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EXHIBIT 10.23
THIS WARRANT AND THE SHARES OF STOCK PURCHASABLE HEREUNDER HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES
LAWS OF ANY STATE, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN COMPLIANCE WITH,
OR PURSUANT TO AN EXEMPTION FROM, THE REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
Number of Shares of Class A Common Stock: __________
Warrant No. A-____
WARRANT
To Purchase Class A Common Stock of
FIREARMS TRAINING SYSTEMS, INC.
THIS IS TO CERTIFY THAT ____________________, or its
registered assigns, is entitled, at any time prior to the Expiration Date (as
hereinafter defined), to purchase from FIREARMS TRAINING SYSTEMS, INC., a
Delaware corporation (the "Company"), __________ shares of Class A Common Stock
(as hereinafter defined and subject to adjustment as provided herein), in whole
or in part, including fractional parts, at a purchase price of $.25 per share,
all on the terms and conditions hereinafter set forth.
1. DEFINITIONS
As used in this Warrant, the following terms have the
respective meanings set forth below:
"Additional Shares of Common Stock" shall mean all shares of
Common Stock issued by Company after the Closing Date, other than Warrant Stock.
"Business Day" means each day on which banking institutions in
New York are not required or authorized by law or executive order to close.
"Class A Common Stock" shall mean the Class A Voting Common
Stock, $0.000006 par value, of the Company as constituted on the Closing Date.
"Closing Date" shall have the meaning set forth in the
Exchange Agreement.
"Commission" shall mean the U.S. Securities and Exchange
Commission or any other federal agency then administering the Securities Act and
other federal securities laws.
"Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock of the Company as constituted on the Closing Date,
including without limitation, the Company's Class A Common Stock, Class B Common
Stock, and any capital stock into which such Common Stock may thereafter be
changed, and shall also include (i) capital stock of the Company of any other
class (regardless of how denominated) issued to the holders of shares of Common
Stock upon any reclassification thereof which is also not preferred as to
dividends or
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assets over any other class of stock of the Company and which is not subject to
redemption and (ii) shares of common stock of any successor or acquiring
corporation (as defined in Section 4.7) received by or distributed to the
holders of Common Stock of the Company in the circumstances contemplated by
Section 4.7.
"Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities or rights which are convertible into or
exchangeable, with or without payment of additional consideration in cash or
property, for Additional Shares of Common Stock, either immediately or upon the
occurrence of a specified date or a specified event.
"Current Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified, if there shall then be a public
market for the Common Stock, the average of the daily market prices for five (5)
consecutive Business Days commencing seven (7) Business Days before such date
or, if there is no such public market, the fair market value thereof as mutually
determined by the Board of Directors of the Company and the Majority Holders.
The daily market price for each such Business Day shall be (i) the last sale
price on such day on the principal stock exchange or NASDAQ National Market
System ("NASDAQ/NMS") on which such Common Stock is then listed or admitted to
trading, (ii) if no sale takes place on such day on any such exchange or
NASDAQ/NMS, the average of the last reported closing bid and asked prices on
such day as officially quoted on any such exchange or NASDAQ/NMS, (iii) if the
Common Stock is not then listed or admitted to trading on any stock exchange or
NASDAQ/NMS, 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., (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, or (v) if there is no such firm, as furnished by any
member of the NASD selected mutually by the Majority Holders and the Company or,
if they cannot agree upon such selection, the average of the prices as furnished
by two such members of the NASD, one of which shall be selected by the Majority
Holders and one of which shall be selected by the Company.
"Current Warrant Price" shall mean, in respect of a share of
Class A Common Stock at any date herein specified, the price at which a share of
Class A Common Stock may be purchased pursuant to this Warrant on such date. The
Current Warrant Price for the date of original issue of this Warrant is $0.25
per share of Class A Common Stock.
"Exchange Act" shall mean 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.
"Exchange Agreement" shall mean the Securities Exchange and
Release Agreement dated as of April 1, 2000 among the Company and the investors
identified therein, as amended, supplemented or otherwise modified and in effect
from time to time.
"Exercise Period" shall mean the period during which this
Warrant is exercisable pursuant to Section 2.1.
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"Expiration Date" shall mean March 31, 2005.
"Fair Market Value" of any consideration other than cash or of
any securities shall mean the amount that a willing buyer would pay to a willing
seller in an arms-length transaction as determined in good faith by the Board of
Directors of the Company and, if required by the Majority Holders, supported by
an opinion from an investment banking firm of recognized national standing
acceptable to the Majority Holders.
"GAAP" shall mean generally accepted accounting principles in
the United States of America as from time to time in effect.
"Holder" shall mean the Person in whose name this Warrant is
registered on the books of the Company maintained for such purpose.
"Majority Holders" shall mean the holders of Warrants
exercisable for in excess of 50% of the aggregate number of shares of Class A
Common Stock then purchasable upon exercise of all outstanding Warrants.
"NASD" shall mean the National Association of Securities
Dealers, Inc, or any successor thereto.
"Other Property" shall have the meaning set forth in Section
4.7.
"Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all issued shares of Common Stock, except shares then owned or held by or for
the account of the Company or any subsidiary thereof, and shall include all
shares issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock.
"Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, association, corporation, limited liability
company, institution, entity or government (whether federal, state, county,
city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Securities Act" shall mean 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" shall mean any disposition of any Warrant or of any
interest therein that would constitute a sale thereof within the meaning of the
Securities Act.
"Warrant Price" shall mean an amount equal to (i) the number
of shares of Class A Common Stock being purchased upon exercise of this Warrant
pursuant to Section 2.1, multiplied by (ii) the Current Warrant Price as of the
date of such exercise.
"Warrants" shall mean, collectively, this Warrant and all of
the other Warrants issued pursuant to the Exchange Agreement and all warrants
issued upon transfer, division or combination of, or in substitution for, any
thereof.
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"Warrant Stock" shall mean the shares of Class A Common Stock
purchased by the holders of Warrants upon the exercise thereof.
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, the Holder may
exercise this Warrant, on any Business Day, for all or any part of the number of
shares of Class A Common Stock purchasable hereunder.
In order to exercise this Warrant, in whole or in part, the
Holder shall deliver to the Company at its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ or at the office or agency designated by the
Company pursuant to Section 11, (i) a written notice in substantially the form
of the Subscription Notice attached hereto of the Holder's election to exercise
this Warrant, which notice shall specify the number of shares of Class A Common
Stock to be purchased, and the denominations of the share certificate or
certificates desired, (ii) payment of the Warrant Price as hereinafter provided
and (iii) this Warrant. Upon receipt thereof, the Company shall, as promptly as
practicable, and in any event within five (5) Business Days thereafter, execute
or cause to be executed and deliver or cause to be delivered to the Holder a
certificate or certificates representing the aggregate number of full shares of
Class A 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 in such denomination or denominations as such
Holder shall request in the notice and shall be registered in the name of the
Holder or such other names as shall be designated in the notice. This Warrant
shall be deemed to have been exercised and such certificate or certificates
shall be deemed to have been issued, and the 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
tender of the exercise price and this Warrant, is received by the Company as
described herein and all taxes required to be paid by the 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 the Holder a new Warrant evidencing the rights of the Holder to
purchase the unpurchased shares of Class A 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 the Holder, appropriate notation may be made on
this Warrant and the same returned to the Holder.
Payment of the Warrant Price shall be made in cash by wire
transfer of immediately available funds or other form acceptable to the Company.
2.2 Payment of Taxes. All shares of Class A Common Stock
issuable upon the exercise of this Warrant pursuant to the terms hereof shall be
validly issued, fully paid and nonassessable and without any preemptive rights.
The Company shall pay all expenses in connection with, and all taxes and other
governmental charges that may be imposed with respect to, the issuance or
delivery thereof. The Company shall not be required, however, to pay any tax or
other charge imposed in connection with any transfer involved in the issue of
any certificate for shares of Class A Common Stock issuable upon exercise of
this Warrant in any name other
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than that of the 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 reasonable satisfaction of 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 Class A Common Stock upon exercise of any
Warrant. As to any fraction of a share which the 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 may pay a cash adjustment
in respect of such final fraction in an amount equal to the same fraction of the
Current Market Price per share of Class A Common Stock on the date of exercise.
2.4 Share Legend. Each certificate for shares of Class A
Common Stock issued upon exercise of this Warrant shall bear the legends
required pursuant to the Purchase Agreement.
2.5 Registration Rights. Pursuant to the Exchange
Agreement, the Warrants and the shares of Warrant Stock issuable upon exercise
thereof are entitled to the benefits of the Registration Rights Agreement, dated
as July 31, 1996, as amended.
3. TRANSFER, DIVISION AND COMBINATION, AND REPLACEMENT OF WARRANTS
3.1 Ownership of Warrant. The Company may deem and treat
the Person in whose name this Warrant is registered as the holder and owner
hereof (notwithstanding any notations of ownership or writing hereon made by any
Person other than the Company) for all purposes and shall not be affected by any
notice to the contrary, until presentation of this Warrant for registration of
transfer as provided in this Section 3.
3.2 Division and Combination. This Warrant may be divided
or combined with other Warrants upon presentation hereof at the aforesaid office
or agency of the Company, together with a written notice specifying the names
and denominations in which new Warrants are to be issued, signed by the Holder
or its agent or attorney. As to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice. The Company shall prepare, issue and deliver at its
own expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.
3.3 Maintenance of Books. The Company agrees to maintain,
at its aforesaid office or agency, books for the registration and the
registration of transfer of the Warrants, and, subject to the terms and
conditions of transfer set forth herein, transfer of this Warrant and all rights
hereunder shall be registered, in whole or in part, on such books, upon
surrender of this Warrant at the principal office of the Company referred to in
Section 2.1 or the office or agency designated by the Company pursuant to
Section 11, together with a written assignment of this Warrant substantially in
the form of Annex B hereto, duly executed by the Holder or his duly authorized
agent or attorney, with (unless the Holder is the original Warrantholder or
another institutional investor) signatures guaranteed by a bank or trust company
or a broker or dealer registered with the NASD, and funds sufficient to pay any
transfer taxes payable upon such
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transfer. Upon surrender and compliance with the terms and conditions of
transfer set forth herein, the Company shall execute and deliver a new Warrant
or Warrants in the name of the assignee or assignees and in the denominations
specified in the instrument of assignment, and this Warrant shall promptly be
canceled. Notwithstanding the foregoing, a Warrant may be exercised by a new
holder that receives this Warrant in compliance with the terms and conditions of
transfer set forth herein without having a new Warrant issued.
4. ADJUSTMENTS
The number of shares of Class A Common Stock for which this
Warrant is exercisable, or the price at which such shares may be purchased upon
exercise of this Warrant, shall be subject to adjustment from time to time as
set forth in this Section 4. The Company shall give each Holder notice of any
event described below which requires an adjustment pursuant to this Section 4 at
the time of such event.
4.1 Stock Dividends, Subdivisions and Combinations. If at
any time the Company shall:
(a) take a record of the holders of Common Stock
for the purpose of entitling them to receive a dividend
payable in, or other distribution of, Additional Shares of
Common Stock,
(b) subdivide outstanding shares of Common Stock
into a larger number of shares of Common Stock, or
(c) combine 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
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 for
which this Warrant is exercisable immediately after such adjustment.
4.2 Certain Other Distributions. If at any time the
Company shall take a record of the holders of Common Stock for the purpose of
entitling them to receive any dividend or other distribution of:
(a) cash,
(b) any evidences of its indebtedness, any
shares of its stock (other than Additional Shares of Common
Stock) or any other securities or property of any nature
whatsoever, or
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(c) any Convertible Securities or any warrants
or other rights to subscribe for or purchase any evidences of
its indebtedness or other property,
then (i) the number of shares of Common Stock for which this Warrant is
exercisable shall be adjusted to equal the product obtained by multiplying the
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such adjustment by a fraction (A) the numerator of which
shall be the Current Market Price per share of Common Stock at the date of
taking such record and (B) the denominator of which shall be such Current Market
Price per share of Common Stock minus the amount allocable to one share of
Common Stock of any such cash so distributable and of the Fair Market Value of
any and all such evidences of indebtedness, shares of stock, other securities or
property or warrants or other subscription or purchase rights so distributable,
and (ii) the Current Warrant Price 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 for which this Warrant is exercisable immediately after such
adjustment. A reclassification of Common Stock (other than a change in par
value, or from par value to no par value or from no par value to par value) into
shares of Common Stock and shares of any other class of stock shall be deemed a
distribution by the Company to the holders of Common Stock of such shares of
such other class of stock within the meaning of this Section 4.2 and, if the
outstanding shares of Common Stock shall be changed into a larger or smaller
number of shares of Common Stock as a part of such reclassification, such change
shall be deemed a subdivision or combination, as the case may be, of the
outstanding shares of Common Stock within the meaning of Section 4.1.
Notwithstanding the foregoing, in the event of any payment of dividends on the
Common Stock in the form of cash from current or retained earnings of the
Company, the Company may, in lieu of any adjustment pursuant to this Section
4.2, pay to the Holder cash in an amount equal to the amount of dividends that
would have been payable to such Holder in the event this Warrant had been
exercised immediately prior to the record date for such dividend.
4.3 Issuance of Additional Shares of Common Stock. If at any time
the Company shall (except as hereinafter provided) issue or sell any Additional
Shares of Common Stock (other than issuances to existing stockholders as a
dividend or other distribution described in Section 4.2, pursuant to the
conversion or exercise of any Convertible Security or pursuant to any employee
or director incentive or benefit plan approved by the Board of Directors of the
Company) for consideration in an amount per Additional Share of Common Stock
less than the Current Market Price, then (i) the number of shares of Common
Stock for which this Warrant is exercisable shall be adjusted to equal the
product obtained by multiplying the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to such issuance or sale by a
fraction (A) the numerator of which shall be the number of shares of Common
Stock Outstanding immediately after such issue or sale, and (B) the denominator
of which shall be the number of shares of Common Stock Outstanding immediately
prior to such issue or sale plus the number of shares which the aggregate
offering price of the total number of such Additional Shares of Common Stock
would purchase at the then Current Market Price; and (ii) the Current Warrant
Price as to the number of shares for which this Warrant is exercisable prior to
such adjustment shall be adjusted by multiplying such Current Warrant Price by a
fraction (X) the numerator of which shall be the number of shares for which this
Warrant is exercisable immediately prior to such issue or sale; and (Y) the
denominator of which shall be the number of shares for which this Warrant is
exercisable immediately after such issue or sale.
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4.4 Issuance of Convertible Securities. If at any time
the Company shall in any manner (whether directly or by assumption in a merger
in which the Company is the surviving corporation) issue or sell, any
Convertible Securities, whether or not the rights to exchange or convert
thereunder are immediately exercisable (other than issuances to existing
stockholders as a dividend or other distribution described in Section 4.2 or
pursuant to any employee or director incentive or benefit plan approved by the
Board of Directors of the Company), for a consideration having a Fair Market
Value on the date of such issuance or sale less than the Fair Market Value of
such Convertible Securities on the date of such issuance or sale, then (i) the
number of shares of Common Stock for which this Warrant is exercisable shall be
adjusted to equal the product obtained by multiplying the number of shares of
Common Stock for which this Warrant is exercisable immediately prior to such
adjustment by a fraction (A) the numerator of which shall be the Current Market
Price per share of Common Stock at the date of such issuance and (B) the
denominator of which shall be such Current Market Price per share of Common
Stock so distributable minus the Per Share Deficiency (as defined below) and
(ii) the Current Warrant Price 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 for which this Warrant is exercisable immediately after such
adjustment. The "Per Share Deficiency" shall mean (x) the Fair Market Value of
such Convertible Securities on the date of such issuance or sale minus the Fair
Market Value of the consideration received by the Company in respect of such
issue or sale divided by (y) the number of shares of Common Stock Outstanding on
the date of such issuance or sale.
4.5 Pro Rata Repurchases. In case the Company or any
subsidiary thereof shall make a pro rata repurchase of shares of Common Stock,
the Current Warrant Price in effect immediately prior to such action shall be
adjusted (but shall not be increased) by multiplying such price by a fraction,
the numerator of which shall be (i) the product of (x) the number of shares of
Common Stock Outstanding immediately before such Pro Rata Repurchase and (y) the
Current Market Price of the Common Stock as of the close of business on the
Business Day immediately preceding the first public announcement by the Company
of the intent to effect such Pro Rata Repurchase minus (ii) the aggregate
purchase price of the Pro Rata Repurchase and the denominator of which shall be
the product of (i) the number of shares of Common Stock Outstanding immediately
before such Pro Rata Repurchase minus the number of shares of Common Stock
repurchased by the Company or any subsidiary thereof in such Pro Rata Repurchase
and (ii) the Current Market Price of the Common Stock as of the close of
business on the Business Day immediately preceding the first public announcement
by the Company of the intent to effect such Pro Rata Repurchase. Such adjustment
shall become effective immediately after the effective date of such Pro Rata
Repurchase.
4.6 Other Provisions Applicable to Adjustments under this
Section. The following provisions shall be applicable to the making of
adjustments of the number of shares of Common Stock for which this Warrant is
exercisable and the Current Warrant Price provided for in this Section 4:
(a) Computation of Consideration. To the extent
that any Additional Shares of Common Stock or any Convertible
Securities or any warrants or other rights to subscribe for or
purchase any Additional Shares of Common Stock or any
Convertible Securities shall be issued for cash consideration,
the
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consideration received by the Company therefor shall be the
amount of the cash received by the Company therefor, or, if
such Additional Shares of Common Stock or Convertible
Securities are offered by the Company for subscription, the
subscription price, or, if such Additional Shares of Common
Stock or Convertible Securities are sold to underwriters or
dealers for public offering without a subscription offering,
the initial public offering price (in any such case
subtracting any amounts paid or receivable for accrued
interest or accrued dividends and without taking into account
any compensation, discounts or expenses paid or incurred by
the Company for and in the underwriting of, or otherwise in
connection with, the issuance thereof). To the extent that
such issuance shall be for a consideration other than cash,
then, except as herein otherwise expressly provided, the
amount of such consideration shall be deemed to be the Fair
Market Value of such consideration. In case any Additional
Shares of Common Stock or any Convertible Securities or any
warrants or other rights to subscribe for or purchase such
Additional Shares of Common Stock or Convertible Securities
shall be issued in connection with any merger in which the
Company issues any securities, the amount of consideration
therefor shall be deemed to be the Fair Market Value of such
portion of the assets and business of the nonsurviving
corporation as the Board of Directors of the Company in good
faith shall determine to be attributable to such Additional
Shares of Common Stock, Convertible Securities, warrants or
other rights, as the case may be. The consideration for any
Additional Shares of Common Stock issuable pursuant to any
warrants or other rights to subscribe for or purchase the same
shall be the consideration received by the Company for issuing
such warrants or other rights plus the additional
consideration payable to the Company upon exercise of such
warrants or other rights. The consideration for any Additional
Shares of Common Stock issuable pursuant to the terms of any
Convertible Securities shall be the consideration received by
the Company for issuing warrants or other rights to subscribe
for or purchase such Convertible Securities, plus the
consideration paid or payable to the Company in respect of the
subscription for or purchase of such Convertible Securities,
plus the additional consideration, if any, payable to the
Company upon the exercise of the right of conversion or
exchange in such Convertible Securities. In case of the
issuance at any time of any Additional Shares of Common Stock
or Convertible Securities in payment or satisfaction of any
dividends upon any class of stock other than Common Stock, the
Company shall be deemed to have received for such Additional
Shares of Common Stock or Convertible Securities a
consideration equal to the amount of such dividend so paid or
satisfied.
(b) When Adjustments to Be Made. The adjustments
required by this Section 4 shall be made whenever and as often
as any specified event requiring an adjustment shall occur,
except that any adjustment of the number of shares of Common
Stock for which this Warrant is exercisable that would
otherwise be required may be postponed (except in the case of
a subdivision or combination of shares of Common Stock, as
provided for in Section 4.1) up to, but not beyond the date of
exercise if such adjustment either by itself or with other
adjustments not previously made adds or subtracts less than 1%
of the shares of Common Stock
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for which this Warrant is exercisable immediately prior to the
making of such adjustment. Any adjustment representing a
change of less than such minimum amount (except as aforesaid)
which is postponed shall be carried forward and made as soon
as such adjustment, together with other adjustments required
by this Section 4 and not previously made, would result in a
minimum adjustment or on the date of exercise. For the purpose
of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its
occurrence.
(c) Fractional Interests. In computing
adjustments under this Section 4, fractional interests in
Common Stock shall be taken into account to the nearest 1/10th
of a share.
(d) When Adjustment Not Required. If the Company
shall take a record of the holders of Common Stock for the
purpose of entitling them to receive a dividend or
distribution or subscription or purchase rights and shall,
thereafter and before the distribution to stockholders
thereof, legally abandon its plan to pay or deliver such
dividend, distribution, subscription or purchase rights, then
thereafter no adjustment shall be required by reason of the
taking of such record and any such adjustment previously made
in respect thereof shall be rescinded and annulled.
4.7 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 each Holder shall have the right thereafter to receive,
upon exercise of such 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 by resolution of the Board of Directors of
the Company) in order to provide for adjustments of shares of 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 4.7, "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 over any other class of stock of such corporation
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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 4.7 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.
4.8 Other Action Affecting Common Stock. In case at any
time or from time to time the Company shall take any action in respect of its
Common Stock, other than any action described in this Section 4, then, unless
such action will not have a materially adverse effect upon the rights of the
Holders, the number of shares of Common Stock or other stock for which this
Warrant is exercisable and/or the purchase price thereof shall be adjusted in
such manner as may be equitable in the circumstances.
5. NOTICES TO WARRANT HOLDERS
5.1 Notice of Adjustments. Whenever the number of shares
of Class A Common Stock for which this Warrant is exercisable, or whenever the
price at which a share of such Class A Common Stock may be purchased upon
exercise of the Warrants, 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 (including
a description of the basis on which the Board of Directors of the Company
determined the fair value of any evidences of indebtedness, shares of stock,
other securities or property or warrants or other subscription or purchase
rights referred to in Section 4), specifying the number of shares of Common
Stock for which this Warrant is exercisable and (if such adjustment was made
pursuant to Section 4.7) 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 each Holder in accordance with Section 13.2. The Company shall keep
at its office or agency designated pursuant to Section 11 copies of all such
certificates and cause the same to be available for inspection at said office
during normal business hours by any Holder or any prospective purchaser of a
Warrant designated by a Holder thereof.
5.2 Notice of Corporate Action. If at any time
(a) The Company shall take a record of the
holders of Common Stock for the purpose of entitling them to
receive a dividend 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
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(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 the Holder (i)
at least thirty (30) 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 thirty (30) days'
prior written notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause also shall specify (A) 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
(B) 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 the Holder at the last address of the Holder
appearing on the books of the Company and delivered in accordance with Section
13.2.
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 shall 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 the Holder against impairment. Without limiting the generality of the
foregoing, the Company shall (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
Class A 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, stock exchange or the NASD as have jurisdiction therefor
as may be necessary to enable the Company to perform its obligations under this
Warrant.
7. RESERVATION AND AUTHORIZATION OF CLASS A COMMON STOCK; REGISTRATION
WITH OR 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 Class A Common Stock as will be
sufficient to permit the exercise in full of all outstanding Warrants. All
shares of Class A Common Stock which shall be so issuable, when issued upon
exercise of this Warrant and payment therefor in accordance with the terms of
the
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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 Class A Common Stock issuable upon exercise of this Warrant, the
Company shall take any corporate action which may be necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares of
such Class A Common Stock at such adjusted Current Warrant Price.
Before taking any action which would result in an adjustment
in the number of shares of Class A 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 Class A Common Stock required to be reserved
for issuance upon exercise of this Warrant require registration or qualification
with any governmental authority or other governmental approval or filing 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 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. SUPPLYING INFORMATION
The Company shall cooperate with each Holder of a Warrant 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.
10. LOSS OR MUTILATION
Upon receipt by the Company from any 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, 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
such Holder; provided that no indemnity, other than pursuant to the writing
agreement of the Holder, shall be required if such Holder is an institutional
investor, nor shall any indemnity be required in the case of mutilation if this
Warrant in identifiable form is surrendered to the Company for cancellation.
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11. OFFICE OF THE COMPANY
As long as any of the Warrants remain outstanding, the Company
shall maintain an office or agency (which may be the principal executive offices
of the Company) where the Warrants may be presented for exercise, registration
of transfer, division or combination as provided in this Warrant.
12. LIMITATION OF LIABILITY
No provision hereof, in the absence of affirmative action by
the Holder to purchase shares of Class A Common Stock, and no enumeration herein
of the rights or privileges of the Holder hereof, shall give rise to any
liability of such Holder for the purchase price of any Class A Common Stock or
as a stockholder of the Company, whether such liability is asserted by the
Company or by creditors of the Company.
13. MISCELLANEOUS
13.1 Nonwaiver and Expenses. No course of dealing or any
delay or failure to exercise any right hereunder on the part of the Holder shall
operate as a waiver of such right or otherwise prejudice the 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 the 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 the
Holder in collecting any amounts due pursuant hereto or in otherwise enforcing
any of its rights, powers or remedies hereunder.
13.2 Notices. Any notices or other communications required
or permitted hereunder shall be sufficiently given if in writing and delivered
in person, transmitted by telecopier or sent by registered or certified mail
(return receipt requested) or recognized overnight delivery service, postage
prepaid, addressed as follows, or to such other address as such party may notify
to the other party in writing:
if to the Company, to:
Firearms Training Systems, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
- and -
if to any Holder or holder of Warrant Stock, at its last known
address appearing on the books of the Company maintained for
such purpose.
A notice or communication will be effective (i) if delivered in person or by
overnight courier, on the business day it is delivered, (ii) if transmitted by
telecopier, on the business day of actual
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confirmed receipt by the addressee thereof, and (iii) if sent by registered or
certified mail, three business days after dispatch.
13.3 Remedies. Each holder of Warrants, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Warrant and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
13.4 Successors and Assigns. 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 the Holder. The
provisions of this Warrant are intended to be for the benefit of all the Holders
from time to time of this Warrant and shall be enforceable by any such Holder.
13.5 Amendment. This Warrant and all other Warrants may be
modified or amended or the provisions hereof waived with the written consent of
the Company and the Majority Holders, provided that no such Warrant may be
modified or amended to reduce the number of shares of Class A Common Stock for
which such Warrant is exercisable or to increase the price at which such shares
may be purchased upon exercise of such Warrant (before giving effect to any
adjustment as provided therein) without the prior written consent of the Holder
thereof.
13.6 Severability. Whenever 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 is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Warrant.
13.7 Headings. The headings used in this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
13.8 CHOICE OF LAW. THIS WARRANT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, APPLICABLE TO
CONTRACTS MADE AND PERFORMED THEREIN.
IN WITNESS WHEREOF, the Company has caused this Warrant to be
duly executed and its corporate seal to be impressed hereon and attested by its
Secretary or an Assistant Secretary.
Dated: ___________, 2000
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FIREARMS TRAINING SYSTEMS, INC.
By:
---------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: CEO and President
Attest:
By:
----------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Secretary
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EXHIBIT A
SUBSCRIPTION FORM
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of ______ shares of Class A Common Stock
of Firearms Training Systems, Inc. and herewith makes payment therefor, all at
the price and on the terms and conditions specified in this Warrant and requests
that certificates for the shares of Class A Common Stock hereby purchased (and
any securities or other property issuable upon such exercise) be issued in the
name of and delivered to __________ whose address is _________ and, if such
shares of Class A Common Stock shall not include all of the shares of Class A
Common Stock issuable as provided in this Warrant, that a new Warrant of like
tenor and date for the balance of the shares of Class A Common Stock issuable
hereunder be delivered to the undersigned.
-------------------------------
(Name of Registered Owner)
-------------------------------
(Signature of Registered Owner)
-------------------------------
(Street Address)
-------------------------------
(City) (State) (Zip Code)
NOTICE: The signature on this subscription must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
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EXHIBIT B
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below all of
the rights of the undersigned under this Warrant, with respect to the number of
shares of Class A Common Stock set forth below:
Name and Address of Assignee No. of Shares of
Class A Common Stock
and does hereby irrevocably constitute and appoint ______________________
attorney-in-fact to register such transfer on the books of Firearms Training
Systems, Inc. maintained for the purpose, with full power of substitution in the
premises.
Dated: Print Name:
----------------- ---------------------------
Signature:
---------------------------
Witness:
-----------------------------
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
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