As filed with the Securities and Exchange Commission
on December 8, 1998
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MACE SECURITY INTERNATIONAL, INC.
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(Exact name of registrant as specified in charter)
Delaware 03-0311630
------------------- ---------------
(State or other (IRS Employer
jurisdiction of I.D. Number)
incorporation)
160 Benmont Avenue
Bennington, Vermont 05201
(802) 447-1503
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(Address, including zip code and telephone number,
including area code, of registrant's principal executive offices)
Jon E. Goodrich
Chief Executive Officer
Mace Security International, Inc.
160 Benmont Avenue
Bennington, Vermont 05201
(802) 447-1503
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Please send copies of all communications to:
Germaine Curtin, Esq.
Herzog, Engstrom & Koplovitz, P.C.
99 Pine Street
Albany, New York 12207
(518) 465-7581
<PAGE>
Approximate date of commencement of proposed sale to the public:
After exercise of options; as early as ______________
If the only securities being registered pursuant to this Form are being
offered pursuant to dividend or interest reinvestment plans, please check
the following box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(b)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box [ ]
<TABLE>
Calculation of Registration Fee
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<CAPTION>
Proposed
Title of Proposed maximum
securities Amount maximum aggregate Amount of
to be to be offering price offering Registration
registered registered<F1> per share<F2> price Fee
<S> <C> <C> <C> <C>
Common Stock, 300,000 1.71875 $576,625 $143.34
par value
$0.01 share
===============================================================================
<FN>
<F1> Pursuant to Rule 416 of the Securities Act of 1933 (the "Securities
Act"), this Registration Statement also covers such additional Common Stock,
par value $0.01 per share (the "Common Stock"), as may become issuable
pursuant to the anti-dilution provisions of the July 14, 1998 Warrant
Agreement between the Company and Armor Holdings, Inc.
<F2> Pursuant to paragraph (c) of Rule 457 of the General Rules and
Regulations under the Securities Act, the filing fee has been calculated by
using the average of the high and low sale price of such securities on the
NASDAQ Stock Market on December 7, 1998, which date is within five business
days prior to filing.
</FN>
</TABLE>
<PAGE>
FORM S-3 ITEM AND HEADING LOCATION IN PROSPECTUS
I. Forepart of the Registration Statement Front Cover Page
and Outside Front Cover Page of
Prospectus
II. Inside Front and Outside Back Cover Inside Front Cover Page
Pages of Prospectus
III. Summary Information, Risk Factors and The Company and Risk Factors
Ratio of Earnings to Fixed Charges
IV. Use of Proceeds Use of Proceeds
V. Determination of Offering Price Not applicable
VI. Dilution Not applicable
VII. Selling Security Holders Selling Shareholder
VIII. Plan of Distribution Plan of Distribution
IX. Description of Securities to be Not applicable
Registered
X. Interests of Named Experts and Counsel Legal Matters; Experts
XI. Material Changes Not applicable
XII. Incorporation of Certain Information by Incorporation of Certain
Reference Documents by Reference
XIII. Disclosure of Commission Position on Indemnification
Indemnification for Securities Act
Liabilities
<PAGE>
Reoffer Prospectus
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MACE SECURITY INTERNATIONAL, INC.
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300,000 Shares
COMMON STOCK
(Par Value $0.01 Per Share)
----------------------------------------
This Prospectus is being used in connection with the offering, from
time to time, by Armor Holdings, Inc. (the "Selling Shareholder"), of shares
of common stock, par value $0.01 per share, (the "Common Stock") of Mace
Security International, Inc. (the "Company") which may be acquired pursuant
to the exercise of the warrants (the "Warrants") granted pursuant to the July
14, 1998 Warrant Agreement (the "Agreement") between the Company and the
Selling Shareholder. Currently, a Warrant to purchase 300,000 shares of Common
Stock is held by the Selling Shareholder. The shares are issuable to the
Selling Shareholder pursuant to and upon the exercise of the Warrant granted
or to be granted under the Agreement. The Company will receive $1.25 per
share for the shares issued upon the exercise of the Warrant. The Company
will not receive any of the proceeds from the sale of the shares by the
Selling Shareholder. All expenses of registration incurred in connection with
this offering are being borne by the Company, but all selling and other
expenses incurred by the Selling Shareholder in connection with the sale of
the shares will be borne by it.
The Company is not aware of any underwriting arrangements with
respect to the sale by the Selling Shareholder of any of the shares offered
herein.
The issued and outstanding Common Stock of the Company is listed on
The NASDAQ Stock Market ("NASDAQ"). Shares of Common Stock which may be
issued upon exercise of the Warrant will also be listed on NASDAQ. On
December 7, 1998 the last sale prices of the Common Stock on the NASDAQ was
$1.75 per share. The shares may be offered by or for the account of the
Selling Shareholder, from time to time, on NASDAQ or on any stock exchange on
which the shares may be listed at the time of sale, in negotiated
transactions, or through a combination of such methods of sale, at fixed
prices which may be changed, at market prices prevailing at the time of sale,
at prices related to such prevailing market prices, or at negotiated prices.
The Selling Shareholder may effect such transactions by selling shares to or
through broker-dealers who may receive compensation in the form of discounts,
concessions, or commissions from the Selling Shareholder and/or the purchaser
of shares for whom such broker-dealers may act as agent or to whom they sell
as principal, or both (which compensation as to a particular broker-dealer
might be in excess of customary commissions). Any broker-dealer acquiring
shares from the Selling Shareholder may sell such shares in its normal market
making activities, through other brokers on a principal or agency basis, in
negotiated transactions, or through a combination of such methods. (See
"Selling Shareholder" and "Plan of Distribution.")
FOR INFORMATION CONCERNING THE COMPANY'S CURRENT FINANCIAL
POSITION AND OTHER IMPORTANT FACTORS, SEE "RISK FACTORS" AND "INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE."
THE PURCHASE OF SECURITIES BEING OFFERED HEREBY IS SUBJECT
TO CERTAIN MATERIAL RISKS. SEE "RISK FACTORS".
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE COMMISSION, OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVE
INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
The date of this Prospectus is December 8, 1998.
No person has been authorized to give any information or to make any
representation not contained in this Prospectus, and, if given or made, such
information or representation must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy any securities other than the
shares offered by this Prospectus or an offer to sell or a solicitation of an
offer to buy such shares in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company or that the information herein is correct as of any
time subsequent to the date hereof.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements, and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements, and other information can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the following Regional Offices: the
Northeast Regional Office, Seven World Trade Center, Suite 1300, New York,
New York 10048, and the Midwest Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can be obtained by written request from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, or at
the Company's main office at 160 Benmont Avenue, Bennington, Vermont 05201,
and the Company's reports and proxy statements may be inspected at such
offices. The Company is an electronic filer and as such, its reports, proxy
and information statements and other information filed electronically with
the Commission may be obtained at the Commissions Web site located at
http://www.sec.gov.
A registration statement on Form S-3, together with all amendments,
exhibits and documents incorporated therein by reference (the "Registration
Statement"), has been filed with the Commission, Washington, D.C., under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to
the shares offered by this Prospectus. This Prospectus does not contain all
the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. Statements in this Prospectus as to the contents of exhibits are
not necessarily complete, and each statement is qualified in all respects by
reference to the copies of documents filed or incorporated by reference as
exhibits to the Registration Statement or otherwise filed with the
Commission. (See also "Incorporation of Certain Documents by Reference.")
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents (or parts thereof) filed with the Commission
by the Company are incorporated by reference in this Prospectus:
(a) The Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1997, as filed with the Commission on April 15, 1998, and
the Company's Annual Report on Form 10-KSB/A for the fiscal year ended
December 31, 1997, as filed with the Commission on June 5, 1998.
(b) The Company's Quarterly Report on Form 10-QSB/A for the fiscal
quarter ended March 31, 1997, as filed with the Commission on June 5, 1998,
its Quarterly Report on Form 10-QSB for the fiscal quarter ended June 30,
1998, as filed with the Commission on August 19, 1998 and its Quarterly
Report on Form 10-QSB for the fiscal quarter ended September 30, 1998, as
filed with the Commission on November 16, 1998.
(c) The description of the Company's securities contained in the
Company's Registration Statement on Form SB-2 as filed with the Commission on
November 12, 1993.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the filing of a post-effective amendment indicating that all of the Shares
offered hereby have been sold, or deregistering all of the shares that, at
the time of such post-effective amendment, remain unsold, shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from
the date of filing of such documents. Any statement contained herein or in
any document incorporated by reference herein which is deemed to be modified
or superseded, shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company shall furnish without charge to each person, including
any beneficial owner, to whom a copy of this Prospectus is delivered, upon
the written or oral request of such person, copies of any or all of the
documents which are incorporated by reference herein (other than exhibits to
such documents, unless such exhibits are specifically incorporated by
reference into such documents). Written or telephone requests for such
documents should be directed to the Corporate Secretary, Mace Security
International, Inc., 160 Benmont Avenue, Bennington, Vermont 05201, telephone
(802) 447-1503.
<PAGE>
THE COMPANY
Mace Security International, Inc. (the "Company") is a well known
producer of less-lethal defense sprays for the Consumer market and a marketer
of Consumer safety and security products.
The original Mace(R) brand defense spray was developed in 1965 for
use as a safe, effective, and humane deterrent against physical attack, but
was sold primarily to the law enforcement market (by a third party unrelated
to the Company) prior to late 1987, when the Company was established and
acquired an exclusive license to market products for the civilian consumer
market (the "Consumer market") under the Mace(R) brand name in the
continental United States. Although not actively promoted in the Consumer
market, therefore, until 1988, the Mace(R) brand registered trademark has
become one of the country's most widely recognized brand labels.
In March 1994, the Company acquired substantially all of the assets,
and assumed certain of the liabilities of, the Federal Laboratories division
of TransTechnology Corporation. As a result of that acquisition, the Company
became a leading manufacturer and distributor of tear gas grenades,
projectiles and sprays to law enforcement, correctional, military and
certain governmental agencies worldwide (the "Law Enforcement market"). The
Law Enforcement division offered a full line of chemical munitions and
accessories designed for outdoor crowd distribution and confined area use as
well as for riot and barricade situations.
On July 14, 1998, the Company consummated the sale of substantially all
of the assets of the Law Enforcement division to a subsidiary of Armor
Holdings, Inc. (the "Selling Shareholder.") Pursuant to the terms of the
April 2, 1998 Purchase Agreement executed by the Company and the Selling
Shareholder and its subsidiary, the Company sold all of the inventory, fixed
assets and intangibles of the division and granted the Selling Shareholder a
99 year paid-up license (the "License Agreement") to exploit the Mace(R)
brand and other related trademarks in the Law Enforcement market only. The
assets of the Law Enforcement division constituted a substantial part of the
Company's assets.
In connection with the July 14, 1998 transaction, the Company also
issued to the Selling Shareholder warrants to purchase 300,000 shares of
Common Stock of the Company with a term of three years and an exercise price
equal to $1.25 per share. This prospectus relates to the offering of the
Common Stock underlying such Warrants.
Mace Anti Crime Bureau, Inc. ("MACB"), an extension of the Consumer
division and a wholly owned subsidiary, was formed in 1998 to hold the assets
of the Company's Mace Anti Crime Bureau division. This division developed and
is currently marketing the MaceCash(TM) dye pack system , as well as other
related security products, to the financial community and other customers
that have a need to secure their products, such as jewelry carriers.
The Company has recently launched its franchise program for Mace
Security Centers(TM) and has sold two franchises, one in South Africa and one
in Chile.
The Company's long term goal is to maximize shareholder value. The
Board of Directors will consider all opportunities to do so, including, but
not limited to, generating growth in the Consumer market through franchising
of Mace Security Centers(TM), product diversification, potential
acquisitions or dispositions, strategic alliances, stock issuances and/or
restructuring management.
Products and Lines of Merchandise
The Company designs, markets and sells its Consumer product line for
use in protection of the home and automobile, and for personal and child
protection. These products include a line of personal alarms, whistles,
window and door security alarms and defense sprays. The Mace Security
Centers(TM) offer a wider range of out-sourced products, including some home
security systems, child monitors, cellular phones and pagers and other
security devices.
In 1997, MACB completed product development of a highly cost
competitive "dye-pack" used by financial institutions for robbery protection.
It was introduced to trade shows in the fall of 1997 as "MaceCash(TM)". MACB
is also in the process of developing other safeguard devices for use by
financial institutions and armored cars in the physical transportation of
cash and by other customers for the physical transportation of other
valuables, such as jewelry. Other services provided by MACB to financial
institutions are state-of-the-art training videos and crisis response
materials.
Distribution/Market Segments for Security Products and Services
Distribution of the Company's Consumer products and services is
aimed at the Consumer market.
The Company's sales efforts are coordinated by in-house sales and
support personnel dealing with a network of manufacturers' representatives
and buyers for a variety of distributors and retail accounts.
The Company is attempting to expand its distribution channels
through the sale of franchises of its Mace Security Centers(TM) retail
stores. The Company has sold two franchises, one in South Africa and one in
Chile.
MACB's market includes financial institutions and related businesses
throughout the world. Sales efforts for MaceCash(TM) in the domestic market
are expected to be conducted through direct marketing and the use of
independent sales representatives and distributors as well as exhibition at
national trade shows and advertisement in trade publications. International
marketing efforts are expected to be conducted primarily through independent
distributors.
Consumer Market
The Company's in-house sales and support staff work with a
nationwide network of manufacturers' representative groups and sells directly
to wholesale distributors and directly to certain large retail accounts. Mail
order and specialty accounts are also generally handled directly by the
Company.
The Company's Consumer market includes mass merchants/department
stores, consumer catalogues and guns/sporting goods, hardware, auto,
convenience, and drug stores. Each market category is reached through
dedicated in-house sales managers, and/or through manufacturers'
representatives. Market categories are also reached through catalogue,
magazine and trade publication advertising and promotion at industry trade
shows.
The Company has realized limited success in exporting its Consumer
product line.
The Company is incorporated in Delaware, and its principal executive
offices are located at 160 Benmont Avenue, Bennington, Vermont 05201. The
telephone number is (802) 447-1503.
<PAGE>
THE OFFERING
<TABLE>
<CAPTION>
<S> <C>
Securities Offered 300,000 Shares of Common Stock,
by Selling Shareholder........... par value $.01 per share
Common Stock Outstanding......... 6,825,000 Shares <F1>
NASDAQ Symbol................... MACE <F2>
- ---------------------
<FN>
<F1> Does not include 630,000 shares of Common Stock reserved for
issuance pursuant to the Mace Security International, Inc.
Non-Qualified Stock Option Plan under which securities offered
pursuant to the June 9, 1997 Prospectus were or are to be issued,
60,000 warrants issued in connection with the acquisition of the
assets of Kindergard Corporation, or the Warrant issued to the
Selling Shareholder.
<F2> Listing on NASDAQ provides no assurance that an active and liquid
trading market for the Common Stock will be maintained.
</FN>
</TABLE>
Proceeds
All of the proceeds of the offering will be received by the Selling
Shareholder. (See "Use of Proceeds").
Risk Factors
Investment in the shares involves a high degree of risk. (See "Risk
Factors".)
<PAGE>
RISK FACTORS
Prospective investors, prior to purchasing any shares offered
hereby, should consider carefully the specific factors set forth below, as
well as the other information regarding the Company appearing elsewhere in
this Prospectus.
Voting Control by Existing Stockholders
Jon E. Goodrich, the Company's President and CEO owns approximately
33 percent of the Company's outstanding stock. Separately, the Company is
aware that two other individuals, David Nagelburg and Ronald Heller each own
approximately 9.9 percent of the Company's outstanding stock. Consequently,
while such persons are not acting as a group, they have a great deal of
influence over the affairs of the Company, including the election of Board
members and the ability to enter into transactions with their affiliates and
related parties and approve or prevent any proposed merger, sale of assets or
other business combination.
Financial Performance; Lack of Profitability
Other than a nominal profit from both continuing and discontinued operations
for the fiscal quarter ended September 30, 1998, the Company has not reported
a profitable quarter since the quarter ended June 30, 1997. The Company has
not had a profitable fiscal year since 1993. The Company has recently sold
its Law Enforcement division which constituted approximately 64 % of the
Company's sales. The Company has not been able to proportionally reduce its
overhead following the sale of its Law Enforcement division due to fixed rent
and other facility related expenses that are no longer needed.
Safety; Product Liability
Although the Company has not been held liable for any permanent
physical injury caused by the Company's defense sprays, the Company is the
subject of several claims of injury and death allegedly resulting from its
defense sprays. The Company does not anticipate that any of these claims will
result in the payment of damages in excess of the Company's insurance
coverage. Furthermore, the Company understands that the Federal Justice
Department is studying the role that pepper defense sprays, other than those
sold by the Company, may have had in the deaths of suspects sprayed by law
enforcement personnel. Furthermore, the Company is aware of several claims
that defense sprays used by law enforcement personnel resulted in deaths of
prisoners and of suspects in custody. Moreover, the Company believes that the
efficacy of defense spray products is affected by the target's size, state of
rage, degree of intoxication and tolerance for pain, and includes comments to
that effect in product packaging. The Company believes that the increasing
use of defense sprays by the public and law enforcement could, in the future,
lead to additional product liability claims.
The Company maintains product liability insurance which covers the
Company and its dealers against certain product liability claims. However,
there is no assurance that the Company's insurance coverage will be adequate
in the event of a valid claim, or that publicity surrounding such claims
might not adversely affect the Company.
Although the Company is not aware of any substantial claim of
permanent personal injury from its products, the Company is aware of recent
reports of incidents in which, among other things, defense sprays have been
mischievously or improperly used, in some cases by minors, have not been
instantly effective or have been ineffective against enraged or intoxicated
individuals. Incidents of this type, or others, could give rise to product
liability or other claims, or to claims that past or future advertising,
packaging or other practices should be, or should have been, modified, or
that regulation of products of this nature should be extended or changed.
Dependence on Continued Demand for Defense Sprays
Sales of defense sprays to the Consumer market accounted for over
24% of the Company's total sales from continuing operations in 1997.
Accordingly, despite the marketing of new security products internally
developed or obtained through acquisition, any significant decreased demand
in the defense spray market, whether due to negative publicity, government
regulation, law enforcement policies or otherwise, could have a material
adverse effect on the Company's results of operations
Media Coverage
The Company believes that negative media coverage of defense sprays,
including stories questioning the safety or efficacy of defense sprays (such
as, for example, the effect of the target's size, state of rage or degree of
intoxication and tolerance for pain), may have a material adverse effect on
sales. Furthermore, the Company believes that its sales could also be
adversely affected by a decline in media coverage of violent crime.
Regulation
The distribution, sale, ownership, and use of Consumer defense
sprays are legal in 50 states and the District of Columbia. On January 1,
1996, California eased restrictions on the sale of defense sprays. On
November 1, 1996, New York lifted an overall ban on defense sprays, allowing
for the sale of oleoresin capsicum (oc) only in licensed pharmacies and
licensed gun stores. Massachusetts requires both users and sellers to be
licensed. Wisconsin allows the sale of oc pepper sprays only and they must be
sold from behind a counter or under glass. Michigan does not permit sales of
chloroacetephenane (CN) sprays. Nevada permits sales of
orthocholorobenzalmalononitrite (CS) sprays only. Sales to minors are
restricted in many states. There can be no assurance, however, that broader,
more severe restrictions will not be enacted that would have and adverse
impact on the Company's financial condition.
Environmental Matters
Some of the Company's manufacturing operations currently incorporate
particular compounds, the use and emission of which is regulated by various
state and federal environmental protection agencies, including the
Environmental Protection Agency. The Company believes that it is in
compliance with all state and local statutes governing the disposal of such
hazardous material through its contract with a licensed hazardous material
disposal company. If, for any reason, there are any changes in environmental
permit or regulatory requirements, or if the Company fails to comply with the
permit and regulatory requirements, including those relating to the disposal
of hazardous materials, such factors may restrict the Company's ability to
continue or expand certain of its operations and may result in a material
adverse effect on the Company's business and financial condition.
Mace Trademark Protection
An essential part of the Company's business strategy has been to
capitalize on, promote heavily, and enhance the public's awareness and
confidence in the Mace(R) brand trademark. The Company relies on the
trademark laws to protect its proprietary rights to the Mace(R) trademark and
monitors and takes action to protect its interest in the Mace(R) trademark.
The Company provides notice to persons that the Company is aware are using
the Mace(R) trademark improperly or using it without authority and notifies
such users of the Company's willingness to take legal action for continued
unauthorized use. All of the Company's distributors are authorized to use the
Mace(R) brand trademark for advertising. The Company is not aware of any
competitors repeatedly misusing the Mace(R) trademark. There can be no
assurance, however, that the efforts taken by the Company to protect its
proprietary rights will be adequate to prevent misappropriation or that the
frequent use of the Mace(R) trademark by the public as an encompassing
description of defense sprays will not jeopardize its proprietary status. In
addition, although the Company has registered its Mace(R) trademark in
certain international markets, protection of such marks outside the United
States may raise legal and practical difficulties and there can be no
assurance that the Company will be successful in enforcing rights in
international markets. The Company hopes that the license to the Selling
Shareholder to use the Mace(R) trademark on products sold to the Law
Enforcement market will continue the high profile and market recognition and
enhance the value of the Mace(R) brand name.
Competition
Domestically, the Company faces intense competition as there
continues to be a large number of companies marketing defense sprays to
consumers. While the Company continues to offer defense spray products that
Management believes distinguish themselves through brand name recognition,
product features and formulations and research and development, the Consumer
market has experienced a sales decline for these products. The Company
attributes this decline not only to strong competition, but also to lower
demand in general.
Dividends
The Company does not anticipate paying dividends in the foreseeable
future. If and when any dividends are paid, over 39% of all dividends paid to
stockholders would inure to the members of management, assuming the
percentage of ownership of the Common Stock remains constant.
Shares Eligible for Future Sale
The Company has 6,825,000 shares of Common Stock outstanding of
which 1,725,000 were issued in the Company's initial public offering, 241,300
were gifted by founding stockholders, 580,000 shares were issued to
TransTechnology Corporation in connection with the acquisition of the assets
of the Federal Laboratories division, and 20,000 shares were issued to a
former president. The Company has an additional 11,175,000 shares of Common
Stock available for issuance of which 630,000 shares are subject to issuance
upon exercise of options granted pursuant to the Mace Security International,
Inc. Non-Qualified Stock Option Plan (the "Plan"), 300,000 shares for the
exercise of the Warrant by the Selling Shareholder, and 60,000 shares for
the exercise of a warrant issued in conjunction with the acquisition of the
assets of Kindergard Corporation.
Shares issued upon exercise of the Kindergard Warrant and options
granted under the Plan, shares of outstanding Common Stock that were not sold
to the public in the initial public offering, or that have not been
previously sold pursuant to Rule 144 or that will not be issued pursuant to
the Plan, will be available for public sale if registered or sold pursuant to
an exemption from registration, including Rule 144 or Rule 144A promulgated
under the Securities Act, which governs sales of restricted securities.
Sales of substantial amounts of the Common Stock in the public
market, or the availability of substantial amounts of the Common Stock for
such sale, could adversely affect the prevailing market price of the shares.
Certain Provisions in the Certificate of Incorporation which Inhibit Takeovers
The Company's Certificate of Incorporation and by-laws provide for
"blank check" preferred stock, with certain restrictions. The ability of the
Company to issue or undertake to issue shares of such preferred stock,
without further shareholder approval, may inhibit a change in control of the
Company if, for example, the Company may issue rights to acquire, or
securities convertible into, Common Stock or other securities of the Company
or of a potential acquirer. In such event, the cost to a potential acquirer
to purchase a majority or more of the Common Stock would increase
significantly and may deter a potential acquirer from offering a premium
price of shares of Common Stock. However, the by-laws presently prohibit the
conversion of preferred stock into Common Stock at less than 80% of the fair
market value of the Common Stock on the date of issuance, among other things.
The Company is subject to Section 203 of the Delaware General
Corporation Law which prohibits a publicly held Delaware corporation from
engaging in a "business combination" with a person who is an "interested
stockholder" for a period of three (3) years, unless approved in a prescribed
manner.
Ability to Issue Additional Shares
The 10,185,000 authorized and unreserved shares of Common Stock
available for issuance may be issued from time to time upon authorization of
the Board of Directors, without further approval by the shareholders unless
required by applicable law. The issuance of such shares of Common Stock by
the Company would, and the issuance of the 2,000,000 available shares of
preferred stock may, result in the dilution of the voting power of the shares
of Common Stock purchased in this Offering.
Possible Volatility of Stock Price
The equity markets have, on occasion, experienced significant price
and volume fluctuations which have affected the market price for many
companies' securities and which have been unrelated to the operating
performance of these companies. Furthermore, the results of operations of the
Company in recent years has also negatively imparted the market price for the
Company's securities. The Company's Common Stock was initially offered to the
public at $5.50 per share in November 1993. It has traded for as little as
$.8125 per share. The closing sales price for the Common Stock on December 7,
1998 was $1.75. Any further fluctuations could have a material adverse
affect on the market price of the Common Stock.
<PAGE>
USE OF PROCEEDS
The Shares which may be sold under this Prospectus will be sold for the
respective accounts of each of the Selling Shareholder. Accordingly, the
Company will not realize any proceeds from the sale of the Shares. The
Company, however, will derive net proceeds of approximately $375,000 if the
Warrant is exercised in full for all the shares available under the Warrant.
Such proceeds will be available to the Company for working capital and
general corporate purposes. No assurance can be given, however, as to when or
if the Warrant will be exercised for any or all of the Shares covered by the
Warrant. (See "Selling Shareholder" and "Plan of Distribution.")
SELLING SHAREHOLDER
The Selling Shareholder is Armor Holdings, Inc., a Delaware
corporation with principle offices at 13386 International Parkway,
Jacksonville, Florida 32218. The number of Shares offered for the Selling
Shareholder's account is 300,000. Since July 1998, Jonothan Spiller, the
chief financial officer of the Selling Shareholder is a director of Mace
Trademark Corp., a subsidiary corporation of the Company. After completion of
the offering, assuming that all Shares offered pursuant to this Prospectus
are sold, the Selling Shareholder will own 300,000 shares of the Company's
common stock or approximately 4%.
PLAN OF DISTRIBUTION
The sales of the Shares by the Selling Shareholder may be effected,
from time to time, on NASDAQ or on any stock exchange on which the Shares may
be listed at the time of sale, in negotiated transactions, or through a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices, or at negotiated prices. The Selling Shareholder
may effect such transactions by selling Shares to or through broker-dealers,
and such broker-dealers may receive compensation in the form of discounts,
concessions, or commissions from the Selling Shareholder and/or the
purchasers of Shares for whom such broker-dealers may act as agent or to whom
they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
The Selling Shareholder and any broker-dealers that act in connection
with the sale of the Shares hereunder might be deemed to be "Underwriters"
within the meaning of Section 2(11) of the Securities Act; any commissions
received by them and any profit realized on the resale of Shares as
principals might be deemed to be underwriting compensation under the
Securities Act.
Any broker-dealer acquiring Shares from the Selling Shareholder may sell
the Shares either directly, in its normal market-making activities, through
or to other brokers on a principal or agency basis, or to its customers. Any
such sales may be at prices then prevailing on the NASDAQ Stock Market, at
prices related to such prevailing market prices, at negotiated prices, or at
prices reflecting the application of a combination of such methods.
The Company has advised the Selling Shareholder that
anti-manipulative Rules 10b-5, 10b-6 and 10b-7 promulgated under the Exchange
Act may apply to their sales in the market. The Company has made available to
the Selling Shareholder copies of these rules, and has informed the Selling
Shareholder of the possible need for them to deliver copies of this
Prospectus in connection with their resales of the shares. The Selling
Shareholder may indemnify any broker-dealer that participates in transactions
involving sale of the Shares against certain liabilities, including
liabilities arising under the Securities Act. Any commissions paid or any
discounts or concessions allowed to any such broker-dealers, and, if any such
broker-dealer purchases shares as a principal, any profits received on the
resale of such shares may be deemed to be underwriting discounts and
commissions under the Securities Act.
Upon the Company's being notified by the Selling Shareholder that any
material arrangement has been entered into with a broker-dealer for the sale
of shares through a cross or block trade, a supplemental prospectus will be
filed under Rule 424(c) under the Securities Act, setting forth the name of
the participating broker-dealer(s), the number of shares involved, the price
at which such Shares were sold by the Selling Shareholder, the commissions
paid or discounts or concessions allowed by the Selling Shareholder to such
broker-dealer(s), and where applicable, that such broker-dealer(s) did not
conduct any investigation to verify the information set out in this
Prospectus.
Any shares which qualify for resale pursuant to Rule 144 promulgated
under the Securities Act may be sold under the Rule rather than pursuant to
this Prospectus.
There can be no assurance that the Selling Shareholder will sell all
or even any of the Shares which may be offered by them or any of them
hereunder.
<PAGE>
INDEMNIFICATION
The Company's Certificate of Incorporation and By-laws as amended,
contain provisions that provide for the indemnification of its Directors and
officers to the fullest extent permitted by law. The Company's Certificate of
Incorporation also contains a provision that limits the personal liability of
its Directors to the Registrant or its shareholders to the fullest extent
permitted by law.
In addition, the Company maintains insurance against certain
liabilities incurred by Directors and officers of the Company while serving
in their capacities as such.
Reference is hereby made to Section 145 of the Delaware General
Corporation Law relating to indemnification of directors, officers, employees
and agents of a Delaware corporation.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
EXPERTS
The balance sheet as of December 31, 1997 and the statements of
operations, stockholders' equity, and cash flows for the year ended December
31, 1997, incorporated by reference in this prospectus, have been
incorporated herein in reliance on the reports of Urbach Kahn & Werlin, PC .,
independent accountants, given on the authority of the firm as experts in
accounting and auditing.
The balance sheet as of December 31, 1996 and the statements of operations,
stockholders' equity, and cash flows for each of the year ended December 31,
1996, incorporated by reference in this prospectus, have been incorporated
herein in reliance on the reports PricewaterhouseCoopers LLP., independent
accountants, given on the authority of the firm as experts in accounting and
auditing.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon
for the Company by Herzog, Engstrom & Koplovitz, P.C., 99 Pine Street,
Albany, New York 12207.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<CAPTION>
<S> <C>
Registration Fee-Securities and
Exchange Commission $ 143.34
Accounting Fees and Expenses $ 4,100 <F1>
Legal Fees and Expenses $ 5,000 <F1>
Miscellaneous Expenses $ 1,000 <F1>
TOTAL $10,243.34 <F1>
<FN>
<F1> Estimated
</FN>
</TABLE>
All of the foregoing estimated expenses are being borne by Mace Security
International, Inc. (the "Registrant").
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant is organized under the laws of the State of Delaware.
Section 145 of the Delaware General Corporation Law permits a Delaware
corporation to indemnify any person who is a party (or is threatened to be
made a party) to any threatened, pending or completed action, suit or
proceeding whether civil, criminal, administrative or investigative (other
than an action by or in the right of the corporation) by reason of the fact
that he or she is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise. A
corporation may similarly indemnify such person in the case of actions or
suits brought by or in the right of the corporation, except (unless otherwise
ordered by the court) that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation.
A corporation may indemnify such person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by such person in connection with such action, suit
or proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. Any indemnification shall be made
by the corporation only as authorized in the specific case upon a
determination that indemnification is proper in the circumstances because the
person has met the aforesaid standard of conduct. Such determination shall be
made (1) by a majority vote of the directors who were not parties to the
action, suit, or proceeding, whether or not a quorum, or (2) if there are no
such directors, or if such directors so direct, by independent legal counsel
in a written opinion, or (3) by the stockholders. To the extent that a
director, officer, employee or agent of a corporation has been successful on
the merits, or otherwise, in defense of any action, suit or proceeding
described above, or in defense of any claim, issue or matter therein, such
person shall be indemnified against expenses (including attorneys' fees)
actually and reasonably incurred in connection therewith. The statute also
provides that it is not exclusive of any other rights to which those seeking
indemnification may be entitled under any bylaws, agreement, vote of
stockholders or disinterested directors, or otherwise. The Registrants'
By-Laws provide for the indemnification of its directors and officers to the
fullest extent permitted by law and requires advancement of expenses.
Section 102(b)(7) of the Delaware General Corporation Law allows a
Delaware corporation to limit or eliminate the personal liability of
directors to the corporation and its stockholders for monetary damages for
breach of fiduciary duty as a director. However, this provision excludes any
limitation on liability (1) for any breach of the director's duty of loyalty
to the corporation or its stockholders, (2) for acts or omissions not in good
faith or which involved intentional misconduct or a knowing violation of law,
(3) for intentional or negligent payment of unlawful dividends or stock
purchases or redemptions or (4) for any transaction from which the director
derived an improper benefit. Moreover, while this provision provides
directors with protection against awards for monetary damages for breaches of
their duty of are, it does not eliminate such duty. Accordingly, this
provision will have no effect on the availability of equitable remedies such
as an injunction or rescission based on a director's breach of his or her
duty of care. Finally, this provision applies to an officer of a corporation
only if he or she is a director of such corporation and is acting in his or
her capacity as director, and does not apply to officers of the corporation
who are not directors.
The Registrant's Certificate of Incorporation provides for the
limitation on liability permitted by Section 102(b)(7). The Registrant
maintains directors and officers' liability insurance.
<PAGE>
ITEM 16. EXHIBITS
(a) Exhibits
The following exhibits are filed as part of this Registration
Statement:
2.1 Warrant granted to Armor Holdings, Inc. in connection with the
acquisition by its subsidiary of the assets of Registrant's Law
Enforcement division. *
4.1 Certificate of Incorporation of the Registrant (incorporated by
reference to Exhibit 3(i)2filed with Registrant's registration
statement on Form SB-2 (33-69270)that was declared effective on
November 12, 1993.)
4.2 By-Laws of the Registrant, as amended (incorporated by reference to
Exhibit 3(ii) and 3(ii)2 filed with Registrant's registration
statement on Form SB-2 (33-69270)that was declared effective on
November 12, 1993 and to Exhibit3(ii)(3) filed with the Registrant's
Form 10-KSB for the fiscal year ended December 31, 1995).
5.1 Opinion of Herzog, Engstrom & Koplovitz, P.C. as to the validity of
the Common Stock being registered. *
10.63 Purchase Agreement between the Company and Armor Holdings, Inc. and
its subsidiary dated April 2, 1998 (Incorporated by reference to the
Company's Form 10-KSB for the year ended December 31, 1997).
10.64 Fairness Opinion relating to the sale of substantially all the
assets of the Law Enforcement division to Armor Holdings, Inc.
(Incorporated by reference to the Company's Form 10-KSB for the year
ended December 31, 1997).
10.65 Warrant granted by the Company to Armor Holdings, Inc. dated
July 14, 1998. (The document is filed herewith as Exhibit 2.1)
23.1 Consent of Herzog, Engstrom & Koplovitz, P.C. (appears in their
opinion filed as Exhibit 5.1)
23.2 Consent of Urbach Kahn & Werlin, PC, Independent Certified Public
Accountants. *
23.3 Consent of PricewaterhouseCoopers, LLP, Independent Certified Public
Accountants. *
- -------------------------
* Filed herewith
<PAGE>
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b)if, in the aggregate, the changes in volume and price represent
no more than a 20 percent change in the maximum aggregate price set forth in
the "Calculation of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to
the Commission by the Registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3, and has duly caused this
registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Town of Bennington, State of Vermont, on
December 8, 1998.
MACE SECURITY INTERNATIONAL, INC.
By: /s/ Jon E. Goodrich
------------------------------------
Jon E. Goodrich
Chief Executive Officer
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
/s/ Jon E. Goodrich President, Chief Executive December 7, 1998
- --------------------- Officer and a Director
Jon E. Goodrich (Principal Executive Officer)
/s/ Marvin P. Brown Chairman of the Board December 7, 1998
- ---------------------
Marvin P. Brown
/s/ Mark A. Capone Chief Financial Officer December 7, 1998
- --------------------
Mark A. Capone
/s/ Neil Campolungo Director December 7, 1998
- ---------------------
Neil Campolungo
/s/ R. David Garwood Director December 7, 1998
- ---------------------
R. David Garwood
/s/ Lewis Cohen Director December 7, 1998
- ---------------------
Lewis Cohen
/s/ Howard Edelman Director December 7, 1998
- ---------------------
Howard Edelman
<PAGE>
INDEX TO EXHIBITS
Sequential Page
Exhibit Description Number
- ---------- ---------------- ------
2.1 Warrant granted to Armor Holdings, Inc. in 20
connection with the acquisition by its subsidiary
of the assets of Registrant's Law Enforcement
division. *
4.1 Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3(i)2 filed with
Registrant's registration statement on Form SB-2
(33-69270)that was declared effective on November 12,
1993.)
4.2 By-Laws of the Registrant, as amended (incorporated
by reference to Exhibit 3(ii) and 3(ii)2 filed with
Registrant's registration statement on Form SB-2
(33-69270)that was declared effective on November 12,
1993 and to Exhibit3(ii)(3) filed with the Registrant's
Form 10-KSB for the fiscal year ended December 31, 1995).
5.1 Opinion of Herzog, Engstrom & Koplovitz, P.C. as to the 29
validity of the Common Stock being registered. *
10.63 Purchase Agreement between the Company and Armor
Holdings, Inc. and its subsidiary dated April 2, 1998
(Incorporated by reference to the Company's Form 10-KSB
for the year ended December 31, 1997).
10.64 Fairness Opinion relating to the sale of substantially
all the assets of the Law Enforcement division to Armor
Holdings, Inc. (Incorporated by reference to the Company's
Form 10-KSB for the year ended December 31, 1997).
10.65 Warrant granted by the Company to Armor Holdings, Inc. 20
dated July 14, 1998. (The document is filed herewith as
Exhibit 2.1)
23.1 Consent of Herzog, Engstrom & Koplovitz, P.C.
(appears in their opinion filed as Exhibit 5.1)
23.2 Consent of Urbach Kahn & Werlin, PC, Independent 30
Certified Public Accountants. *
23.3 Consent of PricewaterhouseCoopers, LLP, Independent 31
Certified Public Accountants. *
* Filed herewith
<PAGE>
EXHIBIT 2.1
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS
OF THIS WARRANT.
WARRANT
To Purchase Common Stock of
MACE SECURITY INTERNATIONAL, INC.
THIS IS TO CERTIFY THAT ARMOR HOLDINGS, INC., or registered
assigns ("Holder"), is entitled, at any time prior to the Expiration Date (as
hereinafter defined), to purchase from Mace Security International, Inc., a
Delaware corporation (the "Company"), 300,000 shares (the "Warrant Stock") of
its common stock, par value $.01 per share (the "Common Stock") subject to
adjustment as provided herein, in whole or in part, including fractional
parts, at a purchase price of $1.25 per share, all on and subject to the
terms and conditions hereinafter set forth.
1. Definitions. As used in this Warrant, the
following terms have the respective meanings set forth below:
"Appraised Value" means, in respect of any share of Common
Stock on any date herein specified, the fair saleable value of such share of
Common Stock (determined without giving effect to the discount for (i) a
minority interest or (ii) any lack of liquidity of the Common Stock or to the
fact that the Company may have no class of equity registered under the
Exchange Act) as of the last day of the most recent fiscal month ending prior
to such date specified, based on the value of the Company, divided by the
number of fully diluted outstanding shares of Common Stock, as determined by
a nationally recognized investment banking firm, at the expense of the
Company, selected by the Holder and reasonably acceptable to the Company.
"Business Day" means any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in the
State of New York.
"Closing Date" means July 14, 1998.
"Commission" means the Securities and Exchange Commission
or any other federal agency then administering the Securities Act and other
federal securities laws.
"Current Market Price" means, in respect of any share of
Common Stock on any date herein specified, if there shall not then be a
public market for the Common Stock, the Appraised Value per share of Common
Stock at such date, or if there shall then be a public market for the Common
Stock, the average of the daily market prices for 20 consecutive Business
Days commencing 30 days before such date. The daily market price for each
such Business Day shall be (i) the last sale price on such day on the
principal stock exchange on which such Common Stock is then listed or
admitted to trading, (ii) if no sales take place on such day on any such
exchange, the average of the last reported closing bid and asked prices on
such day as officially quoted on any such exchange, (iii) if the Common Stock
is not then listed or admitted to trading on any stock exchange, the average
of the last reported closing bid and asked prices on such day in the
over-the-counter market, as furnished by the National Association of
Securities Dealers Automatic Quotation System or the National Quotation
Bureau, Inc., or (iv) if neither such corporation at the time is engaged in
the business of reporting such prices, as furnished by any similar firm then
engaged in such business.
"Current Warrant Price" means, in respect of a share of
Common Stock at any date herein specified, the price at which a share of
Common Stock may be purchased pursuant to this Warrant on such date. Until
the Current Warrant Price is adjusted pursuant to the terms herein, the
initial Current Warrant Price shall be $1.25 per share.
"Exchange Act" means the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect from time to
time.
"Exercise Period" means the period during which this
Warrant is exercisable pursuant to Section 2.1.
"Expiration Date" means the third anniversary of the
Closing Date or such later date to which the Expiration Date has been
extended pursuant to the terms hereof.
"GAAP" means generally accepted accounting principles in
the United States of America as from time to time in effect.
"NASD" means the National Association of Securities Dealers,
Inc., or any successor corporation thereto.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, incorporated organization, association,
corporation, institution, public benefit corporation, entity or government
(whether federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).
"Securities Act" means the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Transfer" means any disposition of any Warrant or Warrant
Stock or of any interest in either thereof, which would constitute a sale
thereof within the meaning of the Securities Act.
"Warrants" means this Warrant and all warrants issued upon
transfer, division or combination of, or in substitution for, any thereof.
All Warrants shall at all times be identical as to terms and conditions and
date, except as to the number of shares of Common Stock for which they may be
exercised.
"Warrant Price" means an amount equal to (i) the number of
shares of Common Stock being purchased upon exercise of this Warrant pursuant
to Section 2.1, multiplied by (ii) the Current Warrant Price.
2. Exercise Of Warrant.
2.1. Manner of Exercise. From and after the Closing Date
and until 5:00 P.M., New York time, on the Expiration Date, Holder may
exercise this Warrant, on any Business Day, for all or any part of the number
of shares of Common Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part,
Holder shall deliver to the Company at its principal office (i) a written
notice of Holder's election to exercise this Warrant, which notice shall
specify the number of shares of Common Stock to be purchased, (ii) payment of
the Warrant Price as provided herein, and (iii) this Warrant. Such notice
shall be substantially in the form of the subscription form appearing at the
end of this Warrant as Exhibit A, duly executed by Holder or its agent or
attorney. Upon receipt thereof, the Company shall, as promptly as
practicable, and in any event within five Business Days thereafter, execute
or cause to be executed and deliver or cause to be delivered to Holder a
certificate or certificates representing the aggregate number of full shares
of Common Stock issuable upon such exercise, together with cash in lieu of
any fraction of a share, as hereinafter provided. The stock certificate or
certificates so delivered shall be, to the extent possible, in such
denomination or denominations as Holder shall request in the notice and shall
be registered in the name of Holder or, such other name as shall be
designated in the notice in accordance with Section 3.1 hereof. This Warrant
shall be deemed to have been exercised and such certificate or certificates
shall be deemed to have been issued, and Holder or any other Person so
designated to be named therein shall be deemed to have become a Holder of
record of such shares for all purposes, as of the date the notice, together
with the payment of the Warrant Price and this Warrant, is received by the
Company as described above and all taxes required to be paid by Holder if
any, pursuant to Section 2.2 prior to the issuance of such shares have been
paid. If this Warrant shall have been exercised in part, the Company shall,
at the time of delivery of the certificate or certificates representing
Warrant Stock, deliver to Holder a new Warrant evidencing the rights of
Holder to purchase the unpurchased shares of Common Stock called for by this
Warrant, which new Warrant shall in all other respects be identical with this
Warrant, or at the request of Holder, appropriate notation may be made on his
Warrant and the same returned to Holder.
Payment of the Warrant Price may be made at the
option of Holder by: (i) certified or official bank check, or (ii) the
surrender and cancellation of a shares of Common Stock for which this Warrant
is exercisable, which shall be valued and credited toward the total Warrant
Price due the Company for the exercise of the Warrant based upon the Current
Market Price of the Common Stock at the time of exercise of the Warrant.
2.2. Payment of Taxes. All shares of Common Stock issuable
upon the exercise of this Warrant pursuant to the terms hereof shall be
validly issued and, upon payment of the Warrant Price, be fully paid and
nonassessable and without any preemptive rights. The Company shall pay all
expenses in connection with, and all transfer, stamp or similar taxes and
other governmental charges that may be imposed with respect to, the issue or
delivery thereof. The Company shall not be required, however, to pay any or
other charge imposed in connection with any transfer involved in the issue of
any certificate for shares of Common Stock issuable upon exercise of this
Warrant in any name other than that of Holder, and in such case the Company
shall not be required to issue or deliver any stock certificate until such
tax or other charge has been paid or it has been established to the
satisfaction of the Company that no such tax or other charge is due.
2.3. Fractional Shares. The Company shall not be required
to issue a fractional share of Common Stock upon exercise of any Warrant. As
to any fraction of a share which Holder of one or more Warrants, the rights
under which are exercised in the same transaction, would otherwise be
entitled to purchase upon such exercise, the Company shall adjust the number
of shares issuable upon exercise downward to the nearest whole number of
shares of Warrant Stock and refund the Warrant Price to the extent of such
adjustment; provided, however that with respect to the final exercise of this
Warrant, the Company shall pay a cash adjustment in respect of any such final
fractional share in an amount equal to the Current Market Price per share of
Common Stock on the date of exercise.
3. Transfer, Division and Combination. The Warrant and the
Warrant Stock shall be freely transferable, subject to compliance with all
applicable laws, including, but not limited to the Securities Act. Transfer
of this Warrant and all rights hereunder, in whole or in part, shall be
registered on the books of the Company to be maintained for such purpose,
upon surrender of this Warrant at the principal office of the Company,
together with a written assignment of this Warrant substantially in the form
of Exhibit B hereto duly executed by Holder or its agent or attorney and
funds sufficient to pay any transfer taxes payable upon the making of such
transfer. Upon such surrender and, if required, such payment, the Company
shall execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the
portion of this Warrant not so assigned, and this Warrant shall promptly be
cancelled. Notwithstanding anything herein to the contrary, this Warrant may
not be transferred or assigned in whole or in part without compliance with
applicable federal and state securities laws. The Warrant may be exercised by
a new Holder for the purchase of shares of Common Stock regardless of whether
the Company issued or registered a new Warrant on the books of the Company.
The Company shall prepare, issue and deliver at its own expense (other than
transfer taxes) the new Warrant or Warrants under this Section 3. The Company
agrees to maintain, at its aforesaid office or agency, books for the
registration and the registration of transfer of the Warrants.
4. Adjustments. The number of shares of Common Stock for
which this Warrant is exercisable, and the price at which such shares may be
purchased upon exercise of this Warrant, shall be subject to adjustment from
time to time as follows:
4.1. Capital Adjustments. If at any time the Company shall
take a record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend payable in, or other distribution of, additional
shares of Common Stock, subdivide its outstanding shares of Common Stock into
a larger number of shares of Common Stock, or combine its outstanding shares
of Common Stock into a smaller number of shares of Common Stock, then (i) the
number of shares of Common Stock for which this Warrant is exercisable
immediately after the occurrence of any such event shall be adjusted to equal
the number of shares of Common Stock which a record holder of the same number
of shares of Common Stock for which this Warrant is exercisable immediately
prior to the occurrence of such event would own or be entitled to receive
after the happening of such event, and (ii) the Current Warrant Price for the
period following such event shall be adjusted to equal (A) the Current
Warrant Price multiplied by the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to the adjustment divided by
(B) the number of shares of Common Stock for which this Warrant is
exercisable immediately after such adjustment.
4.2. Reorganization, Reclassification, Merger,
Consolidation or Disposition of Assets. In case the Company shall reorganize
its capital, reclassify its capital stock, consolidate or merge with or into
another corporation (where the Company is not the surviving corporation or
where there is a change in or distribution with respect to the Common Stock
of the Company), or sell, transfer or otherwise dispose of all or
substantially all its property, assets or business to another corporation
and, pursuant to the terms of such reorganization, reclassification, merger,
consolidation or disposition of assets, shares of common stock of the
successor or acquiring corporation, or any cash, shares of stock or other
securities or property of any nature whatsoever (including warrants or other
subscription or purchase rights) in addition to or in lieu of common stock of
the successor or acquiring corporation ("Other Property"), are to be received
by or distributed to the holders of Common Stock of the Company, then Holder
shall have the right thereafter to receive, upon exercise of this Warrant,
the number of shares of common stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and Other
Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a Holder
of the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the
successor or acquiring corporation (if other than the Company) shall
expressly assume the due and punctual observance and performance of each and
every covenant and condition of this Warrant to be performed and observed by
the Company and all the obligations and liabilities hereunder, subject to
such modifications as may be deemed appropriate (as determined in good faith
by resolution of the Board of Directors of the Company) in order to provide
for adjustments of shares of the Common Stock for which this Warrant is
exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 4. For purposes of this Section 4.2
common stock of the successor or acquiring corporation shall include stock of
such corporation of any class which is not preferred as to dividends or
assets on liquidation over any other class of stock of such corporation and
which is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into
or exchangeable for any such stock, either immediately or upon the arrival of
a specified date or the happening of a specified event and any warrants or
other rights to subscribe for or purchase any such stock. The foregoing
provisions of this Section 4.2 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.
4.3. General. The adjustments required by this Section 4
shall be made whenever and as often as any specified event requiring an
adjustment shall occur. In computing adjustments under this Section 4,
fractional interests in Common Stock shall be taken into account to the
nearest 1/100th of a share.
5. Notices to Warrant Holders.
5.1. Notice of Adjustments. Whenever the number of shares
of Common Stock for which this Warrant is exercisable, or whenever the price
at which a share of such Common Stock may be purchased upon exercise of this
Warrant, shall be adjusted pursuant to Section 4, the Company shall forthwith
prepare a certificate to be executed by the chief financial officer of the
Company setting forth, in reasonable detail, the event requiring the
adjustment and the method by which such adjustment was calculated, specifying
the number of shares of Common Stock for which this Warrant is exercisable
and (if such adjustment was made pursuant to Section 4.2) describing the
number and kind of any other shares of stock or Other Property for which this
Warrant is exercisable, and any change in the purchase price or prices
thereof, after giving effect to such adjustment or change. The Company shall
promptly cause a signed copy of such certificate to be delivered to Holder in
accordance with Section 14.2. The Company shall keep at its office copies of
all such certificates and cause the same to be available for inspection at
said office during normal business hours by Holder or any prospective
purchaser of this Warrant designated by Holder.
5.2. Notice of Corporate Action. If at any time:
(a) the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend
(other than a cash dividend payable out of earnings or earned
surplus legally available for the payment of dividends under the
laws of the jurisdiction of incorporation of the Company) or other
distribution, or any right to subscribe for or purchase any
evidences of its indebtedness, any shares of stock of any class or
any other securities or property, or to receive any other right, or
(b) there shall be any capital reorganization of the
Company, any reclassification or recapitalization of the capital
stock of the Company or any consolidation or merger of the Company
with, or any sale, transfer or other disposition of all or
substantially all the property, assets or business of the Company
to, another corporation, or
(c) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to Holder (i)
at least 15 days' prior written notice of the date on which a record date
shall be selected for such dividend, distribution or right or for determining
rights to vote in respect of any such reorganization, reclassification,
merger, consolidation, sale, transfer, disposition, dissolution, liquidation
or winding up, and (ii) in the case of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up, at least 15 days' prior written
notice of the date when the same shall take place. Such notice in accordance
with the foregoing clause also shall specify (i) the date on which any such
record is to be taken for the purpose of such dividend, distribution or
right, the date on which the holders of Common Stock shall be entitled to any
such dividend, distribution or right, and the amount and character thereof,
and (ii) the date on which any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or
winding up is to take place and the time, if any such time is to be fixed, as
of which the holders of Common Stock shall be entitled to exchange their
shares of Common Stock for securities or other property deliverable upon such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up. Each such written notice
shall be sufficiently given if addressed to Holder at the last address of
Holder appearing on the books of the Company and delivered in accordance with
Section 14.2.
5.3. Notice to Stockholders. The Holder shall be entitled
to the same rights to receive notice of corporate action as any holder of
Common Stock.
6. No Impairment. The Company shall not by any action,
including, without limitation, amending its certificate of incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of
all such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of Holder against impairment. Without
limiting the generality of the foregoing, the Company will (a) not increase
the par value of any shares of Common Stock receivable upon the exercise of
this Warrant above the amount payable therefor upon such exercise immediately
prior to such increase in par value, (b) take all such action as may be
necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the exercise
of this Warrant, and (c) use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be necessary to enable the Company to perform its
obligations under this Warrant. Upon the request of Holder, the Company will
at any time during the period this Warrant is outstanding acknowledge in
writing, in form satisfactory to Holder, the continuing validity of this
Warrant and the obligations of the Company hereunder.
7. Reservation and Authorization of Common Stock:
Registration With Approval of Any Governmental Authority. From and after the
Closing Date, the Company shall at all times reserve and keep available for
issue upon the exercise of Warrants such number of its authorized but
unissued shares of Common Stock as will be sufficient to permit the exercise
in full of all outstanding Warrants. All shares of Common Stock which shall
be so issuable, when issued upon exercise of any Warrant and payment therefor
in accordance with the terms of such Warrant, shall be duly and validly
issued and fully paid and nonassessable, and not subject to preemptive
rights. Before taking any action which would cause an adjustment reducing the
Current Warrant Price below the then par value, if any, of the shares of
Common Stock issuable upon exercise of the Warrants, the Company shall take
any corporate action which may be necessary in order that the Company may
validly and legally issue fully paid and non-assessable shares of such Common
Stock at such adjusted Current Warrant Price. Before taking any action which
would result in an adjustment in the number of shares of Common Stock for
which this Warrant is exercisable or in the Current Warrant Price, the
Company shall obtain all such authorizations or exemptions thereof, or
consents thereto, as may be necessary from any public regulatory body or
bodies having jurisdiction thereof. If any shares of Common Stock required to
be reserved for issuance upon exercise of Warrants require registration or
qualification with any governmental authority under any federal or state law
before such shares may be so issued, the Company will in good faith and as
expeditiously as possible and at its expense endeavor to cause such shares to
be duly registered.
8. Taking of Record; Stock and Warrant Transfer Books. In
the case of all dividends or other distributions by the Company to the
Holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such Holders, the Company will in each
such case take such a record and will take such record as of the close of
business on a Business Day. The Company will not at any time, except upon
dissolution, liquidation or winding up of the Company, close its stock
transfer books or Warrant transfer books so as to result in preventing or
delaying the exercise or transfer of any Warrant.
9. Registration Rights.
(a) As soon as the Company is eligible to do so, but in no
event later than 180 days from the Closing Date, the Company shall file a
registration statement with the Commission to register the Warrant Stock
issuable upon the exercise of the Warrant for an offering to be made on a
continuous or delayed basis pursuant to Rule 415 under the Securities Act,
covering all of the Warrant Stock. Such registration statement shall be on
Form S-3 under the Securities Act, if such Form is then available for use by
the Company, or another appropriate form that is available to the Company
permitting registration of such Warrant Stock for resale by the Holder in the
manner or manners reasonably designated by the Holder (including, without
limitation, one or more underwritten offerings). The Company shall use its
best efforts to prosecute the registration (the "Registration") of the
Warrant Stock pursuant to the Securities Act. The Company shall use its best
efforts to cause the Warrant Stock to be registered as soon as practicable
after the filing of the registration statement relating to such Warrant
Stock, but in no event later than 180 days after the filing of such
registration statement. The Holder shall reasonably cooperate with the
Company to provide all such necessary information as shall be required by the
Company to file the registration statement relating to the Registration. In
addition, Company shall use its best efforts to list, the Warrant Stock on
NASDAQ or on such other securities exchange as the shares of Warrant Stock
may then be listed. Company shall maintain the prospectus relating to the
Warrant Stock effective for so long as the Holder desires to dispose of the
Warrant Stock, not to exceed a period of three years from the date that the
registration statement was declared effective by the Commission.
(b) The Company shall provide a transfer agent and
registrar for the Warrant Stock, not later than the effective date of such
registration.
(c) All expenses in connection with the preparation and
filing of a registration statement filed pursuant to Sections 9.1 shall be
borne solely by the Company, except for any transfer taxes payable with
respect to the disposition of such Warrant Stock, and any underwriting
discounts and selling commissions applicable solely to such sales of Warrant
Stock, which shall be paid by the Holder.
(d) The Company shall use its best efforts to cause all of
the shares covered by such registration statement to be listed on such
securities exchange as the Common Stock, or similar shares, is then listed
for trading, if the listing of such registered shares is permitted by such
exchange.
(e) Following the effective date of such registration
statement, the Company shall, upon the request of the Holder, forthwith
supply such number of prospectuses (including exhibits thereto and
preliminary prospectuses and amendments and supplements thereto) meeting the
requirements of the Securities Act and such other documents as are referred
to in the prospectus as shall be reasonably requested by the Holder to permit
the Holder to make a public distribution of the Warrant Stock.
(f) To the extent the Company elects to use an underwriter,
the Holder may select the underwriter or underwriters, if any, who are to
undertake any offering and distribution of the Warrant Stock to be included
in the registration statement filed hereunder, subject to the Company's prior
approval of the underwriter, which approval shall not be unreasonably
withheld. In no event will any securities to be sold by the Company be
excluded from such registration by reason of any underwriters' cut-backs
unless the Company has agreed in writing thereto with the underwriter.
(g) The Company shall use its best efforts to register the
Warrant Stock covered by any such registration statements filed pursuant to
Section 9.1 under the securities or Blue Sky laws of up to five states in
addition to those in which the Company would otherwise sell shares, as the
Holder shall request, except that neither the Company nor the Holder shall
for any such purpose be required to execute a general consent to service of
process or to qualify to do business as a foreign corporation in any
jurisdiction where it is not so qualified. The fees and expenses incurred in
connection with such registration shall be borne by the Company.
(h) The Holder shall cooperate fully with the Company and
provide the Company with all information reasonably requested by the Company
for inclusion in the registration statement or as necessary to comply with
the Securities Act. The Company shall cooperate fully with any underwriters
selected by the Holder and counsel to such underwriters, and shall provide
reasonable and customary access to the Company's books and records (upon
receipt from such underwriters of customary confidentiality agreements) in
order to facilitate such underwriters' review and examination of the Company
in connection with such underwriting.
(i) The Company shall promptly notify the Holder, at any
time after effectiveness when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of circumstances then existing
(and upon receipt of such notice and until a supplemented or amended
prospectus as set forth below is available, the Holder shall not offer or
sell any securities covered by such registration statement and shall return
all copies of such prospectus to the Company if requested to do so by it),
and at the request of the Holder prepare and furnish the Holder as promptly
as practicable, but in any event within 90 days, a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such shares,
such prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing.
(j) The Company shall furnish to the Holder at the time of
the disposition of the Warrant Stock, a signed copy of an opinion of the
Company's regular in-house or outside general counsel, or other counsel of
the Company's selection reasonably acceptable to, and which opinion shall be
reasonably satisfactory in form and substance to, the Holder to the effect
that: (a) a registration statement covering such Warrant Stock has been filed
with the Commission under the Securities Act and has been declared effective
by order of the Commission, (b) said registration statement and prospectus
contained therein comply as to form in all material respects with the
requirements of the Securities Act, and nothing has come to such counsel's
attention (after due inquiry) which would cause such counsel to believe that
either said registration statement or such prospectus (other than the
financial statements contained therein, as to which such counsel need not
express any opinion) contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein (in the case of such prospectus, in light of the
circumstances under which they were made) not misleading, (c) such counsel
knows of no legal or governmental proceedings required to be described in
such registration statement or prospectus which are not described as
required, or of any contracts or documents of a character required to be
described in such registration statement or such prospectus to be filed as an
exhibit to such registration statement or to be incorporated by reference
therein which are not described and filed as required and (d) to such
counsel's knowledge, no stop order has been issued by the Commission
suspending the effectiveness of such registration statement; it being
understood that such opinion may contain such qualifications and assumptions
as are customary in the rendering of similar opinions, and that such counsel
may rely, as to all factual matters treated therein, on certificates of the
Company (copies of which shall be delivered to the Holder).
(k) The Company will use its best efforts to comply with
the reporting requirements of Sections 13 and 15(d) of the Exchange Act to
the extent it shall be required to do so pursuant to such sections, and at
all times while so required shall use its best efforts to comply with all
other public information reporting requirements of the Commission (including
reporting requirements which serve as a condition to utilization of Rule 144
promulgated by the Commission under the Securities Act) from time to time in
effect and relating to the availability of an exemption from the Securities
Act for the sale of any of the Company's Common Stock held by the Holder. The
Company will also cooperate with the Holder in supplying such information and
documentation as may be necessary for the Holder to complete and file any
information reporting forms presently or hereafter required by the Commission
as a condition to the availability of an exemption from the Securities Act
for the sale of any of the Company's Common Stock held by the Holder.
(l) Until such time as a registration statement relating to
all of the Warrant Stock has been declared effective by the Commission, the
Company shall not grant to any third party any registration rights more
favorable than those contained in this Section 9 sooner than 90 days after
the effectiveness of a registration statement covering all of the shares of
Warrant Stock. In the event that any such registration shall fail to remain
effective (or a stop order shall be entered with respect thereto) while any
of the Warrant Stock remain unsold, the provisions of this Section 9(l) shall
become applicable once again.
10. Supplying Information. The Company shall cooperate with
Holder and each Holder of restricted Warrant Stock in supplying such
information as may be reasonably necessary for such Holder to complete and
file any information reporting forms presently or hereafter required by the
Commission as a condition to the availability of an exemption from the
Securities Act for the sale of any Warrant or restricted Warrant Stock.
11. Loss or Mutilation. Upon receipt by the Company from
Holder of evidence reasonably satisfactory to it of the ownership of and the
loss, theft, destruction or mutilation of this Warrant and indemnity
reasonably satisfactory to it (it being understood that the written agreement
of the original Holder shall be sufficient indemnity) and in case of
mutilation upon surrender and cancellation hereof, the Company will execute
and deliver in lieu hereof a new Warrant of like tenor to Holder; provided,
however, that in the case of mutilation, no indemnity shall be required if
this Warrant in identifiable form is surrendered to the Company for
cancellation.
12. Financial and Business Information. The Company will
file on or before the required date including applicable extensions all
regular or periodic reports (pursuant to the Exchange Act) with the
Commission and will deliver to Holder promptly upon their becoming available
one copy of each report, notice or proxy statement sent by the Company to its
stockholders generally, and of each regular or periodic report (pursuant to
the Exchange Act) and any registration statement, prospectus or written
communication (other than transmittal letters) (pursuant to the Securities
Act), filed by the Company with (i) the Commission or (ii) any securities
exchange on which shares of Common Stock are listed. At any reasonable time
and at reasonable intervals, the Company shall permit any holder of Warrants
or Warrant Stock and any authorized agent or representative thereof to (a)
visit the properties of the Company and any of its subsidiaries and (b)
discuss and review the affairs, finances and accounts of the Company and any
of its subsidiaries with any of their respective officers or directors, but
only to the extent such information is not confidential.
13. Limitation of Liability. No provision hereof, in the
absence of affirmative action by Holder to purchase shares of Common Stock,
and no enumeration herein of the rights or privileges of Holder hereof, shall
give rise to any liability of Holder for the purchase price of any Common
Stock or as a stockholder of the Company, whether such liability is asserted
by the Company or by creditors of the Company.
14. Miscellaneous.
14.1. Nonwaiver and Expenses. No course of dealing or any
delay or failure to exercise any right hereunder on the part of Holder shall
operate as a waiver of such right or otherwise prejudice Holder's rights,
powers or remedies. If the Company fails to make, when due, any payments
provided for hereunder, or fails to comply with any other provision of this
Warrant, the Company shall pay to Holder such amounts as shall be sufficient
to cover any costs and expenses including, but not limited to, reasonable
attorneys' fees, including those of appellate proceedings, incurred by Holder
in collecting any amounts due pursuant hereto or in otherwise enforcing any
of its rights, powers or remedies hereunder.
14.2. Notice Generally. All notices, requests, demands or
other communications provided for herein shall be in writing and shall be
deemed to have been given three days after being sent by registered or
certified mail, return receipt requested, or when personally delivered, or
successfully sent by facsimile transmission as evidenced by a fax machine
confirmation report thereof, addressed, as the case may be, to the Holder at
13386 International Parkway, Jacksonville, Florida 32218, Attention: Mr.
Jonathan M. Spiller, Facsimile No. 904-741-5403 with a copy to Kane Kessler,
P.C., 1350 Avenue of the Americas, New York, New York 10019, Attention:
Robert L. Lawrence, Esq., Facsimile No. (212) 245-3009; or to the Company at
160 Benmont Avenue, Bennington Vermont 05201, attention: Mark Capon,
Facsimile No. 802-442-3823; with a copy to Herzog Engstron & Koplovitz, 99
Pine Street, Albany, New York 12217, attention: Germaine Curtin, Esq.,
Facsimile No. (518) 437-9276, or to such other person or address as either
party shall designate to the other from time to time in writing forwarded in
like manner.
14.3. Indemnification. The Company agrees to indemnify and
hold harmless Holder, its directors, partners, officers and employees, from
and against any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, attorneys' fees, expenses and
disbursements of any kind which may be imposed upon, incurred by or asserted
against Holder in any manner relating to or arising out of (i) any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such Warrant Stock was registered under
the Securities Act, any preliminary prospectus or final prospectus relating
to such Warrant Stock, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by the Company of any
rule or regulation under the Securities Act applicable to the Company or
relating to any action or inaction required by the Company in connection with
any such registration, and will reimburse the Holder and its respective
directors, officers or employees, for any legal or other expenses reasonably
incurred by any such Person in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that the Company will not be liable hereunder to the
extent that any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, attorneys' fees, expenses or
disbursements are found in a final non-appealable judgment by a court to have
arisen out of or to have been based upon the Holder's gross negligence, bad
faith or willful misconduct in its capacity as a stockholder or warrant
Holder of the Company. For purposes of this Section 16, the term Holder shall
be deemed to include each of the affiliates of the Holder.
Promptly after receipt by a Person entitled to
indemnification under this Section 14.3 (for purposes of this Section 14.3,
an "Indemnified Party") of notice of the commencement of any action or claim
as to which indemnity may be sought hereunder, such Indemnified Party will,
if a claim for indemnification hereunder in respect thereof is to be made
against the Company, give written notice to the Company of the commencement
of such action or claim, but the failure to so notify the Company will not
relieve it from any liability which it may have to any Indemnifying Party
otherwise than pursuant to the provisions of this Section 14.3 and shall also
not relieve the Company of its obligations under this Section 14.3, except to
the extent that the Company is damaged solely as a result of the failure to
give timely notice.
If the indemnification provided for in Section 14.3 hereof
would be available based upon the language of this Section 14.3 but is
unavailable to the Indemnified Party, as hereinafter defined, in respect of
any losses, claims, damages or liabilities referred to herein, then the
Company, in lieu of indemnifying such Indemnified Party, shall contribute to
the amount paid or payable by the Company as a result of such losses, claims,
damages or liabilities (i) as between the Company and the Holder on the one
hand and the underwriters on the other, in such proportion as is appropriate
to reflect the relative benefits received by the Company and the Holder on
the one hand and the underwriters on the other from the offering of the
Warrant Stock, or if such allocation is not permitted by applicable law, in
such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company and the Holder on the one hand and
of the underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations and (ii) as between the
Company on the one hand and the Holder on the other, in such proportion as is
appropriate to reflect the relative fault of the Company and of the Holder in
connection with such statements or omissions, as well as any other relevant
equitable considerations.
The indemnity and contribution agreements contained in this
Section 14.3 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any Indemnified Party or by or
on behalf of the Company or the consummation of the sale or successive
resales of the Warrant or Warrant Stock.
14.4. Successors and Assigns. Subject to compliance with
the provisions of Section 3.1, this Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors of the
Company and the successors and assigns of Holder. The provisions of this
Warrant are intended to be for the benefit of all Holders from time to time
of this Warrant, and shall be enforceable by any such Holder.
14.5. Amendment. This Warrant may be modified or amended
or the provisions of this Warrant waived with the written consent of the
Company and Holder.
14.6. Severability. Wherever possible, each provision of
this Warrant shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Warrant shall be
prohibited by or invalid under applicable law, such provision shall be
modified to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Warrant.
14.7. Headings. The headings used in this Warrant are for
the convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.
14.8. Governing Law. This Warrant and the transactions
contemplated hereby shall be deemed to be consummated in the State of New
York and shall be governed by and interpreted in accordance with the local
laws of the State of New York without regard to the provisions thereof
relating to conflict of laws. The Company hereby irrevocably consents to the
jurisdiction of the State and Federal courts located in New York City, New
York in connection with any action or proceeding arising out of or relating
to this Warrant. Within 30 days after such mailing, the Company so served
shall appear or answer to such summons, complaint or other process. Should
the Company so served fail to appear or answer within said 30-day period, the
Company shall be deemed in default and judgment may be entered by the Holder
against the Borrower for the amount as demanded in any summons, complaint or
other process so served.
IN WITNESS WHEREOF, Mace Security International, Inc. has
caused this Warrant to be executed by its duly authorized officer and attested
by its Secretary.
Dated: July 14, 1998
MACE SECURITY INTERNATIONAL, INC.
By: /s/Jon E. Goodrich
--------------------
Name: Jon E. Goodrich
Title: CEO
<PAGE>
EXHIBIT 5.1
LAW OFFICES
HERZOG, ENGSTROM & KOPLOVITZ, P.C.
CAPITAL CENTER 99 PINE STREET
ALBANY, NEW YORK 12207-3163
e-mail: [email protected]
TELEPHONE TELECOPIER
(518) 465-7581 (518)462-2743
Mace Security International, Inc.
160 Benmont Avenue December 7, 1998
Bennington, VT 05201
Greetings:
We have acted as your counsel in connection with the preparation of
registration statement on Form S-3 (the "Registration Statement") being filed
by you with the Securities and Exchange Commission under the Securities Act
of 1933, as amended, with respect to 300,000 shares of common stock, par
value $.01 per share (the "Common Stock") underlying the warrant granted to
Armor Holdings Inc. in connection with the purchase by its wholly-owned
subsidiary of the assets of the Company's Law Enforcement division (the "AHI
Warrant").
We have examined the Company's Certificate of Incorporation, the
Company's By-Laws, as amended, the minutes of the Company's meetings with the
Board of Directors, the minutes of the Company's meetings of shareholders,
and the AHI Warrant and have made such examinations as we have deemed
relevant for the limited purpose of this opinion. The opinion expressed below
is based on the foregoing examinations as of the date of this opinion and,
notwithstanding anything herein to the contrary, specifically excludes any
opinion with respect to the registration, or exemption from registration, of
the Common Stock in compliance with, and the transferability of shares of
Common Stock under, federal or state securities laws.
We advise you that in our opinion, the 300,000 shares of Common Stock to
be issued upon the exercise of the AHI Warrant are duly authorized and, upon
payment in full of the exercise price therefore, will be validly issued,
fully paid, and nonassessable.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement.
Very Truly Yours,
Herzog Engstrom & Koplovitz, P.C.
<PAGE>
EXHIBIT 23.2
Consent of Independent Certified Public Accountants
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated February 26, 1998 on our audit of
the consolidated financial statements of Mace Security International, Inc.
and subsidiaries as of December 31, 1997, and for the year then ended, which
appears on page F-2 of the annual report on Form 10-KSB of Mace Security
International, Inc. for the year ended December 31, 1997, and to the
reference to our firm under the caption AExperts@ in the prospectus.
/s/ URBACH KAHN & WERLIN PC
Albany, New York
December 7, 1998
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Mace Security International, Inc.
We consent to the incorporation by reference in this registration statement
on Form S-3 (File No. 0-22810) of our report dated March 25, 1997, except for
Note 7, for which the date is April 14, 1997, on our audit of the financial
statements and financial statement schedules of Mace Security International,
Inc. as of December 31, 1996, which is included on Form 10KSB of the
registrant. We also consent to the reference to our firm under the caption
"Experts".
PricewaterhouseCoopers LLP
Albany, New York
December 7, 1998
