SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 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): July 15, 1997
Saf T Lok Incorporated
(Exact name of registrant as specified in its charter)
Florida 1-11968 65-0142837
(State of (Commission (IRS Employer Iden-
Incorporation) File Number) tification No.)
18245 S.E. Federal Highway, Tequesta, Florida 33469
(Address of principal executive offices)
Registrant's telephone number, including area code: 561-743-5625
Item 9: Sales of Securities Pursuant to Regulation S.
On July 15, 1997, Saf T Lok, Incorporated (the "Company") completed a sale of
convertible debentures in the principal amount of $550,000 to foreign
purchasers pursuant to Regulation S promulgated under the Securities Act of
1933. The convertible debentures have a term of five years with 8% interest
per year with the interest payable in shares of the Company's common stock.
The holders of the convertible debentures have the right to convert the
principal amount and accrued interest on the debentures at any time from the
41st day after the issuance of the debenture at the conversion price equal to
70% of the average closing bid price of the Company's common stock during the
last five trading days prior to the effective date of the conversion. The
number of shares of common stock which would be issuable upon conversion of
the principal amount assuming a conversion price of $1.05 (based on an average
closing bid price of $1.50) is 523,810 shares. The Company has the right to
pre-pay the principal amount of the debentures in cash (and the accrued
interest in shares of the Company's common stock), provided the Company follows
the procedure set forth in the debentures. The form of each convertible
debenture is attached hereto as Exhibit 4.1.
In connection with the placement of this sale of convertible debentures to the
foreign purchasers, the investment banking firm of Alexander, Wescott & Co.,
Inc. received compensation consisting of a cash commission of 10% of the
offering price of the debentures sold to investors, a 3% non-accountable
expense allowance, and a stock purchase warrant for shares of common stock
equal to 10% of the aggregate number of the shares received by the holders of
the debentures upon the conversion of such debentures at an exercise price
equal to 120% of the conversion price per share, calculated for each
instance in which the conversion of a debenture takes place. The stock
purchase warrant is attached hereto as Exhibit 99.1.
EXHIBITS
Exhibit Number
Exhibit Table
4-1 Form of Convertible Debenture
99.1 Stock Purchase Warrant
SIGNATURES
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 hereunto duly authorized.
Saf T Lok, Incorporated
Date: July 17, 1997
By:__________________________
\s\John L. Gardner
John Gardner, President and
Chief Executive Officer
INDEX TO EXHIBITS
Exhibit Description Sequentially Numbered Page
99.1 Form of Convertible Debenture
99.2 Stock Purchase Warrant
EXHIBIT 4.1
8% CONVERTIBLE DEBENTURE
Number
$
THIS DEBENTURE AND THE COMMON STOCK UNDERLYING THIS
DEBENTURE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE
SOLD OR OFFERED FOR SALE WITHIN THE UNITED STATES OR TO, OR
FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (I) AS PART OF
THEIR DISTRIBUTION AT ANY TIME OR (II) OTHERWISE UNTIL AT LEAST
FORTY DAYS AFTER____________, 1997, EXCEPT IN EITHER CASE IN
ACCORDANCE WITH REGULATION S UNDER THE ACT. TERMS USED IN
THIS LEGEND HAVE THE MEANING GIVEN TO THEM BY REGULATION S.
SAF T LOK, INCORPORATED
Tequesta, Florida
June ___,1997
Saf T Lok, Incorporated, a Florida corporation (the "Company"), for value
received, promises to pay to _____________of ____________.(address), or
registered assigns, the principal sum of ________________ Dollars
($________) on June 30, 2002 (the "Maturity Date"), which principal sum shall
be payable in such coin or currency of the United States of America which at
the time of payment is legal tender for public and private debts. Interest
on such principal sum shall accrue at the rate of eight percent (8%) per
year from the date hereof, and shall be payable in the form of shares of
common stock of the Company when (and not before) payment of such principal
sum has been made or upon the conversion of this Debenture into shares of
common stock of the Company as elsewhere provided herein. Payment of principal
and interest shall be made at the offices of the Company in Tequesta,
Florida. The number of shares of common stock shall be determined as
provided below. Such shares shall be mailed to the registered owner of this
Debenture at the address appearing on the books of the Company.
This Debenture is one of a duly authorized issue of the Company's debentures
in the aggregate amount of up to Two Million Dollars ($2,000,000.00) issued in
minimum denominations of One Thousand Dollars ($1,000.00) all of like tenure
and maturity, except variations necessary to express the number and payee of
each debenture.
1. Equal Rank. All debentures of this issue rank equally and ratably without
priority over one another.
2. Conversion of Debentures and Payment of Interest. The holder of this
Debenture may at any time from the forty-first (41st) day after the issuance of
this Debenture convert the principal amount and accrued interest on this
Debenture into the Company's common stock at the conversion price equal to
seventy percent (70%) of the average closing bid price of the Company's
common stock during the last five (5) trading days prior to the effective
date of the conversion, as reported on the NASDAQ Small Cap Issues market
and/or other market on which the principal public trading takes place for the
Company's common stock (the "Conversion Price"). The number of shares to be
received upon such conversion shall be determined by dividing the principal
and accrued interest on this Debenture through the effective date of the
conversion by the Conversion Price. To convert this Debenture, the holder
hereof must surrender this Debenture at the office of the Company, together
with a written Notice of Conversion in the form annexed to this Debenture,
properly filled out and executed by the holder hereof. If shares of common
stock issuable upon such conversion are to be registered in the name of
anyone other than the registered holder of this Debenture, such Notice of
Conversion shall be accompanied by a written instrument of transfer in a
form satisfactory to the Company, properly completed and executed. Facsimile
copies of such documents will be accepted by the Company, provided that the
originally executed documents are provided to the Company within five (5)
business days after the Company has received such facsimile copies.
If any interest shall be payable on the Debenture when such Debenture is not
being converted pursuant to the terms hereof, such interest shall be payable in
shares of the Company's common stock, at a per-share price computed at 70%
of the average bid price as set forth above in the Paragraph 2, except that
such average bid price shall be calculated for the last five trading days
prior to the date such interest payment is due.
3. Right of Repayment. At any time commencing one year after the date of
issuance of this Debenture, the Company shall have the right to pre-pay this
Debenture, along with all other outstanding debentures in this issue, by
following the procedure set forth in this paragraph. Upon electing to
prepay all, and not less than all, of the outstanding debentures in this
issue, the Company shall notify each debenture holder in writing of this
election. This notice shall state (a) the Company has elected to pre-pay all
of the outstanding debentures on this issue; (b) the date such prepayment
will occur which shall be not less than 60 days from the date of the notice
(the "Prepayment Date"); (c) that the holder has the right to convert this
Debenture prior to the Prepayment Date by notifying the Company pursuant to
the provisions of paragraph 2, provided the Company receives such notice at
least one day prior to the Prepayment Date and (d) that the Company has the
financial capability to prepay all of the
outstanding debentures in this issue along with an explanation for such
prepayment. If the Debenture has not been converted by the Prepayment Date,
(a) the holder of this Debenture shall promptly tender this Debenture to the
Company upon receipt of the principal of this Debenture in cash and the
accrued interest on this Debenture in common stock as provided above and (b)
this Debenture shall, on the Prepayment date, convert to the right to receive
such prepayment only.
4. Adjustments to Conversion. If the Company is recapitalized, consolidated
with or merged into any other company, or sells or conveys to any other
company all or substantially all of its assets as an entity, provisions shall
be made as part of the terms of the recapitalization, consolidation, merger,
sale or conveyance so that the holder of this Debenture may receive, in lieu
of the common stock otherwise issuable to the holder upon conversion or
payment of this Debenture, at the same conversion ratio, the same kind and
amount of securities or assets as may be distributable upon the
recapitalization, consolidation, merger, sale or conveyance with respect to
the common stock into which this Debenture is convertible.
5. Registration Rights. For a three-year period following the issuance
of this Debenture, the holder of this Debenture shall have the right to
require the Company to include in any registration statement filed with the
Securities and Exchange Commission for the sale of shares of common stock
in the Company the common stock underlying this Debenture; provided that if
the registration statement pertains to an underwritten offering, the
inclusion of any such shares shall be subject to an underwriter's cutback if
the underwriter determines, in good faith, that the inclusion of any such
shares will adversely affect the offering by the Company with such cutback
to be accomplished on a pro rata basis among all selling shareholders. In
the event that the holder of this Debenture (or the holder of common stock
underlying this Debenture) owns less than one percent (1%) of the Company's
outstanding shares of common stock and such holder is then able to sell all
of such shares of common stock pursuant to Rule 144, the holder shall not
have the right to require the Company to include any of the shares of common
stock underlying this Debenture in such registration statement.
Commencing ninety (90) days after the issuance of this Debenture, the holders
of more than twenty-five percent (25%) of the outstanding principal amounts of
the debentures in this issue, or the holders of at least thirty percent
(30%) of the shares of common stock into which the debentures are
convertible, may, upon written demand, require the Company to file and to use
its best efforts to make effective, a registration statement pertaining to
the shares underlying the debentures, or the common stock held as the result
of the conversion of such debentures, with the Securities and Exchange
Commission for resale of said shares. This right may not be exercised
during any period in which the Company is in the process of preparing and
filing a registration statement for the sale of shares of common stock by
the Company or for sixty (60) days following the effectiveness of such
registration statement. This registration right shall not be exercisable
unless one or more of the holders of debentures (or holders of common stock
through the conversion of debentures) making such demand in the aggregate
holds more than one percent (1%) of the outstanding shares of common stock
in the Company at the time demand is made for this registration.
In the event that the Company files a registration statement pursuant to this
provision or which will include shares underlying the debentures pursuant to
this provision, all expenses associated with the preparation and filing of such
registration statement, including legal and accounting fees for the Company,
shall be paid by the Company. Such expenses shall not include any
underwriting fee or selling commission payable with respect to the underlying
shares included in such registration.
6. Fractional Shares. In lieu of issuing any fraction of a share upon the
conversion of this Debenture, the Company shall pay to the holder of this
Debenture, for any fraction of a share otherwise issuable upon the conversion,
cash equal to the same fraction of the then current per share Conversion Price.
7. Covenants of Company. The Company covenants and agrees that, so long
as this Debenture shall be outstanding, it will:
(i) Promptly pay and discharge all lawful taxes, assessments, and governmental
charges or levies imposed upon the Company or upon its income and profits, or
upon any of its property, before the same shall become in default, as well
as all lawful claims for labor, materials and supplies which, if unpaid,
might become a lien or charge upon such properties or any part thereof;
provided, however, that the Company shall not be required to pay and
discharge any such tax, assessment, charge, levy or claim so long as the
validity thereof shall be contested in good faith by appropriate proceedings
, and the Company shall set aside on its books adequate reserves with
respect to any such tax, assessment charge, levy or claim so contested;
(ii) Do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence, rights and franchises and comply with
all laws applicable to the Company as its counsel may advise; (iii) At all
times maintain, preserve, protect and keep its property used or useful
in the conduct of its business in good repair, working order and condition, and
from time to time make all needful and proper repairs, renewals, replacements,
betterments and improvements thereto, so that the business carried on in
connection therewith may be properly and advantageously conducted at all
times;
(iv) Keep adequately insured, by financially sound reputable insurers, all
property of a character usually insured by similar corporations and carry such
other insurance as is usually carried by similar corporations; (v) At all
times keep true and correct books, records and accounts;
(vi) At all times reserve for issuance and delivery upon any conversion of this
Debenture and the payment of interest thereon all shares of the Company's
Common Stock receivable by the Holder upon any such conversion and
payment; and (vii) In the event of any occurrences requiring an adjustment
, adjust the shares of Common Stock issuable upon any conversion of this
Debenture in an appropriate and fair manner in accordance with the
provisions of this Debenture.
8. No Short Selling. By holding this Debenture, the holder agrees that
so long as this Debenture is held by the holder and for a period of thirty
(30) days following the conversion of this Debenture, the holder will not
engage in short selling of the Company's common stock, directly or
indirectly, and will not enter into any form of agreement, oral or written,
whereby the holder agrees to allow a person or entity to borrow shares of
common stock underlying this Debenture for the purpose of short selling such
shares. The holder also agrees not to sell this Debenture to any person or
entity who has the intention of utilizing the shares underlying this
Debenture to effectuate a short sale or to cover a short sale of the
Company's common stock.
9. Events of Default.
Payment of the principal and interest due under this Debenture shall become
and be due and payable upon written demand made by the Holder hereof if one
or more of the following events, herein called events of default, shall happen
and be continuing:
(i) Default in the payment of the principal and accrued interest on this
Debenture when and as the same shall become due and payable, whether by
acceleration or otherwise;
(ii) Default in the due observance or performance of any covenant, condition
or agreement on the part of the Company to be observed or performed pursuant
to the terms hereof, if such default shall continue uncured for 30 days after
written notice, specifying such default, shall be given to the Company by the
Holder of the Debenture;
(iii) Application for, or consent to, the appointment of a receiver,
trustee or
liquidator of the Company or of its property;
(iv) Admission in writing of the Company's inability to pay its debts as
they mature;
(v) General assignment by the Company for the benefit of creditors;
(vi) Filing by the Company of a voluntary petition in bankruptcy or a
petition or an answer seeking reorganization, or an arrangement with
creditors; or
(vii) Entering against the Company of a court order approving a petition
filed against it under the Federal bankruptcy laws, which order shall not
have been vacated or set aside or otherwise terminated within 120 days.
The Company agrees that the notice of the occurrence of any event of default
will be promptly given to the Holder at his or her registered address by
Certified Mail. In case any one or more of the events of default specified
above shall happen and be continuing, the Holder may proceed to enforce the
payment of this Debenture or to enforce any other legal or equitable rights
as such Holder may deem appropriate.
10. Registered Owner. The Company may treat the person or persons whose
name or names appear on this Debenture as the absolute owner or owners of
this Debenture for the purpose of receiving payment of the principal and
interest due on this Debenture and for all other purposes.
11. This Debenture Is Unsecured and Is an Obligation of the Company. This
Debenture constitutes an unsecured obligation of the Company and is an
obligation of the Company only. No recourse shall be had for payment of any
principal or interest hereon against any shareholder, officer, director or
employee of the Company, either directly or through the Company.
12. Securities Laws. The holder of this Debenture understands that this
Debenture and the shares of underlying this debenture are not registered under
the Securities Act of 1933, as amended, or any state securities laws. The
holder of this Debenture agrees not to sell this Debenture in the United States
of America except pursuant to an effective registration pertaining to the
Debenture or the shares of common stock or pursuant to an exemption from
registration under such laws, including any exemption afforded under
Regulation S of the Securities and Exchange Commission.
13. Miscellaneous.
(i) No remedy herein enumerated is intended to be exclusive of any other
remedy allowed by law, but each and every remedy shall be cumulative and in
addition to every other remedy herein enumerated or allowed by law.
(ii) No failure or delay to exercise any right or power or any partial
exercise, accruing upon any default hereunder shall impair any such right or
power or be construed to be a waiver of any such default or any acquiescence
therein.
(iii) This Debenture and all rights, benefits, powers, and obligations
hereof shall inure to the benefit and shall bind, respectively, the
successors and assigns of the Holder and the Company.
(iv) In the event any part or parts of this Debenture shall be invalid or
unenforceable for any reason, then such invalid or unenforceable part or parts
shall be deemed and held to be separate and severable, and the remainder of
this Debenture shall continue in full force and effect.
(v) The Company agrees to pay and to save the Holder harmless from all cost,
liability or expense, including reasonable counsel fees and expenses, in
connection with the enforcement of the Holder's rights under this Debenture.
(vi) Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft or destruction of the Debenture, and in the case of loss,
destruction or mutilation upon receipt by the Company of a reasonably
satisfactory indemnification, and upon surrender and cancellation of the
Debenture, if mutilated, the Company shall execute and deliver a new
Debenture of like tenor and date. Any such new Debenture executed and
delivered shall constitute an additional contractual obligation on the part
of the
Company, and the Debenture so lost, stolen, destroyed, or mutilated shall not
be at any time enforceable by anyone. Upon the request of the Holder, this
Debenture may be replaced by Debentures of other denominations (of at least
$1,000 principal amount each) totalling, in aggregate principal amount, the
principal amount of this Debenture, provided that this Debenture shall be
surrendered and cancelled at the time of issuance of such replacement
Debentures.
IN WITNESS WHEREOF, the Company has signed this Debenture this ______
day of July, 1997.
SAF T LOK, INCORPORATED
By:____________________________________________
\s\ John L. Gardner, President
ATTEST:
By: ____________________________________________
Secretary
NOTICE OF CONVERSION
The undersigned, the holder of Debenture No. , issued by
Saf T Lok, Incorporated, hereby elects to convert the Debenture and all accrued
interest into shares of common stock effective as of the date the Company
receives thus Notice pursuant to Paragraph 2 (Conversion) of such Debenture.
Please send a certificate for the appropriate number of shares of common stock
in the Company to the undersigned
at_____________________________________________________________
_______________________________________________________________
_______________________________
__________________________
Print Name of Holder
_________________________
Signature of Authorized Person
Date:___________________________
PLEASE SEND THIS FORM BY FACSIMILE TRANSMISSION TO THE
COMPANY AT (561) 745-6601 WITH THE ORIGINALLY SIGNED FORM SENT
BY U.S. MAIL TO THE COMPANY. THE EFFECTIVE DATE FOR
CONVERSION SHALL BE THE DATE ON WHICH THE COMPANY RECEIVES
EITHER THE FACSIMILE COPY OR THE ORIGINAL FORM, WHICHEVER IS
RECEIVED FIRST.
EXHIBIT 99.1
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT")
AND MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED
OR OTHERWISE DISPOSED OF, UNLESS REGISTERED PURSUANT TO
THE PROVISIONS OF THAT ACT OR AN OPINION OF COUNSEL IS
OBTAINED STATING THAT SUCH DISPOSITION IS IN COMPLIANCE WITH
AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION.
VOID AFTER 5:00 P.M. EASTERN TIME ON JULY 15, 2002
SAF T LOK, INCORPORATED
(Incorporated under the laws of the State of Florida )
Warrant Agreement for the Purchase of Shares of Common Stock
No. AWC - 1
FOR VALUE RECEIVED, SAF T LOK, INCORPORATED (the "Company"), a
Florida corporation, hereby certifies that Alexander, Wescott & Co., Inc. or
its permitted assigns (collectively referred to as the "Holder") is
entitled, subject to the provisions of this Warrant, to purchase from the
Company, during the period commencing on the date of this Warrant and
expiring at 5:00 p.m. Eastern Time on July 15, 2002 (the "Expiration Date")
the number of fully paid and non-assessable shares of the Company's Common
Stock (the "Warrant Shares"), in an amount to be determined as set forth
below, at an exercise price per share (the "Exercise Price") to be
determined as set forth below.
The term "Common Stock" means, unless the context otherwise indicates, the
Common Stock of the Company as constituted on the date hereof (the "Base
Date"), together with any other equity securities that may be issued by the
Company in addition thereto or in substitution therefore. The number of shares
of Common Stock to be received upon the exercise of this Warrant, and the
Exercise Price, may be subject to adjustment from time to time as hereinafter
set forth. The term "Company" means, unless the context otherwise indicates,
and includes the corporation named above as well as (i) any immediate or more
remote successor corporation resulting from the merger or consolidation of the
Company (or any immediate or more remote successor corporation of the
Company) with another corporation, or (ii) any corporation to which the
Company (or any immediate or more remote successor corporation of the
Company) has transferred its property or assets as an entirety or substantially
as an entirety.
The Holder agrees with the Company that this Warrant is issued, and all the
rights hereunder shall be held subject to, all of the conditions,
limitations and provisions set forth herein.
1. Calculation of Warrant Shares. The number of Warrant Shares
purchasable hereunder shall be equal to ten percent (10%) of the aggregate
number of all shares of Common Stock received by the holders of the
Company's 8% Convertible Debentures issued in June and July 1997
("Debentures") upon the conversion of such Debentures into shares of Common
Stock in accordance with the terms of such Debentures. The Company shall
promptly notify the Holder upon each conversion of such Debentures, specifying
the date and amount of such conversion, the conversion price per share as
calculated in accordance with the terms of the Debentures, and the number of
shares of Common Stock issued in each instance.
2. Determination of Exercise Price. The Exercise Price shall be equal to one
hundred twenty percent (120%) of the conversion price per share, calculated for
each instance in which the conversion of the Debentures takes place as set
forth in Section 1 above. The Company shall promptly notify the Holder of the
Exercise Price, in the same manner and at the same time as is provided in
Section 1 with respect to the number of Warrant Shares.
3. Expiration of Warrant. The Warrant shall expire at 5:00 p.m. Eastern
Time on the Expiration Date or, if such day is a day on which banking
institutions in New York are authorized by law to close, then on the next
succeeding day that shall not be such a day.
4. Exercise of Warrant. This Warrant may be exercised in whole or in
part at any time after the date hereof or at any other time as specifically
provided for herein, by presentation and surrender of this Warrant to the
Company at its principal office, or at the office of its stock transfer
agent, if any, with the Warrant Exercise Form attached hereto duly executed
and accompanied by payment (either in cash or by certified or official bank
check, payable to the order of the Company) of the Exercise Price for the
number of shares specified in such form, together with instruments of
transfer, if appropriate, duly executed by the Holder or his or her duly
authorized attorney. If this Warrant should be exercised in part only, the
Company shall, upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant, subject to all of the conditions, limitations, and
provisions set forth herein, evidencing the rights of the Holder
thereof to purchase the balance of the shares purchasable hereunder. Upon
receipt by the Company of this Warrant, together with payment of the Exercise
Price, at its office, or by the stock transfer agent of the Company at its
office, in proper form for exercise, the Holder shall be deemed to be the
holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such shares of Common Stock shall
not then be actually delivered to the Holder. The Holder shall pay any and
all documentary stamp or similar issue or transfer taxes payable in respect
of the issue or delivery of shares of Common Stock on exercise of this Warrant.
5. Reservation of Shares. The Company will at all times reserve for
issuance and delivery upon exercise of this Warrant all shares of Common
Stock or other shares of capital stock of the Company (and other securities)
from time to time receivable upon exercise of this Warrant. All such shares
(and other securities) shall be duly authorized and, when issued upon such
exercise, shall be validly issued, fully paid and non-assessable and free of
all preemptive rights.
6. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant, but, if
the Holder is entitled to any fractional share upon such exercise, the
Company shall pay the Holder an amount equal to the fair market value of
such fractional share of Common Stock, in lieu of each fraction of a share
otherwise called for upon any exercise of this Warrant, as determined by the
Company's Board of Directors.
7. Exchange, Transfer, Assignment or Loss of Warrant. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Warrants of different denominations, entitling the
Holder or Holders thereof to purchase in the aggregate the same number of
shares of Common Stock purchasable hereunder. Upon surrender of this Warrant
to the Company or at the office of its stock transfer agent, if any, with
the Assignment Form annexed hereto duly executed and funds sufficient to pay
any transfer tax, the Company shall, without charge (but subject to the
restrictions on transfer set forth in Sections 11 and 12 below) execute and
deliver a new Warrant in the name of the assignee named in such instrument
of assignment, and this Warrant shall promptly be cancelled. This Warrant
may be divided or combined with other Warrants that carry the same rights
upon presentation hereof at the office of the Company or at the office of
its stock transfer agent, if any, together with a written notice specifying
the names and denominations in which new Warrants are to be issued and
signed by the Holder hereof.
8. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the company, either at law or in
equity, and the rights of the Holder are limited to those expressed in this
Warrant.
9. Adjustment Provisions.
a. If the Company, at any time after the Base Date and prior to exercise
of this Warrant, shall have subdivided its outstanding shares of Common
Stock (or other securities at the time receivable upon the exercise of the
Warrant) by recapitalization, reclassification or split-up thereof, or if
the Company shall have declared a stock dividend or distributed shares of
Common Stock to its stockholders, the number of Warrant Shares purchasable
under this Warrant immediately prior to such exercise shall be
proportionately increased, and if the Company, prior to such exercise, shall
have at any time combined the outstanding shares of Common Stock by
recapitalization, reclassification or combination thereof, the number of
Warrant Shares subject to this Warrant immediately prior to exercise shall
be proportionately decreased.
b In case of any reorganization of the Company (or any other corporation, the
securities of which are at the time receivable on the exercise of this Warrant)
after the Base Date, or in case after such Base Date the Company (or any such
other corporation) shall consolidate with or merge into another corporation or
convey all or substantially all of its assets to another corporation, then,
and in each such case, the Holder of this Warrant upon the exercise thereof as
provided in Section 4 above, at any time after the consummation of such
reorganization, consolidation, merger or conveyance, shall be entitled to
receive the securities or property to which such Holder would have been
entitled upon such consummation if such Holder had exercised this Warrant
immediately prior thereto.
c. In case the Company shall, after the Base Date, issue shares of its
Common Stock to any of its employees, officers, directors, or consultants at a
price less than the then fair market value of such shares determined by the
Company's directors acting in good faith (except for issuance of shares under a
Company incentive stock option plan approved by the Company's directors and
stockholders and not exceeding in authorization up to Ten (10%) Percent of the
Company's then outstanding shares), or shall issue rights, warrants,
options, or convertible securities (other than in conneciton with the
securities offering to which this Warrant relates) permitting the holders
thereof to acquire shares of the Common Stock at less than the fair market
value thereof (as of the date of the issuance of such rights, warrants,
options or convertible securities), the number of Warrant Shares and the
Exercise Price shall be proportionately adjusted so that the holder of this
Warrant, upon the exercise thereof, shall not receive any lesser percentage
ownership of the Common Stock of the Company in return for payment of the
Exercise Price than he would have received in the absence of the issuances
referred to in this paragraph.
d. Whenever the number of Warrant Shares purchasable upon the exercise of
this Warrant is required to be subject to adjustment, the Exercise Price
shall be adjusted by multiplying the Exercise Price in effect immediately
prior to such adjustment by a fraction (x) the numerator of which shall be
the amount of Warrant Shares which would be purchasable upon exercise
immediately prior to such adjustment and (y) the denominator of which shall
be the number of Warrant Shares so purchasable immediately after such
adjustment.
e. The Company will not, by amendment of its Articles of Incorporation or
through reorganization, consolidation, merger, dissolution, issue or sale of
securities, sale of assets or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of the Warrant, but
will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in
order to protect the rights of the Holder of this Warrant. Without limiting
the generality of the foregoing, while any Warrant is outstanding, the Company:
I. will not permit the par value, if any, of the shares of stock
receivable upon the exercise of this Warrant to be above the amount payable
therefor upon such exercise; and ii. will take all such action as may
be necessary or appropriate in order that the Company may validly and
legally issue or sell fully paid and non-assessable stock upon the exercise
of all Warrants at the time outstanding.
f. In case:
I. the Company shall take a record of the holders of its Common Stock (or
other securities at the time receivable upon the exercise of the Warrant)
for the purpose of entitling them to receive any dividend (other than a cash
dividend at the same rate as the rate of the last cash dividend theretofore
paid) or other distribution, or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities,
or to receive any other right;
or
ii. of any capital reorganization of the Company, any reclassification of
the capital stock of the Company, any consolidation or merger of the Company
with or into another corporation, or any conveyance of all or substantially
all of the assets of the Company to another corporation; or
iii. of any voluntary or involuntary dissolution, liquidation or winding
up of the Company; or iv. any other event
specified in this Section 9 requiring the taking of such a
record,
Then, and in each such case, the Company shall mail or cause to be mailed to
each holder of any Warrant at the time outstanding a notice specifying, as the
case may be, the date on which a record is to be taken for the purpose of such
dividend, distribution or right, and stating the amount and character of such
dividend, distribution or right; or the date on which such reorganization,
reclassification, consolidation, merger, conveyance, dissolution,
liquidation or winding up is to take place, and the time, if any, to be
fixed, as to which the holders of record of Common Stock (or such other
securities at the time receivable upon the exercise of the Warrant) shall be
entitled to exchange their shares of Common Stock (or such other securities)
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, conveyance, dissolution,
liquidation or winding up. Such notice shall be mailed at least twenty days
prior to the record date therein specified and this Warrant may then be
exercised prior to said record date during the term of the Warrant and
without regard to any waiting period which may be set forth under
any other provision of this Warrant.
10. Registration Rights. a. If the Company proposes, at any time
prior to the Expiration Date, to file a registration statement with the
Securities and Exchange Commission (the Commission") on a general form for
registration under the 1933 Act and relating to securities issued or to be
issued by it, then it shall give written notice of such proposed filing to
the Holder. If, within thirty days after the giving of such notice, the
Holder shall request in writing that all or any of the Warrant Shares
be included in such proposed registration, the Company will also register such
shares as shall have been requested in writing. If all such Warrant Shares
have been so registered, the rights described in Section 10 (b) below shall
be of no force or effect.
b. In addition (and not as an alternative) if the Holder shall give
notice to the Company at any time prior to the Expiration Date to the effect
that such Holder desires to register, for sale under the 1933 Act, any
Warrant Shares, then the Company will promptly, on one occasion only, no
later than 60 days after receipt of such notice, file a post-effective
amendment to any current registration statement or a new registration
statement, to the end that the Warrant Shares designated in such notice may
be publicly sold under the 1933 Act as promptly as practicable thereafter,
and the Company will use its best effort to cause such registration
statement to become and remain effective (including the taking of
such steps as are necessary to obtain the removal of any stop order);
provided, that the Holder shall furnish the Company with such appropriate
information in connection therewith as the Company may reasonably request in
writing, and provided further that, if such notice is received more than
four weeks before the Company is required to file its current financial
statements with the Commission, the Company may delay filing the
registration statement until the date on which such financial statements are
required to be filed with the Commission.
c. The Holder may give the notice requiring the filing of a registration
statement under the Act as set forth in Subsection b above on not more than
one occasion prior to the Expiration Date.
d. In connection with the filing of a registration statement pursuant to
this Section 10, the Company shall:
i. notify such Holder as to the filing and status thereof and of all
amendments thereto filed prior to the effective date of said registration
statement;
ii. notify such Holder promptly after it shall have received notice of the
time when the registration statement becomes effective or any supplement to any
prospectus forming a part of the registration statement has been filed;
iii. prepare and file without expense to such Holder any necessary amendment
or supplement to such registration statement or prospectus as may be
necessary to comply with the 1933 Act or advisable in connection with the
proposed distribution of the securities by such Holder;
iv. take all reasonable steps to qualify the Warrant Shares for sale
under the securities or blue sky laws of such reasonable number of states
as such Holder may designate in writing and to register or obtain the
approval of any federal or state authority which may be required in
connection with the proposed distribution, except, in each case, in
jurisdictions in which the Company must either qualify to do business or
file a general consent to service of process as a condition of the
qualification of such securities;
v. notify such Holder of any stop order suspending the effectiveness of the
registration statement and use its reasonable best efforts to remove such stop
order;
vi. undertake to keep such registration statement and prospectus effective
for a period of nine months after its effective date;
vii. furnish to such Holder as soon as available, copies of any such
registration statement and each preliminary or final prospectus and any
supplement or amendment required to be prepared pursuant to the foregoing
provisions of this Section, all in such quantities as such Holder may from
time to time reasonably request.
e. The Holder agrees to pay any underwriting discounts and commissions,
transfer taxes, registration fees and the Holder's own counsel fees with
respect to the Warrant Shares being registered. The Company will pay all
other costs and expenses in connection with a registration statement to be
filed pursuant to this Section 10, including, without limitation, the fees
and expenses of counsel for the Company, the fees and expenses of its
accountants, and all other costs and expenses incident to the preparation,
printing and filing under the Act of any such registration statement, each
prospectus and all amendments and supplements thereto, the costs incurred in
connection with the qualification of such securities for sale in such
reasonable number of states as the Holder have designated, including fees
and disbursements of counsel for the Company, and the costs of supplying a
reasonable number of copies of the registration statement, each preliminary
prospectus, final prospectus and any supplements
or amendments thereto to such Holder.
f. The Company agrees to enter into an appropriate cross-indemnity
agreement with any underwriter (as defined in the 1933 Act) for such Holder in
connection with the filing of a registration statement pursuant to this
Section.
g. If the Company shall file any registration statement including therein
all or any part of the shares of the Company's Common Stock held by the
Holder, the Company and each Holder shall enter into an appropriate
cross-indemnity agreement whereby the Company shall indemnify and hold
harmless the Holder against any losses, claims, damages or liabilities (or
actions in respect thereof) arising out of or based upon any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement, or any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make
statements therein not misleading unless such statement or omission was made
in reliance upon and in conformity with written information furnished or
required to be furnished by any such Holder, and each such Holder
shall indemnify and hold harmless the Company, each of its directors and
officers who have signed the registration statement and each person, if any,
who controls the Company, within the meaning of the 1933 Act against any
losses, claims, damages or liabilities (or actions in respect thereof)
arising out of or based upon any untrue statement or alleged untrue
statement of any material fact contained in such registration statement, or
any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make statements therein not misleading,
if the statement or omission was made in reliance upon and in conformity
with written information furnished or required to be furnished by such
Holder expressly for use in such registration statement.
h. Anything to the contrary herein notwithstanding, if the shares of the
Company's Common Stock held by the Holder may be sold by the Holder
thereof in a transaction pursuant to Rule 144 promulgated under the 1933 Act,
the Holder shall not be entitled to require the Company to register such
securities pursuant to any registration statement filed under the 1933 Act.
I. For a period of one year after the effective date of the registration
statement filed pursuant to this Section 10, the Company at its expense will
file such post-effective amendments as may be necessary to make available
for use a prospectus meeting the requirements of the 1933 Act. The Company
will cause copies of such prospectus to be delivered to any person selling
the shares of Common Stock as may be required by the 1933 Act and the rules and
regulations of the Commission.
j. If a managing underwriter acting in good faith determines that the
inclusion of all or any part of the Warrant Shares in a registration
statement would adversely affect the marketing of securities intended to be
underwritten, the amount of such Warrant Shares to be registered shall be
reduced or limited to the amount which the underwriter, in its discretion,
reasonably exercised in good faith, determines would not adversely affect
the successful marketing of the underwritten securities.
11. Transfers to Comply with the 1933 Act; etc. This Warrant and any Warrant
Shares may not be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of except as follows: (1) to a person who, in the
opinion of counsel to the company, is a person to whom this Warrant or the
Warrant Shares may legally be transferred without registration and without
the delivery of a current prospectus under the 1933 Act with respect
thereto and then only against receipt of an agreement of such person to
comply with the provisions of this Section 11 with respect to any resale or
other disposition of such securities; or (2) to any person upon delivery of
a prospectus then meeting the requirements of the 1933 Act relating to such
securities and the offering thereof for such sale or disposition, and
thereafter to all successive assignees. In addition, for a period of one
year after the Base Date, this Warrant shall not be transferable except to
any holding company or affiliate controlling or controlled by the Holder, to
any successor to the Holder's business, to the Holder's officers, directors
or employees, or to other agents or selected dealers of the Holder who
participated in the securities offering in which this Warrant was
issued.
12. Legend. Unless the Warrant Shares have been registered under the 1933
Act, upon exercise of the Warrant and the issuance of any of the Warrant
Shares, all certificates representing such shares shall bear on the face
thereof substantially the following legend: The securities represented by
this certificate have not been registered under the Securities Act of 1933,
as amended, and may not be sold, offered for sale, assigned, transferred or
otherwise disposed of, unless registered pursuant to
the provisions of that Act or unless an opinion of counsel to the
Corporation is obtained stating that such disposition is in compliance with
an available exemption from such registration.
13. Notices. All notices required hereunder shall be in writing and shall be
deemed given when facsimilied (with verified receipt), delivered personally or
mailed by certified or registered mail, return receipt requested, to the
Company or Holder, as the case may be, for whom such notice is intended, to
the address of such party of which the Company or Holder has been advised by
written notice.
14. Applicable Law. The Warrant is issued under and shall for all
purposes be governed by and construed in accordance with the laws of the
State of Florida.
15. Loss of Warrant Certificate: Upon receipt by the Company of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation
of this Warrant, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation
of this Warrant, if
mutilated, the company shall execute and deliver a new Warrant of like tenor
and date. Any such new Warrant executed and delivered shall constitute an
additional contractual obligation on the part of the Company, whether or not
this Warrant so lost, stolen, destroyed or mutilated shall be at any time
enforceable by anyone.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
on its behalf, in its corporate name , by its duly authorized officer, all
as of the day and year first above written.
Dated: July 15,1997 SAF T LOK, INCORPORATED
a Florida corporation
By_________________________________
President
WARRANT EXERCISE FORM
The undersigned hereby irrevocably elects to exercise the within Warrant to the
extent of purchasing ______________ shares of Common Stock of Saf T Lok,
Incorporated and hereby makes payment of $ ____________ representing the
aggregate Exercise Price required in connection therewith. The undersigned
also surrenders the Warrant certificate to be processed in accordance with the
terms set forth therein.
______________________________
Signature
______________________________
Signature, if jointly held
______________________________
Print Name or Names
______________________________
Date
INSTRUCTIONS FOR ISSUANCE OF STOCK
(if other than to the registered holder of the within Warrant)
Name _____________________________________________________________
(Please typewrite or print in block letters)
Address ________________________________________________________
________________________________________________________
Social Security or Taxpayer
Identification Number ___________________________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED, _______________________________________
hereby sells, assigns and transfers unto
Name_________________________________________
(Please typewrite or print in block letters)
Address________________________________________________________
the right to purchase Common Stock of Saf T Lok, Incorporated, represented by
this Warrant to the extent of _____________ shares as to which such right is
exercisable and does hereby irrevocably constitute and appoint
____________________________ Attorney, to transfer the same on the books
of the Company with full power of substitution in the premises.
DATED: __________________________, _______.
____________________________
Signature
____________________________
Signature, if jointly held
