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(1) In case the Company shall hereafter (i) declare a dividend or
make a distribution on its outstanding shares of Common Stock in
shares of Common Stock, (ii) subdivide or reclassify its outstanding
shares of Common Stock into a greater number of shares, or (iii)
combine or reclassify its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect at the time
of the record date for such dividend or distribution or of the
effective date of such subdivision, combination or reclassification
shall be adjusted so that it shall equal the price determined by
multiplying the Exercise Price by a fraction, the denominator of
which shall be the number of shares of Common Stock outstanding
after giving effect to such action, and the numerator of which shall
be the number of shares of Common Stock outstanding immediately
prior to such action. Such adjustment shall be made successively
whenever any event listed above shall occur.
(2) Subject to Subsection (12) below, in case the Company shall
hereafter fix a record date for the issuance of rights or warrants
to all holders of its Common Stock entitling them to subscribe for
or purchase shares of Common Stock (or securities convertible into
Common Stock) at a price (the "Subscription Price") (or having a
conversion price per share) less than the current market price of
the Common Stock (as defined in Subsection (8) below) on the record
date mentioned below, the Exercise Price shall be adjusted so that
the same shall equal the price determined by multiplying the
Exercise Price in effect immediately prior to the date of such
issuance by a fraction, the numerator of which shall be the sum of
the number of shares of Common Stock outstanding on the record date
mentioned below and the number of additional shares of Common Stock
which the aggregate offering price of the total number of shares of
Common Stock so offered (or the aggregate conversion price of the
convertible securities so offered) would purchase at such current
market price per share of the Common Stock, and the denominator of
which shall be the sum of the number of shares of Common Stock
outstanding on such record date and the number of additional shares
of Common Stock offered for subscription or purchase (or into which
the convertible securities so offered are convertible). Such
adjustment shall be made successively whenever such rights or
warrants are issued and shall become effective immediately after the
record date for the determination of shareholders entitled to
receive such rights or warrants; and to the extent that shares of
Common Stock are not delivered (or securities convertible into
Common Stock are not delivered) after the expiration of such rights
or warrants the Exercise Price shall be readjusted to the Exercise
Price which would then be in effect had the adjustments made upon
the issuance of such rights or warrants been made upon the basis of
delivery of only the number of shares of Common Stock (or securities
convertible into Common Stock) actually delivered.
(3) In case the Company shall hereafter distribute to the
holders of its Common Stock evidences of its indebtedness or assets
(excluding cash dividends or distributions and dividends or
distributions referred to in Subsection (1) above) or subscription
rights or warrants (excluding those referred to in Subsection (2)
above), then in each such case the Exercise Price in effect
thereafter shall be determined by multiplying the Exercise Price in
effect immediately prior thereto by a fraction, the
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numerator of which shall be the total number of shares of Common
Stock outstanding multiplied by the current market price per share
of Common Stock (as defined in Subsection (8) below), less the fair
market value (as determined by the Company's Board of Directors) of
said assets or evidences of indebtedness so distributed or of such
rights or warrants, and the denominator of which shall be the total
number of shares of Common Stock outstanding multiplied by such
current market price per share of Common Stock. Such adjustment
shall be made successively whenever such a record date is fixed.
Such adjustment shall be made whenever any such distribution is made
and shall become effective immediately after the record date for the
determination of shareholders entitled to receive such distribution.
(4) Subject to Subsection (12) below, in case the Company
shall hereafter issue shares of its Common Stock (excluding shares
issued (a) in any of the transactions described in Subsection (1)
above, (b) upon exercise of options granted to the Company's
officers, directors and employees under a plan or plans adopted by
the Company's Board of Directors and approved by its shareholders,
if such shares would otherwise be included in this Subsection (4),
(but only to the extent that the aggregate number of shares excluded
hereby and issued after the date hereof, shall not exceed 5% of the
Company's Common Stock outstanding at the time of any issuance), (c)
upon exercise of options, warrants and convertible debentures
outstanding as of the final closing of the Private Placement, or
conversion of the Notes or the Warrants, (d) to shareholders of any
corporation which merges into the Company in proportion to their
stock holdings of such corporation immediately prior to such merger,
upon such merger, (e) issued in a private placement through
Commonwealth, as placement agent, or upon exercise or conversion of
any securities issued in or in connection with such a private
placement (including agent, consulting or advisory warrants) or (f)
issued in a bona fide public offering pursuant to a firm commitment
underwriting, but only if no adjustment is required pursuant to any
other specific subsection of this Section (f) (without regard to
Subsection (9) below) with respect to the transaction giving rise to
such rights) for a consideration per share (the "Offering Price")
less than the current market price per share (as defined in
Subsection (8) below) on the date the Company fixes the offering
price of such additional shares, the Exercise Price shall be
adjusted immediately thereafter so that it shall equal the price
determined by multiplying the Exercise Price in effect immediately
prior thereto by a fraction, the numerator of which shall be the sum
of the number of shares of Common Stock outstanding immediately
prior to the issuance of such additional shares and the number of
shares of Common Stock which the aggregate consideration received
(determined as provided in Subsection (7) below) for the issuance of
such additional shares would purchase at such current market price
per share of Common Stock, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately after the
issuance of such additional shares. Such adjustment shall be made
successively whenever such an issuance is made.
(5) Subject to Subsection (12) below, in case the Company
shall hereafter issue any securities convertible into or
exchangeable for its Common Stock (excluding securities issued in
transactions described in Subsections (2) and (3) above) for a
consideration per share of Common Stock (the "Conversion Price")
initially
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deliverable upon conversion or exchange of such securities
(determined as provided in Subsection (7) below) less than the
current market price per share (as defined in Subsection (8) below)
in effect immediately prior to the issuance of such, the Exercise
Price shall be adjusted immediately thereafter so that it shall
equal the price determined by multiplying the Exercise Price in
effect immediately prior thereto by a fraction, the numerator of
which shall be the sum of the number of shares of Common Stock
outstanding immediately prior to the issuance of such securities and
the number of shares of Common Stock which the aggregate
consideration received (determined as provided in Subsection (7)
below) for such securities would purchase at such current market
price per share of Common Stock, and the denominator of which shall
be the sum of the number of shares of Common Stock outstanding
immediately prior to such issuance and the maximum number of shares
of Common Stock of the Company deliverable upon conversion of or in
exchange for such securities at the initial conversion or exchange
price or rate. Such adjustment shall be made successively whenever
such an issuance is made.
(6) Whenever the Exercise Price payable upon exercise of each
Warrant is adjusted pursuant to Subsections (1), (2), (3), (4) and
(5) above, the number of Shares purchasable upon exercise of this
Warrant shall simultaneously be adjusted by multiplying the number
of Shares initially issuable upon exercise of this Warrant by the
Exercise Price in effect on the date hereof and dividing the product
so obtained by the Exercise Price, as adjusted.
(7) For purposes of any computation respecting consideration
received pursuant to Subsections (4) and (5) above, the following
shall apply:
(A) in the case of the issuance of shares of Common
Stock for cash, the consideration shall be the amount of such
cash, provided that in no case shall any deduction be made for
any commissions, discounts or other expenses incurred by the
Company for any underwriting of the issue or otherwise in
connection therewith;
(B) in the case of the issuance of shares of Common
Stock 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 as determined in good faith by the
Board of Directors of the Company (irrespective of the
accounting treatment thereof), whose determination shall be
conclusive; and
(C) in the case of the issuance of securities
convertible into or exchangeable for shares of Common Stock,
the aggregate consideration received therefor shall be deemed
to be the consideration received by the Company for the
issuance of such securities plus the additional minimum
consideration, if any, to be received by the Company upon the
conversion or exchange thereof (the consideration in each case
to be determined in the same manner as provided in clauses (A)
and (B) of this Subsection (7)).
(8) For the purpose of any computation under Subsections (2),
(3), (4)
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and (5) above, the current market price per share of Common Stock at
any date shall be determined in the manner set forth in Section (c)
hereof except that the current market price per share shall be
deemed to be the higher of (i) the average of the prices for 30
consecutive business days before such date or (ii) the price on the
business day immediately preceding such date.
(9) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at
least five cents ($0.05) in such price; provided, however, that any
adjustments which by reason of this Subsection (9) are not required
to be made shall be carried forward and taken into account in any
subsequent adjustment required to be made hereunder. All
calculations under this Section (f) shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may be.
Anything in this Section (f) to the contrary notwithstanding, the
Company shall be entitled, but shall not be required, to make such
changes in the Exercise Price, in addition to those required by this
Section (f), as it shall determine, in its sole discretion, to be
advisable in order that any dividend or distribution in shares of
Common Stock, or any subdivision, reclassification or combination of
Common Stock, hereafter made by the Company shall not result in any
Federal Income tax liability to the holders of Common Stock or
securities convertible into Common Stock (including Warrants).
(10) Whenever the Exercise Price is adjusted, as herein
provided, the Company shall promptly but no later than 10 days after
any request for such an adjustment by the Holder, cause a notice
setting forth the adjusted Exercise Price and adjusted number of
Shares issuable upon exercise of each Warrant, and, if requested,
information describing the transactions giving rise to such
adjustments, to be mailed to the Holders at their last addresses
appearing in the Warrant Register, and shall cause a certified copy
thereof to be mailed to its transfer agent, if any. In the event the
Company does not provide the Holder with such notice and information
within 10 days of a request by the Holder, then notwithstanding the
provisions of this Section (f), the Exercise Price shall be
immediately adjusted to equal the lowest Offering Price,
Subscription Price or Conversion Price, as applicable, since the
date of this Warrant, and the number of shares issuable upon
exercise of this Warrant shall be adjusted accordingly. The Company
may retain a firm of independent certified public accountants
selected by the Board of Directors (who may be the regular
accountants employed by the Company) to make any computation
required by this Section (f), and a certificate signed by such firm
shall be conclusive evidence of the correctness of such adjustment.
(11) In the event that at any time, as a result of an
adjustment made pursuant to Subsection (1) above, the Holder of this
Warrant thereafter shall become entitled to receive any shares of
the Company, other than Common Stock, thereafter the number of such
other shares so receivable upon exercise of this Warrant shall be
subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to
the Common Stock contained in Subsections (1) to (9), inclusive
above. |
