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Exhibit 4.3
COMMON STOCK WARRANT
AGREEMENT
BY AND AMONG
THE CENTER FOR WOUND HEALING,
INC.
AND
BISON CAPITAL EQUITY PARTNERS
II-A, L.P. and
BISON CAPITAL EQUITY PARTNERS
II-B, L.P
DATED AS OF MARCH 31,
2008
TABLE OF
CONTENTS
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| SECTION 1. |
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Issuance
of Warrants |
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| SECTION 2. |
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Investment Representations |
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2 |
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| SECTION 3. |
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Warrant
Certificate |
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3 |
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| SECTION 4. |
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Registration |
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3 |
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| SECTION 5. |
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Registration of Transfers and Exchanges |
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4 |
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| SECTION 6. |
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Vesting;
Exercise of Warrants |
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4 |
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| SECTION 7. |
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Payment
of Taxes |
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8 |
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| SECTION 8. |
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Mutilated
or Missing Warrant Certificates |
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8 |
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| SECTION 9. |
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Reservation of Warrant Securities |
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8 |
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| SECTION 10. |
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Adjustment of Exercise Price and Number of Warrant Securities
Issuable |
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| SECTION 11. |
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Other
Rights of Warrant Holder |
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15 |
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| SECTION 12. |
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Representations and Warranties of Company |
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16 |
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| SECTION 13. |
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Notices
to Warrant Holders |
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17 |
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| SECTION 14. |
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Survival
of Rights |
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18 |
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| SECTION 15. |
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Certain
Information |
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18 |
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| SECTION 16. |
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Notices
to Company and Warrant Holder |
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| SECTION 17. |
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Consents
and Best Efforts |
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| SECTION 18. |
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Successors |
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| SECTION 19. |
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Governing
Law |
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20 |
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| SECTION 20. |
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Arbitration |
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20 |
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| SECTION 21. |
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Jurisdiction, Venue, Etc |
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20 |
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| SECTION 22. |
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Prevailing Party; Attorney’s Fees |
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| SECTION 23. |
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Benefits
of This Agreement |
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SECTION 24.
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Interpretation |
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SECTION 25.
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Severability |
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SECTION 26.
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Amendment
and Waiver |
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SECTION 27.
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Counterparts |
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22 |
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SECTION 28.
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Time of
Essence |
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-ii-
THIS COMMON STOCK WARRANT
AGREEMENT (the “Agreement”) is dated as
of March 31, 2008 and entered into by and between THE CENTER
FOR WORLD HEALING, INC., a Nevada corporation
(“Company”), on the one hand, and BISON
CAPITAL EQUITY PARTNERS II-A, L.P., a Delaware limited partnership,
and BISON CAPITAL EQUITY PARTNERS II-B, L.P., a Delaware limited
partnership (collectively, “Warrant
Holder”), on the other hand.
RECITALS
A. Pursuant to that certain
Securities Purchase Agreement, dated as of even date herewith (as
amended, restated, supplemented or otherwise modified from time to
time, the “Purchase Agreement”) by and
between Company and Warrant Holder, Company has agreed to issue to
Warrant Holder warrants representing the right to acquire up to
twenty percent (20%) of the total outstanding common stock,
$0.001 par value per share, of the Company (the “Common
Stock”), on a Fully Diluted Basis (as defined in the
Purchase Agreement), as hereinafter described (each warrant to
acquire one share of Common Stock, a
“Warrant”, and collectively, the
“Warrants”).
B. Each Warrant entitles the
holder to purchase one (1) share of Common Stock at an initial
exercise price of $5.00 (the Common Stock issuable upon exercise of
the Warrants being referred to herein as the “Warrant
Securities”). The exercise price of each Warrant, as
adjusted pursuant to the terms of this Agreement, is referred to as
the “Exercise Price”. Capitalized terms
used but not defined in this Agreement shall have the meanings
given such terms in the Purchase Agreement.
AGREEMENT
NOW, THEREFORE, in
consideration of the premises and the mutual agreements herein set
forth, the parties hereto agree as follows:
SECTION 1. Issuance of
Warrants .
(a) In consideration of
monies provided by Warrant Holder to Company pursuant to the
Purchase Agreement, and subject to the conditions and restrictions
contained in this Agreement and in the Purchase Agreement, Company
hereby agrees to issue 7,080,363 Warrants to Warrant Holder to
purchase up to twenty percent (20%) of the total outstanding
Common Stock on a Fully Diluted Basis as of the date hereof, based
on the assumption that the total Common Stock outstanding as of the
date hereof is 35,401,817 shares on a Fully Diluted Basis
(including the Warrant Securities).
(b) In the event that at any
time hereafter it is determined that the total outstanding Common
Stock (on a Fully Diluted Basis) as of the date hereof was greater
than 35,401,817 shares (the date of determination will be the date
on which the original Warrant Holder provides notice to Company and
is referred to as the “Determination
Date”), then:
(i) the Company shall cause
additional Warrants to be issued to the original Warrant Holder so
that such original Warrant Holder holds on the date of such
additional issuance (taking into account any splits, divisions,
consolidations, reclassifications or
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other changes in the Common Stock and
any adjustments pursuant to this Agreement, in each case, that have
occurred since the date hereof) that amount of Warrants that such
original Warrant Holder would have held on the Determination Date
if such original Warrant Holder had been issued on the date hereof
Warrants to purchase up to twenty percent (20%) of the total
Common Stock (on a Fully Diluted Basis) outstanding as of the date
hereof.
(ii) the Exercise Price shall
be adjusted in accordance with the following:
Where:
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E’ =
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the
adjusted Exercise Price. |
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E =
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the
current Exercise Price. |
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O =
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35,401,817. |
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A =
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the
actual number of shares of Common Stock outstanding as of the date
hereof on a Fully Diluted Basis, excluding the Warrant
Securities. |
(c) The adjustment to the
Exercise Price and number of Warrants issued to the original
Warrant Holder shall be made successively on each Determination
Date, and the adjustments and issuances shall become effective on
such Determination Date.
SECTION 2. Investment
Representations . Warrant Holder represents and warrants to
Company as follows:
(a) Authority;
Enforceability . The execution, delivery, and performance by
Warrant Holder of this Agreement has been duly authorized by all
necessary action on the part of Warrant Holder. This Agreement has
been duly executed and delivered by Warrant Holder, and constitutes
the valid and legally binding obligation of Warrant Holder,
enforceable in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance, and any other laws of general
application affecting enforcement of creditors’ rights
generally, and as limited by laws relating to the availability of a
specific performance, injunctive relief, or other equitable
remedies, or (ii) to the extent that the indemnification
provisions contained in the Registration Rights Agreement may be
limited by applicable federal or securities laws.
(b) Investment
Intention . Warrant Holder is acquiring the Warrants for
investment for its own account and not with a view to or for sale
in connection with any distribution of the Warrants or the Warrant
Securities in violation of the Securities Act of 1933, as amended
(the “ Securities Act
” ), or any other applicable federal or state
securities laws and Warrant Holder has no present intention of
selling, granting any participation in, or otherwise distributing
the Warrants or the Warrant Securities.
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(c) Unregistered
Securities . Warrant Holder understands that the Warrants and
the Warrant Securities have not been registered under the
Securities Act, or registered or qualified under the securities
laws of any state and that Warrant Holder may not sell or otherwise
transfer the Warrants or Warrant Securities unless they are
subsequently registered under the Securities Act and registered or
qualified under applicable state securities laws, or unless an
exemption is available which permits sale or other transfer without
such registration and qualification. Warrant Holder acknowledges
that the Warrant Securities must be held indefinitely unless
subsequent registration under the Securities Act or an exemption
from such registration is available.
(d) Legend . Warrant
Holder understands that the Warrant Securities, and any securities
issued in respect thereof or exchange therefor, may bear one or
more legends in substantially the following form:
“THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED OR OTHERWISE DISPOSED OF WITHOUT (i) AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF
COUNSEL (SUCH COUNSEL TO BE REASONABLY SATISFACTORY TO COMPANY)
THAT SUCH REGISTRATION IS NOT REQUIRED, OR (iii) RECEIPT OF NO
ACTION LETTERS FROM THE APPROPRIATE GOVERNMENTAL
AUTHORITIES.”
Notwithstanding the foregoing, this
Section 2(e) shall not apply to the Warrant Securities,
and any securities issued in respect thereof or exchange therefor,
if (i) a registration statement related thereto is effective
as of the date of the issuance or Transfer (as defined below) of
such Warrant Securities and any securities issued in respect
thereof or exchange therefor or (ii) such Warrant Securities,
and any securities issued in respect thereof or exchange therefor,
are sold, assigned, transferred, pledged, hypothecated, or
otherwise disposed pursuant to Rule 144 under the Securities
Act.
(e) Accredited
Investor . Warrant Holder is an accredited investor as defined
in Rule 501 (a) of Regulation D promulgated under the
Securities Act.
SECTION 3. Warrant
Certificate . Each certificate evidencing the Warrants (each, a
“Warrant Certificate” ) to be
delivered pursuant to this Agreement shall be in registered form
only and shall be substantially in the form set forth in Annex
1 attached hereto. Company shall deliver to Warrant Holder on
the date hereof a Warrant Certificate representing all vested
Warrants, and upon the vesting of any Warrants that were not vested
on the date hereof, Company shall deliver a Warrant Certificate
evidencing such vested Warrants. The Company shall deliver on the
date hereof a Warrant Certificate for 469,074 Warrants to BISON
CAPITAL EQUITY PARTNERS II-A, L.P., and 6,611,289 Warrants to BISON
CAPITAL EQUITY PARTNERS II-B, L.P.
SECTION 4.
Registration . Company shall number and register each
Warrant Certificate in a register as it is issued.
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SECTION 5. Registration of
Transfers and Exchange .
(a) Transfer . Prior
to any Transfer (as defined below) or attempted Transfer of the
Warrants, unless the Transfer is made pursuant to Rule 144 under
the Securities Act or an effective registration statement under the
Securities Act, the holder of the Warrants shall obtain from
counsel to such Warrant Holder (who may be an employee of such
Warrant Holder), an opinion that the proposed transfer of such
Warrants may be effected without registration under the Securities
Act; provided , however, that an opinion from counsel
shall not be required in connection with any Transfer of the
Warrants to an Affiliate of such Warrant Holder. Each Warrant
Certificate issued upon such transfer shall bear the restrictive
legends set forth on the Warrant Certificate, unless, with respect
to the first such legend, (i) the Transfer is made pursuant to
Rule 144 under the Securities Act or pursuant to an effective
registration statement under the Securities Act, or (ii) in
the opinion of any such counsel such legend is not required in
order to ensure compliance with the Securities Act. As used herein,
“ Transfer ”
means sell, assign, transfer, pledge, hypothecate, mortgage,
encumber, dispose by gift or bequest, or otherwise transfer or
dispose. Notwithstanding anything to the contrary herein, Warrant
Holder may Transfer any Warrants in connection with a Disposition
Transaction (as defined in Section 10(j) ) without any
requirement to exercise such Warrants.
(b) Registration of
Transfer . Subject to Section 5(a) , Company shall
from time to time register the transfer of each Warrant Certificate
in a warrant register to be maintained by Company upon surrender of
such Warrant Certificate accompanied by a written instrument or
instruments of transfer in a form reasonably satisfactory to
Company, duly executed by the registered holder or holders thereof
or by the duly appointed legal representative thereof or by a duly
authorized attorney. Upon any such registration of transfer, a new
Warrant Certificate shall be issued to the transferee(s), and the
old Warrant Certificate shall be (i) surrendered by the holder
thereof, and (ii) canceled and disposed of by Company. A
Warrant Certificate may be exchanged at the option of Warrant
Holder, when surrendered to Company at its office, for another
warrant certificate or other warrant certificates of like tenor and
representing in the aggregate a like number of Warrant Securities.
Any Warrant Certificate surrendered for exchange shall be canceled
and disposed of by Company.
SECTION 6. Vesting;
Exercise of Warrants .
(a) Grant; Vesting .
All of the Warrants are granted as of the date hereof, and shall be
subject to vesting as follows:
(i) sixty-percent
(60%) of the Warrants (4,248,218 of the Warrants) are vested
as of the date hereof; and
(ii) forty-percent
(40%) of the Warrants (2,832,145 of the Warrants) shall vest
in thirty-six (36) equal monthly installments on the first day
of each month commencing on April 1, 2008 (such 36-month
period, the “ Vesting Period
” ), subject to the following
terms:
(A) if Warrant Holder
receives evidence reasonably satisfactory to Warrant Holder that
(1) Consolidated Adjusted EBITDA (as defined in the
Purchase
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Agreement) for any trailing twelve
(12) month period during the Vesting Period is at least
twenty-million dollars ($20,000,000) and (2) the Consolidated
Leverage Ratio (as defined in the Purchase Agreement) at all times
during such period is less than three-and-one-half (3.5) (the
conditions in the foregoing clauses (1) and (2) are
referred to herein as the “Reset
Conditions” ), then, as of the fifteenth day of the
month immediately following the month in which such evidence is
provided, any then-unvested Warrants shall cease vesting and be
canceled; provided , that in order to demonstrate that the
Reset Conditions have been satisfied, the entire trailing twelve
(12) month period in question shall have been audited by
Company’s independent public accountants (which audit opinion
shall not include any “going concern”, internal
control, material weakness or other qualification); and provided
further, that, solely for purposes of determining whether the
condition in the foregoing clause (1) has been met, any
expense for operating leases of the Company or its Subsidiaries
that would (but for this proviso) otherwise be taken into account
in determining Consolidated Adjusted EBITDA, may instead be treated
as debt relating to a capital lease. The foregoing sentence shall
in no way affect the definition of Consolidated Adjusted EBITDA as
otherwise used herein (including, without limitation,
Section 10 ) or in any other Transaction
Document.
(B) if Company pays off any
portion of the principal amount of the Note (as defined in the
Purchase Agreement) during the Vesting Period and no Default or
Event of Default (as such terms are defined in the Purchase
Agreement) is then existing, then the number of then-unvested
Warrants shall be reduced by a percentage equal to the quotient
resulting from (1) the amount of principal under the Note that
is paid off by Company divided by (2) twenty million
dollars ($20,000,000); provided , however , that this
paragraph shall not apply to any payment of the principal amount of
the Note that is made within 120 days prior to a Change of Control
(as defined in the Purchase Agreement). Solely for purposes of
illustration, if two (2) years following the date hereof,
Company repays five million dollars ($5,000,000) of the principal
amount under the Note (and no Change of Control follows 120 days
from the date of such payment), then for the remaining twelve
(12) month period of the Vesting Period, only seventy-five
percent (75%) of the unvested Warrants at that time shall be
subject to further vesting, and the other twenty-percent
(25%) shall be canceled.
(C) If (i) there is a
Change of Control, (ii) an Event of Default (as defined in the
Purchase Agreement) has occurred and remains uncured for more than
the applicable cure period in the Purchase Agreement), or
(iii) the Note is accelerated for any reason, then all
unvested Warrants shall immediately become vested.
(b) Exercise Period,
Exercise Price; Net Exercise . Subject to the terms of this
Agreement, Warrant Holder shall have the right, which may be
exercised commencing on the date hereof and until 5:00 p.m., Los
Angeles time, on the last to occur of (i) the first
anniversary following the payment in full of all amounts due under
the Note or (ii) the seventh anniversary of the date hereof
(the period from the date hereof until such later date, the
“ Exercise Period
” ), to receive from Company the number
of fully paid and nonassessable Warrant Securities which Warrant
Holder may at the time be entitled to receive upon exercise of the
Warrants and payment to Company of the Exercise Price (as defined
below) then in effect for such Warrant Securities; provided,
however, that the Exercise Period shall be extended by the number
of days during which any Event of Default existed. In the
alternative, the Warrant Holder may exercise its right, during the
Exercise Period, to receive Warrant Securities on a net basis, such
that, without
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the exchange of any funds, such Warrant
Holder receives that number of Warrant Securities otherwise
issuable (or payable) upon exercise of its Warrants less
that number of Warrant Securities, having a Current Market Price
(as defined in Section 10(g)(l) ) one Business Day (as
defined in the Purchase Agreement) prior to the time of exercise,
that is equal to the Aggregate Exercise Price (as defined below)
that would otherwise have been paid by such Warrant Holder.
“ Aggregate Exercise Price
” means, with respect to the exercise of any
Warrants, the Exercise Price (as defined below) multiplied
by the number of shares of Warrant Securities being acquired
through the exercise of such Warrants. If not exercised by the end
of the Exercise Period, then any un-exercised Warrants shall become
void and all rights thereunder and all rights in respect thereof
under this Agreement shall cease as of such time; provided ,
however , that if the Exercise Price is less than the
Current Market Price per share of Common Stock at the end of
the Exercise Period, then any un-exercised Warrants shall be
automatically exercised on a net basis without any further action
on the part of Warrant Holder immediately prior to the end of the
Exercise Period.
(c) Procedure . The
Warrants may be exercised upon written notice of surrender to
Company at its office designated for such purpose (the address of
which is set forth in Section 16 hereof), which notice
shall include the certificate or certificates evidencing the
Warrants to be exercised, the form of election to purchase duly
filled in and signed, and payment to Company of the Aggregate
Exercise Price. Payment of the Aggregate Exercise Price shall be
made, at Warrant Holder’s option (i) in cash in
immediately available funds or by certified or official bank check
payable to the order of Company, (ii) on a net exercise basis
as provided herein, or (iii) by assigning to Company all or
any part of the unpaid principal amount of the Note held by the
applicable Warrant Holder in a principal amount equal to the
Aggregate Exercise Price. If, pursuant to clause (iii) above,
less than the entire unpaid principal amount of the Note is applied
toward payment of the Aggregate Exercise Price, then Warrant Holder
shall surrender the Note and Company shall (A) pay to Warrant
Holder the amount of unpaid interest accrued to the date of
surrender on the portion of the principal amount of the Note which
has been applied toward the Aggregate Exercise Price, such payment
to be in the form of a certified or official bank check or checks,
and (B) issue a new Note (dated the date of the Note being
surrendered) representing the balance of the unpaid principal
amount of the Note so surrendered plus any accrued but unpaid
interest thereon, payable to Warrant Holder or as Warrant Holder
may otherwise direct (unless the Note provides for a different form
of payment at such time, in which case Warrant Holder shall receive
such form of payment).
(d) Delivery of Warrant
Securities . Upon receipt of such written notice of surrender
of any Warrants and payment of the Aggregate Exercise Price
therefor (or simply upon receipt of such written notice of
surrender of such Warrants alone if Warrant Holder exercises such
Warrants on a net exercise basis as provided herein), Company shall
issue and cause to be delivered within five (5) Business Days
to or upon the written order of Warrant Holder and in such name or
names as Warrant Holder may designate, a certificate or
certificates for the number of full Warrant Securities issuable
upon the exercise of such Warrants (the date on which the Warrant
Securities are to be delivered, the “
Warrant Securities Delivery Date
” ). Subject to Section 5(a), such
certificate or certificates shall be deemed to have been issued and
any person so designated to be named therein shall be deemed to
have become a holder of record of such Warrant Securities as of the
date of the surrender of such Warrants and payment of the Aggregate
Exercise Price therefor (or simply upon receipt of such written
notice of surrender of such Warrants alone if Warrant Holder
exercises such Warrants on a net exercise basis as provided
herein).
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(e) Partial Exercise .
The Warrants shall be exercisable, at the election of Warrant
Holder, either in full or from time to time in part and, in the
event that a certificate evidencing the Warrants is exercised in
respect of fewer than all of the Warrant Securities issuable on
such exercise at any time prior to the date of expiration of such
Warrants, a new warrant certificate evidencing the right to receive
the remaining Warrant Securities will be issued and delivered
pursuant to the provisions of this Section.
(f) Conditional
Exercise . The Warrants shall also be conditionally
exercisable, at the election of Warrant Holder, so that if Warrant
Holder exercises the Warrants in contemplation of the consummation
of a transaction described in any of clauses (i)—(vi)
of Section 12(b) and such transaction is not
consummated, Warrant Holder may elect to revoke such exercise, in
which case, such Warrant shall be deemed not to have been so
exercised.
(g) Surrender . Any
Warrant Certificate surrendered upon exercise of a Warrant shall be
canceled and disposed of by Company. Company shall keep copies of
this Agreement and any notices given or received hereunder
available for inspection by Warrant Holder during normal business
hours at Company’s principal office.
(h) Fractional Shares
. No fractional shares or scrip representing fractional shares
shall be issued upon the exercise of a Warrant, but in lieu of such
fractional shares Company shall make a cash payment therefor on the
basis of the Current Market Price then in effect.
(i) Buy-In . If
Company fails to transmit to Warrant Holder a certificate or
certificates representing the Warrant Securities by the Warrant
Securities Delivery Date, then Warrant Holder will have the right
to rescind such exercise. In addition to any other rights available
to Warrant Holder, if the Common Stock is then registered under the
Exchange Act and Company fails to transmit to Warrant Holder one
(1) or more certificates representing the Warrant Securities
pursuant to an exercise on or before the Warrant Securities
Delivery Date, and if after such date Warrant Holder is required by
its broker to purchase (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by
Warrant Holder of the Warrant Securities which Warrant Holder in
good faith anticipated receiving upon such exercise (a
“ Buy-In ”
), then Company shall (A) pay in cash to Warrant Holder
the amount by which (1) Warrant Holder’s total purchase
price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (2) the amount equal to
(x) the number of Warrant Securities that Company was required
to deliver to the Holder in connection with the exercise at issue
multiplied by (y) the price at which the sell order
giving rise to such purchase obligation was executed, and
(B) at the option of Warrant Holder, either reinstate the
portion of the Warrants and equivalent number of Warrant Securities
for which such exercise was not honored or deliver to Warrant
Holder the number of shares of Common Stock that would have been
issued had Company timely complied with its exercise and delivery
obligations hereunder. For example, if Warrant Holder purchases
Common Stock having a total purchase price of $11,000 to cover a
Buy-In as a result of an attempted exercise of Warrants with an
Aggregate Exercise Price of $10,000 (in which exercise Company
failed to deliver the Warrant Securities
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by the Warrant Securities Deliver Date),
then Company shall be required to pay Warrant Holder $1,000.
Warrant Holder shall provide Company written notice indicating the
amounts payable to Warrant Holder in respect of the Buy-In,
together with applicable confirmations and other evidence
reasonably requested by Company. Nothing herein shall limit a
Warrant Holder’s right to pursue any other remedies available
to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with
respect to Company’s failure to timely deliver certificates
representing shares of Common Stock upon exercise of Warrants as
required pursuant to the terms hereof.
SECTION 7. Payment of
Taxes . Company shall pay all documentary stamp taxes
attributable to the initial issuance of Warrant Securities upon the
exercise of any Warrants; provided , however , that
Company shall not be required to pay any tax or taxes which may be
payable in respect of any transfer involved in the issuance of any
Warrant Certificate or any certificates for Warrant Securities in a
name other than that of the registered holder of the Warrant
Certificate surrendered upon the exercise of such Warrants, and
Company shall not be required to issue or deliver such Warrant
Certificate unless or until the person or persons requesting the
issuance thereof has paid to Company the amount of such tax or has
established to the reasonable satisfaction of Company that such tax
has been paid.
SECTION 8. Mutilated or
Missing Warrant Certificates . In case a Warrant Certificate
(or any other warrant certificate evidencing the Warrants) is
mutilated, lost, stolen or destroyed, Company shall within five
(5) days after request by the re
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