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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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F O R M 8 - K
CURRENT REPORT
Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act
of 1934
Date of Report (Date of earliest event reported) May 31, 1996
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FIBERCHEM, INC.
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(Exact name of registrant as specified in charter)
Delaware 1-17569 84-1063897
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(State or other jurisdiction (Commission) (IRS Employer
of incorporation) File Number) Identification No.)
1181 Grier Drive, Suite B, Las Vegas, Nevada 89119
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(Address of principal executive offices) (Zip Code)
(702) 361-9873
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Registrant's telephone number, including area code
N/A
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(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On May 31, 1996, FiberChem, Inc. (the "Company") completed an offering
under Regulation S promulgated under the Securities Act of 1933, as amended, to
investors outside the United States who are not U.S. Persons (the "Offering") of
3,333,333 units of the Company (the "Units") at a purchase price of $.90 per
Unit. Each Unit consisted of one share (the "Shares") of the Company's common
stock, $.0001 par value (the "Common Stock"), and one warrant (the "Warrants")
to purchase one share of Common Stock, the Shares and Warrants being immediately
separable.
The Warrants are exercisable from May 31, 1996 through May 30, 2001 at an
exercise price of $1.00 per share (the "Exercise Price"). At any time after May
30, 1997, in the event that the Market Price of the Common Stock has equalled or
exceeded 200% of the Exercise Price for any period of thirty (30) consecutive
days, the Company may redeem the Warrants at a redemption price of $.05 per
Warrant. For the purpose hereof, the term "Market Price" shall mean the average
of the reported closing bid and asked prices on the principal national
securities exchange on which the Common Stock is listed or admitted to trading,
or if the Common Stock is not listed or admitted to trading on any national
securities exchange but is quoted on (a) the Nasdaq National Market, the last
reported sale price on any day on which securities were traded on such
applicable exchange or market (the "Trading Day"), or if no such reported sale
occurs on such Trading Day, the average of the high and low bid prices on such
Trading Day, or (b) the Nasdaq SmallCap Market, the average of the high and low
bid prices on such Trading Day, or if the Common Stock is not listed or admitted
to trading on any national securities exchange or quoted on the Nasdaq National
or SmallCap Market, the average of the high and low bid prices in the over-the-
counter market as furnished by any National Association of Securities Dealers,
Inc. member firm that is selected from time to time by the Company for that
purpose.
In connection with the Offering, the Company paid Rauscher Pierce & Clark
Inc. and Rauscher Pierce & Clark Limited (together, the "Placement Agent") a
selling commission of $240,000 in cash, which equals eight percent (8%) of the
gross cash proceeds of the Units sold in the Offering, and agreed to pay six
percent (6%) of the aggregate Exercise Price of the Warrants upon the exercise
thereof. The Placement Agent also received, for nominal consideration, warrants
to purchase up to 333,333 shares of Common Stock at an exercise price of $.90
per share, subject to adjustment in certain events. (the "Placement Agent
Warrants"), which equal 10% of the number of shares sold in the Offering. The
Placement Agent Warrants are exercisable at any time on or after November 30,
1996 through May 30, 2001 and contain certain "piggyback" registration rights.
The Company intends to use the net proceeds of the Offering for sales and
marketing expenditures, including the hiring of new personnel to strengthen
international sales efforts, product development, acquisition of equipment,
patents and technology, and working capital.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. Not applicable.
(b) PRO FORMA FINANCIAL INFORMATION. Not applicable.
(c) EXHIBITS.
1.1 Placement Agent Agreement.
4.1 Form of Warrant issued by the Company in its May 1996 offering of
Units under Regulation S, each Unit consisting of one share of Common Stock and
one Warrant to purchase one share of Common Stock.
4.2 Form of Placement Agent Warrants issued by the Company in its May 1996
offering under Regulation S of Units.
99.1 Press Release dated June 10, 1996 announcing the Company's offering
under Regulation S of Units.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIBERCHEM, INC.
Date: July 11, 1996 By: /s/ Geoffrey F. Hewitt
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Geoffrey F. Hewitt
President
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PLACEMENT AGENT AGREEMENT
Offering of Units Consisting of Common Shares and Warrants
May 31, 1996
Rauscher Pierce & Clark Inc. and
Rauscher Pierce & Clark Limited
c/o Rauscher Pierce & Clark Limited
56 Green Street
London W1Y 3RH
England
Dear Sirs:
1. INTRODUCTION
FiberChem, Inc., a Delaware corporation (the "Company"), has duly
authorized the issuance and sale of up to 3,333,333 units (the "Units"), each
unit consisting of one share (the "Shares") of the Company's common stock,
$.0001 par value (the "Common Stock") and one warrant (the "Warrants") to
purchase one share of Common Stock (the "Offering").
The Company has prepared and delivered a confidential preliminary
offering memorandum dated April 25, 1996 (the "Preliminary Offering
Memorandum"), describing, among other things, the Units, and providing material
information about the Company and the terms of the Offering. The Company has
prepared and delivered to you a final offering memorandum dated May 22, 1996
(together with any amendments or supplements thereto, the "Final Offering
Memorandum").
The Company intends to offer and sell the Units to investors who are
not "U.S. persons" as defined in Regulation S ("Regulation S") under the United
States Securities Act of 1933, as amended (the "Securities Act"), pursuant to
purchase agreements (the "Purchase Agreements") to be entered into by the
Company and each purchaser (each a "Purchaser," and together the "Purchasers"),
in reliance upon and in conformity with an exemption from the registration
requirements of the Securities Act pursuant to Regulation S.
The Company has requested you to assist the Company as placement agent
in the placement of the Units, and you have indicated your willingness to do so,
subject to the satisfactory completion of such investigation and inquiry into
the Company's business as you deem appropriate under the circumstances and
subject to the conditions set forth below.
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2. APPOINTMENT OF PLACEMENT AGENT;
PLACEMENT OF UNITS
(a) The Company hereby appoints Rauscher Pierce & Clark Inc. and
its wholly-owned subsidiary Rauscher Pierce & Clark Limited (together, the
"Placement Agent") as placement agent in connection with the placement of all of
the Units for the period (the "Offering Period") terminating at the close of
business on May 31, 1996, unless you and the Company agree in writing that the
Offering Period shall be further extended (the "Offering Termination Date").
Subject to the performance in all material respects by the Company of its
obligations to be performed hereunder, and to the completeness and accuracy in
all material respects of all of the representations and warranties of the
Company contained herein, you hereby accept such agency and agree on the terms
and conditions set forth in this Agreement to use your best efforts during the
Offering Period to find qualified Purchasers for all of the Units. Your agency
hereunder, which is coupled with an interest and therefore is not terminable by
the Company without your permission, shall continue until the Offering
Termination Date, except that, in any event, your agency shall terminate on the
date of the initial issuance of the Units (the "Closing Date").
(b) In the event the Offering is commenced and no Units shall
have been subscribed for prior to the Offering Termination Date, your agency and
this Agreement shall terminate without obligation on your part or on the part of
the Company except as provided in SECTION 5 and except that the indemnification
and contribution provided for in SECTION 8 shall continue after termination of
this Agreement.
(c) The Placement Agent shall not, in fulfilling its obligations
hereunder, act as underwriter for the Units, and is in no way obligated,
directly or indirectly, to advance its own funds to purchase any Units.
(d) Notwithstanding anything herein to the contrary, the Company
shall not be obligated to sell any of the Units unless the Placement Agent shall
have found qualified Purchasers for such Units.
(e) Notwithstanding anything herein to the contrary, the Company
shall have the right to reject any and all Purchasers for the Units for any
reason the Company deems reasonable in the exercise of its sole and arbitrary
discretion.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to, and agrees with, the Placement
Agent that:
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(a) The Final Offering Memorandum, as of its date and at the
Closing Date for the sale of Units and any amendment thereof and supplement
thereto, as of their respective dates and at the Closing Date, did not and will
not as of such dates, contain any untrue statement of a material fact or omit to
state any material fact required to be stated or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; PROVIDED, HOWEVER, that this representation and warranty shall
not apply to any statements or omissions relating to matters of foreign law or
made in reliance upon and in conformity with information furnished in writing to
the Company by the Placement Agent expressly for use therein.
(b) Neither the Company or any affiliate of the Company nor
anyone acting on the behalf of the Company or any such affiliate, other than the
Placement Agent, has, directly or indirectly, offered, sold or attempted to
offer, sell or dispose of any of the Units, or solicited any offer to buy any
Units from, or otherwise approached or negotiated with respect to the Units with
any person.
(c) The execution, delivery and performance of this Agreement
and the Placement Agent Warrants (as defined in SECTION 5(b)) by the Company (i)
has been duly authorized by all requisite corporate action of the Company, and
(ii) will not violate (A) the Certificate of Incorporation or By-laws of the
Company as amended to date hereof or (B) any law applicable to the Company or
any of its subsidiaries or any applicable rule, regulation or order of any court
or governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or (C) any provision of any indenture, mortgage, agreement,
contract or other instrument to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries is bound or to which
any of the material properties or assets of the Company or any of its
subsidiaries are subject, or be in conflict with, or result in a breach of or
constitute (upon notice or lapse of time or both) a default under any such
indenture, mortgage, agreement, contract or other instrument or result in the
creation or imposition of any claim, lien, security interest, mortgage, pledge,
charge or other encumbrance of any nature whatsoever upon any of the properties
or assets of the Company or any of its subsidiaries (except for such violation
or conflict described in this Section which would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole). Upon execution
and delivery by the Company, this Agreement will constitute the legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as the enforceability thereof may be limited by any
applicable bankruptcy, insolvency, reorganization or other similar laws relating
to or affecting the enforcement of creditors' rights generally and by general
equitable principles, regardless of whether such enforceability is considered in
a proceeding in equity or at law and except as rights to indemnity or
contribution may be limited under applicable law.
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(d) Upon delivery to the Placement Agent in accordance herewith,
the Placement Agent Warrants (as defined in SECTION 5(b)) will be duly issued
and will constitute the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms, except as the
enforceability thereof may be limited by any applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or affecting the enforcement of
creditors' rights generally and by general equitable principles, regardless of
whether such enforceability is considered in a proceeding in equity or at law,
and except as rights to specific performance may be unavailable and rights to
indemnity or contribution may be limited under applicable law. The shares of
common stock of the Company (the "Common Shares") issuable upon exercise of any
of the Placement Agent Warrants (the "Warrant Shares") have been duly and
validly authorized and reserved for issuance. The Warrant Shares, as and when
issued and delivered in accordance with the terms of the Placement Agent
Warrants, and upon receipt by the Company of the exercise price, will be duly
and validly issued and outstanding, fully paid and non-assessable, and will not
be subject to any pre-emptive or similar rights.
4. CERTAIN AGREEMENTS OF THE COMPANY
The Company hereby agrees with the Placement Agent that:
(a) During the Offering Period, neither the Company or any
affiliate of the Company nor anyone acting on behalf of the Company or any such
affiliate, other than the Placement Agent and any agents which the Placement
Agent may appoint with reasonable care, shall, directly or indirectly, offer or
sell, or attempt to offer, sell or dispose of, any of the Units, or solicit any
offer to buy, or otherwise approach or negotiate in respect of, any of the
Units.
(b) If any event shall occur as a result of which it is
necessary, in the opinion of the Placement Agent, to amend or supplement the
Final Offering Memorandum in order to correct any untrue statement of a material
fact or to state a material fact required to be stated or necessary to make the
statements in the Final Offering Memorandum, in the light of the circumstances
under which they were made, not misleading, the Company shall forthwith prepare
and furnish to the Placement Agent a reasonable number of copies of such
amendment of or supplement to the Final Offering Memorandum (in form and
substance satisfactory to the Placement Agent), so that, as so amended or
supplemented, the Final Offering Memorandum will not contain an untrue statement
of a material fact or omit to state a material fact required to be stated or
necessary to make the statements, in the light of the circumstances under which
they were made, not misleading. The Company will not at any time amend or
supplement the Final Offering Memorandum (i) prior to having furnished the
Placement Agent and its counsel with a copy of the proposed form of the
amendment or supplement and giving the Placement Agent and its counsel a
reasonable opportunity to review and comment upon the same or (ii) in a manner
to which the
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Placement Agent or its counsel shall reasonably object, unless in the Company's
opinion the Company's failure to amend or supplement the Final Offering
Memorandum could result in a violation of applicable law.
(c) The Company shall furnish such information, execute such
instruments and take such action, if any, as may be required to effect the
placement of the Units under the securities laws of each jurisdiction in which
the Units are offered for sale or sold; PROVIDED, HOWEVER, that nothing in the
foregoing shall require the Company to register any securities under the
Securities Act or any other applicable securities or blue sky laws of any state
or any foreign or other jurisdiction (collectively, the "Securities Laws") other
than as expressly provided in the Placement Agent Warrants; and PROVIDED
FURTHER, that the Company shall not be required to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action that would
subject it to general or unlimited service of process in any jurisdiction where
it is not now so subject.
(d) The Company shall furnish or make available to the Placement
Agent or its counsel such additional documents and information regarding the
Company and its affairs as the Placement Agent may from time to time reasonably
request, including any and all documentation reasonably requested in connection
with its due diligence efforts regarding information in the Final Offering
Memorandum and in order to evidence the accuracy or completeness of any of the
conditions contained in this Agreement; and all actions taken by the Company to
authorize the issuance and sale of the Units and to reserve for issuance the
shares of Common Stock issuable upon exerise of the Warrants and the Placement
Agent Warrants shall be reasonably satisfactory in form and substance to the
Placement Agent.
(e) The Company shall, at all times upon reasonable request from
the date hereof through the Closing Date and prior to the acceptance of each
subscription, (i) make available to each Purchaser or its advisers, or both,
such information (in addition to that contained in the Final Offering
Memorandum) concerning the Offering, the Company and any other relevant matters
as it possesses or can acquire without unreasonable effort or expense, and (ii)
provide each Purchaser or its advisers, or both, prior to acceptance of its
subscription, the opportunity to ask questions of, and receive answers from, the
Company with respect to such matters.
(f) The Company shall not offer or sell any securities of the
same class as the Units until a period of six (6) months has elapsed from the
Closing Date of the Offering, unless the Company shall have provided the
Placement Agent with a satisfactory opinion from the Company's legal counsel to
the effect that the proposed offer or sale will not result in any violation of
the Securities Act, any state securities or blue sky laws, and any rules or
regulations promulgated thereunder.
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(g) After the expiration of the applicable Restricted Period,
the Common Shares issuable upon exercise of the Warrants shall be, and on or
prior to the date that the Placement Agent Warrants are first exercisable, the
Common Shares issuable upon exercise of the Placement Agent Warrants shall be,
tradeable as part of the Company's Common Shares on the National Association of
Securities Dealers - Automated Quotation System - The Small Cap Market
("NASDAQ"), or any other national securities exchange or share quotation system
on which the Common Shares of the Company are listed at any time subsequent to
the Closing Date.
(h) The Company will not at any time issue a press release to
announce the Offering of the Units (i) without the prior consent of the
Placement Agent, (ii) prior to having furnished the Placement Agent with a copy
of the proposed form of the press release and giving the Placement Agent a
reasonable opportunity to review and comment upon the same or (iii) in a manner
to which the Placement Agent or its counsel shall reasonably object, unless the
Company is required to do so by applicable law.
5. COMPENSATION; PAYMENT OF EXPENSES
(a) In consideration of the Placement Agent's services in acting
as exclusive placement agent for the Units, the Company hereby agrees to:
(i) pay the Placement Agent a fee (the "Placement Agent Fee") in
an amount equal to eight percent (8%) of the aggregate gross cash proceeds of
the sale of the Units, on the Closing Date by wire transfer of immediately
available funds to an account to be designated by the Placement Agent at least
two (2) business days prior to the Closing Date.
(ii) reimburse the Placement Agent for all of the reasonable out-
of-pocket expenses incurred by the Placement Agent in connection with the
Offering, including the reasonable fees, disbursements and expenses of the
Placement Agent's legal counsel. Such expense reimbursement is not contingent
upon the successful completion of the Offering, and shall be payable as billed
by the Placement Agent from time to time prior to the Closing Date. Any
outstanding sum due for out-of-pocket expenses shall be payable on the Closing
Date by wire transfer of immediately available funds to an account to be
designated by the Placement Agent at least two (2) business days prior to the
Closing Date.
(b) For a price of one hundred United States dollars ($100.00),
the Company hereby agrees to issue to Rauscher Pierce & Clark Limited ("RPC
Ltd."), concurrently with the successful completion and closing of the Offering,
warrants to purchase Common Stock (the "Placement Agent Warrants") covering a
number of shares of Common Stock equal to ten percent (10%) of the number of
shares sold in the Closing, exercisable
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at the price per share equal to the issue price of the Units. All shares of
Common Stock issuable upon the exercise of the Placement Agent Warrants (the
"Warrant Shares") will be issuable out of the authorised Common Stock of the
Company. The Placement Agent Warrants will have a term of five (5) years, will
provide for piggy-back registration rights and may be exercised as to all or any
lesser number of shares of Common Stock covered thereby commencing six months
after the Closing Date. The Placement Agent Warrants shall be non-transferable
except to (i) RPC Inc. or RPC Ltd.; (ii) successors to RPC Inc. or RPC Ltd;
(iii) purchasers of substantially all of the assets of RPC Inc. or RPC Ltd.;
(iv) officers, directors, employees, or agents of RPC Inc. or RPC Ltd.; (v)
shareholders of RPC Inc. or RPC Ltd. or the shareholders or partners of their
respective transferees in the event of a dissolution or liquidation of RPC Inc.
or RPC Ltd.; or (vi) the respective nominees of any of the foregoing parties.
The Placement Agent Warrants and the Warrant Shares shall be issued pursuant to
the exemption from registration under the Securities Act provided by Regulation
S. RPC Ltd. and any and all transferees of the Placement Agent Warrants and the
Warrant Shares pursuant to clauses (i) through (vi) of this Section shall
comply, and any and all such permitted transfers of Placement Agent Warrants and
Warrant Shares shall be made in compliance with the terms and provisions of the
Securities Act, including Regulation S, and all other applicable securities laws
of all other jurisdictions in which the Placement Agent Warrants and the Warrant
Shares are issued and transferred, and any transfer not in such compliance shall
be null and void and shall be given no effect.
(c) The Company shall pay the Placement Agent a fee (the
"Warrant Exerise Fee") equal to six percent (6%) of the exercise price of the
Warrants, which shall be payable by banker's draft, cashier's cheque or wire
transfer of immediately available funds within five (5) business days after
notice of exercise of the Warrants and payment of the exercise price therefor by
the holders thereof is received by the Company.
(d) Whether or not the transactions contemplated hereby and by
the Purchase Agreements shall be consummated, the Company shall pay all costs
and expenses in connection with (i) the preparation and reproduction of the
Preliminary Offering Memorandum and the Final Offering Memorandum, the
certificates representing the Shares and the Warrants and the shares of Common
Stock issuable upon exercise of the Warrants and upon exercise of the Placement
Agent Warrants, and any amendment of or supplements to such documents, (ii) the
reproduction of the Purchase Agreements, (iii) the Company's performance of and
compliance with all agreements and conditions contained herein and in the
Placement Agent Warrants, the Purchase Agreements, the certificates representing
the shares of Common Stock issuable upon exercise of the Warrants and upon
exercise of the Placement Agent Warrants on its part to be performed or complied
with, (iv) all expenses incident to the issuance and delivery of the Units, the
shares of Common Stock issuable upon exercise of the Warrants and upon exercise
of the
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Placement Agent Warrants; and (v) the fees, disbursements and expenses of the
Company's legal counsel and accountants.
(e) The Company reserves the unilateral right to terminate or
withdraw the Offering at any time and for any reason whatsoever in the exercise
of its sole and arbitrary discretion. If the Company so elects to terminate or
withdraw from the Offering or elects to pursue an alternative financial
arrangement, merger or other transaction in lieu of the Offering during the
Offering Period or decides not to proceed with the Closing in each such case,
for any reason other than a breach by the Placement Agent of its
representations, warranties or agreements hereunder and the Placement Agent
determines that it has identified investors sufficient to complete the minimum
amount of the Offering, then the Company shall pay the Placement Agent the full
fees and expenses provided for herein as if the Offering had been completed.
6. CONDITIONS OF THE PLACEMENT AGENT'S OBLIGATION
(a) The Placement Agent's obligation to place the Units is
subject to the accuracy of the representations and warranties of the Company in
this Agreement and the Purchase Agreements, to the performance by the Company of
its obligations under each of those agreements, and to the following further
conditions:
(i) After the expiration of the applicable Restricted Period,
the Warrant Shares shall be tradeable as part of the Company's Common Stock on
NASDAQ or any other national securities exchange, share quotation system or
listing service on which the shares of Common Stock of the Company are listed or
admitted to trading at any time subsequent to the Closing Date.
(ii) The conditions to the Purchasers' obligations as set forth
in the Purchase Agreements shall have been satisfied in all material respects.
(iii) All documents incident to this Agreement and the Purchase
Agreements shall be reasonably satisfactory in form and substance to the
Placement Agent and its counsel, and the Placement Agent and its counsel shall
have received such information, certificates and documents as they may
reasonably request.
(b) The obligations of the Company hereunder are subject to the
following conditions:
(i) the accuracy of the representations and warranties of the
Placement Agent set forth herein and of the Purchasers in their respective
Purchase Agreements;
(ii) the performance by the Placement Agent of its agreements and
obligations hereunder and the
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performance by the Purchasers of their respective agreements and obligations
under their respective Purchase Agreements; and
(iii) all documents incident hereto and to the Purchase
Agreements shall be reasonably satisfactory in form and substance to the Company
and its counsel, and the Company and its counsel shall have received such
information, certificates and documents as they may reasonably request.
7. MANNER OF OFFERS AND SALES OF THE UNITS
(a) The offers and sales of the Units are to be effected pursuant
to the exemption from the registration requirements of the Securities Act
pursuant to Regulation S thereunder. The Company and the Placement Agent have
established the following procedures in connection with the offer, sale and
resale of the Units:
(i) each offer and sale of the Units shall be made only in an
"offshore transaction" (as defined in Regulation S) and to investors who are not
"U.S. persons" (as defined in Regulation S);
(ii) no offer or sale of any of the Units shall be made in the
United States or to, or for the account or benefit of, any "U.S. person" (as
defined in Regulation S);
(iii) no "directed selling efforts" (as defined in Regulation S)
in respect of the Units shall be made in or directed toward the United States;
(iv) "offering restrictions" (as defined in Regulation S) in
respect of the Units shall be implemented;
(v) each Purchaser of the Units shall be furnished with the
Final Offering Memorandum prepared by the Company, together with any amendments
thereof and supplements thereto as shall have been prepared by the Company,
which describes, among other things, (A) the Units, (B) such summary financial
and business information concerning the Company as is considered appropriate,
and (C) the restrictions on resale of the Units;
(vi) no Preliminary Offering Memorandum or Final Offering
Memorandum shall be delivered to any "U.S. person" (as defined in Regulation S);
and
(vii) each Purchaser of the Units shall be required to execute
and deliver a Purchase Agreement which shall contain restrictions on resale of
the Units otherwise than in compliance with the Securities Act and the rules and
regulations promulgated by the Securities and Exchange Commission thereunder.
(viii) the Company agrees to furnish the Placement Agent with
such number of copies of the Preliminary
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Offering Memorandum and the Final Offering Memorandum and any revision or
amendment thereof or supplement thereto as the Placement Agent may reasonably
require in connection with the offer and sale of the Units.
(b) The Placement Agent hereby represents, warrants and
covenants with the Company that the Placement Agent, its affiliates, and any
person acting on behalf of, or as agent of, any of the foregoing (each, an
"Associated Person"), shall, whether as principal or agent, (i) comply with the
procedures set forth in SECTION 7(a) hereof, (ii) offer and sell the Units to
the Purchasers only in an "offshore transaction" (as defined in Regulation S),
(iii) not engage with respect to the Units in any "directed selling efforts" (as
defined in Regulation S) in or directed toward the United States, (iv) comply
with all "offering restrictions" (as defined in Regulation S) in respect of the
Units, (v) not deliver any Preliminary Offering Memorandum or Final Offering
Memorandum or any revision or amendment thereof or supplement thereto to any
"U.S. person" (as defined in Regulation S), (vi) not make any offers or sales of
any of the Units or any interest therein in the United States or to, or for the
account or benefit of, any "U.S. person" (as defined in Regulation S), (vii)
comply with all laws and regulations of those jurisdictions in which the Units
are offered or sold which are applicable to the offer and sale of the Units,
(viii) send a written confirmation or other notice, on or prior to the Closing
Date, to each person who is acting on behalf of the Placement Agent to the
effect that such person is subject to the same restrictions on offers and sales
that apply to the Placement Agent, (ix) the distribution of the Units shall be
completed on or prior to the Offering Termination Date, (x) RPC Ltd. is not a
"U.S. person" (as defined in Regulation S), is acquiring the Placement Agent
Warrants in an "offshore transaction" (as defined in Regulation S) and is
otherwise acquiring the Placement Agent Warrants and the Common Shares issuable
upon exercise thereof in compliance with all applicable Securities Laws, and
(xi) each of the Placement Agent and any Associated Person has complied with
each of the covenants set forth in clauses (i) through (viii) above from the
date the Placement Agent first learned of the proposed offering of the Company's
equity securities through and including the date hereof.
(c) The Company hereby represents, warrants and covenants with
the Placement Agent that the Company, its affiliates, and any person acting on
behalf of, or as agent of, any of the foregoing (each, an "Associated Person"),
shall, whether as principal or agent, (i) comply with the procedures set forth
in SECTION 7(a) hereof, (ii) offer and sell the Units to the Purchasers only in
an "offshore transaction" (as defined in Regulation S), (iii) not engage with
respect to the Units in any "directed selling efforts" (as defined in Regulation
S) in or directed toward the United States, (iv) comply with all "offering
restrictions" (as defined in Regulation S) in respect of the Units, (v) not
deliver any Preliminary Offering Memorandum or Final Offering Memorandum or any
revision or amendment thereof
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or supplement thereto to any "U.S. person" (as defined in Regulation S), (vi)
not make any offers or sales of any of the Units or any interest therein in the
United States or to, or for the account or benefit of, any "U.S. person" (as
defined in Regulation S), and (vii) not make any sales of any of the Units or
any interest therein to any person other than the Purchasers; PROVIDED,
HOWEVER, that insofar as this representation and warranty involves any broker-
dealer participating in the Offering as placement agent, any affiliate of such
broker-dealer or any officer, director, employee or agent of such broker-dealer,
such representation is made by the Company solely on the basis of and in
reliance upon the representations and warranties of such broker-dealer.
8. INDEMNIFICATION AND CONTRIBUTION
(a) The Company agrees to defend, indemnify and hold RPC Inc.,
RPC Ltd. and their respective officers, directors, agents, employees and
controlling persons (each in the context of this Section an "Indemnified Party")
harmless from and against any losses, claim, damages or liabilities (including,
without limitation, court costs and reasonable attorneys' fees and expenses) to
which any Indemnified Party may become subject insofar as the same arises from
an action which alleges or is based upon (i) any alleged untrue statement of a
material fact in, or omission of a material fact necessary to make,
communications by the Company made in connection with the Offering (other than
with respect to any written information furnished by the Placement Agent for
express inclusion in any such communications), in light of the circumstances in
which they were made, not misleading; or (ii) any other violation of applicable
securities or other laws, rules and regulations, by the Company or its officers,
directors, agents, employees, and controlling persons, irrespective of the role
or concurrent negligence of such Indemnified Party (except as set forth in the
proviso below); or (iii) any claim asserted by Fladgate Fielder, Daniel Shier,
European Capital Advisors, Gordon Werner or any other person or company
affiliated or associated with any of the foregoing parties; or (vi) any person
or company claiming that such party is entitled to a broker's fee, introduction
fee, finder's fee or any other commission or payment of any nature whatsoever in
connection with the Unit Offering, and the Company agrees to reimburse each
Indemnified Party for any legal or other expenses reasonably incurred by them in
connection with investigating, settling or defending any action or claim in
connection therewith (including, without limitation, court costs and reasonable
attorneys' fees and expenses); PROVIDED, HOWEVER, that the Company shall not be
liable to so indemnify any Indemnified Party in any such case to the extent that
any such loss, claim, damage or liability is found in a final judgment of a
court of competent jurisdiction to have resulted from an Indemnified Party's
gross negligence or bad faith or breach of the terms of this Agreement.
(b) The Placement Agent agrees to defend, indemnify and hold
harmless the Company and its officers,
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<PAGE>
directors, agents, employees and controlling persons (each in the context of
this Section an "Indemnified Party") from and against any losses, claims,
damages or liabilities (including, without limitation, court costs and
reasonable attorneys' fees and expenses) to which any Indemnified Party may
become subject insofar as the same arises from an action which alleges or is
based upon, related to or arises in connection with (i) any alleged untrue
statement of a material fact in, or omission of a material fact necessary to
make, any written information furnished by the Placement Agent for express
inclusion in any communications by the Company, in light of the circumstances,
not misleading and (ii) any breach by the Placement Agent or any Associated
Person of this agreement and to reimburse each Indemnified Party for any legal
or other expenses reasonably incurred by them in connection with investigating,
settling or defending any action or claim in connection therewith (including
without limitation, court costs and reasonable attorneys' fees and expenses);
PROVIDED, HOWEVER, that the Placement Agent shall not be liable to so indemnify
an Indemnified Party in any such case to the extent that any such loss, claim,
damage or liability is found in a final judgment of a court of competent
jurisdiction to have resulted from an Indemnified Party's gross negligence, bad
faith or breach of the terms of this Agreement.
(c) With respect to SECTION 8(a) AND (b) above, the parties
agree that an Indemnified Party shall not be deemed to have been grossly
negligent for reasonably relying upon any written untrue statement or alleged
omission of a material fact necessary to make the statements, in light of the
circumstances in which made, not misleading, contained in or omitted from any
information provided by or on behalf of the Indemnitor (as defined in SECTION
8(d)) (including, without limitation of the generality of the foregoing, any
accountant or attorney employed or retained by the Indemnitor). The
indemnification provided in SECTION 8(a) AND (b) above shall extend upon the
same terms and conditions to each person, if any, who may be deemed to control
any Indemnified Party. If for any reason the foregoing indemnification is
unavailable to any Indemnified Party or insufficient to hold such Indemnified
Party harmless, then the Indemnitor shall contribute to the amount paid or
payable by such Indemnified Party as a result of such loss, claim, damage, or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the Indemnitor on the one hand and the Indemnified Party on
the other hand but also the relative fault of the Indemnitor and the Indemnified
Party, as well as any other relevant equitable considerations. The Indemnitor
agrees to reimburse the Indemnified Party within ten days after presentation of
any statement by the Indemnified Party of all reasonable expenses (including
without limitation of the generality of the foregoing reasonable fees and
expenses of attorneys selected by the Indemnified Party) incurred in connection
with any testimony they or their employees are required to give (in court,
before a regulatory agency, by deposition, or otherwise) in any regulatory or
court proceeding (including depositions), whether or not the
12
<PAGE>
Indemnified Party is a party, and which related directly or indirectly to the
proposed Offering.
(d) In the event any action (with respect to which indemnity or
reimbursement (i) from the Company pursuant to the provisions of SECTION 8(a) or
(ii) from the Placement Agent pursuant to the provisions of SECTION 8(b) (each
such party hereinafter referred to as the "Indemnitor"), may be sought by any
indemnified party pursuant to the provisions of SECTION 8(d) OR (b) (each such
party in the context of this SECTION 8(d), an "Indemnified Party"), on account
of the agreements contained herein, shall be brought or threatened against an
Indemnified Party, prompt notice of such action shall be given by such
Indemnified Party to the Indemnitor in writing, together with a copy of all
papers served on, or received by, the Indemnified Party in connection with such
action; PROVIDED, HOWEVER, that failure to give such notice shall not affect the
Indemnified Party's rights under the indemnification provisions of this Section,
unless, and only to the extent that, such failure results in the Indemnitor's
forfeiture of substantive rights or defenses. If such an event occurs, the
Indemnitor shall assume the defense of such action, including the employment of
counsel and the payment of all expenses. Each Indemnified Party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of the Indemnified Party unless (a) the employment thereof has been
specifically authorized by the Indemnitor in writing; (b) the Indemnitor has
failed to assume the defense and employ counsel; or (c) the named parties, or
parties threatened to be named, to any such action (including any impleaded
parties or parties threatened to be impleaded) include both the Indemnified
Party and the Indemnitor, and the Indemnified Party has been advised by such
counsel that there may be one or more legal defenses available to them which are
different from or additional to those available to the Indemnitor (in which
cases such Indemnified Party shall have the right to employ their own counsel
and in such cases any reasonable fees and expenses of such counsel shall be paid
by the Indemnitor).
9. TERMINATION OF THIS AGREEMENT
(a) In the event the Company does not perform any obligation
under this Agreement on its part to be performed within five (5) days of written
notice of such failure from the Placement Agent or any representation and
warranty of the Company hereunder is incomplete or inaccurate in any material
respect, this Agreement, including all of the Placement Agent's obligations
under this Agreement, may be immediately cancelled by the Placement Agent by
notice thereof to the Company. Any such cancellation shall be without liability
of any party to any other party except that the provisions of SECTIONS 5 AND 8
hereof shall survive any such cancellation.
(b) In the event that the Placement Agent does not perform any
obligation under this Agreement on its part
13
<PAGE>
to be performed within five (5) days of written notice of such failure from the
Company any representation or warranty of the Placement Agent hereunder is
incomplete or inaccurate in any material respect, this Agreement and all of the
Company's obligations hereunder may be immediately cancelled by the Company by
notice to the Placement Agent. Any such cancellation shall be without liability
of any party to any other party except that the provisions of SECTIONS 5 AND 8
shall survive any such cancellation.
10. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY
All representations, warranties, covenants and agreements contained in
this Agreement, or contained in certificates of officers of the Company and the
Placement Agent, shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of the Placement Agent or the Company
or any controlling person, director or officer of the Placement Agent or by or
on behalf of the Company, and shall survive delivery of the Units to the
Purchasers, and delivery of the shares of Common Stock upon exercise of any of
the Warrants and upon exercise of the Placement Agent Warrants.
11. NOTICES
All communications provided for or permitted in this Agreement shall
be in writing and shall be deemed to have been duly given if personally
delivered, sent by courier or mailed by registered or certified mail, postage
prepaid and return receipt requested, or transmitted by telefax, telex or
telegraph and confirmed by a similar mailed writing, if to the Placement Agent,
addressed to Rauscher Pierce & Clark Limited, 56 Green Street, London W1Y 3RH,
England, Attention: David P. Quint, Managing Director, or to such other address
as the Placement Agent may designate in writing to the Company, and, if to the
Company, addressed to the Company, 1181 Grier Drive, Suite B, Las Vegas, Nevada
89119, United States of America, Attention: Geoffrey F. Hewitt, or to such other
address as the Company may designate in writing to the Placement Agent.
12. PARTIES
This Agreement shall inure to the benefit of and be binding upon the
Placement Agent, the Company and their respective successors. Nothing expressed
herein is intended or shall be construed to give any person other than the
persons referred to in the preceding sentence any legal or equitable right,
remedy or claim under or in respect of this Agreement. This Agreement and all
conditions and provisions hereof are intended to be for the sole and exclusive
benefit of the parties hereto and their respective successors and for the
benefit of no other person except as otherwise expressly set forth herein. No
Purchaser of Units from the Company shall be deemed to be a successor by reason
merely of such purchase.
14
<PAGE>
13. MISCELLANEOUS
This Agreement constitutes the entire agreement and understanding of
the parties with respect to the matters and transactions contemplated in this
Agreement and supersedes all prior agreements and understandings whatsoever
relating to such matters and transactions. Neither this Agreement nor any term
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought. The headings in this
Agreement are for purposes of reference only and shall not limit or otherwise
affect the meaning. This Agreement may be executed in counterparts, each of
which shall constitute an original, but all of which shall together constitute
one instrument.
14. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware without regard to the conflict of laws
provisions of Delaware law.
If the foregoing is in accordance with your understanding, kindly sign
and return to us the enclosed duplicate hereof, whereupon it will become a
binding agreement between the undersigned in accordance with its terms.
Very truly yours,
FIBERCHEM, INC.
By ________________________________
Name: _____________________________
Title: ____________________________
15
<PAGE>
The foregoing Placement Agent
Agreement is confirmed
and accepted as of the date
first above written:
RAUSCHER PIERCE & CLARK INC.
By ________________________________
Name: _____________________________
Title: ____________________________
RAUSCHER PIERCE & CLARK LIMITED
By ________________________________
Name: _____________________________
Title: ____________________________
16
<PAGE>
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER FEDERAL
OR STATE SECURITIES OR BLUE SKY LAWS, AND HAVE BEEN ISSUED IN A MANNER INTENDED
TO COMPLY REGULATION S UNDER THE ACT. PRIOR TO JULY 11, 1996, NO OFFER, SALE,
TRANSFER, PLEDGE OR OTHER DISPOSITION (COLLECTIVELY, A "DISPOSAL") OF THE
WARRANTS REPRESENTED BY THIS CERTIFICATE OR THE SHARES ISSUABLE UPON EXERCISE OF
THE WARRANTS MAY BE MADE (A) IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, ANY "U.S. PERSON" (AS DEFINED IN REGULATION S) UNLESS (I) REGISTERED
UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS OR
(II) FIBERCHEM, INC. (THE "COMPANY") RECEIVES A WRITTEN OPINION OF UNITED STATES
LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO IT TO THE EFFECT THAT SUCH
DISPOSAL IS EXEMPT FROM SUCH REGISTRATION REQUIREMENTS OR (B) OUTSIDE THE UNITED
STATES TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSON WHO IS NOT A "U.S.
PERSON" UNLESS PRIOR TO SUCH DISPOSAL (I) THE BENEFICIAL OWNER OF SUCH WARRANTS
AND SHARES ISSUABLE UPON THE EXERCISE OF THE WARRANTS AND THE PROPOSED
TRANSFEREE SUBMIT CERTIFICATIONS TO THE COMPANY (FORMS OF WHICH ARE AVAILABLE
FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES) AND (II) THE COMPANY
RECEIVES THE LEGAL OPINION DESCRIBED IN (A)(II) ABOVE. THE WARRANTS REPRESENTED
BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON EXERCISE THEREOF ARE NOT
TRANSFERABLE AT ANY TIME UNLESS THEY ARE REGISTERED UNDER THE SECURITIES ACT, OR
AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
No. U-
WARRANTS TO PURCHASE
COMMON STOCK OF FIBERCHEM, INC.
Issuance on May 31, 1996
Void after 5:00 p.m. New York Time, May 30, 2001
THIS CERTIFIES THAT, for value received, [.] or registered assigns (the
"Holder") is the registered holder of warrants (the "Warrants") to purchase from
FiberChem, Inc., a Delaware corporation (the "Company"), at any time or from
time to time beginning on May 31, 1996 and until 5:00 p.m., New York time, on
May 30, 2001 (the "Expiration Date"), subject to the conditions set forth
herein, at an exercise price per share equal $1.00, subject to adjustment as set
forth herein (the "Exercise Price"), up to an aggregate of [.] ([.]) fully paid
and non-assessable shares of common stock, par value $0.0001 per share (the
"Common Stock"), of the Company (the "Shares") upon surrender of this
certificate (the "Certificate") and payment of the Exercise Price multiplied by
the number of Shares being purchased to the principal office of Corporate Stock
Transfer, the transfer agent for the Company's warrants and Common Stock, or any
successor transfer agent thereto (the "Warrant Agent") at its principal office
at 370 17th Street, Denver, Colorado 80202.
<PAGE>
1. EXERCISE OF WARRANTS.
(a) The exercise of any Warrants represented by this Certificate is
subject to the conditions set forth below in PARAGRAPH 4, "Compliance with U.S.
Securities Laws."
(b) Subject to compliance with all of the conditions set forth
herein, the Holder shall have the right to purchase from the Company the number
of Shares which the Holder may at the time be entitled to purchase pursuant
hereto, upon surrender of this Certificate, together with the form of election
to purchase attached hereto duly completed and signed, and upon payment to the
Warrant Agent of the Exercise Price multiplied by the number of Shares in
respect of which Warrants are then exercised.
(c) No Warrant may be exercised after 5:00 p.m., New York time, on
the Expiration Date, after which time all Warrants evidenced hereby shall be
void, unless exercised prior thereto.
(d) Payment of the Exercise Price multiplied by the number of Shares
in respect of which Warrants are exercised shall be made in cash, by wire
transfer of immediately available funds or by certified check or banker's draft
payable to the order of the Company, or any combination of the foregoing.
(e) The Warrants represented by this Certificate are exercisable at
the option of the Holder, in whole or in part, but not as to fractional Shares.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the Holder a new certificate
of like tenor representing the number of unexercised Warrants.
(f) Upon surrender of this Certificate to the Warrant Agent at its
principal office and upon payment to the Warrant Agent, at its principal office,
of the Exercise Price multiplied by the number of Shares in respect of which
Warrants are then exercised, the Company shall cause to be delivered promptly to
or upon the written order of the Holder and in such name or names as the Holder
may designate, a share certificate or share certificates for the number of whole
Shares purchased upon the exercise of the Warrants. Such share certificate or
share certificates representing the Shares shall be free of any restrictive
legend. The Company shall ensure that no "stop transfer" or similar instruction
or order with respect to the Shares purchased upon exercise of the Warrants
shall be in effect at the Warrant Agent or any successor transfer agent for the
Common Stock of the Company.
2. FRACTIONAL SHARES. No fractional shares of Common Stock shall be
issued upon exercise of any Warrant or Warrants. In lieu of any fractional
share of Common Stock which would otherwise be issuable upon exercise of any
Warrant or Warrants, the Company, at the time the Shares are delivered, shall
pay, or cause to be paid
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<PAGE>
through the Warrant Agent, a cash adjustment in respect of such fraction in an
amount equal to the same fraction of the current Market Price per share of the
Common Stock at the close of business on the date of exercise (or, if such day
is not a Trading Day, on the Trading Day immediately preceding such day). The
term "Market Price" shall mean, on any Trading Day with respect to the per share
price of Common Stock, the last reported sales price regular way, or in case no
such reported sale takes place on such Trading Day, the average of the reported
closing bid and asked prices regular way, in either case on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading, or if the Common Stock is not listed or admitted to trading on any
national securities exchange but is quoted on (a) the Nasdaq National Market,
the last reported sale price on any Trading Day, or if no such reported sale
occurs on such Trading Day, the average of the high and low bid prices on such
Trading Day, or (b) the Nasdaq SmallCap Markets, the average of the high and low
bid prices on such Trading Day, or if the Common Stock is not listed or admitted
to trading on any national securities exchange or quoted on the Nasdaq National
or SmallCap Markets, the average of the high and low bid prices in the over-the-
counter market as furnished by any National Association of Securities Dealers,
Inc. member firm that is selected from time to time by the Company for that
purpose. The term "Trading Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday, other than any day on which securities are not traded on
the applicable securities exchange or in the applicable securities market.
3. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes,
if any, attributable to the issuance and delivery of the Shares upon the
exercise of the Warrants; PROVIDED, HOWEVER, that the Company shall not be
required to pay any taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any Warrant or any Shares in any name
other than that of the Holder, which transfer taxes shall be paid by the Holder.
4. COMPLIANCE WITH U.S. SECURITIES LAWS. The Warrants and the Shares
issuable upon the exercise of the Warrants have not been registered, and except
as provided in Section 9 hereof, will not be registered, under the United States
Securities Act of 1933, as amended (the "Securities Act"), or any other federal
or state securities or blue sky laws, and the Warrants may not be exercised
within the United States or by, or on behalf of, any "U.S. person" (as defined
in Regulation S under the Securities Act) unless the Warrants and the Shares
have been registered under the Securities Act and any applicable state
securities or blue sky laws or exemptions from the registration requirements
under the Securities Act and any applicable state securities or blue sky laws
are available. Accordingly, (i) the Warrants may not be exercised within the
United States, and any Shares issuable upon exercise of the Warrants, may not be
delivered within the United States, except in circumstances constituting an
"offshore transaction" (as defined
- 3 -
<PAGE>
in Regulation S under the Securities Act) and otherwise complying with
Regulation S, or unless such Shares have been registered under the Securities
Act and any applicable state securities or blue sky laws or exemptions from the
registration requirements under the Securities Act and any applicable state
securities or blue sky laws are available, and (ii) it is a condition to the
exercise of the Warrants that the exercising Holder must deliver to the Company
(A) a written certification that such Holder is not a "U.S. person" and that the
Warrants are not being exercised on behalf of, or for the account or benefit of,
a "U.S. person," or (B) a written opinion of United States legal counsel, in
form and substance satisfactory to the Company, to the effect that the Warrants
and the Shares have been registered under the Securities Act and any applicable
state securities or blue sky laws or are exempt from the registration
requirements under the Securities Act and any applicable state securities or
blue sky laws.
5. TRANSFER OF WARRANTS.
(a) The Warrants shall be transferable only on the books of the
Company maintained at the Warrant Agent's principal office upon delivery of this
Certificate with the form of assignment attached hereto duly completed and
signed by the Holder or by its duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment or authority to
transfer. The Company may, in its discretion, require, as a condition to any
transfer of Warrants, a signature guarantee, which may be provided by a
commercial bank or trust company, by a broker or dealer which is a member of the
National Association of Securities Dealers, Inc., or by a member of a national
securities exchange, The Securities and Futures Authority Limited in the United
Kingdom, or The International Stock Exchange in London, England. Upon any
registration of transfer, the Company shall cause to be delivered a new warrant
certificate or warrant certificates of like tenor and evidencing in the
aggregate a like number of Warrants to the person entitled thereto in exchange
for this Certificate, subject to the limitations provided herein, without any
charge except for any tax or other governmental charge imposed in connection
therewith.
(b) Notwithstanding anything in this Certificate to the contrary,
neither any of the Warrants nor any of the Shares issuable upon exercise of any
of the Warrants shall be transferable, except upon compliance by the Holder with
any applicable provisions of the Securities Act and any applicable state
securities or blue sky laws.
6. EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES; LOSS OR MUTILATION
OF WARRANT CERTIFICATES.
(a) This Certificate is exchangeable without expense, upon the
surrender hereof by the Holder at the principal office of the Warrant Agent, for
a new warrant certificate of like tenor and
- 4 -
<PAGE>
date representing in the aggregate the right to purchase the same number of
Shares in such denominations as shall be designated by the Holder at the time of
such surrender.
(b) Upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Certificate and, in
case of such loss, theft or destruction, of indemnity and security reasonably
satisfactory to it and to the Warrant Agent, and reimbursement to the Company of
all reasonable expenses incidental thereto, and upon surrender and cancellation
of this Certificate, if mutilated, the Company will make and deliver a new
warrant certificate of like tenor, in lieu thereof.
7. EXERCISE PRICE; ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES.
(a) INITIAL EXERCISE PRICE. The Warrants are exercisable at the
Exercise Price per Share, subject to adjustment from time to time as provided
herein.
(b) ADJUSTMENTS; COMPUTATION OF ADJUSTED PRICE. Subject to the
exceptions referred to in PARAGRAPH (g) below, in the event that the Company
shall at any time after the initial issuance date of the Warrants represented by
this Certificate issue or sell any shares of Common Stock (other than the
issuance or sale of Common Stock referred to in PARAGRAPH (g) below), including
shares of Common Stock held in the Company's treasury, for a consideration per
share less than the Exercise Price in effect immediately prior to the issuance
or sale of such shares, or without consideration, then forthwith upon such
issuance or sale, the Exercise Price shall (until another such issuance or sale)
be reduced to a price (calculated to the nearest full cent) equal to the
quotient derived by dividing (i) an amount equal to the sum of (A) the product
of (x) the total number of shares of Common Stock outstanding immediately prior
to such issuance or sale, multiplied by (y) the Exercise Price in effect
immediately prior to such issuance or sale, plus, (B) the aggregate of the
amount of all consideration, if any, received by the Company upon such issuance
or sale, by (ii) the total number of shares of Common Stock outstanding
immediately after such issuance or sale; PROVIDED, HOWEVER, that in no event
shall the Exercise Price be adjusted pursuant to this computation to an amount
in excess of the Exercise Price in effect immediately prior to such computation,
except in the case of readjustments provided for in PARAGRAPH (c) below or a
combination of outstanding shares of Common Stock provided for in PARAGRAPH (d)
below.
For the purposes of any computation to be made in accordance with this
PARAGRAPH (b), the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common Stock
for a consideration part or all of which
- 5 -
<PAGE>
shall be cash, the amount of the cash consideration therefor shall be
deemed to be the amount of cash received by the Company for such shares
(or, if shares of Common Stock are offered by the Company for subscription,
the subscription price, or, if such shares of Common Stock shall be sold to
underwriters or dealers for public offering without a subscription
offering, the initial public offering price) before deducting therefrom any
compensation paid or discount allowed in the sale, underwriting or purchase
thereof by underwriters or dealers or others performing similar services,
or any expenses incurred in connection therewith.
(ii) In case of the issuance or sale (otherwise than as a
dividend or other distribution on any stock of the Company, or on the
exercise of options, rights or warrants or on the conversion or exchange of
convertible or exchangeable securities) of shares of Common Stock for a
consideration part or all of which shall be other than cash, the amount of
the consideration therefor other than cash shall be deemed to be the value
of such consideration as determined in good faith by the Board of Directors
of the Company.
(iii) Shares of Common Stock issuable by way of dividend or
other distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the day following the
record date for the determination of stockholders entitled to receive such
dividend or other distribution and shall be deemed to have been issued
without consideration.
(iv) The reclassification of securities of the Company (other
than shares of Common Stock into securities including shares of Common
Stock) shall be deemed to involve the issuance of such shares of Common
Stock for a consideration other than cash immediately prior to the close of
business on the date fixed for the determination of security holders
entitled to receive such shares, and the value of the consideration
allocable to such shares of Common Stock shall be determined as provided in
SUBPARAGRAPH (ii) above.
(v) The number of shares of Common Stock at any one time
outstanding shall include the aggregate number of shares issued or issuable
(subject to readjustment upon the actual issuance thereof) upon the
exercise of options, rights, warrants and upon the conversion or exchange
of convertible or exchangeable securities.
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<PAGE>
(c) OPTIONS, RIGHTS, WARRANTS AND CONVERTIBLE AND EXCHANGEABLE
SECURITIES. Except in the case of the Company issuing rights to subscribe for
shares of Common Stock distributed to all the shareholders of the Company and
Holders of Warrants pursuant to PARAGRAPH (i), in the event that the Company
shall at any time after the initial issuance date of the Warrants represented by
this Certificate issue any options, rights or warrants to subscribe for shares
of Common Stock, or issue any securities convertible into or exchangeable for
shares of Common Stock (other than the issuance or exercise of options, rights,
warrants or preferred stock referred to in PARAGRAPH (g) below), (i) for a
consideration per share less than the Exercise Price in effect immediately prior
to the issuance of such options, rights, or warrants, or such convertible or
exchangeable securities, or (ii) without consideration, the Exercise Price in
effect immediately prior to the issuance of such options, rights or warrants, or
such convertible or exchangeable securities, as the case may be, shall be
reduced to a price determined by making a computation in accordance with the
provisions of PARAGRAPH (b) above; PROVIDED, HOWEVER, that:
(i) The aggregate maximum number of shares of Common Stock
issuable under such options, rights or warrants shall be deemed to be
issued and outstanding at the time such options, rights or warrants are
issued, and for a consideration equal to the minimum purchase price per
share of Common Stock provided for in such options, rights or warrants at
the time of issuance, plus the consideration (determined in the same manner
as consideration received on the issue or sale of shares of Common Stock),
if any, received by the Company for such options, rights or warrants, and
if no minimum price is provided in such options, rights or warrants, then
the consideration shall be equal to zero; PROVIDED, HOWEVER, that upon the
expiration or other termination of such options, rights or warrants, if any
thereof shall not have been exercised, the number of shares of Common Stock
deemed to be issued and outstanding pursuant to this SUBPARAGRAPH (i) (and
for the purposes of SUB-PARAGRAPH (v) OF PARAGRAPH (b) above) shall be
reduced by such number of shares of Common Stock as to which options,
warrants and/or rights shall have expired or terminated unexercised, and
such number of shares of Common Stock shall no longer be deemed to be
issued and outstanding, and the Exercise Price then in effect shall
forthwith be readjusted and thereafter be the price which it would have
been had adjustment been made on the basis of the issuance only of shares
of Common Stock actually issued or issuable upon the exercise of those
options, rights or warrants as to which the exercise rights shall not have
expired or terminated unexercised.
(ii) The aggregate maximum number of shares of Common Stock
issuable upon conversion or exchange of any convertible or exchangeable
securities shall be deemed to be issued and outstanding at the time of
issuance of such securities, and for a consideration equal to the
consideration
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(determined in the same manner as consideration received on the issue or
sale of shares of Common Stock) received by the Company for such
securities, plus the minimum consideration, if any, receivable by the
Company upon the conversion or exchange thereof; PROVIDED, HOWEVER,
that upon the termination of the right to convert or exchange such
convertible or exchangeable securities (whether by reason of redemption
or otherwise), the number of shares of Common Stock deemed to be issued
and outstanding pursuant to this SUBPARAGRAPH (ii) (and for the purpose
of SUBPARAGRAPH (v) OF PARAGRAPH (b) above) shall be reduced by such
number of shares of Common Stock as to which the conversion or exchange
rights shall have expired or terminated unexercised, and such number of
shares shall no longer be deemed to be issued and outstanding and the
Exercise Price then in effect shall forthwith be readjusted and
thereafter be the price which it would have been had adjustment been
made on the basis of the issuance only of the shares of Common Stock
actually issued or issuable upon the conversion or exchange of those
convertible or exchangeable securities as to which the conversion or
exchange rights shall not have expired or terminated unexercised.
(iii) If any change shall occur in the price per share provided
for in any of the options, rights or warrants referred to in SUBPARAGRAPH
(i) above, or in the price per share at which the securities referred to in
SUBPARAGRAPH (ii) above are convertible or exchangeable, such options,
rights or warrants or conversion or exchange rights, as the case may be,
shall be deemed to have expired or terminated on the date when such price
change became effective in respect of shares not theretofore issued
pursuant to the exercise or conversion or exchange thereof, and the Company
shall be deemed to have issued upon such date new options, rights or
warrants or convertible or exchangeable securities at the new price in
respect of the number of shares issuable upon the exercise of such options,
rights or warrants or the conversion or exchange of such convertible or
exchangeable securities.
(iv) When an adjustment has been made in the Exercise Price
pursuant to this PARAGRAPH (c) in respect of the issuance of any options,
rights or warrants to subscribe for shares of Common Stock or the issuance
of any securities convertible into or exchangeable for shares of Common
Stock, no additional adjustment in the Exercise Price shall be made
pursuant to PARAGRAPH (b) above upon the issuance of shares of Common Stock
upon the exercise of such options, rights or warrants or upon the
conversion or exchange of such securities.
(d) SUBDIVISION AND COMBINATION. In the event that the Company shall
at any time after the initial issuance date of the
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Warrants and before the exercise or Expiration of all the Warrants subdivide
or combine the outstanding shares of Common Stock or declare a dividend
consisting solely of shares of Common Stock, the Exercise Price shall
forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
(e) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the
Exercise Price pursuant to the provisions of this SECTION 7, the number of
Shares issuable upon the exercise of each Warrant shall be adjusted to the
nearest full share by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of Shares issuable upon
exercise of the Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
(f) ADJUSTMENT FOR RECLASSIFICATION, CONSOLIDATION, MERGER, SALE OR
CONVEYANCE. In the event of any reclassification or change of the outstanding
shares of Common Stock into different securities (other than a change in the
number of outstanding shares or a change in par value to no par value, or from
no par value to par value, or as a result of a subdivision or combination), or
in the event of any consolidation of the Company with, or merger of the Company
into, another corporation (other than a consolidation or merger in which the
Company is the surviving corporation and which does not result in any
reclassification or change of the outstanding shares of Common Stock into
different securities, except a change as a result of a subdivision or
combination of such shares or a change in par value, as aforesaid), or in the
case of a sale or conveyance to another corporation of all or substantially all
of the assets of the Company, the Holder shall thereafter have the right to
convert into and to purchase the kind and respective number of shares of stock
and other securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance as if the Holder were the owner of the
Shares underlying the Warrants immediately prior to any such events at a price
equal to the product of (x) the number of Shares issuable upon exercise of the
Warrants and (y) the Exercise Price, both as in effect immediately prior to the
record date for such reclassification, change, consolidation, merger, sale or
conveyance.
(g) NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No adjustment
of the Exercise Price shall be made:
(i) upon (A) the issuance of options or warrants to any employee,
executive, officer, director, agent, advisor or consultant pursuant to any
existing benefit, incentive, stock option or profit sharing plan of the
Company or (B) the issuance or sale by the Company of any shares of Common
Stock pursuant to the exercise of any such options or warrants; or
(ii) upon the issuance or sale by the Company of
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any shares of Common Stock pursuant to the exercise of any options,
warrants or the conversion of preferred stock previously issued and
outstanding or authorized on the initial issuance date of the Warrants
represented by this Certificate; or
(iii) if the amount of said adjustment shall be less than two
cents ($0.02) per Share; PROVIDED, HOWEVER, that 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 of and together with the
next adjustment which, together with any adjustment so carried
forward, shall amount to at least two cents ($0.02) per Share.
(h) DIVIDENDS AND OTHER DISTRIBUTION WITH RESPECT TO OUTSTANDING
SECURITIES. In the event that the Company shall at any time prior to the
exercise of all Warrants declare a dividend (other than a dividend consisting
solely of shares of Common Stock or preferred stock, or a cash dividend or
distribution payable out of current or retained earnings or a dividend
consisting solely of preferred stock paid only to preferred stockholders) or
otherwise distribute to its stockholders any monies, assets, property, rights,
evidences of indebtedness, securities (other than shares of Common Stock),
whether issued by the Company or by another person or entity, or any other thing
of value, the Holder of the unexercised Warrants shall thereafter be entitled,
in addition to the shares of Common Stock or other securities receivable upon
the exercise thereof, to receive, upon the exercise of such Warrants, the same
monies, property, assets, rights, evidences of indebtedness, securities or any
other thing of value that it would have been entitled to receive at the time of
such dividend or distribution. At the time of any such dividend or
distribution, the Company shall make appropriate reserves to ensure the timely
performance of the provisions of this PARAGRAPH (h).
(i) SUBSCRIPTION RIGHTS FOR SHARES OF COMMON STOCK OR OTHER
SECURITIES. If the Company shall at any time after the initial issuance date of
the Warrants represented by this Certificate and prior to the exercise or
expiration of all the Warrants issue any rights to subscribe for shares of
Common Stock or any other securities of the Company to all the stockholders of
the Company, the Holder of the unexercised Warrants shall be entitled, in
addition to the Shares receivable upon the exercise of the Warrants, to receive
such rights on a pro rata basis at the time such rights are distributed to the
other stockholders of the Company.
(j) STATEMENT ON WARRANTS. Irrespective of any adjustments in the
Exercise Price or the number or kind of shares purchasable upon the exercise of
the Warrants, the warrant certificates representing the Warrants theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the warrant certificate representing the
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Warrants initially issuable.
8. NOTICE OF CERTAIN CORPORATE ACTION.
In the event:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock payable (i) otherwise than exclusively in cash or (ii)
exclusively in cash in an amount that would require an Exercise Price adjustment
pursuant to paragraph (d) of Section 7; or
(b) the Company shall offer to all holders of its Common Stock any
additional shares of capital stock or securities convertible into or
exchangeable for shares of capital stock of the Company; or
(c) the Company shall authorize the granting to the holders of its
Common Stock of rights, warrants or options to subscribe for or purchase any
shares of capital stock of any class or of any other rights (excluding employee
stock options); or
(d) of any reclassification of the Common Stock of the Company (other
than a subdivision or combination of its outstanding shares of Common Stock), or
of any consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company is required, or of the sale or
transfer of all or substantially all of the assets of the Company; or
(e) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(f) the Company or Environmental shall commence a tender or exchange
offer for all or a portion of the Company's outstanding shares of Common Stock
(or shall amend any such tender or exchange offer);
then the Company shall cause to be mailed to Rauscher Pierce & Clark Limited,
the Warrant Agent and all registered holders of Warrants at their last addresses
as they shall appear in the records of the Warrant Agent at least 20 days prior
to the applicable record, effective or expiration date hereinafter specified, a
notice stating (i) the date on which a record is to be taken for the purpose of
such dividend, distribution or granting of rights, warrants or options, or, if a
record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, rights, warrants or
options are to be determined, or (ii) the date on which such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up
is expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their shares
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of Common Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up, or (iii) the date on which such tender offer
commenced, the date on which such tender offer is scheduled to expire unless
extended, the consideration offered and the other material terms thereof (or the
material terms of any amendment thereto).
9. REGISTRATION RIGHTS.
(a) PIGGYBACK REGISTRATION. If, at any time during the five (5)
years beginning on the initial issuance date of the Warrants represented by this
Certificate, the Company proposes to prepare and file any new registration
statement under the Securities Act covering the public sale of Common Stock of
the Company for cash, other than in connection with an employee benefit plan, a
dividend reinvestment plan or pursuant to a registration statement Form S-8 or
any successor form, (collectively, a "Registration Statement"), it will give
written notice by certified or registered mail, at least thirty (30) days prior
to the filing of each such Registration Statement, to the Holder of its
intention to do so. If the Holder notifies the Company within fifteen (15) days
after receipt of any such notice of such Holder's desire to include in such
proposed Registration Statement any shares of Common Stock (i) issued or
issuable to the Holder upon exercise of the Holder's Warrants, and (ii) that are
owned by the Holder (the "Registrable Shares") (which notice shall specify the
number of Registrable Shares owned by the Holder, the number intended to be
disposed of by the Holder, if any, and the intended method of disposition of
such Registrable Shares), the Company shall use reasonable efforts to include,
to the extent possible, in such Registration Statement the number of Registrable
Shares which the Company has been so requested to register by the Holder, at the
Company's sole cost and expense and at no cost or expense to the Holder, except
that the Holder shall pay (i) all underwriters', broker-dealers', placement
agents' and similar selling discounts, commissions and fees relating to the
Holder's Registrable Shares, (ii) all registration and filing fees imposed under
the Securities Act, by any stock exchange or under applicable state securities
or blue sky laws based on the Holder's Registrable Shares, (iii) all transfer,
franchise, capital stock and other taxes, if any, applicable to the Holder's
Registrable Shares, and (iv) any costs and expenses of legal counsel,
accountants or other advisors retained by the Holder (collectively, the
"Holder's Expenses"), all of which shall be paid by the Holder; PROVIDED, THAT:
(i) anything in this Section 9 to the contrary notwithstanding,
if the Company's securities so registered for sale are to be distributed in
an underwritten offering and the managing underwriter shall advise the
Company in writing that, in its opinion, the amount of securities to be
offered should be limited in order to assure a successful offering, the
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amount of Registrable Shares to be included in such Registration Statement
shall be so limited and shall be allocated among the persons selling such
securities in the following order of priority: (A) first to be registered
will be the securities the Company proposes to sell, (B) next to be
registered will be the securities subject to any demand or other piggyback
registration rights granted by the Company before the initial issuance date
of the Warrants, and (C) next to be registered will be the Registrable
Shares and any other shares of Common Stock subject to similar piggyback
registration rights granted by the Company as of the initial issuance date
of the Warrants in proportion, as nearly as practicable, to the number of
shares of Common Stock desired and eligible to be sold by each holder of
such shares of Common Stock; and
(ii) anything in this Section 9 to the contrary notwithstanding,
the Company shall not be required to include any of the Holder's
Registrable Shares in a registration statement if in the written opinion of
legal counsel to the Company the securities for which registration is
requested may be sold publicly without registration under the Securities
Act; and
(iii) if the securities or blue sky laws of any jurisdiction in
which the securities so registered are proposed to be offered would require
the Holder's payment of greater registration expenses than those otherwise
required by this Section 9 and if the Company shall determine, in good
faith, that the offering of such securities in such jurisdiction is
necessary for the successful consummation of the registered offering, then
the Holder shall either agree to pay the portion of the registration
expenses required by the securities or blue sky laws of such jurisdiction
to be paid by the Holder or withdraw his request for inclusion of his
Registrable Shares in such registration; and
(iv) notwithstanding the provisions of paragraph (a) of this
Section 9, the Company shall have the right at any time and for any reason
or for no reason after it shall have given written notice pursuant to this
paragraph (irrespective of whether a written request for inclusion of any
such securities shall have been made) to elect not to file any such
proposed Registration Statement, or to withdraw the same after the filing
but prior to the effective date thereof and, thereupon, shall be relieved
from its obligation to proceed with such registration.
If the Holder's Registrable Shares are included in the Registration
Statement, the Holder shall furnish the Company in writing with such appropriate
information in connection with the sale of such Shares, including, without
limitation, information
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about the Holder, the Registrable Shares, other securities of the Company owned
by the Holder, and the plan of distribution, as the Company shall reasonably
request or as shall be reasonably required in connection with any registration,
qualification or compliance referred to in this Agreement. In addition, if the
offering is underwritten, the Company shall have the exclusive right to select
the underwriter. The Holder shall execute and deliver all documents reasonably
requested by the underwriter and any other documents customary in similar
offerings, including, without limitation, underwriting agreements, custody
agreements, powers of attorney, indemnification agreements, and agreements
restricting other sales of securities.
The rights and obligations under paragraphs (a) and (b) of this Section 9
shall terminate at the earlier of (i) five (5) years after the initial issuance
date of the Warrants, or (ii) the date all of the Holder's Registrable Shares
have been transferred by the Holder, except for transfers in accordance with
paragraph (b) of Section 5 above.
(b) COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. The
Company covenants and agrees as follows:
(i) The Company shall pay all costs, fees and expenses in
connection with all Registration Statements filed pursuant to paragraph (a)
of Section 9 above including, without limitation, the Company's legal and
accounting fees, printing expenses, filing fees and other expenses, except
that the Holder shall pay all of the Holder's Expenses (as defined in
paragraph (a) of Section 9).
(ii) The Company will use its reasonable efforts to qualify or
register the Registrable Shares included in a Registration Statement for
offering and sale under the securities or blue sky laws of such states of
the United States as are reasonably requested by the Holder; PROVIDED,
HOWEVER, that the Company shall not be required to (i) qualify or register
the Registrable Shares in any jurisdiction in which the Company would be
required to qualify as a broker or dealer in securities under the
securities or blue sky laws of such jurisdictions, (ii) qualify generally
to do business as a foreign corporation in any jurisdiction wherein it is
not already so qualified, (iii) subject itself to taxation in any such
jurisdiction, or (iv) consent to general service of process in any such
jurisdiction.
(c) INDEMNIFICATION.
(i) To the extent permitted by law, the Company shall indemnify
and hold harmless each Holder of the Registrable Shares to be sold pursuant
to any Registration Statement (such Holder being hereinafter referred to as
a
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"Distributing Holder"), each underwriter (an "Underwriter") and each
person, if any, who controls such Distributing Holder or Underwriter within
the meaning of Section 15 of the Securities Act and each director of such
Distributing Holder and Underwriter, against all loss, claim, damage,
expense or liability (or actions in respect thereof) to which any of them
may become subject under the Securities Act or otherwise, arising out of or
based upon any untrue statement or alleged untrue statement of any material
fact contained in any such Registration Statement or any preliminary
prospectus or final prospectus constituting part thereof or any amendments
or supplements thereto, or arising out of or based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and will
reimburse the Distributing Holder and Underwriter and each such controlling
person and director of the Distributing Holder and Underwriter for any
legal or other expenses reasonably incurred by any of them in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred (including reasonable attorneys'
fees); PROVIDED, HOWEVER, that (A) the Company will not be liable in any
such case to the extent that any such loss, claim, damage, expense or
liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance
upon and in conformity with written information furnished to the Company
by, or on behalf of, such Distributing Holder, any other Distributing
Holder or any such Underwriter specifically for use therein, and (B) such
indemnity shall not inure to the benefit of such Distributing Holder or
Underwriter (or such controlling person or director of the Distributing
Holder or Underwriter) if any such loss, claim, damage, expense or
liability arises out of or is based upon (i) any Distributing Holder's or
the Underwriter's failure to deliver timely a copy of the final prospectus
(or the final prospectus as then amended, revised or supplemented), or (ii)
any such untrue statement or omission of a material fact that was corrected
in the final prospectus (or the most recent amendment, revision or
supplement thereto) and any Distributing Holder or the Underwriter failed
to deliver it in a timely manner.
(ii)To the extent permitted by law, each Distributing Holder
shall, severally and jointly, indemnify and hold harmless the Company, its
directors, officers, employees and agents, each Underwriter and each
person, if any, who controls any of the foregoing within the meaning of
Section 15 of the Securities Act, against all loss, claim, damage, expense
or liability (or actions in respect thereof) to which any of them may
become subject under the Securities Act or otherwise, arising out of or
based upon any untrue
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statement or alleged untrue statement of any material fact contained in any
such Registration Statement or any preliminary prospectus or final
prospectus constituting part thereof or any amendments or supplements
thereto, or arising out of or based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading, and will reimburse the Company and each
such director, officer, employee, agent, Underwriter or controlling person
for any legal or other expenses reasonably incurred by any of them in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred (including reasonable
attorneys' fees) in each case to the extent, but only to the extent, that
(A) such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by, or on behalf of, such Distributing
Holder or any other Distributing Holder specifically for use therein, or
(B) such loss, claim, damage, expense or liability arises out of or is
based upon (i) any Distributing Holder's failure to deliver in a timely
manner a copy of the final prospectus (or the final prospectus as then
amended, revised or supplemented), or (ii) any such untrue statement or
omission of a material fact that was corrected in the final prospectus (or
the most recent amendment, revision or supplement thereto) and any
Distributing Holder failed to deliver it in a timely manner.
Notwithstanding the foregoing, such indemnity shall not inure to the
benefit of such Underwriter (or such controlling person of the Underwriter)
if any such loss, claim, damage, expense or liability arises out of or is
based upon (i) the Underwriter's failure to deliver in a timely manner a
copy of the final prospectus (or the final prospectus as then amended,
revised or supplemented), or (ii) any such untrue statement or omission of
a material fact that was corrected in the final prospectus (or, the most
recent amendment, revision or supplement thereto) and the Underwriter
failed to deliver it in a timely manner.
(iii) Promptly after receipt by an indemnified party under this
paragraph 9(c) of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against
the indemnifying party under this paragraph 9(c), notify the indemnifying
party in writing of the commencement thereof; PROVIDED, HOWEVER, that the
omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability that it may have to any indemnified
party otherwise than under this paragraph 9(c) except to the extent such
indemnifying party is materially prejudiced by such lack of notice. In
case any such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof,
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the indemnifying party will be entitled to participate therein and, to the
extent that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified
party, to assume the defense thereof, with counsel reasonably satisfactory
to such indemnified party, and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party under
this paragraph 9(c) for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation requested by the indemnifying party or
required by law. If the indemnifying party does not elect to assume the
defense of any such claim, action or proceeding, the indemnifying party
shall not be liable for any settlement thereof which is effected without
its prior written consent. No indemnifying party shall, without the prior
written consent of the indemnified party, agree to the settlement of any
such claim, action or proceeding if the effect thereof would be to find the
indemnified party has violated the Securities Act, the United States
Securities Exchange Act of 1934, as amended, or any state securities or
blue sky laws.
(iv) If recovery is not available under the foregoing
indemnification provisions of this paragraph 9(c) for any reason other than
as specified therein, the parties entitled to indemnification by the terms
thereof shall be entitled to contribution toward the amount paid or payable
by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subparagraph 9(c)(i) or 9(c)(ii) above, except
that no person found to be liable for fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not also found to be liable for such
fraudulent misrepresentation. In determining the amount of contribution to
which the respective parties are entitled, there shall be considered the
relative benefits received by each party from the offering of the
securities, the parties' relative knowledge and access to information
concerning the matter with respect to which the claim was asserted, the
opportunity to correct and prevent any untrue statement or omission, and
any other equitable considerations appropriate under the circumstances,
including, without limitation, the relative fault of the parties. The
amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this
subparagraph 9(c)(iv) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim that is the subject of this
subparagraph 9(c)(iv) (including reasonable attorneys' fees).
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10. RESERVATION AND LISTING OF SECURITIES.
(a) The Company covenants and agrees that at all times during the
period the Warrants are exercisable, the Company shall reserve and keep
available, free from preemptive rights, out of its authorized and unissued
shares of Common Stock or out of its authorized and issued shares of Common
Stock held in its treasury, solely for the purpose of issuance upon exercise of
the Warrants, such number of Shares as shall be issuable upon exercise of the
Warrants.
(b) The Company covenants and agrees that, upon exercise of the
Warrants in accordance with their terms and payment of the Exercise Price
therefor, all Shares issued or sold upon such exercise shall not be subject to
the preemptive rights of any stockholder and when issued and delivered in
accordance with the terms of the Warrants shall be duly and validly issued,
fully paid and non-assessable, and the Holder shall receive good and valid title
to such Shares free and clear from any adverse claim (as defined in the
applicable Uniform Commercial Code), except such as have been created by the
Holder.
(c) As long as the Warrants shall be outstanding, the Company shall
use its reasonable efforts to cause all Shares issuable upon exercise of the
Warrants to be quoted by or listed on any national securities exchange or other
securities listing service on which the shares of Common Stock of the Company
are then listed.
11. PROVISIONS IN CASE OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE
OF ASSETS. In the event that the Company shall be a party to any transaction
(including without limitation any (i) recapitalization or reclassification of
the Common Stock (other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination of the Common Stock), (ii) any consolidation of the Company with, or
merger of the Company into, any other person, any merger of another person into
the Company (other than a merger which does not result in a reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Company), (iii) any sale or transfer of all or substantially all of the
assets of the Company, or (iv) any compulsory share exchange) pursuant to which
the Common Stock is converted into the right to receive other securities, cash
or other property, then lawful provision shall be made as part of the terms of
such transaction whereby the holder of this Warrant shall have the right
thereafter to receive upon exercise of this Warrant only the kind of common
stock receivable upon such transaction by a holder of Common Stock (at an
adjusted Exercise Price equal to (a) the Exercise Price determined pursuant to
Section 7 as though all such securities, cash or property (other than common
stock) had been distributed in a dividend covered by paragraph (e) of Section 7
with an "ex" date
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on the date of such transaction divided by (b) the number of shares (or fraction
thereof) of common stock receivable upon such transaction in respect of each
share of Common Stock) and thereafter this Warrant shall represent a Warrant of
the person formed by such consolidation or resulting from such merger or which
acquired such assets or which acquired the Company's shares, as the case may be,
and entitle the registered holder to purchase the common stock of such person at
an exercixe price and on such other terms as are provided herein, subject to
this Agreement. Such amendment shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in
Section 7 hereof. The above provisions of this Section 11 shall similarly apply
to successive transactions of the foregoing type.
12. REDEMPTION.
At the option of the Company, if for any period of 30 consecutive days the
Market Price for each Trading Day during such period shall have been at least
200% of the Exercise Price, the Company, by notice to all of the registered
holders of the Warrants may, at any time after May 29, 1997, redeem all the
Warrants at a price of $.05 per Warrant (the "Redemption Price"). In such case,
the Company shall, within five (5) business days after such 30-day period,
deliver to the registered holders a notice of redemption and provide notice by
publication as provided in the paragraph below, each of which notices will set
forth a date by which registered holders of Notes are required to surrender such
Warrants for redemption. After such date, the rights of the holder to exercise
Warrants will terminate and the only rights of a registered holder of a Warrant
will be to receive the Redemption price.
Any notice which is given in the manner herein provided shall be
conclusively presumed to be given and any defect in such notice to the
registered holder of any Warrant designated for required redemption shall not
affect the validity of the proceedings for the required redemption of any other
Warrant.
13. SURVIVAL. All agreements, covenants, representations and warranties
herein shall survive the execution and delivery of this Certificate and any
investigation at any time made by or on behalf of any party hereto and the
exercise, sale and purchase of the Warrants and the Shares (and any other
securities or properties) issuable on exercise hereof.
14. REMEDIES. The Company agrees that the remedies at law of the Holder,
in the event of any default or threatened default by the Company in the
performance of or compliance with any of the terms hereof, may not be adequate
and such terms may, in addition to and not in lieu of any other remedy, be
specifically enforced by a decree of specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof
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<PAGE>
or otherwise.
15. REGISTERED HOLDER. The Company may deem and treat the registered
Holder hereof as the absolute owner of this Certificate and the Warrants
represented hereby (notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise of the Warrants, of any
notice, and of any distribution to the Holder hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
16. NOTICES. All notices and other communications from the Company to the
Holder of the Warrants represented by this Certificate shall be in writing and
shall be deemed to have been duly given if and when personally delivered, two
(2) business days after sent by overnight courier or ten (10) days after mailed
by certified, registered or international recorded mail, postage prepaid and
return receipt requested, or when transmitted by telefax, telex or telegraph and
confirmed by sending a similar mailed writing, if to the Holder, to the last
address of such Holder as it shall appear on the books of the Warrant Agent
maintained at the Warrant Agent's principal office or to such other address as
the Holder may have specified to the Warrant Agent in writing.
17. HEADINGS. The headings contained herein are for convenience of
reference only and are not part of this Certificate.
18. GOVERNING LAW. This Certificate shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by, and construed in accordance with, the laws of said state, without regard to
the conflict of laws provisions thereof.
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly
executed by its duly authorized officers under its corporate seal.
Dated: May 31, 1996 FIBERCHEM, INC.
By: ______________________________
Geoffrey F. Hewitt
President and Chief Executive
Officer
Attest:
______________________________
Melvin W. Pelley
Secretary
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<PAGE>
FIBERCHEM, INC.
FORM OF ELECTION TO PURCHASE
(To be executed by the registered Holder
if such Holder desires to exercise Warrants)
The undersigned registered Holder hereby irrevocably elects to exercise the
right of purchase represented by this Warrant Certificate for, and to purchase,
_____________________ Shares hereunder, and herewith tenders in payment for
such Shares cash, a wire transfer, a certified check or a banker's draft payable
to the order of FiberChem, Inc. in the amount of _______________________ , all
in accordance with the terms hereof. The undersigned requests that a share
certificate for such Shares be registered in the name of and delivered to:
____________________________________________________________
(Please Print Name and Address)
____________________________________________________________
____________________________________________________________
and, if said number of Shares shall not be all the Shares purchasable hereunder,
that a new Warrant Certificate for the balance remaining of the Shares
purchasable hereunder be registered in the name of the undersigned Warrant
Holder or his Assignee as below indicated and delivered to the address stated
below.
DATED: ________________________________________________________
Name of Warrant Holder: ________________________________________
(Please Print)
Address: _______________________________________________________
________________________________________________________________
Signature: _____________________________________________________
Note: The above signature must correspond in all respects with the name of the
Holder as specified on the face of this Warrant Certificate, without alteration
or enlargement or any change whatsoever, unless the Warrants represented by this
Warrant Certificate have been assigned.
IN CONNECTION WITH THIS ELECTION TO PURCHASE, THE WARRANT HOLDER MUST DELIVER TO
THE COMPANY (i) A WRITTEN CERTIFICATION THAT SUCH HOLDER IS NOT A "U.S. PERSON"
(AS DEFINED IN REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT")), AND THAT THE WARRANTS ARE NOT BEING EXERCISED
ON BEHALF OF, OR FOR THE ACCOUNT OR BENEFIT OF, A "U.S. PERSON" (AS DEFINED IN
REGULATION S UNDER THE SECURITIES ACT), OR (ii) A WRITTEN OPINION OF UNITED
STATES LEGAL COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT THE WARRANTS AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THE WARRANTS HAVE BEEN REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES OR BLUE SKY LAWS OR ARE EXEMPT FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES OR
BLUE SKY LAWS.
FIBERCHEM, INC.
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<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered Holder if such Holder
desires to transfer the Warrant Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers to:
____________________________________________________________
(Please Print Name and Address of Transferee)
____________________________________________________________
____________________________________________________________
Warrants to purchase up to ___________ Shares represented by this Warrant
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ___________________________, Attorney,
to transfer such Warrants on the books of the Company, with full power of
substitution in the premises. The undersigned requests that if said number of
Shares shall not be all of the Shares purchaseable under this Warrant
Certificate that a new Warrant Certificate for the balance remaining of the
Shares purchaseable under this Warrant Certificate be registered in the name of
the undersigned Warrant Holder and delivered to the registered address of said
Warrant Holder.
DATED:
Name of registered Holder: _________________________________
Address: _______________________________
_______________________________
_______________________________
Signature of
registered Holder: _________________________________
Note: The above signature must correspond in all respects with the name of
the Holder as specified on the face of this Warrant Certificate,
without alteration or enlargement or any change whatsoever. The above
signature of the registered Holder must be guaranteed by a commercial
bank or trust company, by a broker or dealer which is a member of the
National Association of Securities Dealers, Inc. or by a member of a
national securities exchange, The Securities and Futures Authority
Limited in the United Kingdom or The International Stock Exchange in
London, England. Notarized or witnessed signatures are not acceptable
as guaranteed signatures.
Signature Guaranteed:
_____________________________
Authorized Officer
_____________________________
Name of Institution
- 22 -
<PAGE>
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON STOCK
ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
OTHER FEDERAL OR STATE SECURITIES OR BLUE SKY LAWS, AND HAVE BEEN ISSUED IN A
MANNER INTENDED TO COMPLY WITH REGULATION S UNDER THE ACT. PRIOR TO JULY
11, 1996, NO OFFER, SALE, TRANSFER, PLEDGE OR OTHER DISPOSITION
(COLLECTIVELY, A "DISPOSAL") OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE
MAY BE MADE (A) IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
ANY "U.S. PERSON" (AS DEFINED IN REGULATION S) UNLESS (I) REGISTERED UNDER
THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES OR BLUE SKY LAWS OR
(II) FIBERCHEM, INC. (THE "COMPANY") RECEIVES A WRITTEN OPINION OF UNITED
STATES LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO IT TO THE EFFECT
THAT SUCH DISPOSAL IS EXEMPT FROM SUCH REGISTRATION REQUIREMENTS OR (B)
OUTSIDE THE UNITED STATES TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY PERSON
WHO IS NOT A "U.S. PERSON" UNLESS PRIOR TO SUCH DISPOSAL (I) THE BENEFICIAL
OWNER OF SUCH SHARES AND THE PROPOSED TRANSFEREE SUBMIT CERTIFICATIONS TO THE
COMPANY (FORMS OF WHICH ARE AVAILABLE FROM THE COMPANY AT ITS PRINCIPAL
EXECUTIVE OFFICES) AND (II) THE COMPANY RECEIVES THE LEGAL OPINION DESCRIBED
IN (A)(II) ABOVE.
No.W2-RP-1
WARRANTS TO PURCHASE
COMMON STOCK OF FIBERCHEM, INC.
Initial Issuance on May 31, 1996
Void after 5:00 p.m. New York Time, May 30, 2001
THIS CERTIFIES THAT, for value received, RAUSCHER PIERCE & CLARK LIMITED
("RPC Ltd.") or registered assigns (the "Holder") is the registered holder of
warrants (the "Warrants") to purchase from FiberChem, Inc., a Delaware
corporation (the "Company"), at any time or from time to time beginning on
November 31, 1996 and until 5:00 p.m., New York time, on May 30, 2001 (the
"Expiration Date"), subject to the conditions set forth herein, at the initial
exercise price of $.90 per share (the "Initial Exercise Price"), subject to
adjustment as set forth herein (the "Exercise Price"), up to an aggregate of
three hundred twenty-nine thousand seven hundred (329,700) fully paid and non-
assessable common shares, par value $0.0001 per share (the "Common Stock"), of
the Company (the "Shares") upon surrender of this certificate (the
"Certificate") and payment of the Exercise Price multiplied by the number of
Shares being purchased at the principal office of the Company presently located
at 1181 Grier Drive, Suite B, Las Vegas, Nevada 89119, United States of America.
<PAGE>
1. EXERCISE OF WARRANTS.
(a) The exercise of any Warrants represented by this Certificate is
subject to the conditions set forth below in PARAGRAPH 4, "Compliance with U.S.
Securities Laws."
(b) Subject to compliance with all of the conditions set forth
herein, the Holder shall have the right to purchase from the Company the number
of Shares which the Holder may at the time be entitled to purchase pursuant
hereto, upon surrender of this Certificate to the Company at its principal
office, together with the form of election to purchase attached hereto duly
completed and signed, and upon payment to the Company of the Exercise Price
multiplied by the number of Shares in respect of which Warrants are then
exercised.
(c) No Warrant may be exercised after 5:00 p.m., New York time, on
the Expiration Date, after which time all Warrants evidenced hereby shall be
void, unless exercised prior thereto.
(d) Payment of the Exercise Price multiplied by the number of Shares
in respect of which Warrants are exercised shall be made in United States
dollars, in cash, by wire transfer of immediately available funds or by
certified check or banker's draft payable to the order of the Company, or any
combination of the foregoing.
(e) The Warrants represented by this Certificate are exercisable at
the option of the Holder, in whole or in part, but not as to fractional Shares.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the Holder a new certificate
of like tenor representing the number of unexercised Warrants.
(f) Subject to compliance with all of the conditions set forth
herein, upon surrender of this Certificate to the Company at its principal
office, together with the form of election to purchase attached hereto duly
completed and signed, and upon payment of the Exercise Price multiplied by the
number of Shares in respect of which Warrants are then exercised, the Company
shall cause to be delivered promptly to or upon the written order of the Holder
and in such name or names as the Holder may designate, a share certificate or
share certificates for the number of whole Shares purchased upon the exercise of
the Warrants. Such share certificate or share certificates representing the
Shares shall be free of any restrictive legend. The Company shall ensure that
no "stop transfer" or similar instruction or order with respect to the Shares
purchased upon exercise of the Warrants shall be in effect at Corporate Stock
Transfer, Inc. or any successor transfer agent for the Common Stock of the
Company (the "Transfer Agent").
(g) In the event that the Holder exercises part or all of the
Warrants and the Company does not have
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<PAGE>
sufficient authorized but unissued Common Stock on that date to allow for
exercise of all of the Warrants then exercised, the Company shall (i) issue such
shares of Common Stock as it has available to the Holder of the Warrants so
exercised, and (ii) with respect to any remaining Warrants then exercised and
for which shares of Common Stock are not available for issuance, make a cash
payment to the Holder in an amount equal to the middle closing price between the
bid and offer closing prices of the Common Stock on the National Association of
Securities Dealers Automated Quotation System - The SmallCap Market ("Nasdaq")
or any other national securities exchange or other securities listing service on
which the shares of Common Stock of the Company are then listed (a "Securities
Exchange") on the trading day immediately prior to the date on which the notice
of election to exercise was given, or if the Common Stock is not then listed on
Nasdaq or a Securities Exchange the fair market value as determined by the Board
of Directors of the Company on such date, less the aggregate exercise price of
the Placement Agent Warrants exercised, in lieu of issuing such shares of Common
Stock.
2. ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not be
required to issue share certificates representing fractions of Shares and shall
not be required to issue scrip or pay cash in lieu of fractional interests. All
fractional interests shall be eliminated by rounding any fraction to the nearest
whole number of Shares.
3. PAYMENT OF TAXES. The Company will pay all documentary stamp taxes,
if any, attributable to the issuance and delivery of the Shares upon the
exercise of the Warrants; PROVIDED, HOWEVER, that the Company shall not be
required to pay any taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any Warrant or any Shares in any name
other than that of the Holder, which transfer taxes shall be paid by the Holder.
4. COMPLIANCE WITH U.S. SECURITIES LAWS. The Warrants and the Shares
issuable upon the exercise of the Warrants have not been registered under the
United States Securities Act of 1933, as amended (the "Securities Act"), or
under any other federal or state securities or blue sky laws, and the Warrants
may not be exercised within the United States or by, or on behalf of, any "U.S.
person" (as defined in Regulation S under the Securities Act) unless the
Warrants and the Shares have been registered under the Securities Act and under
any applicable state securities or blue sky laws or exemptions from the
registration requirements under the Securities Act and any applicable state
securities or blue sky laws are available. Accordingly, (i) the Warrants may
not be exercised within the United States and any Shares issuable upon the
exercise thereof may not be delivered within the United States except in
circumstances constituting an "offshore transaction" (as defined in Regulation S
under the Securities Act) and otherwise complying with Regulation S, or unless
such Shares have been registered under the Securities Act and any applicable
state securities or blue sky laws or exemptions from the registration
requirements under the Securities Act and any applicable state securities or
- 3 -
<PAGE>
blue sky laws are available, and (ii) it is a condition to the exercise of the
Warrants that the exercising Holder must deliver to the Company (A) a written
certification that such Holder is not a "U.S. person" (as defined in Regulation
S under the Securities Act) and that the Warrants are not being exercised on
behalf of, or for the account or benefit of, a "U.S. person" (as defined in
Regulation S under the Securities Act), or (B) a written opinion of United
States legal counsel, in form and substance satisfactory to the Company, to the
effect that the Warrants and the Shares have been registered under the
Securities Act and any applicable state securities or blue sky laws or are
exempt from the registration requirements under the Securities Act and any
applicable state securities or blue sky laws.
5. TRANSFER OF WARRANTS.
(a) The Warrants shall be transferable only on the books of the
Company maintained at the Company's principal office upon delivery of this
Certificate with the form of assignment attached hereto duly completed and
signed by the Holder or by its duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment or authority to
transfer. The Company may, in its discretion, require, as a condition to any
transfer of Warrants, a signature guarantee, which may be provided by a
commercial bank or trust company, by a broker or dealer which is a member of the
National Association of Securities Dealers, Inc., or by a member of a national
securities exchange, The Securities and Futures Authority Limited in the United
Kingdom, or The International Stock Exchange in London, England. Upon any
registration of transfer, the Company shall deliver a new warrant certificate or
warrant certificates of like tenor and evidencing in the aggregate a like number
of Warrants to the person entitled thereto in exchange for this Certificate,
subject to the limitations provided herein, without any charge except for any
tax or other governmental charge imposed in connection therewith.
(b) Subject to the restriction specified on the first page of this
Certificate, the Warrants may be transferred only to: (i) Rauscher Pierce &
Clark Inc. ("RPC Inc."); (ii) any corporation, partnership, joint venture or
other entity which is a successor by merger or consolidation to RPC Inc. or RPC
Ltd.; (iii) any purchaser of substantially all of the assets of RPC Inc. or RPC
Ltd.; (iv) any officer, director, employee or agent of RPC Inc. or RPC Ltd.;
(v) any of the stockholders of RPC Inc. or RPC Ltd., (vi) any of the
stockholders or partners of their respective transferees in the event of the
liquidation, dissolution or winding-up of RPC Inc. or RPC Ltd.; or (vii) the
respective nominees of any of the foregoing parties.
(c) Notwithstanding anything in this Certificate to the contrary,
neither any of the Warrants nor any of the Shares issuable upon exercise of any
of the Warrants shall
- 4 -
<PAGE>
be transferable, except upon compliance by the Holder with any applicable
provisions of the Securities Act and any applicable state securities or blue sky
laws.
6. EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES; LOSS OR MUTILATION
OF WARRANT CERTIFICATES.
(a) This Certificate is exchangeable without expense, upon the
surrender hereof by the Holder at the principal office of the Company, for a new
warrant certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Shares in such denominations as shall be
designated by the Holder at the time of such surrender.
(b) Upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Certificate and, in
case of such loss, theft or destruction, of indemnity and security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of this Certificate, if
mutilated, the Company will make and deliver a new warrant certificate of like
tenor, in lieu thereof.
7. INITIAL EXERCISE PRICE; ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF
SHARES.
(a) INITIAL EXERCISE PRICE. The Warrants are exercisable at the
Initial Exercise Price per Share, subject to adjustment from time to time as
provided herein.
(b) ADJUSTMENT ON FIRST ANNIVERSARY OF ISSUANCE; COMPUTATION OF
ADJUSTED PRICE. In the event that the average closing bid price during the
thirty business days immediately prior to the first anniversary of the date of
issuance of the Warrants is less than the Exercise Price then the Exercise Price
shall be reduced to a price equal to ten percent (10%) less than the average
closing bid price for such thirty business day period.
(c) OTHER ADJUSTMENTS; COMPUTATION OF ADJUSTED PRICE. Subject to the
exceptions referred to in PARAGRAPH (h) below, in the event that the Company
shall at any time after the initial issuance date of the Warrants represented by
this Certificate issue or sell any shares of Common Stock (other than the
issuance or sale of Common Stock referred to in PARAGRAPH (h) below), including
shares of Common Stock held in the Company's treasury, for a consideration per
share less than the Exercise Price in effect immediately prior to the issuance
or sale of such shares, or without consideration, then forthwith upon such
issuance or sale, the Exercise Price shall (until another such issuance or sale)
be reduced to a price (calculated to the nearest full cent) equal to the
quotient derived by dividing (i) an amount equal to the sum of (A) the product
of (x) the total number of shares of Common Stock outstanding immediately prior
to such issuance or sale, multiplied by (y) the Exercise Price
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<PAGE>
in effect immediately prior to such issuance or sale, plus, (B) the aggregate of
the amount of all consideration, if any, received by the Company upon such
issuance or sale, by (ii) the total number of shares of Common Stock outstanding
immediately after such issuance or sale; PROVIDED, HOWEVER, that in no event
shall the Exercise Price be adjusted pursuant to this computation to an amount
in excess of the Exercise Price in effect immediately prior to such computation,
except in the case of readjustments provided for in PARAGRAPH (d) below or a
combination of outstanding shares of Common Stock provided for in PARAGRAPH (E)
below.
For the purposes of any computation to be made in accordance with this
PARAGRAPH (c), the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common Stock for a
consideration part or all of which shall be cash, the amount of the cash
consideration therefor shall be deemed to be the amount of cash received by
the Company for such shares (or, if shares of Common Stock are offered by
the Company for subscription, the subscription price, or, if such shares of
Common Stock shall be sold to underwriters or dealers for public offering
without a subscription offering, the initial public offering price) before
deducting therefrom any compensation paid or discount allowed in the sale,
underwriting or purchase thereof by underwriters or dealers or others
performing similar services, or any expenses incurred in connection
therewith.
(ii) In case of the issuance or sale (otherwise than as a dividend or
other distribution on any stock of the Company, or on the exercise of
options, rights or warrants or on the conversion or exchange of convertible
or exchangeable securities) of shares of Common Stock for a consideration
part or all of which shall be other than cash, the amount of the
consideration therefor other than cash shall be deemed to be the value of
such consideration as determined in good faith by the Board of Directors of
the Company.
(iii) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the day following the
record date for the determination of stockholders entitled to receive such
dividend or other distribution and shall be deemed to have been issued
without consideration.
(iv) The reclassification of securities of the Company (other than
shares of Common Stock into securities including shares of Common Stock)
shall
- 6 -
<PAGE>
be deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on
the date fixed for the determination of security holders entitled to
receive such shares, and the value of the consideration allocable to such
shares of Common Stock shall be determined as provided in SUBPARAGRAPH (ii)
above.
(v) The number of shares of Common Stock at any one time outstanding
shall include the aggregate number of shares issued or issuable (subject to
readjustment upon the actual issuance thereof) upon the exercise of
options, rights, warrants and upon the conversion or exchange of
convertible or exchangeable securities.
(d) OPTIONS, RIGHTS, WARRANTS AND CONVERTIBLE AND EXCHANGEABLE
SECURITIES. Except in the case of the Company issuing rights to subscribe for
shares of Common Stock distributed to all the shareholders of the Company and
Holders of Warrants pursuant to PARAGRAPH (i), in the event that the Company
shall at any time after the initial issuance date of the Warrants represented by
this Certificate issue any options, rights or warrants to subscribe for shares
of Common Stock, or issue any securities convertible into or exchangeable for
shares of Common Stock (other than the issuance or exercise of options, rights,
warrants or preferred stock referred to in PARAGRAPH (h) below), (i) for a
consideration per share less than the Exercise Price in effect immediately prior
to the issuance of such options, rights, or warrants, or such convertible or
exchangeable securities, or (ii) without consideration, the Exercise Price in
effect immediately prior to the issuance of such options, rights or warrants, or
such convertible or exchangeable securities, as the case may be, shall be
reduced to a price determined by making a computation in accordance with the
provisions of PARAGRAPH (c) above; PROVIDED, HOWEVER, that:
(i) The aggregate maximum number of shares of Common Stock
issuable under such options, rights or warrants shall be deemed to be
issued and outstanding at the time such options, rights or warrants are
issued, and for a consideration equal to the minimum purchase price per
share of Common Stock provided for in such options, rights or warrants at
the time of issuance, plus the consideration (determined in the same manner
as consideration received on the issue or sale of shares of Common Stock),
if any, received by the Company for such options, rights or warrants, and
if no minimum price is provided in such options, rights or warrants, then
the consideration shall be equal to zero; PROVIDED, HOWEVER, that upon the
expiration or other termination of such options, rights or warrants, if any
thereof shall not have been exercised, the number of shares of Common
- 7 -
<PAGE>
Stock deemed to be issued and outstanding pursuant to this SUBPARAGRAPH (i)
(and for the purposes of SUB-PARAGRAPH (v) OF PARAGRAPH (c) above) shall be
reduced by such number of shares of Common Stock as to which options,
warrants and/or rights shall have expired or terminated unexercised, and
such number of shares of Common Stock shall no longer be deemed to be
issued and outstanding, and the Exercise Price then in effect shall
forthwith be readjusted and thereafter be the price which it would have
been had adjustment been made on the basis of the issuance only of shares
of Common Stock actually issued or issuable upon the exercise of those
options, rights or warrants as to which the exercise rights shall not have
expired or terminated unexercised.
(ii) The aggregate maximum number of shares of Common Stock
issuable upon conversion or exchange of any convertible or exchangeable
securities shall be deemed to be issued and outstanding at the time of
issuance of such securities, and for a consideration equal to the
consideration (determined in the same manner as consideration received on
the issue or sale of shares of Common Stock) received by the Company for
such securities, plus the minimum consideration, if any, receivable by the
Company upon the conversion or exchange thereof; PROVIDED, HOWEVER, that
upon the termination of the right to convert or exchange such convertible
or exchangeable securities (whether by reason of redemption or otherwise),
the number of shares of Common Stock deemed to be issued and outstanding
pursuant to this SUBPARAGRAPH (ii) (and for the purpose of this
SUBPARAGRAPH (v) OF PARAGRAPH (c) above) shall be reduced by such number of
shares of Common Stock as to which the conversion or exchange rights shall
have expired or terminated unexercised, and such number of shares shall no
longer be deemed to be issued and outstanding and the Exercise Price then
in effect shall forthwith be readjusted and thereafter be the price which
it would have been had adjustment been made on the basis of the issuance
only of the shares of Common Stock actually issued or issuable upon the
conversion or exchange of those convertible or exchangeable securities as
to which the conversion or exchange rights shall not have expired or
terminated unexercised.
(iii) If any change shall occur in the price per share provided
for in any of the options, rights or warrants referred to in SUBPARAGRAPH
(i) above, or in the price per share at which the securities referred to in
SUBPARAGRAPH (ii) above
- 8 -
<PAGE>
are convertible or exchangeable, such options, rights or warrants or
conversion or exchange rights, as the case may be, shall be deemed to have
expired or terminated on the date when such price change became effective
in respect of shares not theretofore issued pursuant to the exercise or
conversion or exchange thereof, and the Company shall be deemed to have
issued upon such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or the
conversion or exchange of such convertible or exchangeable securities.
(iv) When an adjustment has been made in the Exercise Price
pursuant to this PARAGRAPH (d) in respect of the issuance of any options,
rights or warrants to subscribe for shares of Common Stock or the issuance
of any securities convertible into or exchangeable for shares of Common
Stock, no additional adjustment in the Exercise Price shall be made
pursuant to PARAGRAPH 7(c) above upon the issuance of shares of Common
Stock upon the exercise of such options, rights or warrants or upon the
conversion or exchange of such securities.
(e) SUBDIVISION AND COMBINATION. In the event that the Company shall
at any time after the initial issuance date of the Warrants and before the
exercise or expiration of all the Warrants subdivide or combine the outstanding
shares of Common Stock or declare a dividend consisting solely of shares of
Common Stock, the Exercise Price shall forthwith be proportionately decreased in
the case of subdivision or increased in the case of combination.
(f) ADJUSTMENT IN NUMBER OF SHARES. Upon each adjustment of the
Exercise Price pursuant to the provisions of this PARAGRAPH 7, the number of
Shares issuable upon the exercise of each Warrant shall be adjusted to the
nearest full share by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of Shares issuable upon
exercise of the Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
(g) ADJUSTMENT FOR RECLASSIFICATION, CONSOLIDATION, MERGER, SALE OR
CONVEYANCE. In the event of any reclassification or change of the outstanding
shares of Common Stock into different securities (other than a change in the
number of outstanding shares or a change in par value to no par value, or from
no par value to par value, or as a result of a subdivision or combination), or
in the event of any consolidation of the Company with, or merger of the Company
into, another corporation (other than a consolidation or merger in which the
Company is the surviving corporation and which does not result
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<PAGE>
in any reclassification or change of the outstanding shares of Common Stock into
different securities, except a change as a result of a subdivision or
combination of such shares or a change in par value, as aforesaid), or in the
case of a sale or conveyance to another corporation of all or substantially all
of the assets of the Company, or in the event of a statutory share exchange
pursuant to which outstanding shares of Common Stock are exchanged for different
securities, after the initial issuance date of the Warrants and before the
exercise or expiration of all of the Warrants, the Holder shall thereafter have
the right to convert into and to purchase the kind and respective number of
shares of stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, statutory share exchange, sale
or conveyance as if the Holder were the owner of the Shares underlying the
Warrants immediately prior to any such events at a price equal to the product of
(x) the number of Shares issuable upon exercise of the Warrants and (y) the
Exercise Price, both as in effect immediately prior to the record date for such
reclassification, change, consolidation, merger, statutory share exchange, sale
or conveyance.
(h) NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No adjustment
of the Exercise Price shall be made:
(i) upon (A) the issuance of options or warrants to any employee,
executive, officer, director, agent, advisor or consultant pursuant to any
existing benefit, incentive, stock option or profit sharing plan of the
Company or (B) the issuance or sale by the Company of any shares of Common
Stock pursuant to the exercise of any such options or warrants; or
(ii) upon the issuance or sale by the Company of any shares of
Common Stock pursuant to the exercise of any options, warrants or the
conversion of preferred stock previously issued and outstanding or
authorized on the initial issuance date of the Warrants represented by this
Certificate; or
(iii)if the amount of said adjustment shall be less than two
cents ($0.02) per Share; PROVIDED, HOWEVER, that 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 of and together with the next
adjustment which, together with any adjustment so carried forward, shall
amount to at least two cents ($0.02) per Share.
(i) DIVIDENDS AND OTHER DISTRIBUTION WITH RESPECT TO OUTSTANDING
SECURITIES. In the event that the Company shall at any time prior to the
exercise of all Warrants declare a dividend (other than a dividend consisting
solely of shares of Common Stock or preferred stock, or a cash dividend or
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distribution payable out of current or retained earnings or a dividend
consisting solely of preferred stock paid only to preferred stockholders) or
otherwise distribute to its stockholders any monies, assets, property, rights,
evidences of indebtedness, securities (other than shares of Common Stock),
whether issued by the Company or by another person or entity, or any other thing
of value, the Holder of the unexercised Warrants shall thereafter be entitled,
in addition to the shares of Common Stock or other securities receivable upon
the exercise thereof, to receive, upon the exercise of such Warrants, the same
monies, property, assets, rights, evidences of indebtedness, securities or any
other thing of value that it would have been entitled to receive at the time of
such dividend or distribution. At the time of any such dividend or
distribution, the Company shall make appropriate reserves to ensure the timely
performance of the provisions of this PARAGRAPH (i).
(j) SUBSCRIPTION RIGHTS FOR SHARES OF COMMON STOCK OR OTHER
SECURITIES. If the Company shall at any time after the initial issuance date of
the Warrants represented by this Certificate and prior to the exercise or
expiration of all the Warrants issue any rights to subscribe for shares of
Common Stock or any other securities of the Company to all the stockholders of
the Company, the Holder of the unexercised Warrants shall be entitled, in
addition to the Shares receivable upon the exercise of the Warrants, to receive
such rights on a pro rata basis at the time such rights are distributed to the
other stockholders of the Company.
(k) STATEMENT ON WARRANTS. Irrespective of any adjustments in the
Exercise Price or the number or kind of shares purchasable upon the exercise of
the Warrants, the warrant certificates representing the Warrants theretofore or
thereafter issued may continue to express the same price and number and kind of
shares as are stated in the warrant certificate representing the Warrants
initially issuable.
8. REGISTRATION RIGHTS.
(a) PIGGYBACK REGISTRATION. If, at any time during the five (5)
years beginning on the initial issuance date of the Warrants represented by this
Certificate, the Company proposes to prepare and file any new registration
statement under the Securities Act covering the public sale of Common Stock of
the Company for cash (in any case, other than in connection with an employee
benefit plan, an exchange offer, a dividend reinvestment plan, a merger or
acquisition or pursuant to a registration statement Form S-8 or any successor
form) (collectively, a "Registration Statement"), it will give written notice by
certified or registered mail, at least thirty (30) days prior to the filing of
each such Registration Statement, to the Holder of its intention to do so. If
the Holder notifies the Company within fifteen (15) days after receipt of any
such notice of such Holder's desire to include in such proposed Registration
Statement any shares of Common Stock (i) issued or issuable to the Holder upon
exercise of the Holder's Warrants, and (ii) that
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are owned by the Holder (the "Registrable Shares") (which notice shall specify
the number of Registrable Shares owned by the Holder, the number intended to be
disposed of by the Holder, if any, and the intended method of disposition of
such Registrable Shares), the Company shall use reasonable efforts to include,
to the extent possible, in such Registration Statement the number of Registrable
Shares which the Company has been so requested to register by the Holder, at the
Company's sole cost and expense and at no cost or expense to the Holder, except
that the Holder shall pay (i) all underwriters', broker-dealers', placement
agents' and similar selling discounts, commissions and fees relating to the
Holder's Registrable Shares, (ii) all registration and filing fees imposed under
the Securities Act, by any stock exchange or under applicable state securities
or blue sky laws based on the Holder's Registrable Shares, (iii) all transfer,
franchise, capital stock and other taxes, if any, applicable to the Holder's
Registrable Shares, and (iv) any costs and expenses of legal counsel,
accountants or other advisors retained by the Holder (collectively, the
"Holder's Expenses"), all of which shall be paid by the Holder; PROVIDED, THAT:
(i) anything in this Section to the contrary notwithstanding, if
the Company's securities so registered for sale are to be distributed in an
underwritten offering and the managing underwriter shall advise the Company
in writing that, in its opinion, the amount of securities to be offered
should be limited in order to assure a successful offering, the amount of
Registrable Shares to be included in such Registration Statement shall be
so limited and shall be allocated among the persons selling such securities
in the following order of priority: (A) first to be registered will be the
securities the Company proposes to sell, (B) next to be registered will be
the securities subject to any demand or other piggyback registration rights
granted by the Company before the initial issuance date of the Warrants,
and (C) next to be registered will be the Registrable Shares and any other
shares of Common Stock subject to similar piggyback registration rights
granted by the Company as of the initial issuance date of the Warrants in
proportion, as nearly as practicable, to the number of shares of Common
Stock desired and eligible to be sold by each holder of such shares of
Common Stock; and
(ii) anything in this Section to the contrary notwithstanding,
the Company shall not be required to include any of the Holder's
Registrable Shares in a registration statement if in the written opinion of
legal counsel to the Company the securities for which registration is
requested may be sold publicly without registration under the Securities
Act; and
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(iii) if the securities or blue sky laws of any jurisdiction in
which the securities so registered are proposed to be offered would require
the Holder's payment of greater registration expenses than those otherwise
required by this Section and if the Company shall determine, in good faith,
that the offering of such securities in such jurisdiction is necessary for
the successful consummation of the registered offering, then the Holder
shall either agree to pay the portion of the registration expenses required
by the securities or blue sky laws of such jurisdiction to be paid by the
Holder or withdraw his request for inclusion of his Registrable Shares in
such registration; and
(iv) notwithstanding the provisions of this PARAGRAPH 8(a), the
Company shall have the right at any time and for any reason or for no
reason after it shall have given written notice pursuant to this paragraph
(irrespective of whether a written request for inclusion of any such
securities shall have been made) to elect not to file any such proposed
Registration Statement, or to withdraw the same after the filing but prior
to the effective date thereof and, thereupon, shall be relieved from its
obligation to proceed with such registration.
If the Holder's Registrable Shares are included in the Registration
Statement, the Holder shall furnish the Company in writing with such appropriate
information in connection with the sale of such Shares, including, without
limitation, information about the Holder, the Registrable Shares, other
securities of the Company owned by the Holder, and the plan of distribution, as
the Company shall reasonably request or as shall be reasonably required in
connection with any registration, qualification or compliance referred to in
this Agreement. In addition, if the offering is underwritten, the Company shall
have the exclusive right to select the underwriter. The Holder shall execute
and deliver all documents reasonably requested by the underwriter and any other
documents customary in similar offerings, including, without limitation,
underwriting agreements, custody agreements, powers of attorney, indemnification
agreements, and agreements restricting other sales of securities.
The rights and obligations under PARAGRAPHS 8(a) AND (b) shall terminate at
the earlier of (i) five (5) years after the initial issuance date of the
Warrants or (ii) the date all of the Holder's Registrable Shares have been
transferred by the Holder, except for transfers in accordance with PARAGRAPH
5(b) above.
(b) COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. The
Company covenants and agrees as follows:
(i) The Company shall pay all costs,
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fees and expenses in connection with all Registration Statements filed
pursuant to PARAGRAPH (a) above including, without limitation, the
Company's legal and accounting fees, printing expenses, filing fees and
other expenses, except that the Holder shall pay all of the Holder's
Expenses (as defined in PARAGRAPH (a)).
(ii) The Company will use its reasonable efforts to qualify or
register the Registrable Shares included in a Registration Statement for
offering and sale under the securities or blue sky laws of such states of
the United States as are reasonably requested by the Holder; PROVIDED,
HOWEVER, that the Company shall not be required to (i) qualify or register
the Registrable Shares in any jurisdiction in which the Company would be
required to qualify as a broker or dealer in securities under the
securities or blue sky laws of such jurisdictions, (ii) qualify generally
to do business as a foreign corporation in any jurisdiction wherein it is
not already so qualified, (iii) subject itself to taxation in any such
jurisdiction, or (iv) consent to general service of process in any such
jurisdiction.
(c) INDEMNIFICATION.
(i) To the extent permitted by law, the Company shall indemnify
and hold harmless each Holder of the Registrable Shares to be sold pursuant
to any Registration Statement (such Holder being hereinafter referred to as
a "Distributing Holder"), each underwriter (an "Underwriter") and each
person, if any, who controls such Distributing Holder or Underwriter within
the meaning of Section 15 of the Securities Act and each director of such
Distributing Holder and Underwriter, against all loss, claim, damage,
expense or liability (or actions in respect thereof) to which any of them
may become subject under the Securities Act or otherwise, arising out of or
based upon any untrue statement or alleged untrue statement of any material
fact contained in any such Registration Statement or any preliminary
prospectus or final prospectus constituting part thereof or any amendments
or supplements thereto, or arising out of or based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and will
reimburse the Distributing Holder and Underwriter and each such controlling
person and director of the Distributing Holder and Underwriter for any
legal
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<PAGE>
or other expenses reasonably incurred by any of them in connection with
investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred (including reasonable attorneys'
fees); PROVIDED, HOWEVER, that (A) the Company will not be liable in any
such case to the extent that any such loss, claim, damage, expense or
liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance
upon and in conformity with written information furnished to the Company
by, or on behalf of, such Distributing Holder, any other Distributing
Holder or any such Underwriter specifically for use therein, and (B) such
indemnity shall not inure to the benefit of such Distributing Holder or
Underwriter (or such controlling person or director of the Distributing
Holder or Underwriter) if any such loss, claim, damage, expense or
liability arises out of or is based upon (i) any Distributing Holder's or
the Underwriter's failure to deliver timely a copy of the final prospectus
(or the final prospectus as then amended, revised or supplemented), or (ii)
any such untrue statement or omission of a material fact that was corrected
in the final prospectus (or the most recent amendment, revision or
supplement thereto) and any Distributing Holder or the Underwriter failed
to deliver it in a timely manner.
(ii) To the extent permitted by law, each Distributing Holder
shall, severally and jointly, indemnify and hold harmless the Company, its
directors, officers, employees and agents, each Underwriter and each
person, if any, who controls any of the foregoing within the meaning of
Section 15 of the Securities Act, against all loss, claim, damage, expense
or liability (or actions in respect thereof) to which any of them may
become subject under the Securities Act or otherwise, arising out of or
based upon any untrue statement or alleged untrue statement of any material
fact contained in any such Registration Statement or any preliminary
prospectus or final prospectus constituting part thereof or any amendments
or supplements thereto, or arising out of or based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and will
reimburse the Company and each such director, officer, employee, agent,
Underwriter or controlling person for any legal or other expenses
reasonably incurred by any of them in connection with investigating or
defending any
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<PAGE>
such loss, claim, damage, liability or action as such expenses are incurred
(including reasonable attorneys' fees) in each case to the extent, but only
to the extent, that (A) such untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company by, or on behalf of, such
Distributing Holder or any other Distributing Holder specifically for use
therein, or (B) such loss, claim, damage, expense or liability arises out
of or is based upon (i) any Distributing Holder's failure to deliver in a
timely manner a copy of the final prospectus (or the final prospectus as
then amended, revised or supplemented), or (ii) any such untrue statement
or omission of a material fact that was corrected in the final prospectus
(or the most recent amendment, revision or supplement thereto) and any
Distributing Holder failed to deliver it in a timely manner.
Notwithstanding the foregoing, such indemnity shall not inure to the
benefit of such Underwriter (or such controlling person of the Underwriter)
if any such loss, claim, damage, expense or liability arises out of or is
based upon (i) the Underwriter's failure to deliver in a timely manner a
copy of the final prospectus (or the final prospectus as then amended,
revised or supplemented), or (ii) any such untrue statement or omission of
a material fact that was corrected in the final prospectus (or, the most
recent amendment, revision or supplement thereto) and the Underwriter
failed to deliver it in a timely manner.
(iii) Promptly after receipt by an indemnified party under this
PARAGRAPH 8(c) of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against
the indemnifying party under this PARAGRAPH 8(c), notify the indemnifying
party in writing of the commencement thereof; PROVIDED, HOWEVER, that the
omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability that it may have to any indemnified
party otherwise than under this PARAGRAPH 8(c) except to the extent such
indemnifying party is materially prejudiced by such lack of notice. In
case any such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified
party, to assume the defense thereof, with counsel reasonably satisfactory
to
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<PAGE>
such indemnified party, and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof,
the indemnifying party will not be liable to such indemnified party under
this PARAGRAPH 8(c) for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation requested by the indemnifying party or
required by law. If the indemnifying party does not elect to assume the
defense of any such claim, action or proceeding, the indemnifying party
shall not be liable for any settlement thereof which is effected without
its prior written consent. No indemnifying party shall, without the prior
written consent of the indemnified party, agree to the settlement of any
such claim, action or proceeding if the effect thereof would be to find the
indemnified party has violated the Securities Act, the United States
Securities Exchange Act of 1934, as amended, or any state securities or
blue sky laws.
(iv) If recovery is not available under the foregoing
indemnification provisions of this PARAGRAPH 8(c) for any reason other than
as specified therein, the parties entitled to indemnification by the terms
thereof shall be entitled to contribution toward the amount paid or payable
by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in SUBPARAGRAPH 8(c)(i) OR 8(c)(ii) above, except
that no person found to be liable for fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not also found to be liable for such
fraudulent misrepresentation. In determining the amount of contribution to
which the respective parties are entitled, there shall be considered the
relative benefits received by each party from the offering of the
securities, the parties' relative knowledge and access to information
concerning the matter with respect to which the claim was asserted, the
opportunity to correct and prevent any untrue statement or omission, and
any other equitable considerations appropriate under the circumstances,
including, without limitation, the relative fault of the parties. The
amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this
SUBPARAGRAPH 8(c)(iv) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim that is the subject of this
SUBPARAGRAPH 8(c)(iv)
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(including reasonable attorneys' fees).
9. NOTICES TO WARRANT HOLDERS. Nothing contained in this Certificate
shall be construed as conferring upon the Holder the right to vote or to consent
or to receive notice as a stockholder in respect of any meetings of stockholders
for the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company. If, however, at any time prior to
the exercise or expiration of the Warrants, any of the following events shall
occur:
(i) the Company shall take a record of the holders of its shares
of Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on
the books of the Company; or
(ii) the Company shall offer to all the holders of its Common
Stock any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the
Company, or any option, right or warrant to subscribe therefor; or
(iii) a dissolution, liquidation or winding-up of the Company
(other than in connection with a consolidation or merger or statutory share
exchange) or a sale of all or substantially all of its property, assets and
business as an entirety shall be proposed; or
(iv) there shall be any capital reorganization or
reclassification of the capital stock of the Company, or consolidation or
merger of the Company with another entity;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, options or warrants, or entitled
to vote on such proposed dissolution, liquidation, winding-up or sale. Such
notice shall specify such record date or the date of closing the transfer books,
as the case may be. Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection with the declaration or
payment of any such dividend or distribution, or the issuance of any convertible
or exchangeable securities or subscription rights, options or warrants, or any
proposed dissolution, liquidation, winding-up or sale.
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<PAGE>
10. RESERVATION AND LISTING OF SECURITIES.
(a) The Company covenants and agrees that at all times during the
period the Warrants are exercisable, the Company shall reserve and keep
available, free from preemptive rights, out of its authorized and unissued
shares of Common Stock or out of its authorized and issued shares of Common
Stock held in its treasury, solely for the purpose of issuance upon exercise of
the Warrants, such number of Shares as shall be issuable upon the exercise of
the Warrants.
(b) The Company covenants and agrees that, upon exercise of the
Warrants in accordance with their terms and payment of the Exercise Price
therefor, all Shares issued or sold upon such exercise shall not be subject to
the preemptive rights of any stockholder and when issued and delivered in
accordance with the terms of the Warrants shall be duly and validly issued,
fully paid and non-assessable, and the Holder shall receive good and valid title
to such Shares free and clear from any adverse claim (as defined in the
applicable Uniform Commercial Code), except such as have been created by the
Holder.
(c) As long as the Warrants shall be outstanding, the Company shall
use its reasonable efforts to cause all Shares issuable upon the exercise of the
Warrants to be quoted by or listed on any national securities exchange or other
securities listing service on which the shares of Common Stock of the Company
are then listed.
11. SURVIVAL. All agreements, covenants, representations and warranties
herein shall survive the execution and delivery of this Certificate and any
investigation at any time made by or on behalf of any party hereto and the
exercise, sale and purchase of the Warrants and the Shares (and any other
securities or properties) issuable on exercise hereof.
12. REMEDIES. The Company agrees that the remedies at law of the Holder,
in the event of any default or threatened default by the Company in the
performance of or compliance with any of the terms hereof, may not be adequate
and such terms may, in addition to and not in lieu of any other remedy, be
specifically enforced by a decree of specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
13. REGISTERED HOLDER. The Company may deem and treat the registered
Holder hereof as the absolute owner of this Certificate and the Warrants
represented hereby (notwithstanding any notation of ownership or other writing
hereon made by anyone), for the purpose of any exercise of the Warrants, of any
notice, and of any distribution to the Holder hereof, and for all other
purposes, and the Company shall not be affected by any notice to the contrary.
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<PAGE>
14. NOTICES. All notices and other communications from the Company to the
Holder of the Warrants represented by this Certificate shall be in writing and
shall be deemed to have been duly given if and when personally delivered, two
(2) business days after sent by overnight courier or ten (10) days after mailed
by certified, registered or international recorded mail, postage prepaid and
return receipt requested, or when transmitted by telefax, telex or telegraph and
confirmed by sending a similar mailed writing, if to the Holder, to the last
address of such Holder as it shall appear on the books of the Company maintained
at the Company's principal office or to such other address as the Holder may
have specified to the Company in writing.
15. HEADINGS. The headings contained herein are for convenience of
reference only and are not part of this Certificate.
16. GOVERNING LAW. This Certificate shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by, and construed in accordance with, the laws of said state, without regard to
the conflict of laws provisions thereof.
IN WITNESS WHEREOF, the Company has caused this Certificate to be duly executed
by its duly authorized officers under its corporate seal.
Dated May 31, 1996
FIBERCHEM, INC.
By ______________________________
Name: ______________________________
Title: ______________________________
Attest:
_________________________________
Secretary
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FIBERCHEM, INC.
FORM OF ELECTION TO PURCHASE
(To be executed by the registered Holder
if such Holder desires to exercise Warrants)
The undersigned registered Holder hereby irrevocably elects to exercise the
right of purchase represented by this Warrant Certificate for, and to purchase,
____________________ Shares hereunder, and herewith tenders in payment for such
Shares cash, a wire transfer, a certified check or a banker's draft payable to
the order of FiberChem, Inc. in the amount of ________________________, all in
accordance with the terms hereof. The undersigned requests that a share
certificate for such Shares be registered in the name of and delivered to:
________________________________________________________________
(Please Print Name and Address)
________________________________________________________________
________________________________________________________________
and, if said number of Shares shall not be all the Shares purchasable hereunder,
that a new Warrant Certificate for the balance remaining of the Shares
purchasable hereunder be registered in the name of the undersigned Warrant
Holder or his Assignee as below indicated and delivered to the address stated
below.
DATED: _________________________________________________________
Name of Warrant Holder: ________________________________________
(Please Print)
Address: _______________________________________________________
________________________________________________________________
Signature:______________________________________________________
Note: The above signature must correspond in all respects with the name of
the Holder as specified on the face of this Warrant Certificate, without
alteration or enlargement or any change whatsoever, unless the Warrants
represented by this Warrant Certificate have been assigned.
IN CONNECTION WITH THIS ELECTION TO PURCHASE, THE WARRANT HOLDER MUST DELIVER TO
THE COMPANY (I) A WRITTEN CERTIFICATION THAT SUCH HOLDER IS NOT A "U.S. PERSON"
(AS DEFINED IN REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT")), AND THAT THE WARRANTS ARE NOT BEING EXERCISED
ON BEHALF OF, OR FOR THE ACCOUNT OR BENEFIT OF, A "U.S. PERSON" (AS DEFINED IN
REGULATION S UNDER THE SECURITIES ACT), OR (II) A WRITTEN OPINION OF UNITED
STATES LEGAL COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT THE WARRANTS AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE
OF THE WARRANTS HAVE BEEN REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES OR BLUE SKY LAWS OR ARE EXEMPT FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES OR
BLUE SKY LAWS.
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<PAGE>
FIBERCHEM, INC.
FORM OF ASSIGNMENT
(To be executed by the registered Holder if such Holder
desires to transfer the Warrant Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers to:
________________________________________________________________
(Please Print Name and Address of Transferee)
________________________________________________________________
________________________________________________________________
Warrants to purchase up to ______________ Shares represented by this Warrant
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ___________________________, Attorney,
to transfer such Warrants on the books of the Company, with full power of
substitution in the premises. The undersigned requests that if said number of
Shares shall not be all of the Shares purchaseable under this Warrant
Certificate that a new Warrant Certificate for the balance remaining of the
Shares purchaseable under this Warrant Certificate be registered in the name of
the undersigned Warrant Holder and delivered to the registered address of said
Warrant Holder.
DATED:
Name of registered Holder: ______________________________
Address: ______________________________
______________________________
______________________________
Signature of
registered Holder: ______________________________
Note: The above signature must correspond in all respects with the name of
the Holder as specified on the face of this Warrant Certificate,
without alteration or enlargement or any change whatsoever. The above
signature of the registered Holder must be guaranteed by a commercial
bank or trust company, by a broker or dealer which is a member of the
National Association of Securities Dealers, Inc. or by a member of a
national securities exchange, The Securities and Futures Authority
Limited in the United Kingdom or The International Stock Exchange in
London, England. Notarized or witnessed signatures are not acceptable
as guaranteed signatures.
Signature Guaranteed:
______________________________
Authorized Officer
______________________________
Name of Institution
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Contact: Sheila Whitman, Account Executive
Carl Thompson Associates
(303) 494-5472
FOR IMMEDIATE RELEASE
FIBERCHEM RAISES $3 MILLION IN PRIVATE FINANCING
********************************************************************************
Las Vegas, Nevada, June 10, 1996 -- FiberChem, Inc. (NASDAQ: FOCS)
announced today that it has raised $3 million in a private placement under the
Securities Act of 1933, as amended (the "Act").
The $3 million was in the form of a private placement of units comprising
shares of common stock and warrants.
The net proceeds of this offering will be used to finance the Company's
growth objectives, in the form of additional sales and marketing resources, for
product development and for working capital.
The securities offered have not been registered under the Act and may not
be offered or sold in the United States absent registration or an applicable
exemption from registration requirements.
FiberChem, Inc. develops, manufactures, markets and licenses fiber optic
chemical sensors (FOCS-Registered Trademark-) that produce continuous, real-time
information on environmental pollutants in the air, water and soil .
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