by Subscriber.
C. Company Representations and Warranties
7. The Company hereby represents and warrants to the Subscriber
that:
(a) The Company is validly existing and in good standing under
the laws of the State of Delaware and has all requisite
corporate power and authority to enter into and to carry out
and perform its obligations under this Agreement.
(b) When issued and paid for on the date of closing, the
Warrants will be validly issued, fully paid and non-
assessable.
(c) When and if executed by the Company, this Agreement will
have been duly authorized, validly executed, and delivered
on behalf of the Company and will be a valid and binding
agreement enforceable in accordance with its terms, subject
to general principles of equity and to bankruptcy or other
laws affecting the enforcement of creditors' rights generally.
(d) If this subscription is accepted by the Company, the
Company will issue the Warrants in the name of Subscriber.
Nothing in this section shall affect in any way Subscriber's
obligations and agreement to comply with all applicable
securities laws upon resale of the Warrants.
(e) 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
Shares and shall take all action reasonably necessary to
qualify the Shares under all applicable state "blue sky" laws.
(f) 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 upon exercise of the Warrants.
(g) The Company shall reimburse Subscriber for all reasonable
costs and expenses relating to ongoing and periodic due
diligence regarding the Company in connection with its
investment in the Warrants, but not to exceed $25,000 in the
aggregate. Upon request of the Company, the Subscriber
will supply the Company with reasonable documentation
supporting such expenses.
D. Miscellaneous
8. This Agreement constitutes the entire understanding of the
parties with regard to the subject matter, supersedes all written and oral
agreements with respect to the same and may not be waived, modified,
changed, discharged, terminated, revoked or canceled except by a
writing signed by the party against which enforcement thereof is sought.
9. 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, or
covenant contained in this Agreement.
10. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York affecting contracts
made in and to be performed in such State without giving effect to
principles governing choice of laws, irrespective of the domicile of any
party or the place of execution of this Agreement by any party or the
location for performance of any of the terms hereof, and the parties
hereto shall be subject to the exclusive jurisdiction of the state and
federal courts located in Nassau County, New York, United States of
America. Facsimile signatures to this Agreement or on any notice
given hereunder or under the Warrants shall be binding on all parties
hereto.
11. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
12. The Subscriber hereby certifies that Subscriber has read and
understands this Subscription Agreement, that the representations and
warranties made by the Subscriber in this Subscription Agreement are
accurate on the date hereof, that Subscriber recognizes that the
Company is relying on such representations and warranties and
covenants and that they shall remain in effect through the closing of the
sale of the Warrants to Subscriber hereunder unless Subscriber notifies
the Company otherwise.
13. Either party may rescind this Agreement by providing notice
to the other if the Registration Statement has not been declared effective
by December 31, 1998.
14. All notices required or permitted to be given by either the
Company or the Subscriber pursuant to the terms of this Agreement or
the Warrants shall be in writing and shall be deemed given when
delivered personally or by facsimile, or by overnight or two day courier
addressed to the parties at the last known address of the party or such
other address as a party may request by notifying the other in writing.
15. The representations, warranties, covenants, indemnities, and
agreements of the parties contained herein shall survive any termination
or expiration of this Agreement.
IN WITNESS WHEREOF, the Subscriber has executed this
Subscription Agreement this 1st day of October, 1998.
AILOUROS LTD., an Antigua and Barbuda corporation
By:____________________________________________
Managing Director
Accepted and Agreed To:
RESEARCH FRONTIERS INCORPORATED
By:____________________________________________
Robert L. Saxe, President
By:____________________________________________
Joseph M. Harary, Vice President and General Counsel
Date of Acceptance: October 1, 1998<PAGE>
EXHIBIT A
RISK FACTORS
Purchase of the Warrants involves a high degree of risk. In
addition to the other information set forth in the Public Documents,
prospective investors should carefully consider the following risk
factors before making a decision to purchase the Warrants:
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.
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 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 fluid
suspensions and 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 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, 3 pending patent applications in the United States,
32 foreign patents, and 59 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.
Dilution
There will be immediate and substantial dilution to the purchasers
of the Warrants offered hereby because the net tangible book value per
share of the Common Stock after completion of the offering could be
substantially less than the Exercise Price of the Warrants.<PAGE>
EXHIBIT 4.2
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF
UNLESS THERE IS A REGISTRATION STATEMENT THEN IN
EFFECT COVERING SUCH SECURITIES OR AN EFFECTIVE
EXEMPTION FROM SUCH REGISTRATION OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT UNDER THE
CIRCUMSTANCES REGISTRATION IS NOT NECESSARY.
RESEARCH FRONTIERS INCORPORATED
CLASS A WARRANT
THIS CERTIFIES that, for value received, AILOUROS LTD.
hereinafter called "Warrantholder"), is entitled and required to purchase at
the Exercise Price from Research Frontiers Incorporated, a Delaware
corporation (hereinafter called the "Company"), the number of shares of
common stock, par value $.0001 per share (hereinafter called the "Shares")
of the Company calculated in accordance with Section 1.1 below, at any
time on or before 4:30 p.m. New York time on December 31, 2001 (the
"Expiration Date"), all in accordance with the terms hereof.
1. Exercise of Warrants.
1.1 During any Quarter and prior to 4:30 p.m. New York time on the
Expiration Date, the Warrantholder shall during such Quarter exercise the
Outstanding Amount of this Warrant by delivering to the Company a
Notice of Exercise duly executed and completed by Warrantholder, at the
office of the Company, 240 Crossways Park Drive, Woodbury, New York
11797-2033, Attention: Joseph M. Harary, together with payment in full
in lawful money of the United States, of the portion of the Outstanding
Amount of the Warrant being exercised by such Notice of Exercise. Such
payment shall be made by wire transfer of immediately available funds to
the account of Research Frontiers Incorporated at Chemical Bank, 1064
Old Country Road, Plainview, New York 11803, Account No.:
904-709361, ABA Wire Code No.: 021 000 021, or to such other account
or place, as the Company may specify. Upon exercise, the Warrantholder
shall receive the number of Shares equal to the Outstanding Amount being
exercised divided by the applicable Exercise Price. Upon receipt of the
aforesaid payment, the Company shall issue instructions to its transfer
agent to issue such Shares to the Warrantholder within three business days
of the Company's receipt of such payment. Provided that the entire
Outstanding Amount during any Quarter has been exercised, and subject
to the other restrictions contained in this Warrant or in the Subscription
Agreement dated October 1, 1998 between the Company and the
Warrantholder, the timing and number of Notices of Exercise delivered by
the Warrantholder to the Company shall be at the discretion of the
Warrantholder. The Company may treat any Notice of Exercise received
by it by facsimile after 4:30 p.m. New York time to be received on the next
business day.
1.2 The following definitions shall apply:
1.2.1 The "Exercise Price" shall mean the lesser of (i) $15.00 or (ii)
92% of the average of the high and low trading prices on the Nasdaq
National Market (or other exchange or market if the Shares are traded
thereon) for each of the seven trading days preceding the date that a Notice
of Exercise is given. The Exercise Price in effect during a Quarter specified
in a Put Notice may never be lower than the Floor Price specified by the
Company in such Put Notice, and the Warrantholder's obligation to exercise
this Warrant shall be suspended for so long as the Exercise Price is lower
than the Floor Price. Nothing contained in the preceding sentence shall
prevent the Warrantholder from voluntarily electing to exercise this Warrant
at a price per Share equal to or greater than the Exercise Price, provided
that such price is at least as high as the Floor Price.
1.2.2 "Notice of Exercise" shall mean a notice or notices delivered
by the Warrantholder to the Company indicating (A) the portion of the
Outstanding Amount of this Warrant being exercised, (B) the
Warrantholder's Deposit/Withdrawal At Custodian (DWAC) instructions
for delivery of the Shares, and (C) specifying the Warrantholder's
calculation of (1) number of Shares to be issued to such Warrantholder, (2)
the Exercise Price in effect for such Notice of Exercise, and (3) the
remaining balance of the Outstanding Amount. Notwithstanding anything
to the contrary contained herein, unless otherwise agreed to by the Company
in writing, each Notice of Exercise shall be deemed to contain a
representation by Warrantholder that, after giving effect to the Shares to be
issued pursuant to such Notice of Exercise, the total number of shares of
common stock of the Company deemed beneficially owned by the
Warrantholder, together with all shares of the common stock of the
Company deemed beneficially owned by the Warrantholder'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 of the Company.
1.2.3 The "Outstanding Amount" of this Warrant shall be the amount
specified in any Put Notice given by the Company from time to time,
reduced by the amount of this Warrant exercised by the Warrantholder
during the Quarter specified in such Put Notice to which the Put Notice
relates. Unless waived by the Company and the Warrantholder, the
Outstanding Amount in any Quarter shall automatically be reduced to equal
the lesser of: (1) an amount equal to (A) 7% of the daily dollar trading
volume in the Company's common stock for the three month period ending
on the day prior to the beginning of the Quarter specified in the Put Notice
multiplied by (B) the number of trading days in the Quarter specified in the
Put Notice, or (2) an amount equal to (A) 7% of the daily dollar trading
volume in the Company's common stock for the three month period ending
on the day prior to the beginning of the three month period specified in
Section 1.2.3(1)(A) above, multiplied by (B) the number of trading days in
the Quarter specified in the Put Notice. Unless waived by the Company in
writing, on the last day of any Quarter and on the Expiration Date, the
Warrantholder shall be deemed to have given a Notice of Exercise for any
Outstanding Amount remaining on such date.
1.2.4 "Put Notice" shall mean the notice given to the Warrantholder
or its specified agent by the Company and signed by an executive officer of
the Company setting forth: (A) the amount chosen by the Company (which
may be any amount from $0.00 to $1.5 million) to be the Outstanding
Amount of this Warrant to be exercised by the Warrantholder during the
Quarter, (B) the exact dates of the Quarter which shall be specified by the
Company, (C) the Floor Price specified by the Company. The Company
shall give the Warrantholder a Put Notice at least 30 days prior to the
beginning of any Quarter specified in such Put Notice. The Company may
amend any terms specified in such Put Notice (except that the Outstanding
Amount may not be increased by the Company without the Warrantholder's
consent) by delivery of an amendment to such Put Notice to the
Warrantholder at any time prior to the beginning of such Quarter. Unless
mutually agreed to in writing, the Company may not specify an Outstanding
Amount which, when exercised in full, would result in the Warrantholder
having exercised more than $15 million. As of the date of this Warrant, the
Outstanding Amount shall be $0.00. If no Put Notice is given by the
Company, the Outstanding Amount after the expiration of the Quarter
specified in any prior Put Notice shall be $0.00.
1.2.5 "Quarter" shall mean any three-month period specified in a Put
Notice.
1.3 Certificates representing Shares issued hereunder shall be
stamped or otherwise imprinted with a legend substantially in the following
form (in addition to any legend required under any applicable state
securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED PURSUANT TO THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS THERE IS A REGISTRATION
STATEMENT THEN IN EFFECT COVERING SUCH SHARES OR
AN EFFECTIVE EXEMPTION FROM SUCH REGISTRATION OR
AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT UNDER THE CIRCUMSTANCES
REGISTRATION IS NOT NECESSARY.
Provided, however, that if the issuance of the Shares pursuant to the
exercise of this Warrant are subject to an effective registration statement
pursuant to Section 5 of the Securities Act of 1933, as amended, certificates
representing the Shares shall not bear any restrictive legend.
2. Reclassification, Fractional Shares; Change in Management.
2.1 The Floor Price specified in any Put Notice, and the daily trading
price of the common stock of the Company for any trading day used to
calculate the Exercise Price, shall be adjusted proportionally to reflect any
stock splits, stock dividends, reclassifications, combinations and similar
transactions involving the common stock.
2.2 No fractional shares of common stock shall be issued upon the
exercise of any Warrants evidenced hereby, but 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.
2.3 Either party may terminate this Warrant prior to the Expiration
Date if there has been a change in management of the other party by
providing such party with written notice of such election to terminate.
3. Prior Notice as to Certain Events.
The Company shall mail to Warrantholder not less than ten (10) days
prior to the date on which (a) a record will be taken for the purpose of
determining the holders of Capital Stock entitled to subscription rights, or
(b) a record will be taken (or in lieu thereof, the transfer books will be
closed) for the purpose of determining the holders of Capital Stock entitled
to notice of and to vote at the meeting of stockholders at which any
consolidation, merger, dissolution, liquidation, winding up or sale of the
Company shall be considered and acted upon.
4. Reservation and Issuance of Shares.
4.1 The Company covenants and agrees that all Shares which may be
issued upon the exercise of the rights represented by this Warrant Certificate
will be duly authorized, legally issued and when paid for in accordance with
the terms hereof, fully paid and non-assessable, and free from all liens and
charges with respect to the issue thereof to the Warrantholder.
4.2 The Company will reserve at all times such number of Shares as
may be issuable pursuant to the exercise of Warrants evidenced by this
Warrant Certificate.
5. Investment Representation.
By accepting delivery of this Warrant Certificate and by exercising
any Warrants evidenced hereby, the Warrantholder represents that the
Warrantholder is acquiring the Warrants and the Shares issuable upon the
exercise of the Warrants for investment and not for resale or distribution.
6. Miscellaneous.
6.1 The Warrantholder shall not be entitled to any rights whatsoever
as a stockholder of the Company by virtue of its ownership of this Warrant
Certificate.
6.2 This Warrant Certificate is being executed and delivered in the
State of New York, and this Warrant Certificate shall be interpreted under,
and the Warrantholder and the Company subject to, the laws and jurisdiction
of the state and federal courts of the State of New York, United States of
America. The parties hereby consent to such jurisdiction.
6.3 Subject to the provisions of Section 1 hereof, this Warrant
Certificate may be exercised at any time after the date hereof and prior to its
expiration as of 4:30 p.m. New York time on the Expiration Date, and shall
be void and of no effect after 4:30 p.m. New York time on the Expiration
Date.
6.4 By accepting delivery of this Warrant Certificate, the
Warrantholder acknowledges that the Warrants granted hereunder shall be
in full satisfaction of all obligations to issue Class A Warrants to the
Warrantholder pursuant to the Subscription Agreement dated October 1,
1998 between the Company and the Warrantholder.
IN WITNESS WHEREOF, the Company and the Warrantholder have
executed this Warrant Certificate this 1st day of October, 1998 by each of
their duly authorized officers.
RESEARCH FRONTIERS INCORPORATED
By:______________________________________
Robert L. Saxe, President
AILOUROS LTD.
By:____________________________________________
Managing Director<PAGE>
EXHIBIT 4.3
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS THERE
IS A REGISTRATION STATEMENT THEN IN EFFECT COVERING
SUCH SECURITIES OR AN EFFECTIVE EXEMPTION FROM SUCH
REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY THAT UNDER THE CIRCUMSTANCES
REGISTRATION IS NOT NECESSARY.
RESEARCH FRONTIERS INCORPORATED
CLASS B WARRANT
THIS CERTIFIES that, for value received, AILOUROS LTD.
hereinafter called "Warrantholder"), is entitled to purchase from Research
Frontiers Incorporated, a Delaware corporation (hereinafter called the
"Company"), 131,000 shares of common stock, par value $.0001 per
share (hereinafter called the "Shares") of the Company at a warrant exercise
price of $8.25 per share (such price per share and the number of shares of
common stock so purchasable being subject to adjustment and vesting as provided
below) at any time on or before 4:30 p.m. New York time on September 30, 2008
(the "Expiration Date"), all in accordance with the terms hereof.
1. Exercise of Warrants and Holding of Underlying Stock.
1.1 To the extent vested pursuant to Section 1.2 hereof, and provided
that the Warrantholder has fully complied with its obligations and is not in
default under any term of the Subscription Agreement dated October 1,
1998 between the Warrantholder and the Company or under the Class A
Warrant issued pursuant thereto, the Warrants evidenced by this Warrant
Certificate may be exercised prior to 4:30 p.m. New York time on the
Expiration Date in whole at any time or in part from time to time during
such period by the surrender of this Warrant Certificate, along with a Notice
of Exercise in the form attached hereto duly executed and completed by
Warrantholder, at the office of the Company, 240 Crossways Park Drive,
Woodbury, New York 11797-2033 together with payment in full in lawful
money of the United States, of the Warrant exercise price payable at the
time of such exercise in respect of the Warrants being exercised. Such
payment shall be made by wire transfer of immediately available funds to
the account of Research Frontiers Incorporated at Chemical Bank, 1064 Old
Country Road, Plainview, New York 11803, Account No.: 904-709361,
ABA Wire Code No.: 021 000 021, or to such other account or place, as the
Company may specify. If less than all of the Warrants represented by this
Warrant Certificate are being exercised, the Company will, upon such
exercise, deliver to Warrantholder a new certificate (dated the date hereof)
evidencing the Warrants not so exercised.
1.2 Notwithstanding anything herein to the contrary, Warrants to
purchase 65,500 Shares shall be immediately vested. The remaining warrants
shall vest, if at all, as follows:
(A) If by December 31, 1999, the Warrantholder has not received at
least one Put Notice (as such term is defined in the Class A Warrant
between the Company and the Warrantholder) from the Company and has
not exercised this Warrant in whole or in part as of such date, Warrants to
purchase an additional 21,834 Shares shall become vested.
(B) If by December 31, 2000, the Warrantholder has not received a
total of at least two Put Notices from the Company and has not exercised
this Warrant in whole or in part as of such date, Warrants to purchase an
additional 21,834 Shares shall become vested.
(C) If by December 31, 2001, the Warrantholder has not received a
total of at least three Put Notices from the Company and has not exercised
this Warrant in whole or in part as of such date, Warrants to purchase an
additional 21,832 Shares shall become vested.
1.3 Certificates representing Shares issued hereunder shall be stamped
or otherwise imprinted with a legend substantially in the following form (in
addition to any legend required under any applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED PURSUANT TO THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS THERE IS A REGISTRATION
STATEMENT THEN IN EFFECT COVERING SUCH SHARES OR
AN EFFECTIVE EXEMPTION FROM SUCH REGISTRATION OR
AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT UNDER THE CIRCUMSTANCES
REGISTRATION IS NOT NECESSARY.
Provided, however, that if the issuance of the Shares pursuant to the
exercise of this Warrant are subject to an effective registration statement
pursuant to Section 5 of the Securities Act of 1933, as amended, certificates
representing the Shares shall not bear any restrictive legend.
2. Reclassification, Consolidation or Merger.
2.1 In the event that the outstanding Shares are hereafter changed by
reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination or exchange of Shares and the
like, or dividends payable in Shares, an appropriate adjustment shall be
made by the Board of Directors of the Company in the number of Shares
and price per Share subject to this Warrant Certificate. If the Company
shall be reorganized, consolidated, or merged with another corporation, or
if all or substantially all of the assets of the Company shall be sold or
exchanged, the Warrantholder shall at the time of issuance of the stock
under such a corporate event, be entitled to receive upon the exercise of the
vested Warrants evidenced by this Warrant Certificate the same number and
kind of shares of stock or the same amount of property, cash or securities as
he would have been entitled to receive upon the occurrence of any such
corporate event as if he had been, immediately prior to such event, the
holder of the number of Shares so exercised.
2.2 Any adjustment under this Paragraph 2 in the number of Shares
subject to this Warrant Certificate shall apply proportionately to only the
unexercised portion hereunder and shall not have any retroactive effect with
respect to Warrants theretofore exercised. If fractions of a Share would
result from any such adjustment, the adjustment shall be revised to the next
lower whole number of Shares.
2.3 No adjustment of the exercise price shall be made if the amount
of such adjustment shall be less than $.01 per Share, but in such case any
adjustment that would otherwise be required then to be made, shall be
carried forward and shall be made at the time and together with the next
subsequent adjustment which, together with any adjustment so carried
forward, shall amount to no less than $.01 per share.
2.4 No fractional shares of common stock shall be issued upon the
exercise of any Warrants evidenced hereby, but 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.
2.5 When any adjustment is required to be made in the exercise price
or number of Shares subject to this Warrant Certificate, initial or adjusted,
the Company shall within sixty (60) days after the date when the
circumstances giving rise to the adjustment occurred mail to the
Warrantholder a statement describing in reasonable detail any method used
in calculating such adjustment.
3. Prior Notice as to Certain Events.
The Company shall mail to Warrantholder not less than ten (10) days
prior to the date on which (a) a record will be taken for the purpose of
determining the holders of Capital Stock entitled to subscription rights, or
(b) a record will be taken (or in lieu thereof, the transfer books will be
closed) for the purpose of determining the holders of Capital Stock entitled
to notice of and to vote at the meeting of stockholders at which any
consolidation, merger, dissolution, liquidation, winding up or sale of the
Company shall be considered and acted upon.
4. Reservation and Issuance of Shares.
4.1 The Company covenants and agrees that all Shares which may be
issued upon the exercise of the rights represented by this Warrant Certificate
will be duly authorized, legally issued and when paid for in accordance with
the terms hereof, fully paid and non-assessable, and free from all liens and
charges with respect to the issue thereof to the Warrantholder.
4.2 The Company will reserve at all times such number of Shares as
may be issuable pursuant to the exercise of Warrants evidenced by this
Warrant Certificate.
5. Investment Representation.
By accepting delivery of this Warrant Certificate and by exercising
any Warrants evidenced hereby, the Warrantholder represents that the
Warrantholder is acquiring the Warrants and the Shares issuable upon the
exercise of the Warrants for investment and not for resale or distribution.
6. Miscellaneous.
6.1 The Warrantholder shall not be entitled to any rights whatsoever
as a stockholder of the Company by virtue of its ownership of this Warrant
Certificate.
6.2 This Warrant Certificate is being executed and delivered in the
State of New York, and this Warrant Certificate shall be interpreted under,
and the Warrantholder and the Company subject to, the laws and jurisdiction
of the state and federal courts of the State of New York, United States of
America. The parties hereby consent to such jurisdiction.
6.3 Subject to the provisions of Section 1.2 hereof, this Warrant
Certificate may be exercised at any time after the date hereof and prior to its
expiration as of 4:30 p.m. New York time on the Expiration Date, and shall
be void and of no effect after 4:30 p.m. New York time on the Expiration
Date.
6.4 By accepting delivery of this Warrant Certificate, the
Warrantholder acknowledges that the Warrants granted hereunder shall be
in full satisfaction of all obligations to issue Class B Warrants to the
Warrantholder pursuant to the Subscription Agreement dated October 1,
1998 between the Company and the Warrantholder.
IN WITNESS WHEREOF, the Company and the Warrantholder have
executed this Warrant Certificate this 1st day of October, 1998 by each of
their duly authorized officers.
RESEARCH FRONTIERS INCORPORATED
By:______________________________________
Robert L. Saxe, President
AILOUROS LTD.
By:____________________________________________
Managing Director<PAGE>
[Form of Notice of Exercise]
The undersigned hereby irrevocably elects to exercise the warrants we
currently hold to purchase ____________ shares of common stock, $0.0001
par value per share, of Research Frontiers Incorporated (the "Company") at
an exercise price of $__________per share. Attached to this notice is the
original Warrant certificate evidencing the aforementioned warrants. We
have delivered to the Company US$_______________ representing the
aggregate exercise price for the warrants exercised hereunder. A certificate
representing the shares issuable upon exercise should be issued in the
undersigned's name.
The undersigned hereby represents and warrants to the Company that
the representations and warranties and acknowledgments made by the
undersigned in the Subscription Agreement dated October 1, 1998 between
the undersigned and the Company are still true and correct as if made on the
date of this Notice of Exercise, and that the undersigned has carefully read
any reports or statements filed with the Securities and Exchange
Commission regarding the Company after October 1, 1998, and that the
Company has also made available to the undersigned all other documents
and information that the undersigned has requested relating to an investment
in the Company.
Dated: ________ __, _____ AILOUROS LTD.
By:__________________________________
Name:
Title:
