WARRANT AGREEMENT (this "Agreement") dated June 26, 2002, between MEDICAL
TECHNOLOGY SYSTEMS, INC., a Delaware corporation (the "Company"), and EUREKA I,
L.P., a Delaware limited partnership (the "Purchaser").
The parties to this Agreement are also parties to a Securities Purchase
Agreement dated the date hereof (the "Purchase Agreement"). Section 6 of the
Purchase Agreement provides that as a condition of the Purchaser's obligation to
purchase and pay for the Series A Preferred Stock, Notes and Warrants (as
defined therein), the Company will execute and deliver this Agreement and issue
to the Purchaser one or more Warrant Certificates evidencing the Warrants (these
and certain other terms being defined in Section 14) to be purchased by the
Purchaser on the Closing Date (as defined in the Purchase Agreement).
NOW, THEREFORE, the parties agree as follows, intending to be legally
bound:
Section 1. Issuance of the Warrants.
On the date hereof, the Company hereby issues to the Purchaser and, subject
to the terms and conditions hereof, the Purchaser hereby acquires from the
Company, Warrants to purchase 566,517 shares of Common Stock. The exercise price
for the Warrants shall be $0.01 per share, as adjusted from time to time
pursuant to Sections 11, 12 and 13 (the "Exercise Price"). Each Warrant entitles
the holder thereof to purchase one Warrant Share.
Section 2. Warrant Certificates.
The certificates evidencing the Warrants (the "Warrant Certificates") to be
delivered pursuant to this Agreement shall be in registered form only and shall
be substantially in the form of Exhibit A.
Section 3. Execution of Warrant Certificates.
Warrant Certificates shall be signed on behalf of the Company by its
Chairman of the Board, Chief Executive Officer, President, any Vice President,
Chief Financial Officer or Treasurer. The Company's corporate seal may but need
not be affixed to any Warrant Certificate.
Section 4. Registration.
The Company will keep at its principal office a register or registers in
which the Company shall record the registrations of the Warrants and the names
and addresses of the holders thereof from time to time and all transfers
thereof. The Company shall number and register the Warrant Certificates in such
register as they are issued by the Company. The Company may deem and treat the
registered holders of the Warrant Certificates as the absolute owners thereof,
for all purposes, and the Company shall not be affected by any notice to the
contrary.
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Section 5. Registration of Transfers, Exchanges or Assignment of Warrants.
Subject to the limitations of this Section, the Warrant holders shall be
entitled to assign their Warrants in whole or in part to any Person, so long as
such transferee or assignee executes a counterpart to the Intercreditor
Agreement or a joinder thereto, agreeing to be bound by its terms. The Company
shall, from time to time, register the transfer of any outstanding Warrant
Certificates upon the register maintained by it for that purpose pursuant to
Section 4, upon surrender thereof accompanied by a written instrument or
instruments of transfer in the form of the Assignment Form attached to the
Warrant Certificate duly executed by the registered holder or holders thereof or
by the duly appointed legal representative thereof or by his attorney duly
authorized in writing. In the event of any assignment in part, the Exercise
Price shall be apportioned between the Warrants to be issued to the holder with
respect to that portion not transferred and the Warrants to be issued to the
transferee, based on their respective number of Warrants.
If a transfer is made otherwise than pursuant to an effective registration
statement under the Securities Act, the Company may require the transferor to
deliver, prior to such transfer, an opinion of counsel, which may be counsel to
such transferor, reasonably satisfactory to the Company, that the Warrant or
Warrant Shares may be sold without registration under the Securities Act and
state securities or blue sky laws. In such event, regardless of whether the
Company requires delivery of an opinion of counsel, the Company may also require
that the transferee provide, prior to such transfer:
(1) a written representation, signed by the proposed transferee, that
such transferee is purchasing the Warrants or Warrant Shares for investment
and not with a view toward distribution;
(2) an agreement by such transferee to the impression of the
restrictive investment legend set forth below on the Warrant or the Warrant
Shares;
(3) an agreement by such transferee that the Company may place a
notation in the stock books and the Warrant register of the Company in
respect of the restrictions on transfer described in the legend set forth
below; and
(4) an agreement by such transferee to be bound by the provisions of
this Section relating to the restrictions on transfer of such Warrant or
Warrant Shares.
Each Warrant Certificate and each certificate representing Warrant Shares
shall, until the Warrants or Warrant Shares represented by such certificates
have been distributed to the public pursuant to an offering registered under the
Securities Act, or until the Warrants or Warrant Shares may be sold by the
holder pursuant to Rule 144(k) under the Securities Act, or until the Company
has received an opinion of counsel, which may be counsel to the holder of such
certificate, reasonably satisfactory to the Company, that such legend is not
required under the Securities Act, bear a legend in substantially the following
form:
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THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT"), OR THE SECURITIES LAW OF ANY STATE AND MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS SUCH
OFFER, SALE, PLEDGE OR TRANSFER IS REGISTERED UNDER THE 1933
ACT OR APPLICABLE STATE SECURITIES LAWS OR EXEMPT FROM SUCH
REGISTRATION. TRANSFER OF THESE SECURITIES IS ALSO SUBJECT
TO CERTAIN RESTRICTIONS UNDER THE WARRANT AGREEMENT DATED
JUNE 26, 2002, BETWEEN THE COMPANY AND EUREKA I, L.P.
Warrant Certificates may be exchanged or combined at the option of the
holder thereof for another Warrant Certificate or other Warrant Certificates of
like tenor and representing in the aggregate a like number of Warrants upon
presentation thereof to the Company at its principal office, together with a
written notice signed by the holder specifying the names and denominations in
which the new Warrants are to be issued.
Upon surrender of a Warrant Certificate to the Company at its principal
office for transfer or exchange in accordance with this Section, the Company
shall, without charge, execute and deliver a new Warrant Certificate of like
tenor, and in the amount of the Warrants being transferred, in the name of the
assignee named in the instrument of assignment and, if the holder's entire
interest is not being assigned, in the name of the holder with respect to that
portion not transferred, and the Warrant Certificate so surrendered shall
promptly be canceled.
Any new Warrant Certificate issued as a result of transfer, exchange or
combining shall bear the legend required by the Intercreditor Agreement.
Section 6. Terms of Warrants; Exercise of Warrants.
Subject to the terms of this Agreement, each Warrant holder shall have the
right, which may be exercised at any time during the period from (and including)
the date of this Agreement until 5:00 p.m., Eastern time, on June 26, 2012 (such
period being herein referred to as the "Exercise Period"), to receive from the
Company the number of Warrant Shares which the holder may at the time be
entitled to receive on exercise of such Warrants and payment of the Exercise
Price then in effect for such Warrant Shares. The Warrant Shares issued to a
Warrant holder upon exercise of its Warrants shall be fully paid, nonassessable
and subject to no preemptive rights. Each Warrant not exercised prior to the
expiration of the Exercise Period shall become void, and all rights thereunder
and all rights in respect thereof under this Agreement shall cease as of such
time.
During the Exercise Period, each Warrant holder may exercise, at any time
or from time to time, some or all of the Warrants represented by its Warrant
Certificates by (1) surrendering to the Company at its principal office such
Warrant Certificates with the Form of Election to Purchase attached thereto duly
filled in and signed, with signatures guaranteed by a bank or trust company
having an office or correspondent in the United States or a broker or dealer
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which is a member of a registered securities exchange or the National
Association of Securities Dealers, Inc., and (2) paying to the Company the
Exercise Price for the number of Warrant Shares in respect of which such
Warrants are then being exercised. Warrants shall be deemed exercised on the
date Warrant Certificates representing such Warrants are surrendered to the
Company, accompanied by the Form of Election to Purchase as provided above, and
payment of the Exercise Price for such Warrants is received by the Company, and
the Warrant Shares in respect of which the Warrants are exercised shall be
deemed issued on that date, and the Person in whose name the certificate
representing the Warrant Shares is to be issued shall be deemed the holder of
such Warrant Shares as of that date for all purposes. Payment of the aggregate
Exercise Price by the Warrant holder shall be made by check payable to the order
of the Company or by wire transfer of immediately available funds, as the holder
shall elect.
In addition to the rights of the holders under the preceding provisions of
this Section, each holder shall have the right, in lieu of paying the Exercise
Price in cash, to instruct the Company to reduce the number of shares of Common
Stock thereafter eligible to be purchased by such holder pursuant to Warrants
held by it in accordance with the following formula:
P
N = -------------
( M - E )
where:
N = the number of shares of Common Stock to be subtracted from
remaining number of Warrant Shares purchasable upon exercise
of such holder's Warrants; and
P = the aggregate Exercise Price otherwise payable for the shares
issuable upon exercise of the Warrants; and
M = the Market Price determined as of the date of such exercise; and
E = the Exercise Price on the date of such exercise.
Subject to the provisions of Section 7, upon the exercise of any Warrants,
the Company shall issue and cause to be delivered with all reasonable dispatch
(but in any event within ten Business Days) to or upon the written order of the
holder and in such name or names as the Warrant holder may designate, a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants, together with such other property, including
cash, which shall be deliverable upon such exercise.
Notwithstanding any other provision of this Agreement or the Warrants, but
subject to the terms of the Intercreditor Agreement, the Company shall have the
option in lieu of delivering shares of Common Stock upon exercise of Warrants,
to deliver cash in an amount equal to the number of shares of Common Stock
otherwise deliverable times the Market Price per share of the Common Stock on
the date of exercise.
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The Warrants shall be exercisable at any time or from time to time during
the Exercise Period, at the election of the holders thereof, either in full or
from time to time in part, and if fewer than all of the Warrants represented by
a Warrant Certificate are exercised, a new certificate evidencing the Warrants
not exercised will be issued by the Company at the Company's expense, to the
holder of such Warrants with all reasonable dispatch (but in any event within
ten Business Days). All Warrant Certificates surrendered upon exercise of
Warrants shall be canceled by the Company.
Section 7. Payment of Taxes.
The Company will pay all documentary stamp taxes attributable to the
initial issuance of the Warrants or the initial issuance of the Warrant Shares
upon the exercise of Warrants; but the Company shall not be required to pay any
transfer tax which may be payable in respect of any transfer involved in the
issuance of any Warrant Certificates or any certificates for Warrant Shares in a
name other than that of the registered holder of the Warrant Certificate
surrendered for exercise or transfer of a Warrant, and the Company shall not be
required to issue or deliver such Warrant Certificate or certificates
representing such Warrant Shares unless or until the Person or Persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
Section 8. Mutilated or Missing Warrant Certificates.
In case any Warrant Certificate shall be mutilated, lost, stolen or
destroyed, the Company shall issue in exchange and substitution for, upon
surrender of the mutilated Warrant Certificate, or in lieu of and substitution
for the Warrant Certificate lost, stolen or destroyed, a new Warrant Certificate
of like tenor and representing an equivalent number of Warrants, but only upon
receipt of evidence satisfactory to the Company of such loss, theft or
destruction of such Warrant Certificate. The new Warrant Certificate shall be
dated the date of issuance of the lost, stolen or destroyed Warrant Certificate
and shall bear the legends required by Section 5. Applicants for such substitute
Warrant Certificates shall also comply with any other reasonable requests of the
Company, including, without limitation, in the case of any such loss, theft or
destruction, a request to provide an indemnity bond, the form and issuer of
which shall be satisfactory to the Company, except that neither the Purchaser,
any of its Affiliates nor any other institutional investor shall be required to
furnish an indemnity bond if it furnishes to the Company an unsecured indemnity
agreement in customary form.
Section 9. Reservation of Warrant Shares.
The Company will at all times reserve and keep available, free from
preemptive rights and liens, out of the aggregate of its authorized but unissued
Common Stock or its authorized and issued Common Stock held in its treasury, for
the purpose of enabling it to satisfy any obligation to issue Warrant Shares
upon exercise of Warrants, the maximum number of shares of Common Stock which
may then be deliverable upon the exercise of all outstanding Warrants.
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Section 10. Certain Other Agreements of the Company.
(a) The Company hereby covenants and agrees that (1) all Warrant
Shares will upon issuance be validly issued, fully paid and nonassessable,
and free from all taxes, liens and charges, and will upon issuance be
listed, on each national securities exchange or trading market, if any, on
which other shares of the same class are then listed; (2) the Company will
not increase the par value of the shares of Common Stock receivable upon
the exercise of the Warrants above the Exercise Price then in effect; (3)
during the Exercise Period, without the consent of the holders of a
majority in interest of the Warrants and Warrant Shares, the Company will
not authorize any new class of Common Stock (as defined in Section 12) that
differs from the Common Stock (as constituted on the date of this
Agreement) in any respect other than voting rights; (4) the Company will
not authorize any Preferred Stock without the written consent of the
holders of a majority of the Warrants and Warrant Shares; (5) before or
within a reasonable time after taking any action which would cause an
adjustment reducing the Exercise Price below the then par value of the
shares of Common Stock (but in any case not later than the next annual or
special meeting of stockholders), the Company will use commercially
reasonable efforts to take all such corporate 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 at such adjusted Exercise
Price upon the exercise of the Warrants (it being understood that failure
to obtain the appropriate action despite the Company's use of commercially
reasonable efforts will not constitute a violation of this Agreement); and
(6) the Company will not take any action which results in any adjustment of
the Exercise Price if the total number of Warrant Shares issuable after the
action upon the exercise of the Warrants (including any additional Warrants
issued pursuant to Section 11) would exceed the total number of shares of
Common Stock then authorized by the Company's certificate of incorporation
and available for the purpose of issue upon such exercise.
(b) The holders of a majority of the outstanding Warrants have the
right (so long as the outstanding Warrants represent the unexercised right
to purchase during the Exercise Period at least one-half of the Warrant
Shares originally covered by the Warrants initially issued hereunder) to
appoint one observer who shall have the right to attend all meetings of the
board of directors of the Company and all committee meetings of such board;
provided, however, that, so long as the holders of the Series A Preferred
Stock, the Notes or the Warrants shall have the right to appoint such an
observer, all shall appoint the same observer, the identity of which will
be determined (i) by the requisite holders of the Notes until the principal
and interest of the Notes are repaid in full, (ii) thereafter, by the
holders of a majority of the outstanding Warrants, and (iii) thereafter, by
the holders of the majority of the issued and outstanding Series A
Preferred Stock. Notwithstanding anything to the contrary, the Company
shall be entitled to exclude such observer from any board discussions (and
withhold any related materials) materially affecting the relationship of
the Company or any of its Subsidiaries to any holder of Series A Preferred
Stock, the Warrants or the Notes.
(c) During the Exercise Period, the Company will permit any
representatives designated by the holders of a majority of the Warrants,
during normal business hours and upon reasonable notice to (1) visit and
inspect any of the properties of the Company and its Subsidiaries, (2)
examine the corporate and financial records of the Company and its
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Subsidiaries and make copies thereof or extracts therefrom and (3) discuss
the affairs, finances and accounts of any such companies with the
directors, officers, key employees and independent accountants of the
Company and its Subsidiaries; provided, that in no event shall such
inspection impede or interrupt the normal business operations of the
Company. The Company will reimburse the holders of the Warrants for their
reasonable expenses (including travel) incurred under the preceding
sentence for not more than one such examination per year. The presentation
of an executed copy of this Agreement by the holders of a majority of the
Warrants to the Company's independent accountants will constitute the
Company's permission to its independent accountants to participate in
discussions with such persons. The holders of the Warrants and their
designated representative shall maintain the confidentiality of any
confidential and Proprietary Information so obtained by them or obtained
from any board observer which is not otherwise available from other sources
that are free from similar restrictions; provided, however, that the
foregoing shall in no way limit or otherwise restrict the ability of the
holders of the Warrants or such authorized representatives to disclose any
such information concerning the Company which they may be required to
disclose (i) to their partners to the extent required to satisfy their
fiduciary obligations to such persons (so long as such partners agree to be
bound by the confidentiality provisions hereof), or (ii) otherwise as
required by law. The holders of the Warrants and Warrant Shares (i)
acknowledge that they may, from time to time, be in possession of
non-public information regarding the Company as a result of the information
rights granted to them hereunder, and (ii) agree not to trade in the
securities of the Company while in possession of any material, non-public
information in violation of applicable law.
(d) During the Exercise Period, the Company will furnish each holder
of Warrants with the following:
(i) As soon as practicable, and in any case within thirty (30)
days after the end of each calendar month, the monthly management
reporting package in the form customarily prepared by the Company from
time to time, but minimally including (A) an unaudited balance sheet
as of the last day of such month, (B) an unaudited statement of income
for such month, together with a cumulative statement of income from
the first day of the then current fiscal year to the last day of such
month, and (C) a statement of cash flows for such month and a
comparison between the actual figures for such month and the
comparable figures (with respect to clauses (A) and (B) only) for the
prior year period, along with management commentary. The foregoing
financial statements shall be accompanied by an Officers' Certificate
to the effect that such statements fairly present in all material
respects the financial position and financial results of the Company
for the fiscal period covered, qualified by the fact that the Company
may need to make adjustments to the foregoing figures as determined by
the Company's auditors in accordance with generally accepted
accounting procedures.
(ii) As soon as practicable and in any event within 90 days after
the end of each fiscal year commencing with the fiscal year ending
March 31, 2002, an annual independent certified audit prepared by
nationally recognized certified public accountants.
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(iii) Not later than the beginning of each fiscal year, an annual
operating plan with budget for the Company, including the Company's
capital budget, for the coming fiscal year.
(iv) Promptly upon receipt thereof, any additional reports,
management letters or other detailed information concerning
significant aspects of the Company's operations and financial affairs
given to the Company by its independent accountants (and not otherwise
contained in other materials provided pursuant to this Section 7.2).
(v) Within fifteen days after transmission thereof, copies of all
financial statements, proxy statements, reports and any other general
written communications which the Company sends to its shareholders
and/or lenders and copies of all registration statements and all
regular, special or periodic reports which it files, with the
Securities and Exchange Commission or with any securities exchange on
which any of its securities are then listed, and copies of all press
releases and other statements made available generally by the Company
to the public concerning material developments in the Company's
business.
(vi) From time to time upon request of any holder of Warrants,
such other information as the Company is required by law to furnish to
as any stockholder on request.
(e) If for any period the Company shall have any Subsidiary or
Subsidiaries, then in respect of such period the financial statements
delivered pursuant to subsections (i) and (ii) of Section 10(d) shall
include consolidating (unaudited) and consolidated financial statements of
the Company and its Subsidiaries.
Section 11. Adjustment on Liquidity Event.
(a) Adjustment. If a Liquidity Event occurs, at the option of any
holder of Warrants the number of Warrant Shares issuable upon exercise of
the Warrants shall be increased, if necessary (but not decreased), so that
each of the investment thresholds set forth in the following table opposite
the period in which the Liquidity Event occurs is met, determined in each
case (1) with reference to the value implicit in the Liquidity Event of the
Warrant Shares issuable (after such adjustment) upon exercise of all of the
Warrants, and (2) on the assumption that all outstanding Convertible
Securities (including Convertible Securities issuable upon exercise of
outstanding options), warrants and other rights are exercised, converted or
exchanged, and all shares of Common Stock issuable upon such exercise,
converted or exchanged are issued:
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Period (dates Internal Rate Investment
Inclusive) of Return Multiple
-------------------------------- --------------- --------------
June 27, 2002, through 32% 2.50
June 26, 2005
June 27, 2005, through 32% 2.75
June 26, 2006
June 27, 2006 and thereafter 32% 3.00
(b) Definitions. For purposes of this Section:
(1) "Liquidity Event" means (A) the sale, lease, abandonment,
transfer or other disposition of all or substantially all the stock or
assets of the Company, including by merger, consolidation or
otherwise, (B) the dissolution, liquidation or winding up of the
Company, (C) the occurrence of a Change of Control, or (D) a Qualified
Public Offering.
(2) A "Change of Control" occurs when, as the result of the
issuance of securities by the Company or the disposition of
outstanding securities of the Company by the holders thereof, by
merger, or by any other transaction, (i) members of the Xxxxxx Family
collectively own less than 22.5% of the combined voting power of all
classes of Voting Securities, or (ii) any "person" or group of persons
(within the meaning of section 13(d) of the Securities Exchange Act of
1934 or Rule 13d-5 thereunder) (other than one or more members of the
Xxxxxx Family or holders of the Series A Preferred Stock, Warrants or
shares of Common Stock issued as a result of conversion of the Series
A Preferred Stock or exercise of the Warrants), becomes the
"beneficial owner" (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, except that a person shall be deemed
to be the beneficial owner of all securities that such person has the
right to acquire before or after the expiration of any period of time
specified in such rule) of Voting Securities with combined voting
power equal to or greater than 35% of combined voting power of all
outstanding Voting Securities. In determining the percentage of voting
power of all Voting Securities held by any Person (or "person"), all
Voting Securities issuable upon the exercise, conversion or exchange
of outstanding options, warrants, convertible securities or other
rights to purchase or subscribe for Voting Securities shall be deemed
to be outstanding.
(3) "Voting Securities" means securities entitled in ordinary
circumstances to vote generally in the election of directors of the
Company.
(4) "Xxxxxx Family" means (1) Xxxx X. Xxxxxx, his siblings, the
descendants of Xxxx X. Xxxxxx and his siblings, and the spouses of any
of the foregoing persons; and (2) any general or limited partnership
(including Jade Partners), trust (including the Xxxxxx Family Trust)
or other entity all of whose partners, beneficiaries or other owners
are Persons described in clause (1).
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(5) "Qualified Public Offering" means the first issuance and sale
after the date of this Agreement by the Company, pursuant to a
registration statement that becomes effective under the Securities
Act, of securities (other than senior debt securities that are neither
Convertible Securities nor issued as part of an offering that includes
equity securities or Convertible Securities) for net proceeds to the
Company of $15,000,000 or more.
(6) "Internal Rate of Return" means the per annum discount rate
(calculated on the basis of daily compounding) that, when applied to
each payment in cash of principal of, interest on, and prepayment fee
in connection with, the Notes and to the proceeds received (or deemed
received pursuant to paragraph (B)) by the Warrant holders pursuant to
a Liquidity Event, results in an aggregate present value as of the
Weighted Average Issue Date equal to the aggregate purchase price paid
by the Purchaser for the Notes and the Warrants. For this purpose:
(A) "Weighted Average Issue Date" means the date determined
by (i) multiplying the aggregate issue price of each separate
issuance of Notes and Warrants by the number of days between the
date of such issuance and the date of the Liquidity Event; (ii)
adding together the amounts determined under clause (A); (iii)
dividing the result obtained under clause (ii) by the aggregate
issue price of all Notes and Warrants issued before the date of
the Liquidity Event; and (iv) counting backward from the date of
the Liquidity Event the number of days so determined; and
(B) if the Liquidity Event is a Qualified Public Offering,
the Internal Rate of Return will be calculated on the assumption
that all Warrants are exercised and all Warrant Shares are sold
at the public offering price, whether or not any Warrants are in
fact exercised or any Warrant Shares are in fact sold.
(7) "Investment Multiple" means the result obtained by dividing
(A) the sum of (i) the aggregate amount paid in cash on account of the
principal of, interest on and prepayment fee in connection with the
Notes; plus (ii) the proceeds received (or deemed received pursuant to
the next sentence) by the Warrant holders pursuant to a Liquidity
Event, by (B) the aggregate purchase price paid by the Purchaser for
the Notes and the Warrants. For this purpose, if the Liquidity Event
is a Qualified Public Offering, the Investment Multiple will be
calculated on the assumption that all Warrants are exercised and all
Warrant Shares are sold at the public offering price, whether or not
any of the Warrants are in fact exercised or any of the Warrant Shares
are in fact sold.
(c) Ratable Treatment. All additional Warrants issued pursuant to this
Section will be apportioned among the Warrant holders in proportion to the
number of Warrants held by each immediately before the Liquidity Event that
causes the adjustment.
(d) Issuance of Additional Warrant Certificates. Promptly (and in any
event within ten Business Days) after the occurrence of any adjustment
under this Section, the Company will execute and deliver to each Warrant
Holder one or more additional Warrant Certificates for the additional
Warrants to be issued on account of such adjustment, except that if it
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shall be necessary for the Warrant Holders to possess or deliver Warrants
or certificates representing Warrant Shares in order to participate in the
related Liquidity Event, the Company will execute and deliver Warrant
Certificates in sufficient time for the Warrant Holders to exercise the
Warrants evidenced thereby and obtain all share certificates necessary for
them to participate in the Liquidity Event.
(e) Limitation. The number of Warrants that the Company shall be
required to issue pursuant to this Section shall not exceed 12,500,000,
less the number of shares of Common Stock issued by the Company pursuant to
Section 11 of the Registration Rights Agreement dated the date hereof
between the Company and the Purchaser.
Section 12. Dilution Adjustments and Related Provisions.
The number of shares of Common Stock purchasable upon the exercise of each
Warrant and the Exercise Price shall be subject to adjustment from time to time
upon the occurrence of certain events, as provided in this Section. Any
reduction in the Exercise Price is subject to subsection (k). For purposes of
this Section, "Common Stock" means the Common Stock (as defined in Section 14)
and any other stock of the Company, however designated, that has the right to
participate in any distribution of the assets or earnings of the Company without
limit as to per share amount.
(a) Adjustment for Change in Capital Stock. If at any time after the
date hereof, the Company:
(1) pays a dividend or makes a distribution on its Common Stock
in shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a
greater number of shares;
(3) combines its outstanding shares of Common Stock into a
smaller number of shares;
(4) makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock; or
(5) issues by reclassification of its Common Stock any shares of
its capital stock;
then the number of shares of Common Stock purchasable upon exercise of the
Warrants and the Exercise Price, as in effect immediately prior to such action,
shall be adjusted so that the holders may receive upon exercise of the Warrants
and payment of the same aggregate consideration the number of shares of capital
stock of the Company which the holders would have owned immediately following
such action if the holders had exercised the Warrants immediately prior to such
action. The adjustment shall become effective immediately after the record date
in the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification. If after an
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adjustment a holder of a Warrant upon exercise may receive shares of two or more
classes or series of capital stock of the Company, the Company shall determine
the allocation of the adjusted Exercise Price between the classes or series of
capital stock. After such allocation, the exercise privilege and the Exercise
Price of each class or series of capital stock shall thereafter be subject to
adjustment on terms comparable to those applicable to Common Stock in this
Section. Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) Adjustment for Common Stock Issuances. If at any time after the
date of this Agreement the Company issues (other than in an Exempt Issuance
or in a transaction described in subsection (a) or (e)) shares of Common
Stock for a consideration per share less than the Market Price, determined
as of the date of issuance of such shares, the Exercise Price shall be
reduced in accordance with the following formula:
P
O + -------
M
EP9 = EP x -----------
O9
where: EP9 = the adjusted Exercise Price;
EP = the then current Exercise Price;
O = the number of shares of Common Stock outstanding immediately
prior to the issuance of such additional shares;
P = the aggregate consideration received for the issuance of such
additional shares;
M = the Market Price, determined as of the date of issuance of such
shares; and
O9 = the number of shares of Common Stock outstanding immediately
after the issuance of such additional shares.
The adjustment shall be made successively whenever any such issuance occurs, and
shall become effective immediately after such issuance.
(c) Adjustment for Convertible Securities Issuance. If at any time after
the date hereof the Company issues (other than in an Exempt Issuance or in a
transaction described in subsection (a)) any Convertible Securities for an
aggregate consideration which, when added to the aggregate consideration payable
for the number of shares of Common Stock initially deliverable upon conversion,
exchange or exercise of such Convertible Securities, is less than the product of
such number of shares of Common Stock and the Market Price, determined as of the
date of issuance of such Convertible Securities, the Exercise Price shall be
reduced in accordance with the following formula:
13
P
O + -------
M
EP9 = EP x -----------
O + C
where: EP9 = the adjusted Exercise Price.
EP = the then current Exercise Price;
O = the number of shares of Common Stock outstanding immediately
prior to the issuance of such Convertible Securities;
P = the sum of the aggregate consideration received for the
issuance of such Convertible Securities plus the additional
consideration, if any, payable upon conversion, exchange or
exercise of such Convertible Securities at the initial
conversion, exchange or exercise rate;
M = the Market Price, determined as of the date of issuance of
such Convertible Securities; and
C = the maximum number of shares deliverable upon conversion,
exchange or exercise of such Convertible Securities at the
initial conversion, exchange or exercise rate.
The adjustment shall be made successively whenever any such issuance occurs, and
shall become effective immediately after such issuance. If all of the Common
Stock deliverable upon conversion, exchange or exercise of such Convertible
Securities has not been issued when such Convertible Securities are no longer
outstanding, then the Exercise Price shall promptly be readjusted to the
Exercise Price which would then be in effect had the adjustment upon the
issuance of such securities been made on the basis of the actual number of
shares of Common Stock issued upon conversion, exchange or exercise of such
Convertible Securities.
(d) Adjustment for Rights Issue. If at any time after the date hereof
the Company distributes any rights, options or warrants to all holders of
its Common Stock entitling them for a period expiring within 60 days after
the record date mentioned below to purchase shares of Common Stock or
Convertible Securities at a price per share (or with an initial conversion,
exchange or exercise price per share) less than the Market Price per share
on that record date, the Exercise Price shall be reduced in accordance with
the following formula:
14
M
EP9 = EP x -------
O + N
where: EP9 = the adjusted Exercise Price;
EP = the then current Exercise Price;
O = the number of shares of Common Stock outstanding on the
record date;
N = the number of additional shares of Common Stock covered
by the rights, options, warrants or Convertible Securities;
P = the offering price per share (including the initial
conversion, exchange or exercise price, in the case of
Convertible Securities) of the additional shares; and
M = the Market Price determined as of the record date.
The adjustment pursuant to this subsection shall be made successively whenever
any such rights, options or warrants are issued and shall become effective
immediately after the record date for the determination of stockholders entitled
to receive the rights, options or warrants. If at the end of the period during
which such rights, options or warrants are exercisable, not all rights, options
or warrants shall have been exercised, the Exercise Price shall be immediately
readjusted to what it would have been if "N" in the above formula had been the
number of shares actually issued.
(e) Adjustment for Distribution on or Purchase or Redemption of Common
Stock. If at any time after the date hereof the Company or any Subsidiary
of the Company (1) distributes to the holders of Common Stock any of the
assets (including cash), debt securities, preferred stock, or rights to
purchase debt securities, preferred stock or common stock of the Company or
any of its Subsidiaries, or (2) redeems, purchases or otherwise acquires
for value any shares of Common Stock, the Exercise Price shall be reduced
in accordance with the following formula:
(M x O) - F
EP9 = EP x -------------
M x (O - N)
where: EP9 = the adjusted Exercise Price;
EP = the then current Exercise Price;
M = the Market Price determined as of the date on which
the distribution, redemption, purchase or acquisition
occurs;
15
O = the number of shares of Common Stock outstanding immediately
before the distribution, redemption, purchase or acquisition;
F = the aggregate amount of cash plus the Fair Market Value of
the aggregate non-cash consideration or securities distributed
to holders of Common Stock or paid for all shares of Common
Stock so redeemed, purchased or acquired; and
N = the number of shares of Common Stock so redeemed, purchased or
acquired.
No adjustment shall be required under this subsection on account of the first
$50,000 paid by the Company after the date hereof to acquire odd lots (less than
100 shares) of Common Stock.
(f) No Increase in Exercise Price. In no event shall any adjustment
made pursuant to subsection (b), (c), (d) or (e) increase the Exercise
Price.
(g) Adjustment in Number of Warrant Shares. Upon each adjustment in
the Exercise Price pursuant to any provision of this Section, the number of
shares of Common Stock purchasable hereunder shall be adjusted, to the
nearest one hundredth of a whole share, to the product obtained by
multiplying the number of shares purchasable immediately prior to such
adjustment in the Exercise Price by a fraction, the numerator of which
shall be the Exercise Price immediately prior to such adjustment and the
denominator of which shall be the Exercise Price in effect immediately
thereafter, determined without reference to subsection (k). All
calculations under this Section shall be made to the nearest ten-thousandth
of a cent and to the nearest hundredth of a share.
(h) Deferral of De Minimis Adjustments. No adjustment in the Exercise
Price need be made unless the adjustment would require an increase or
decrease of at least one percent in the Exercise Price. Any adjustments
that are not made shall be carried forward and taken into account in any
later adjustment.
(i) Consideration Received. In any calculation of consideration
received for purposes of this Section, the following shall apply:
(1) in the case of the issuance of shares of Common Stock or
Convertible Securities for cash, the consideration shall be the amount
of such cash, before deduction for commissions, discounts and other
expenses of the issuance; and
(2) in the case of the issuance of shares of Common Stock or
Convertible Securities for a consideration in whole or in part other
than cash, the consideration other than cash shall be deemed to be the
Fair Market Value thereof.
(j) When No Adjustment Required. No adjustment need be made for a
change in the par value, or from par value to no par value, or from no par
value to par value, of the Common Stock. To the extent the holders become
entitled to receive cash upon exercise of the Warrants, no adjustment need
be made thereafter as to the cash. Interest will not accrue on the cash.
16
(k) Par Value. Notwithstanding any other provision of this Section, no
adjustment to the Exercise Price shall reduce the Exercise Price below the
then par value per share of the Common Stock, and any such purported
adjustment shall instead reduce the Exercise Price to such par value.
However, in applying subsection (g), the "Exercise Price in effect
immediately thereafter" shall be determined without regard to this
subsection.
(l) Notice of Certain Transactions. If:
(1) the Company takes any action that would require an
adjustment in the Exercise Price pursuant to this Section,
(2) the Company takes any action that would require a
supplemental Warrant Agreement pursuant to subsection (m),
(3) there is a liquidation or dissolution of the Company, or
(4) a Liquidity Event occurs,
the Company shall mail to Warrant holders a notice describing the event and
stating applicable record date or, if there is no record date, the
effective date. The Company shall mail the notice at least 30 days before
such date if practicable, but in any event not less than ten days before
the time the Warrant holders would be required to exercise their warrants
in order to participate in the transaction on the same basis as holders of
Common Stock. Failure to mail the notice or any defect in it shall not
affect the validity of the transaction.
Whenever the Exercise Price or the number of shares of Common Stock
purchasable under the terms of the Warrants shall be adjusted pursuant to
this Section, the Company shall as soon as practicable prepare a
certificate signed by its President or a Vice President setting forth in
reasonable detail the event requiring the adjustment, the amount of the
adjustment, the method by which the adjustment was calculated, the Market
Price (if applicable), and the number of shares of Common Stock purchasable
after giving effect to such adjustment, and shall as soon as practicable
cause copies of such certificate to be mailed (by first class, postage
prepaid) to the registered holders of the Warrants.
(m) Reorganization of the Company.
If the Company consolidates or merges with or into, or transfers or
leases all or substantially all its assets to, any person (other than to
one of its Wholly-Owned Subsidiaries), upon consummation of such
transaction the Warrants shall automatically become exercisable for the
kind and amount of securities, cash or other assets which the holder of a
Warrant would have owned immediately after the consolidation, merger,
transfer or lease if the holder had exercised the Warrant immediately
before the record date (or, if none, the effective date) of the
transaction. Concurrently with and as a condition of the consummation of
17
such transaction, the corporation formed by or surviving any such
consolidation or merger if other than the Company, or the person to which
such sale or conveyance shall have been made (any such person, the
"Successor Guarantor"), shall enter into a supplemental Warrant Agreement
so providing and further providing for adjustments which shall be as nearly
equivalent as may be practical to the adjustments provided for in this
Section. The Successor Guarantor shall mail to Warrant holders a copy of
the supplemental Warrant Agreement. If the issuer of securities deliverable
upon exercise of Warrants under the supplemental Warrant Agreement is an
affiliate of the surviving transferee or lessee corporation, that issuer
shall join in the supplemental Warrant Agreement.
Notwithstanding the preceding paragraph, in the case of any merger,
reverse stock split, or other transaction in which the Common Stock shall
be converted into the right to receive a consideration consisting solely of
cash, then each holder of a Warrant, without having to take any action
other than the surrendering of such Warrant to the Company, shall receive
an amount equal to the amount (if any) by which the price per share payable
to, or which would be received by, any holder of Common Stock in connection
with such transaction exceeds the Exercise Price effective at that time.
If this subsection applies, subsections (a), (b), (c), (d) and (e) do
not apply.
(n) Form of Warrants. Irrespective of any adjustments in the Exercise
Price or the number or kind of shares purchasable upon the exercise of the
Warrants, Warrants theretofore or thereafter issued may continue to express
the same price and number and kind of shares as are stated in the Warrants
initially issuable pursuant to this Agreement.
(o) Violation of Purchase Agreement. Nothing in this Section shall be
deemed to waive any restriction on the Company set forth in the Purchase
Agreement or elsewhere in this Agreement.
Section 13. No Impairment.
The Company will not, by amendment of its certificate of incorporation or
through any consolidation, merger, reorganization, transfer of assets,
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 the Warrants,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the holder of the Warrants against dilution or other
impairment. Without limiting the generality of the foregoing, the Company (1)
will 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 on the exercise of the Warrants from time to time outstanding and
(2) will not take any action which results in any adjustment of the Exercise
Price if the total number of Warrant Shares issuable after the action upon the
exercise of all of the Warrants would exceed the total number of shares of
Common Stock then authorized by the Company's certificate of incorporation and
available for the purposes of issue upon such exercise.
18
Section 14. Definitions.
The following terms shall have the following meanings:
"Affiliate" of any Person means any other Person that controls, is
controlled by or is under common control with such Person.
"Business Day" means any day on which the New York Stock Exchange is open
for trading.
"Change of Control" is defined in Section 11(b).
"Common Stock" means the Common Stock, par value $0.01 per share, of the
Company as constituted on the date of this Agreement, except as otherwise
provided in Sections 10(a)(3) and 12 and in the definition of "Convertible
Securities."
"Convertible Securities" means securities or obligations that are
exercisable for, convertible into or exchangeable for shares of Common Stock (as
defined in Section 12). The term includes options, warrants or other rights to
subscribe for or purchase Common Stock or to subscribe for or purchase other
Convertible Securities.
"Exempt Issuance" means (a) the issuance of Common Stock upon the exercise,
conversion or exchange of Convertible Securities, (b) the issuance of Common
Stock or Convertible Securities in a bona fide underwritten public offering,
registered under the Securities Act, (c) the issuance of Common Stock pursuant
to any plan of the Company for the reinvestment of dividends on the same class
of capital stock, (d) the issuance after the date hereof for compensation
purposes of options to purchase up to 155,500 shares of Common Stock to
officers, employees, or directors of, or bona fide consultants to, the Company,
(e) the issuance of Common Stock pursuant to Section 2.C of the Executive Stock
Appreciation Rights and Non Qualified Stock Option Agreement, dated as of
February 6, 1995, between the Company and Xxxx X. Xxxxxx, as amended October 28,
2000, and (f) the issuance of Common Stock pursuant to Section 3.c of, and
Exhibit A to, the Employment Agreement, effective as of March 2, 2001, between
the Company and Xxxxxxx X. Xxxxxx.
"Exercise Period" is defined in Section 6.
"Exercise Price" is defined in Section 1.
"Fair Market Value" of property other than cash means (1) in the case of
any security traded in the Nasdaq Stock Market, listed on a securities exchange
or reported on the NASD OTC bulletin board, its Market Price, and (2) in all
other cases, the fair market value of the property as determined in good faith
by the Board of Directors of the Company, subject to the appraisal procedure
described below. In connection with any transaction described herein that
requires the determination of the Fair Market Value of property, the Company
will notify the holders of the Warrants in writing of the terms of the
19
transaction and of the amount determined by the Board of Directors to be the
Fair Market Value of the property, including a description of the valuation
method. If the holders of a majority of the Warrants believe that the Company's
notice incorrectly states the Fair Market Value of the property, the holders of
a majority of the Warrants may engage an independent appraisal firm selected by
them (the "First Appraiser") to determine the Fair Market Value of the property.
The report of the First Appraiser shall be conclusive on the question of the
Fair Market Value of the property unless, within 15 Business Days after its
receipt of the report of the First Appraiser, the Company appoints an
independent appraisal firm (the "Second Appraiser") and notifies the holders of
all Warrants of the identity of the Second Appraiser. If the reports of the
First Appraiser and the Second Appraiser are within 10 percent of the lower of
the two, report of the First Appraiser shall conclusively establish the Fair
Market Value of the property. Otherwise, the First Appraiser and the Second
Appraiser will jointly appoint a third appraiser reasonably satisfactory to the
Company and the holders of a majority of the Warrants (the "Third Appraiser").
The report of the Third Appraiser shall be averaged with the report of the First
Appraiser or the Second Appraiser, whichever shall be closer to that of the
Third Appraiser, and the average shall conclusively establish the Fair Market
Value of the property. Each appraiser will be instructed to complete its
appraisal within 30 days after its appointment. The Company will permit all
appraisers appointed hereunder to have reasonable access to its books and
records, to its officers and employees, and to its accountants. The Company will
pay the cost of the First Appraiser. If the adjustment based on the Fair Market
Value as finally determined exceeds the adjustment based on the Fair Market
Value stated in the Company's notice by more than 10 percent, the Company will
pay the cost of the Second Appraiser; otherwise, the Warrant Holders will pay
the cost of the Second Appraiser (in proportion to the number of Warrants held
by each). The cost of the Third Appraiser will be paid half by the Company and
half by the Warrant holders (in proportion to the number of Warrants held by
each).
"Holder" or "holder" means a registered holder of Warrants or of Warrant
Shares.
"Intercreditor Agreement" means the Subordination Agreement dated the date
hereof among LaSalle Business Credit, Inc., the Purchaser, the Company and MTS
Packaging, Inc., as in effect from time to time.
"Internal Rate of Return" is defined in Section 11(b).
"Investment Multiple" is defined in Section 11(b).
"Liquidity Event" is defined in Section 11(b).
"Market Price" of a security on (or determined as of) any day means the
average of the last reported sale prices of such security as reported by the
Nasdaq Stock Market or, if such security is listed on a securities exchange, the
average of the last reported sale prices of such security on such exchange,
which shall be for consolidated trading if applicable to such exchange, or, if
not so reported, or if no sale shall have occurred on a particular trading day,
the last reported bid price of such security, in each case for the five trading
days immediately before such day. If a security is publicly traded, but not in
the Nasdaq Stock Market or on a securities exchange, its Market Price is the
20
average of the last reported bid prices of such security on the NASD OTC
bulletin board for the five trading days immediately preceding such day. If a
security is not reported on the NASD OTC bulletin board, its Market Price is its
Fair Market Value irrespective of any accounting treatment.
"Notes" means the Company's 14% Senior Subordinated Notes issued pursuant
to the Purchase Agreement.
"Person" means an individual, corporation, partnership, limited liability
company, trust or any other entity.
"Purchase Agreement" is defined in the preamble.
"Qualified Public Offering" is defined in Section 11(b).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder, all as the same
shall be in effect from time to time.
"Series A Preferred Stock" means the Company's Series A Convertible
Participating Preferred Stock, par value $0.0001 per share.
"Xxxxxx Family" is defined in Section 11(b).
"Subsidiary" means (1) any partnership in which the Company or any
Subsidiary of the Company is a general partner, (2) any Person in which the
Company and its Subsidiaries collectively own a majority of the equity
interests, and (3) any Person of which securities having a majority of the
ordinary voting power in electing the board of directors or comparable body are,
at the time as of which any determination is being made, owned by the Company
either directly or through one or more Subsidiaries.
"Warrant Certificate" is defined in Section 2.
"Warrant Shares" means shares of Common Stock (and any other securities or
property) issued or issuable upon exercise of the Warrants.
"Warrants" means the Warrants to purchase shares of Common Stock issued or
to be issued by the Company pursuant to Section 1 or pursuant to an adjustment
under Section 11 or 12.
"Wholly-Owned Subsidiary" means any Subsidiary, all of the equity
securities of which are owned by the Company or another Wholly-Owned Subsidiary.
21
Section 15. Fractional Shares.
The Company shall not be required to issue fractional Warrant Shares on the
exercise of Warrants, but it may elect to do so, and if fractional Warrant
Shares are issued, the Company need not carry the fraction to more than three
decimal places. In lieu of issuing fractions, or smaller fractions, of a share,
the Company may, subject to the terms of the Intercreditor Agreement, pay the
holder cash equal to the product of (1) any fraction of a Warrant Share
otherwise issuable and (2) the excess of the Market Price of a share of Common
Stock (determined as of the date of exercise) over the Exercise Price.
Section 16. No Rights as Stockholders.
Nothing contained in this Agreement shall be construed as conferring upon
the holder or any transferee of any Warrant prior to the time of the exercise
thereof, the right to vote, to receive dividends or to consent to or receive
notice as a stockholder in respect of any meeting of stockholders for the
election of directors of the Company, or otherwise to enjoy the rights of a
stockholder of the Company.
Section 17. Right of First Offer.
(a) Except as provided in subsection (b), the Company shall, prior to
any proposed issuance by the Company of any of its securities, offer to
each Holder by written notice the right, for a period of 30 days, to
purchase all or any part of such securities for cash at an amount equal to
the price or other consideration for which such securities are proposed to
be issued.
(b) Subsection (a) shall not apply (1) to debt securities that are
neither Convertible Securities nor issued as part of a transaction that
includes equity securities or Convertible Securities; or (2) to securities
issued (A) pursuant to an Exempt Issuance, (B) as consideration for the
acquisition from an unaffiliated third party of all or part of another
business (whether by purchase of stock or assets or otherwise), or (C) in a
transaction described in Section 12(a).
(c) The Company's written notice to the Holders shall describe the
securities proposed to be issued by the Company and specify the number,
price and payment terms. Each Holder may accept the Company's offer as to
the full number of securities offered or any lesser number, by written
notice thereof given by it to the Company and to the other Holders prior to
the expiration of the aforesaid 30-day period, in which event the Company
shall promptly sell and each Holder shall buy, upon the terms specified,
the number of securities agreed to be purchased by such Holder. The Company
shall be free at any time prior to 90 days after the date of its notice of
offer to the Holders, to offer and sell to any third party or parties the
securities not agreed by the Holders to be purchased by them, at a price
and on payment terms no less favorable to the Company than those specified
in such notice of offer to the Holders. However, if such third party sale
or sales are not consummated within such 90-day period, the Company shall
not sell such securities as shall not have been purchased within such
period without again complying with this Section.
22
(d) If the Holders in the aggregate elect to purchase more securities
than the Company proposes to issue, each Holder shall purchase such
securities (1) in the proportion that all electing Holders shall agree
among themselves in writing, notice of which shall be given in writing to
the Company not later than one business day before the issuance, sale and
purchase is scheduled to be completed, or (2) failing such agreement in the
proportion that the amount of securities that such Holder elects to
purchase bears to the amount of securities elected to be purchased by all
Holders.
Section 18. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or duly sent by overnight
courier, facsimile transmission or registered or certified mail, return receipt
requested, postage prepaid, addressed to such party at the address set forth
below or such other address as may hereafter be designated in writing by the
addressee to the other parties:
If to the Company:
Medical Technology Systems, Inc.
00000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Fax: 000-000-0000
Attention: Xxxx X. Xxxxxx,
President and Chief Executive Officer
and if to a Warrant holder, to its address shown from time to time on the
register maintained by the Company pursuant to Section 4.
All such notices and communications shall be deemed to have been received in the
case of (a) facsimile transmission, on the date sent, (b) personal delivery, on
the date of such delivery, (c) overnight courier, on the first business day
following delivery to such courier and (d) mailing, on the fifth day after the
posting thereof.
Section 19. Supplements and Amendments.
Any amendment or supplement to this Agreement shall require the written
consent of the Company and the registered holders of a majority of the Warrants
then outstanding, except that the consent of each holder of a Warrant affected
shall be required for any amendment to this Agreement that would increase the
Exercise Price or decrease the number of shares of Common Stock purchasable at
the time of such amendment upon exercise of Warrants, other than pursuant to
adjustments provided in this Agreement.
Section 20. Successors.
All the covenants and provisions of this Agreement by or for the benefit of
the Company or the Purchaser shall bind and inure to the benefit of their
respective successors and permitted assigns hereunder.
23
Section 21. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any Person other
than the Company, the Purchaser and the registered holders of the Warrants any
legal or equitable right, remedy or claim under this Agreement; but this
Agreement shall be for the sole and exclusive benefit of the Company, the
Purchaser and the registered holders of the Warrants.
Section 22. Counterparts; Effectiveness.
This Agreement may be executed in any number of counterparts, and each such
counterpart hereof shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement. A signature page
delivered by facsimile transmission shall be the equivalent of an original
signed copy of this Agreement for all purposes. This Agreement shall become
effective on the date on which each party hereto shall have received
counterparts hereof executed by each of the parties hereto.
Section 23. Entire Agreement.
This Agreement, the Purchase Agreement and the Transaction Documents embody
the entire agreement and understanding among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings
relating to the subject matter hereof.
Section 24. Severability.
If any provision of this Agreement shall be held or deemed to be, or shall
in fact be, invalid, inoperative, illegal or unenforceable as applied to any
particular case in any jurisdiction because of the conflict of such provision
with any constitution or statute or rule of public policy or for any other
reason, such circumstance shall not have the effect of rendering the provision
or provisions in question invalid, inoperative, illegal or unenforceable in any
other jurisdiction or in any other case or circumstance or of rendering any
other provision or provisions herein contained invalid, inoperative, illegal or
unenforceable to the extent that such other provisions are not themselves
actually in conflict with such constitution, statute or rule of public policy,
but this Agreement shall be reformed and construed in any such jurisdiction or
case as if such invalid, inoperative, illegal or unenforceable provision had
never been contained herein and such provision reformed so that it would be
valid, operative and enforceable to the maximum extent permitted in such
jurisdiction or in such case.
Section 25. Governing Law.
All issues and questions concerning the construction, validity,
interpretation and enforcement of this Warrant Agreement shall be governed by
the laws of the State of Delaware. The parties hereby waive any and all right to
trial by jury in any legal proceeding arising out of or relating to this
Agreement.
S-1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal, as of the day and year first above written.
MEDICAL TECHNOLOGY SYSTEMS, INC.
By___________________________
Name:
Title:
EUREKA I, L.P.
By: EUREKA MANAGEMENT, L.P.,
its sole general partner
By: BERWIND CAPITAL PARTNERS, LLC,
its sole general partner
By:________________________________
Xxxxxxxxx X. Xxxxx,
President
EXHIBIT A
to Warrant Agreement
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR THE SECURITIES LAW OF ANY STATE AND
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS SUCH OFFER,
SALE, PLEDGE OR TRANSFER IS REGISTERED UNDER THE 1933 ACT OR APPLICABLE STATE
SECURITIES LAWS OR EXEMPT FROM SUCH REGISTRATION. TRANSFER OF THESE SECURITIES
IS ALSO SUBJECT TO CERTAIN RESTRICTIONS UNDER THE WARRANT AGREEMENT DATED JUNE
26, 2002, BETWEEN THE COMPANY AND EUREKA I, L.P.
No._____ _______Warrants
Warrant Certificate
MEDICAL TECHNOLOGY SYSTEMS, INC.
This Warrant Certificate certifies that __________ or its permitted
assigns, is the holder of _______ Warrants (the "Warrants") expiring at 5:00
p.m., Eastern time on June 26, 2012 (the "Expiration Time"), to purchase shares
of the Common Stock, par value $0.01 per share (the "Common Stock"), of Medical
Technology Systems, Inc., a Delaware corporation (the "Company"). Each Warrant
entitles the holder, upon exercise, to receive from the Company, if exercised at
or before the Expiration Time, one fully paid and nonassessable share of Common
Stock (a "Warrant Share") at the exercise price (the "Exercise Price") of $0.01
per share, payable as provided in the Warrant Agreement (defined below), upon
surrender of this Warrant Certificate and payment of the Exercise Price at the
principal office of the Company, subject to the conditions set forth herein and
in the Warrant Agreement. The Exercise Price and number of Warrant Shares
issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events, as provided in the Warrant Agreement.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants of the Company and are issued or to be issued
pursuant to a Warrant Agreement dated June 26, 2002 (the "Warrant Agreement"),
between the Company and Eureka I, L.P., the initial purchaser of the Warrants.
The Warrant Agreement is hereby incorporated by reference in and made a part of
this instrument and is hereby referred to for a description of the rights,
limitations or rights, obligations, duties and immunities thereunder of the
Company and the holders (the words "holders" or "holder" meaning the registered
holders or holder of the Warrants). A copy of the Warrant Agreement may be
obtained by the holder hereof upon written request to the Company.
2
All issues and questions concerning the construction, validity,
interpretation and enforcement of this Warrant Certificate shall be governed by
the laws of the State of Delaware without regard to principles of conflicts of
laws.
3
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed.
MEDICAL TECHNOLOGY SYSTEMS, INC.
Dated ________________ By_____________________________
Name:
Title:
FORM OF ELECTION TO PURCHASE
Dated _________________
The undersigned, being duly authorized, hereby irrevocably elects to
exercise the within Warrant to the extent of purchasing ___________________
shares of Common Stock and hereby:
(check one)
[ ]1 makes payment of $_________ in payment of the
Exercise Price thereof.
[ ]2 instructs the Company pursuant to the third
paragraph of Section 6 of the Warrant Agreement to reduce the
number of shares of Common Stock eligible to be purchased by
the undersigned by _______ shares.
* * * * *
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name __________________________________________________________
(please typewrite or print in block letters)
Address _______________________________________________________
Signature/Title ________________________________
Note: The signature must conform in all respects to the name of
the holder as specified on the face of this Warrant Certificate.
Taxpayer Identification Number of holder _________________________
Signature Guarantee _______________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
Name ______________________________________________
(please typewrite or print in block letters)
Address _____________________________________________
Taxpayer Identification No.__________________________
its right represented by this Warrant Certificate to purchase
____________ shares of Common Stock and does hereby irrevocably
constitute and appoint attorney-in-fact to transfer the same on
the books of the Company with full power of substitution in the
premises.
Date: ____________________
Signature/Title __________________________________________
Note: The signature must conform in all respects to name of
the holder as specified on the face of this Warrant
Certificate.
Taxpayer Identification number of transferor __________________________
Signature Guarantee _________________________
