EXHIBIT 1.4
WARRANT EXERCISE FEE AGREEMENT
AGREEMENT dated this ___ day of __________, 1999, by and among
Xxxxxxxxx Financial Group, Inc. ("Xxxxxxxxx"), SportsTrac Systems, Inc. (the
"Company") and American Stock Transfer & Trust Company (the "Warrant Agent").
W I T N E S S E T H:
WHEREAS, in connection with a public offering of 585,000 Units, each
Unit consisting one share of Common Stock ("Common Stock") and two Redeemable
Class A Common Stock Purchase Warrants (the "Class A Warrants") of the Company
at a public offering price of $6.00 per Unit, the Company proposes to issue, in
accordance with an agreement dated ________, 1999 by and between the Company and
the Warrant Agent (the "Warrant Agreement"), Class A Warrants to purchase up to
672,750 shares of Common Stock; and
WHEREAS, the parties hereto wish to provide Xxxxxxxxx a member of
the National Association of Securities Dealers, Inc. ("NASD") with certain
rights on an exclusive basis in connection with the exercise of the Class A
Warrants.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
Section 1. Description of the Class A Warrants. The Company's Class
A Warrants may be exercised on or after _________, 2000 and expire at 5:00 p.m.
New York City time on _______ 2002 (the "Expiration Date"), subject to the
Company's right to extend the Expiration Date, at which time all rights
evidenced by the Class A Warrants shall cease and the Class A Class A Warrants
shall become void. In accordance with the provisions of the Warrant Agreement,
the holder of each Class A Warrant shall have the right to purchase from the
Company, and the Company shall issue and sell to such holders of Class A
Warrants, one fully paid and non-assessable share of the Company's Common Stock
for every Class A Warrant exercised at an exercise price of $7.20 subject to
adjustment as provided in the Warrant Agreement (the "Exercise Price").
Section 2. Notification of Exercise. Within five (5) days of the
last day of each month commencing ___________, 2000 (one year from the effective
date of the Company's Registration Statement), the Warrant Agent will notify
Xxxxxxxxx of each Class A Warrant certificate which has been properly completed
and delivered for exercise by holders of Class A Warrants during each such
month, if any, the determination of the proper completion to be in the sole and
absolute reasonable discretion of the Company and the Warrant Agent. The Warrant
Agent will provide Xxxxxxxxx with such information, in connection with the
exercise of each Class A Warrant, as Xxxxxxxxx shall reasonably request.
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Section 3. Payment to Xxxxxxxxx. The Company hereby agrees to pay to
Fairchld upon solicitation of the exercise of any Class A Warrant by Xxxxxxxxx
or any other member of the NASD an amount equal to ten (10%) percent of the
Exercise Price (i.e. $.72 per share based on the initial Exercise Price of the
Class A Warrants) for each Class A Warrant exercised (the "Exercise Fee") a
portion of which may be allowed by Xxxxxxxxx to the dealer who solicited the
exercise (which may also be Xxxxxxxxx) provided that:
(a) such Class A Warrant is exercised on or after ________, 2000,
which represents one year from the effective date of the Company's Registration
Statement;
(b) at the time of exercise, the market price of the Company's
Common Stock is higher than the applicable Exercise Price of the Class A Warrant
being exercised;
(c) the holders of Class A Warrants being exercised have indicated
in writing, either in the Form of Election contained on the specimen Class A
Warrant Certificates attached hereto as Exhibits A, or by written documents
signed and dated by the holders and specifically stating that the exercise of
such Class A Warrants were solicited by Xxxxxxxxx or another member of the NASD;
(d) Solicitation of the exercise was in compliance with NASD Notice
to Members 81-38; and
(e) Xxxxxxxxx and/or the member of the NASD which solicited the
exercise of Class A Warrants delivers a certificate to the Company within five
(5) business days of receipt of information relating to such exercised Class A
Warrants from the Company or the Warrant Agent in the form attached hereto as
Exhibit B, stating that:
(1) the Class A Warrants exercised were not held in a
discretionary account or, if held in a discretionary account, prior specific
written approval for such exercise has been received from the related customer;
(2) Xxxxxxxxx or the member of the NASD which solicited the
exercise of Class A Warrants did not, within the applicable number of
business days under Regulation M granted an exemption by the Securities and
Exchange Commission from the provisions thereof), immediately preceding the date
of exercise of the Class A Warrant bid for or purchase the Common Stock of the
Company or any securities of the Company immediately convertible into or
exchangeable for the Common Stock (including Class A Warrants) or otherwise
engage in any activity that would be prohibited by Regulation M under the
Securities Exchange Act of 1934, as amended, with one engaged in a distribution
of the Company's securities;
(3) in connection with the solicitation, it disclosed the
compensation it would receive as part of the original offering and upon exercise
of the Class A Warrant; and
(4) in connection with the solicitation, it complied with NASD
Notice to Members 81-38.
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Section 4. Payment of the Exercise Fee. The Company hereby agrees to
pay over to Xxxxxxxxx within two (2) business days after receipt by the Company
of the certificate described in Section 3(e) above, but in no event later than
simultaneously with the distribution of proceeds to the Company from such
exercise of Class A Warrant the Exercise Fee out of the proceeds it received
from the applicable Exercise Price paid for the Class A Warrants to which the
certificate relates.
Section 5. Inspection of Records. Xxxxxxxxx may at any time during
business hours and upon reasonable prior written notice, , at its expense,
examine the records of the Company and the Warrant Agent which relate to the
exercise of the Class A Warrants.
Section 6. Termination. Xxxxxxxxx shall be entitled to terminate
this Agreement prior to the exercise of all Class A Warrants at any time upon
five (5) business days' prior written notice to the Company and the Agent.
Notwithstanding any such termination notice, Xxxxxxxxx shall be entitled to
receive an Exercise Fee for the exercise of any Class A Warrant for which it has
already delivered to the Company prior to any such termination the certificate
required by Section 3(e) of this Agreement and shall be entitled to receive such
Exercise Fee simultaneously with the distribution of such proceeds to the
Company.
Section 7. Notices. Any notice or other communication required or
permitted to be given pursuant to this Agreement shall be in writing and shall
be deemed sufficiently given if sent by first class certified mail, return
receipt requested, postage prepaid, addressed as follows: if to the Company at
Suite 100, 0000 Xxxxxxx Xxxxx, Xxxxxxx, XX 00000; if to Xxxxxxxxx at 00 Xxxx
Xxxxxx, Xxxxxx Xxxxx, Xxx Xxxx, XX 00000; and if to the Warrant Agent at 00 Xxxx
Xxxxxx, Xxx Xxxx, XX 00000, or such other address as such party shall have given
notice to the other parties hereto in accordance with this Section. All such
notices or other communications shall be deemed given three (3) business days
after mailing, as aforesaid.
Section 8. Supplements and Amendments. The Company, the Warrant
Agent and Xxxxxxxxx may from time-to-time supplement or amend this Agreement by
a written instrument signed by the party to be charged, without the approval of
any holders of Class A Warrants in order to cure any ambiguity or to correct or
supplement any provisions contained herein or to make any other provisions in
regard to matters or questions arising hereunder which the Company, the Warrant
Agent and Xxxxxxxxx may deem necessary or desirable and which do not adversely
affect the interests of the holders of Class A Warrants.
Section 9. Assignment. This Agreement may not be assigned by any
party without the express written approval of all other parties, except that
Xxxxxxxxx may assign this Agreement to its successors.
Section 10. Governing Law. This Agreement will be deemed made under
the laws of the State of New York with respect to matters of contract law and
for all purposes
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shall be governed by and construed in accordance with the internal laws of said
state, without regard to the conflicts of laws provisions thereof.
Section 11. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give any person or corporation other than the Company, the
Warrant Agent and Xxxxxxxxx any legal or equitable right, remedy or claim under
this Agreement; and this Agreement shall be for the sole and exclusive benefit
of, and be binding upon, the Company, the Warrant Agent and Xxxxxxxxx and their
respective successors and permitted assigns.
Section 12. Descriptive Headings. The descriptive headings of the
sections of this Agreement are inserted for convenience only and shall not
control or affect the meanings or construction of any of the provisions hereof.
Section 13. Superseding Agreement. This Agreement supersedes any and
all prior agreements between the parties with respect to the subject matter
hereof.
Section 14. Exclusive Agreement. It is understood that this
agreement is on an exclusive basis to solicit the exercise of the Warrants and
that the Company may not engage other broker-dealers to solicit the exercise of
Warrants without the consent of Xxxxxxxxx.
Section 15. Conflict with Warrant Agreement. Any conflict between
any term hereof and any term of the Warrant Agreement shall be resolved in favor
of such provision contained in the Warrant Agreement except that nothing
contained in the Warrant Agreement shall be construed to modify the amount of
compensation payable to Xxxxxxxxx.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
SPORTRTRAC SYSTEMS, INC
By:
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Xxxx X. Xxxxxxxxx, President
XXXXXXXXX FINANCIAL GROUP, INC.
By:
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Xxxxx Xxxx, Chief Operating Officer
AMERICAN STOCK TRANSFER
& TRUST COMPANY
By:
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CERTIFICATE
The undersigned, being the ________________ of Xxxxxxxxx Financial
Group, Inc. ("Xxxxxxxxx") pursuant to Section 3(e) of the Warrant Exercise Fee
Agreement relating to the exercise of Class A Warrants dated ________, 1999
between SportsTrac Systems, Inc. (the "Company") and American Stock Transfer &
Trust Company (the "Class A Warrant Agent") hereby certifies that:
1. The Company or the Warrant Agent has notified Xxxxxxxxx that
______________ Class A Warrants (as defined in the Agreement) have been
exercised during _____________, 200__.
2. The exercise of ______________ of such Class A Warrants was
solicited by __________________________.
3. Such Class A Warrants were not held in a discretionary account
or, if held in a discretionary account, prior specific written approval for such
exercise has been received from the related customer.
4. ______________ did not, within _____ business days immediately
preceding _______________ 200__, bid for or purchase the Common Stock of the
Company or any securities of the Company immediately convertible into or
exchangeable for the Common Stock (including Class A Warrants) or otherwise
engage in any activity that would be prohibited by Regulation M under the
Securities Exchange Act of 1934, as amended, with one engaged in a distribution
of the Company's securities.
5. In connection with the solicitation of the exercise of the Class
A Warrants, _____________ disclosed the compensation it will receive to holders
of the Class A Warrants as part of the original offering and upon exercise of
the Class A Warrants.
6. In connection with the solicitation of the exercise of the Class
A Warrants, ____ complied with NASD Notice to Members 81-38.
DATED: _________________, 200__
XXXXXXXXX FINANCIAL GROUP, INC.
By:
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Soliciting Broker-Dealer
By:
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