SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of earliest event reported: September 25, 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 September 25, 1997, Saf T Lok, Incorporated (the
"Company") completed a sale of convertible debentures in the
principal amount of $100,000 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 $0.328125
(based on an average closing bid price of $0.46875) is
304,762 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: October 10, 1997
By:\s\John L. Gardner
John Gardner, President and
Chief Executive Officer
INDEX TO EXHIBITS
Sequential
Exhibit Description ly
Numbered
Page
4.1 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
