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EXHIBIT 10.47
Dated: February ____, 1999 170,000 UNDERWRITERS' WARRANTS
UNDERWRITERS' WARRANT
THIS CERTIFIES THAT X.X. Xxxxxx & Company, L.L.C., Millenium Financial
Group, Inc. And HD Xxxxx & Co., Inc. (referred to hereinafter as either the
"Holders" or the "Representatives") are entitled to purchase from DXP
ENTERPRISES, INC., a Texas corporation (the "Company"), (a) up to 170,000 shares
of the Company's common stock, $.01 par value per share (the "Shares"), at a
purchase price of $13.20 per Share (the "Share Exercise Price") and (b) up to
170,000 Common Stock purchase warrants, in the form attached hereto as Exhibit A
(the "Public Warrant(s)") at a purchase price of $2.0625 per Public Warrant (the
"Public Warrant Price," collectively, with the Share Exercise Price, the
"Exercise Prices") (the aforesaid right to purchase Shares and Public Warrants
being referred to herein as "Underwriters' Warrant"), subject to adjustment as
provided in Section 7 hereof. The Shares and the Public Warrants are referred to
collectively herein as the "Securities." This Underwriters' Warrant is
exercisable in whole or in part beginning at 8:00 a.m., Central Time on February
___, 2000 and at any time thereafter until 5:00 p.m., Central Time on February
___, 2004 (the "Expiration Date"). This Underwriters' Warrant is issued in
consideration of $10.00 received by the Company pursuant to an Underwriting
Agreement dated February ____, 1999, among the Company, the Representatives and
certain Selling Shareholders named therein, in connection with a public offering
of 1,700,000 units (the "Units"). Each Unit consists of one share of Common
Stock and one Public Warrant, each as described in the Underwriting Agreement.
Up to an additional 255,000 Units (the "Option Securities") are covered by an
over-allotment option granted by the Company and the aforementioned Selling
Shareholders to the Underwriters. The Units, together with their underlying
securities may be hereinafter referred to together with the Option Securities,
as the "Public Securities." The Shares and Public Warrants issuable pursuant to
the Underwriters' Warrant shall have same terms and conditions as the shares of
Common Stock and Public Warrants making up the Public Securities, as described
under the caption "Description of Capital Stock" in the Company's Registration
Statement on Form S-1, File No. 333-53387, as amended (the "Registration
Statement"), except that the Holder shall have registration rights under the
Securities Act of 1933, as amended, (the "Act"), for the Shares, the Public
Warrants, and the Shares issuable on the exercise of the Public Warrants as set
forth in Section 3 hereof. After the Expiration Date, the Holder shall have no
right to purchase any Securities hereunder.
1. (a) The rights represented by this Underwriters' Warrant may be
exercised at any time within the periods above specified, in whole or in part,
by (i) the surrender of the Underwriters' Warrant (with the purchase form at the
end hereof properly executed) at the principal executive office of the Company
(or such other office or agency of the Company as it may designate by notice in
writing to the Holder at the address of the Holder appearing on the books of the
Company); and (ii) payment to the Company of
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the Exercise Price then in effect for the number of Securities specified in the
above-mentioned purchase form together with applicable stock transfer taxes, if
any. This Underwriters' Warrant shall be deemed to have been exercised, in whole
or in part to the extent specified, immediately prior to the close of business
on the date this Underwriters' Warrant is surrendered and payment is made in
accordance with the foregoing provisions of this Section 1, and the person or
persons in whose name or names the certificates for Shares and/or Public
Warrants shall be issuable upon such exercise shall become the holder or holders
of record of such Shares and Public Warrants at that time and Public Warrants so
purchased shall be delivered to the Holder within a reasonable time, not
exceeding ten (10) business days, after the rights represented by this
Underwriters' Warrant shall have been so exercised.
2. The Underwriters' Warrant shall not be transferred, sold, assigned,
or hypothecated (other than by will or pursuant to the laws of descent and
distribution) for a period of one year commencing February ____, 1999, except
that it may be transferred to successors of the Holder, and may be assigned in
whole or in part, subject to compliance with federal and state securities laws,
to any person who is an officer or director of the Holder or to any Underwriter
and/or the officers or shareholders or members or partners thereof during such
period. Any such assignment shall be effected by the Holder by (i) executing the
form of assignment at the end hereof and (ii) surrendering the Underwriters'
Warrant for cancellation at the office or agency of the Company referred to in
Section 1 hereof, accompanied by a certificate (signed by an officer of the
Holder if the Holder is a corporation), stating that each transferee is a
permitted transferee under this Section 2; whereupon the Company shall issue, in
the name or names specified by the Holder (including the Holder) a new
Underwriters' Warrant or Warrants of like tenor and representing in the
aggregate rights to purchase the same number of Securities as are purchasable
hereunder.
3. The Company covenants and agrees that all shares of Common Stock
which may be purchased hereunder or upon exercise of the Public Warrants will,
upon issuance against payment of the purchase price therefor, be duly and
validly issued, fully paid and nonassessable, and no personal liability will
attach to the holder thereof. The Company further covenants and agrees that,
during the periods within which the Underwriters' Warrant may be exercised, the
Company will at all times have authorized and reserved a sufficient number of
shares of its Common Stock to provide for the exercise of the Underwriters'
Warrant and the Public Warrants.
4. The Underwriters' Warrant shall not entitle the Holder to any voting
rights or other rights as shareholders of the Company.
5. (a)(i) Piggyback Registration. If, at any time commencing one year
from the date hereof and expiring four (4) years thereafter, the Company
proposes to register any of its securities under the Act, for its own account or
for the account of others, (other than in connection with a merger or pursuant
to Form S-8, S-4 or other comparable registration statement) it will give
written notice by registered mail, at least twenty (20) business days prior to
the filing of each such registration statement, to all the Holders of the
Underwriters' Warrants and/or the underlying Securities of its intention to do
so. If a Holder of the Underwriters' Warrants and/or the underlying Securities
notifies the Company within twenty (20)
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business days after receipt of any such notice of its or their desire to include
any such securities in such proposed registration statement (the "Registerable
Securities"), the Company shall afford each of the Holders of the Underwriters'
Warrants and/or the underlying Securities the opportunity to have any such
Securities registered under such registration statement. In addition, if the
managing underwriter of such an offering determines that a limitation of the
number of Registerable Securities to be underwritten is required, the managing
underwriter may exclude some or all of the Registerable Securities from such
registration; provided, however, that no other securities of the Company shall
be included in such registration statement for an account of any person other
than the Company and the Holders, unless and until all the Registerable
Securities requested by the Holders to be included in such registration
statement are included.
(ii) Notwithstanding the provisions of this Section, the Company
shall have the right at any time after it shall have given written notice
pursuant to this Section (irrespective of whether a written request for
inclusion of any such securities shall have been made) to elect not to file any
such proposed registration statement, or to withdraw the same after the filing
but prior to the effective date thereof.
(b) Demand Registration.
(i) At any time commencing one year from the date hereof and
expiring five (5) years thereafter, the Holders of "80 Percent" (as hereinafter
defined) of the Underwriters' Warrants and the underlying Securities (assuming
the exercise of all of the Underwriters' Warrants) shall have the right (which
right is in addition to the registration rights under Section 5(a)(i) hereof),
exercisable by written notice to the Company, to have the Company prepare and
file with the Securities and Exchange Commission (the "Commission"), on one
occasion, a registration statement, and such other documents, including a
prospectus, as may be necessary in the opinion of counsel for the Holders to
comply with the provisions of the Act, so as to permit a public offering and
sale of their respective Securities by such Holders and any other holders of the
Underwriters' Warrants and/or the underlying Securities who notify the Company
within twenty (20) business days after receiving notice from the Company of such
request.
(ii) The Company covenants and agrees to give written notice of
any registration request under this Section 5(b) by any Holder to all other
registered Holders of the Underwriters' Warrants and the underlying Securities
within ten (10) business days from the date of the receipt of any such
registration request.
(iii) The Company shall include such Underwriters' Warrants and
the underlying Securities in the Registration Statement relating to this
offering and
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shall keep such Registration Statement current at least until the expiration of
the Public Warrants.
(iv) For purposes of this Agreement, the term "80 Percent" shall
mean not less than that number of Holders of the Underwriters' Warrants who hold
not less than 80% of the Common Stock issued or issuable by the Company upon
exercise of the Underwriters= Warrants, assuming such exercise also included an
exercise of the Public Warrants issuable upon the exercise of the Underwriters'
Warrant.
(v) Covenants of the Company and Other Agreements of the Parties
With Respect to Registration. In connection with any registration under Section
5(a) or (b) hereof, the Company covenants and agrees as follows:
(A) The Company shall use its best efforts to file a
registration statement within twenty (20) business days of receipt of any demand
therefor, shall use its best efforts to have any registration statement declared
effective at the earliest possible time, and shall furnish each Holder desiring
to sell Securities such number of prospectuses as shall reasonably be requested.
(B) The Company shall pay all costs (excluding fees and
expenses of Holder=s counsel and any underwriting or selling commissions), fees
and expenses in connection with all registration statements filed pursuant to
Sections (a) and (b) hereof including, without limitation, the Company's legal
and accounting fees, printing expenses, blue sky fees and expenses. If the
Company shall fail to comply with the provisions of Section (b)(v)(A), the
Company shall, in addition to any other equitable or other relief available to
the Holder(s), postpone the Expiration Date by such number of days as shall
equal the delay caused by the Company's failure.
(C) The Company will take all necessary action which may be
required in qualifying or registering the Securities included in a registration
statement for offering and sale under the securities or blue sky laws of such
states as reasonably are requested by the Holder(s), provided that the Company
shall not be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business under the laws of
any such jurisdiction.
(D) The Company shall furnish to each underwriter, if any, a
signed counterpart, addressed to such underwriter, of (x) an opinion of counsel
to the Company, dated the effective date of such registration statement (and, if
such registration includes an underwritten public offering, an opinion dated the
date of the closing under the underwriting agreement), and (y) a "cold comfort"
letter dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, a letter dated the date
of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such registration statement, in each case covering
substantially the same matters with respect to such registration statement (and
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the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities.
(E) The Company shall as soon as practicable after the
effective date of the registration statement, and in any event within 15 months
thereafter, make "generally available to its security holders" (within the
meaning of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the Act and covering a period of at
least 12 consecutive months beginning after the effective date of the
registration statement.
(F) The Company shall deliver promptly to the managing
underwriters, if any, copies of all correspondence between the Commission, on
the one hand, and the Company, its counsel or auditors, on the other, with
respect to the registration statement and permit each Holder and underwriter to
do such investigation, upon reasonable advance notice, with respect to
information contained in or omitted from the registration statement as it deems
reasonably necessary to comply with applicable securities laws or rules of the
National Association of Securities Dealers, Inc. ("NASD"). Such investigation
shall include access to books, records and properties and opportunities to
discuss the business of the Company with its officers and independent auditors,
all to such reasonable extent and at such reasonable times and as often as any
such Holder or underwriter shall reasonably request.
(G) The Company shall enter into an underwriting agreement
with the managing underwriters of such an offering. Such agreement shall be
satisfactory in form and substance to the Company, and such managing
underwriters, and shall contain such representations, warranties and covenants
by the Company and such other terms as are customarily contained in agreements
of that type used by the managing underwriter. The Holders shall be parties to
any underwriting agreement relating to an underwritten sale of their Securities
and may, at their option, require that any or all the representations,
warranties and covenants of the Company to or for the benefit of such
underwriters shall also be made to and for the benefit of such Holders. Such
Holders shall not be required to make any representations or warranties to or
agreements with the Company or the underwriters except as they may relate to
such Holders and their intended methods of distribution.
(H) Notwithstanding the foregoing, if the Company shall
furnish to each holder planning to participate in an offering a certificate
signed by the President of the Company stating that in the good faith judgement
of the Board of Directors of the Company it would be detrimental to the Company
or its shareholders for a registration statement to be filed in the near future
containing the disclosure of material information required to be included
therein by reason of the federal securities laws, then the Company's obligation
to use its best efforts to file a registration statement under Section 5(b)
shall be deferred for a period during which such disclosure would be
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detrimental, provided that his period will not exceed 120 days and provided
further, that the Company shall not defer its obligation in this matter more
than once in any 12 month period.
(c) For so long as the Holders can sell the Registerable
Securities pursuant to Rule 144, without limitations as to the volume or any
other Rule 144 restrictions, or under the Registration Statement, as may be
amended, then the piggy back and demand registration rights of the Holders under
the provisions of Section 5 will not be available to the Holders.
6. (a) The Company will indemnify and hold harmless each Holder of the
securities covered by the Registration Statement, and any amendment or
supplement thereto, (such Holder being hereinafter called the "Distributing
Holder"), and each person, if any, who controls (within the meaning of Section
15 of the Act) the Distributing Holder, and each underwriter (within the meaning
of the Act) of such securities and each person, if any, who controls (within the
meaning of Section 15 of the Act) any such underwriter, against any losses,
claims, damages or liabilities, joint or several, to which the Distributing
Holder, any such controlling person or any such underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities, or actions in respect thereof, arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any such registration statement or final prospectus constituting a part thereof
or any amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein (with respect to a
prospectus, in light of the circumstances under which they were made) not
misleading and will reimburse the Distributing Holder or such controlling person
or underwriter for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnification contained in
this paragraph (a) with respect to any prospectus shall not inure to the benefit
of any Distributing Holder (or the benefit of any person controlling such
Distributing Holder) on account of any such loss, claim, damage or liability
arising from the sale of the securities covered by such registration statement
by such Distributing Holder if a copy of a later-dated prospectus shall not have
been delivered or sent to such person within the time required by the Act, and
the untrue statement or alleged untrue statement or omission or alleged omission
of a material fact contained in such prospectus was corrected in the later-dated
prospectus, provided that the Company had delivered the later-dated prospectus
to the Distributing Holder in requisite quantity on a timely basis to permit
such delivery or sending; and provided, further, that the Company will not be
liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information furnished
by such Distributing Holder or any other Distributing Holder for use in the
preparation thereof.
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(b) The Distributing Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed said
Registration Statement and such amendments and supplements thereto, and each
person, if any, who controls the Company (within the meaning of Section 15 of
the Act) against any losses, claims, damages or liabilities, joint, or several,
to which the Company or any such director, officer or controlling person may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities, or actions in respect thereof, arise out of or are based
upon any untrue or alleged untrue statement of any material fact contained in
said registration statement, said prospectus, or said amendment or supplement,
or arises out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in said registration statement, said prospectus or said amendment
or supplement in reliance upon and in conformity with written information
furnished by such Distributing Holder for use in the preparation thereof; and
will reimburse the Company or any such director, officer or controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party notice of the commencement thereof, but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under this
Section 6.
(d) In case any such action is brought against any indemnified
party, and it notifies an indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate in and, to the extent that it
may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 6 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
(e) In order to provide for just equitable contribution under
the Act in any case in which (i) any person entitled to indemnification under
this Section 6 makes claim for indemnification pursuant hereto but it is
judicially determined (by entry of a final judgment or decree by a court of
competent jurisdiction an the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 6 provides for
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indemnification in such case, or (ii) contribution under the Act may be required
on the part of any such person in circumstances for which indemnification is
provided under this Section 6, then, and in each such case, the Company and each
Holder shall contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (after any contribution from others) in such
proportion taking into consideration the relative benefits received by each
party from the offering covered by the Prospectus (taking into account the
portion of the proceeds of the offering realized by each), the parties' relative
knowledge and access to information concerning the matter with respect to which
the claim was assessed, the opportunity to correct and prevent any statement or
omission and other equitable considerations appropriate under the circumstances;
and provided, that, in any such case, no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11 (f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
Within fifteen (15) days after receipt by any party to this
Agreement (or its representative) of notice of the commencement of any action,
suit or proceeding, such party will, if a claim for contribution in respect
thereof is to be made against another party (the "contribution party"), notify
the contributing party of the commencement thereof, but the omission so to
notify the contributing party will not relieve it from any liability which it
may have to any other party other than for contribution hereunder. In case any
such action, suit or proceeding is brought against any party, and such party
notifies a contributing party or his or its representative of the commencement
thereof within the aforesaid fifteen (15) days, the contributing party will be
entitled to participate therein with the notifying party and any other
contributing party similarly notified. Any such contributing party shall not be
liable to any party seeking contribution on account of any settlement of any
claim, action or proceeding effected by such party seeking contribution without
the written consent of such contributing party. The provisions contained in this
Section 6 are in addition to any other rights or remedies which either party
hereto may have with respect to the other or hereunder.
7. Adjustment of Exercise Price
(a) Except as hereinafter provided, in the event the Company
shall, at any time or from time to time after the date hereof, sell any shares
of Common Stock for a consideration per share less than the lower of (i) the
last sale price of the Common Stock as reported on the Nasdaq National Market on
the trading date immediately preceding such sale (the "Market Price"), or (ii)
the Share Exercise Price then in effect, or issue any shares of Common Stock as
a stock dividend to the holders of Common Stock, or subdivide or combine the
outstanding shares of Common Stock into a greater or lesser number of shares
(any such sale, issuance, subdivision or combination being herein called a
"Change of Shares"), then, and thereafter immediately before the date of such
sale or the record date for each Change of Shares, the Share Exercise Price for
the Common Stock included in this Underwriters' Warrants (whether or not the
same shall be issued and outstanding) in effect immediately prior to such Change
of Shares shall be changed to a price (including any applicable fraction of a
cent to the nearest cent) determined by
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dividing (1) the product of (a) the Share Exercise Price in effect immediately
before such Change of Shares and (b) the sum (i) the total number of shares of
Common Stock outstanding immediately prior to such Change of Shares, and (ii)
the number of shares determined by dividing (A) the aggregate consideration, if
any, received by the Company upon such sale, issuance, subdivision or
combination, by (B) the lesser of (x) the Market Price, and (y) the Share
Exercise Price, in effect immediately prior to such Change of Shares; by (2) the
total number of shares of Common Stock outstanding immediately after such Change
of Shares.
(b) For the purposes of any adjustment to be made in accordance
with this Section 7(a) the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common
Stock (or of other securities deemed hereunder to involve the issuance or sale
of shares of Common Stock) for a consideration part or all of which shall be
cash, the amount of the cash portion of the consideration therefor deemed to
have been received by the Company shall be (x) the subscription price (before
deducting any commissions or any expenses incurred in connection therewith), if
shares of Common Stock are offered by the Company for subscription, or (y) the
public offering price (before deducting therefrom any compensation paid or
discount allowed in the sale, underwriting or purchase thereof by underwriters
or dealers or others performing similar services, or any expenses incurred in
connection therewith), if such securities are sold to underwriters or dealers
for public offering without a subscription offering, or (z) the gross amount of
cash actually received by the Company for such securities, in any other case.
(ii) In case of the issuance or sale (otherwise than as a
dividend or other distribution on any stock of the Company, and otherwise than
on the exercise of options, rights or warrants or the conversion or exchange of
convertible or exchangeable securities) of shares of Common Stock (or of other
securities deemed hereunder to involve the issuance or sale of shares of Common
Stock) for a consideration part or all of which shall be other than cash, the
amount of the consideration therefor other than cash deemed to have been
received by the Company shall be the value of such consideration as determined
in good faith by the Board of Directors of the Company.
(iii) Shares of Common Stock issuable by way of dividend or
other distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the day following the record
date for the determination of shareholders entitled to receive such dividend or
other distribution and shall be deemed to have been issued without
consideration.
(iv) The reclassification of securities of the Company
other than shares of Common Stock into securities including shares of Common
Stock shall be deemed to involve the issuance of such shares of Common Stock for
a consideration other than cash immediately prior to the close of business on
the date fixed for the determination of security holders entitled to receive
such shares, and the value of
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the consideration allocable to such shares of Common Stock shall be determined
as provided in subsection (ii) of this Section 7(a).
(v) The number of shares of Common Stock at any one time
outstanding shall be deemed to include the aggregate maximum number of shares
issuable (subject to readjustment upon the actual issuance thereof) upon the
exercise of options, rights or warrants and upon the conversion or exchange of
convertible or exchangeable securities.
(c) Upon each adjustment of the Exercise Price pursuant to this
Section 7, the number of shares of Common Stock purchasable upon the exercise of
each Warrant shall be the number derived by multiplying the number of shares of
Common Stock purchasable immediately prior to such adjustment by the Exercise
Price in effect prior to such adjustment and dividing the product so obtained by
the applicable adjusted Exercise Price.
(d) In case the Company shall at any time after the date hereof
issue options, rights or warrants to subscribe for shares of Common Stock, or
issue any securities convertible into or exchangeable for shares of Common
Stock, for a consideration per share (determined as provided in Section 7(a) and
as provided below) less than the lower of (i) the Market Price, or (ii) Share
Exercise Price in effect immediately prior to the issuance of such options,
rights or warrants, or such convertible or exchangeable securities, or without
consideration (including the issuance of any such securities by way of dividend
or other distribution), the Exercise Price for the Common Stock included in this
Underwriters' Warrants (whether or not the same shall be issued and outstanding)
in effect immediately prior to the issuance of such options, rights or warrants,
or such convertible or exchangeable securities, as the case may be, shall be
reduced to a price determined by making the computation in accordance with the
provisions of Section 7(a) hereof, provided that:
(i) The aggregate maximum number of shares of Common Stock,
as the case may be, issuable or that may become issuable under such options,
rights or warrants (assuming exercise in full even if not then currently
exercisable or currently exercisable in full) shall be deemed to be issued and
outstanding at the time such options, rights or warrants were issued, for a
consideration equal to the minimum Exercise Price per share provided for in such
options, rights or warrants at the time of issuance, plus the consideration, if
any, received by the Company for such options, rights or warrants; provided,
however, that upon the expiration or other termination of such options, rights
or warrants, if any thereof shall not have been exercised, the number of shares
of Common Stock deemed to be issued and outstanding pursuant to this subsection
(i) (and for the purposes of subsection (v) of Section 7(b) hereof) shall be
reduced by the number of shares as to which options, warrants and/or rights
shall have expired, and such number of shares shall no longer be deemed to be
issued and outstanding, and the Exercise Price then in effect shall forthwith be
readjusted and thereafter be the price that it would have been had adjustment
been made on the basis of the issuance only of the
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shares actually issued plus the shares remaining issuable upon the exercise
of those options, rights or warrants as to which the exercise rights shall not
have expired or terminated unexercised.
(ii) The aggregate maximum number of shares of Common Stock
issuable or that may become issuable upon conversion or exchange of any
convertible or exchangeable securities (assuming conversion or exchange in full
even if not then currently convertible or exchangeable in full) shall be deemed
to be issued and outstanding at the time of issuance of such securities, for a
consideration equal to the consideration received by the Company for such
securities, plus the minimum consideration, if any, receivable by the Company
upon the conversion or exchange thereof; provided, however, that upon the
expiration or other termination of the right to convert or exchange such
convertible or exchangeable securities (whether by reason of redemption or
otherwise), the number of shares of Common Stock deemed to be issued and
outstanding pursuant to this subsection (ii) (and for the purposes of subsection
(v) of Section 7(b) hereof) shall be reduced by the number of shares as to which
the conversion or exchange rights shall have expired or terminated unexercised,
and such number of shares shall no longer be deemed to be issued and
outstanding, and the Exercise Price then in effect shall forthwith be readjusted
and thereafter be the price that it would have been had adjustment been made on
the basis of the issuance only of the shares actually issued plus the shares
remaining issuable upon conversion or exchange of those convertible or
exchangeable securities as to which the conversion or exchange rights shall not
have expired or terminated unexercised.
(iii) If any change shall occur in the exercise price per
share provided for in any of the options, rights or warrants referred to in
subsection (i) of this Section 7(d), or in the price per share or ratio at which
the securities referred to in subsection (ii) of this Section 7(d) are
convertible or exchangeable, such options, rights or warrants or conversion or
exchange rights, as the case may be, to the extent not theretofore exercised,
shall be deemed to have expired or terminated on the date when such price change
became effective in respect of shares not theretofore issued pursuant to the
exercise or conversion or exchange thereof, and the Company shall be deemed to
have issued upon such date new options, rights or warrants or convertible or
exchangeable securities.
(e) In case of any reclassification or change of outstanding
shares of Common Stock issuable upon exercise of the Warrants (other than a
change in par value, or from par value to no par value, or from no par value to
par value or as a result of subdivision or combination), or in case of any
consolidation or merger of the Company with or into another corporation (other
than a merger with a subsidiary in which merger the Company is the continuing
corporation and which does not result in any reclassification or change of the
then outstanding shares of Common Stock or other capital stock issuable upon
exercise of the Warrants) or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, then, as a condition of such reclassification, change, consolidation,
merger, sale
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or conveyance, the Company, or such successor or purchasing corporation, as the
case may be, shall make lawful and adequate provision whereby the Registered
Holder of each Underwriters' Warrant then outstanding shall have the right
thereafter to receive on exercise of such Underwriters' Warrant the kind and
amount of securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a holder of the number of
securities issuable upon exercise of such Warrant immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance and shall
forthwith file at the Corporate Office of the Warrant Agent a statement signed
by its President or a Vice President and by its Treasurer or an Assistant
Treasurer or its Secretary or an Assistant Secretary evidencing such provision.
Such provisions shall include provision for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in Section 7(a)
and (b). The above provisions of Section 7(c) shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales or conveyances.
(f) Irrespective of any adjustments or changes in the Share
Exercise Price or the number of shares of Common Stock purchasable upon exercise
of the Underwriters' Warrants, the Warrant Certificates theretofore and
thereafter issued shall, unless the Company shall exercise its option to issue
new Warrant Certificates pursuant hereto, continue to express the Share Exercise
Price per share and the number of shares purchasable thereunder as the Share
Exercise Price per share and the number of shares purchasable thereunder were
expressed in the Warrant Certificates when the same were originally issued.
(g) After each adjustment of the Share Exercise Price pursuant to
this Section 7, the Company will promptly prepare a certificate signed by the
Chairman or President, and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, of the Company setting forth: (i) the
Exercise Price as so adjusted, (ii) the number of shares of Common Stock
purchasable upon exercise of each Warrant, after such adjustment, and (iii) a
brief statement of the facts accounting for such adjustment. The Company will
promptly file such certificate with the Warrant Agent and cause a brief summary
thereof to be sent by ordinary first class mail to each Registered Holder at his
last address as it shall appear on the registry books of the Warrant Agent. No
failure to mail such notice nor any defect therein or in the mailing thereof
shall affect the validity thereof except as to the holder to whom the Company
failed to mail such notice, or except as to the holder whose notice was
defective. The affidavit of an officer of the Warrant Agent or the Secretary or
an Assistant Secretary of the Company that such notice has been mailed shall, in
the absence of fraud, be prima facie evidence of the facts stated therein.
(h) No adjustment of the Share Exercise Price or the number of
shares issuable upon exercise of this Underwriters' Warrant shall be made as a
result of or in connection with (A) the issuance or sale of the Units, the
Over-Allotment Option, the Underwriters' Warrants or the securities underlying
such Securities, (B) the issuance or
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sale of shares of Common Stock pursuant to options, warrants, stock purchase
agreements and convertible or exchangeable securities outstanding or in effect
on the date hereof, options to be granted under the Company's Long-Term
Incentive Plan or any management, employee, consultant or director award or plan
approved by the board of directors of the Company or a committee thereof, (C)
any securities issued in connection with the Company's acquisition of
substantially all the stocks or assets of another business, (D) any securities
issued pursuant to an underwritten public offering, or (E) the issuance or sale
of shares of Common Stock if the amount of said adjustment shall be less than
$.02 for one share of Common Stock, provided, however, that in such case, any
adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment that shall amount, together with any adjustment so carried forward,
to at least $.02 for one share of Common Stock. In addition, any Holder shall
not be entitled to cash dividends paid by the Company prior to the exercise of
any Underwriters' Warrant held by them.
8. This Agreement shall be governed by and in accordance with the
laws of the State of New York. Each party hereto agrees to submit to the
personal jurisdiction and venue of the state and/or federal courts located in
New York City, New York, for resolution of all disputes arising out of, in
connection with, or by reason of the interpretation, construction, and
enforcement of this Agreement, and hereby waives the claim or defense therein
that such courts constitute an inconvenient forum.
IN WITNESS WHEREOF, DXP ENTERPRISES, INC., has caused this
Underwriters' Warrant to be signed by its duly authorized officers, and this
Underwriters' Warrant to be dated as of the date first above written.
DXP ENTERPRISES, INC.
By:
----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman of the Board, Chief
Executive Officer and President
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PURCHASE FORM
(To be signed only upon exercise of Underwriters' Warrant)
The undersigned, the holder of the foregoing Underwriters' Warrant,
hereby irrevocably elects to exercise the purchase rights represented by such
Warrant for, and to purchase thereunder, ______ Shares of DXP ENTERPRISES, INC.
$0.01 per share, and/or Redeemable Common Stock Purchase Warrants to purchase
one (1) share of Common Stock, and herewith makes payment of $____ therefor (or
hereby surrenders and delivers that portion of the Underwriters' Warrant having
equivalent value (as determined in accordance with the provisions of Section 1
of the Underwriters' Warrant)), and requests that the certificates for shares of
Common Stock and/or Warrants be issued in the name(s) of, and delivered to whose
addressees) is (are):
------------------------------------------
Dated: , 19
------------------ ----
Signature:
-------------------------------------------------
(Print name under signature)
(Signature must conform in all respects to the
name of holder as specified on the face of the
Underwriters' Warrant).
---------------------------------------------------------------------
(Insert Social Security or Other Identifying Number of Holder)
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FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Warrant)
FOR VALUE RECEIVED hereby sells, assigns and transfers unto (Please
print name and address of transferee) this Warrant, together with all right,
title and interest therein, and does hereby irrevocably constitute and appoint
Attorney, to transfer the within Warrant on the books DXP ENTERPRISES, INC. with
full power of substitution.
Dated: , 19
------------------- -----
Signature:
----------------------------------------------------------
(Print name under signature)
(Signature must conform in all respects to the
name of holder as specified on the face of the
Underwriter's Warrant.
------------------------------------------------------------------------
(Insert Social Security or Other Identifying Number of Holder)
