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EXHIBIT 10.34
WARRANT
TO SUBSCRIBE FOR AND PURCHASE COMMON STOCK OF
G.I. JOE'S, INC.
THIS CERTIFIES THAT, for value received, ____________________
(herein called "Purchaser") or registered assigns is entitled to subscribe for
and purchase from G.I. Xxx's, Inc. (the "Company"), a corporation organized and
existing under the laws of the State of Oregon, at the warrant purchase price
specified below (subject to adjustment as noted below) at any time from and
after the first anniversary of the date on which the Company's Registration
Statement on Form S-1 (No. 33-61527) is declared effective by the Securities and
Exchange Commission (the "Effective Date") to and including the fifth
anniversary of the Effective Date, ___________ fully paid and nonassessable
shares of the Company's Common Stock (subject to adjustment as noted below).
The warrant purchase price (subject to adjustment as noted below)
shall be $[_____](1) per share.
This Warrant is subject to the following provisions, terms and
conditions:
1. Exercise. Subject to the terms of this Warrant, the rights
represented by this Warrant may be exercised by the holder hereof, in whole or
in part, but not for less than 10,000 shares (appropriately adjusted for stock
dividends, splits or combinations) at a time (or such lesser amount then
issuable upon the entire exercise of this Warrant) by written notice of exercise
in the form attached hereto delivered to the Company and by the surrender of
this Warrant (properly endorsed if required) at the principal office of the
Company and upon payment to the Company by cashier's check or wire transfer of
funds of the purchase price for such shares. The Company agrees that the shares
so purchased shall be and are deemed to be issued to the holder hereof as the
record owner of such shares as of the close of business on the date on which
this Warrant shall have been surrendered and payment made for such shares as
aforesaid. Subject to the provisions of paragraph 2, certificates for the shares
of stock so purchased shall be delivered to the holder hereof within a
reasonable time, not exceeding fourteen days, after the rights represented by
this Warrant shall have been so exercised, and,
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(1) 120% of the initial public offering price per share.
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unless this Warrant has expired, a new Warrant representing the number of
shares, if any, with respect to which this Warrant shall not then have been
exercised shall also be delivered to the holder hereof within such time.
2. Restriction on Transferability. Notwithstanding the foregoing,
however, the Company shall not be required to deliver any certificate for shares
of stock upon exercise of this Warrant except in accordance with the provisions,
and subject to the limitations, of paragraph 6 hereof and the restrictive legend
under the heading "Restriction on Transfer" below. Neither this Warrant nor any
interest herein shall be sold, transferred, assigned or hypothecated for a
period of one year from the Effective Date except to (a) officers and/or
partners of [Cruttenden Xxxx Incorporated] [Black & Company, Inc.], or (b)
members of the selling group for the Company's initial public offering or their
respective officers and/or partners provided that, in each such case, the
transferee or transferees agree in writing to be bound by the terms of this
Section 2 with respect to further sales, transfers, assignments or
hypothecations of this Warrant or any interest herein.
3. Covenants of the Company. The Company covenants and agrees
that all shares which may be issued upon the exercise of the rights represented
by this Warrant will, upon issuance, and receipt by the Company of the purchase
price for the shares as set forth herein, be duly authorized and issued, fully
paid and nonassessable. The Company further covenants and agrees that during the
period within which the rights represented by this Warrant may be exercised, the
Company will at all times have authorized and reserved for the purpose of issue
upon exercise of the subscription rights evidenced by this Warrant, a sufficient
number of shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant.
4. Anti-Dilution Adjustments. The above provisions are, however,
subject to the following:
(a) The warrant purchase price shall, from and after the
date of issuance of this Warrant, be subject to adjustment from time to time as
hereinafter provided. Upon each adjustment of the warrant purchase price, the
holder of this Warrant shall thereafter be entitled to purchase, at the warrant
purchase price resulting from such adjustment, the number of shares obtained by
multiplying the warrant purchase price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto immediately prior
to such adjustment and dividing the product thereof by the warrant purchase
price resulting from such adjustment.
(b) In case the Company shall at any time prior to the
exercise or termination hereof subdivide its outstanding shares of Common Stock
into a greater number of shares, including any stock dividend declared to effect
a subdivision of the outstanding shares of Common Stock, the warrant purchase
price in effect immediately prior to such subdivision shall be proportionately
reduced, and conversely, in case the outstanding shares of Common
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Stock of the Company shall be combined into a smaller number of shares, the
warrant purchase price in effect immediately prior to such combination shall be
proportionately increased.
(c) If at any time prior to the exercise or termination
hereof any capital reorganization or reclassification of the capital stock of
the Company, or consolidation or merger of the Company with another corporation,
or the sale of all or substantially all of its assets to another corporation
shall be effected in such a way that holders of Common Stock shall be entitled
to receive stock, securities or assets with respect to or in exchange for Common
Stock, then, in each such case, lawful and adequate provision shall be made
whereby the holder hereof shall, after the consummation of such reorganization,
reclassification, consolidation, merger or sale, have the right to purchase and
receive, upon the basis and upon the terms and conditions specified in this
paragraph 4(c) and in lieu of the shares of the Common Stock of the Company
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby (at the aggregate warrant purchase price in effect for
all shares of Common Stock issuable upon such exercise immediately prior to the
consummation of such transaction as adjusted at the time of such transaction),
such shares of stock, securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of such Common
Stock equal to the number of shares of such stock immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby
had such reorganization, reclassification, consolidation, merger or sale not
taken place, and in any such case appropriate provision shall be made with
respect to the rights and interests of the holder of this Warrant to the end
that the provisions hereof (including without limitation provisions for
adjustments of the warrant purchase price and of the number of shares
purchasable upon the exercise of this Warrant) shall thereafter be applicable,
as nearly as may be, in relation to any shares of stock, securities or assets
thereafter deliverable upon the exercise hereof.
(d) Upon any adjustment of the warrant purchase price, then
and in each such case the Company shall give written notice thereof, by
first-class mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder as shown on the books of the Company,
which notice shall state the warrant purchase price resulting from such
adjustment and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise of this Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
(e) In case any time prior to the exercise or termination
hereof:
(1) the Company shall declare any cash dividend on its
Common Stock;
(2) the Company shall pay any dividend payable in
stock upon its Common Stock or make any distribution (other than
regular cash dividends and dividends payable solely in Common Stock
of the Company) to the holders of its Common Stock;
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(3) the Company shall offer for subscription pro rata
to the holders of its Common Stock any additional shares of stock of
any class or other rights;
(4) there shall be any capital reorganization, or
reclassification of the capital stock of the Company, or
consolidation or merger of the Company with, or sale of all or
substantially all of its assets to, another corporation; or
(5) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then, in any one or more of said cases, the Company shall give written notice,
addressed to the registered holder of this Warrant at the address of such holder
as shown on the books of the Company and to Xxxx X. Xxxxxx, Xxxxx Xxxxx LLP, 900
S.W. Fifth Avenue, Xxxxx 0000, Xxxxxxxx, Xxxxxx 00000-1268, of the date on which
(A) the books of the Company shall close or a record shall be taken for such
dividend, distribution or subscription rights, or (B) such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also specify
the date as of which the holders of Common Stock of record shall participate in
such dividend, distribution or subscription rights, or shall be entitled to
exchange their Common Stock for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up, as the case may be. Such written notice shall be
received at least 15 days prior to the action in question and not less than 10
days prior to the record date or the date on which the Company's transfer books
are closed in respect thereto.
(f) No fractional shares of Common Stock shall be issued
upon the exercise of this Warrant, but, instead of any fraction of a share which
would otherwise be issuable, the Company shall pay a cash adjustment (which may
be effected as a reduction of the amount to be paid by the holder hereof upon
such exercise) in respect of such fraction in an amount equal to the same
fraction of the market price per share of Common Stock as of the close of
business on the date of the written notice of exercise required by paragraph 1
above. "Market price" for purposes of this paragraph 4(f) shall mean, if the
Common Stock is traded on a securities exchange or on the Nasdaq National
Market, the closing price of the Common Stock on such exchange or the last sale
price on the Nasdaq National Market, or, if the Common Stock is otherwise traded
in the over-the-counter market, the closing bid price, in each case averaged
over a period of five consecutive trading days prior to the date as of which
"market price" is being determined. If at any time the Common Stock is not
traded on an exchange or the Nasdaq National Market, or otherwise traded in the
over-the-counter market, the "market price" shall be deemed to be the fair value
thereof determined in good faith by the Board of Directors of the Company as of
a date which is within 15 days of the date as of which the determination is to
be made.
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5. No Shareholder Rights. This Warrant shall not entitle the
holder hereof to any voting rights, rights to receive dividends or other rights
as a shareholder of the Company.
6. Notice of Transfer of Warrant or Resale of Shares. The holder
of this Warrant, by acceptance hereof, agrees to give written notice to the
Company before transferring this Warrant or transferring any Common Stock
issuable or issued upon the exercise hereof of such holder's intention to do so,
describing briefly the manner of any proposed transfer of this Warrant or such
xxxxxx's intention as to the disposition to be made of shares of Common Stock
issuable or issued upon the exercise hereof. Such holder shall also provide the
Company with written representations from the holder and the proposed transferee
satisfactory to the Company regarding the transfer or, at the election of the
Company, an opinion in form and from counsel reasonably satisfactory to the
Company to the effect that the proposed transfer of this Warrant or disposition
of shares may be effected without registration or qualification (under any
Federal or State law) of this Warrant or the shares of Common Stock issuable or
issued upon the exercise hereof. Upon receipt of such written notice and either
such representations or opinion by the Company, such holder shall, subject to
the last sentence of paragraph 2, be entitled to transfer this Warrant, or to
exercise this Warrant in accordance with its terms and dispose of the shares
received upon such exercise or to dispose of shares of Common Stock received
upon the previous exercise of this Warrant, all in accordance with the terms of
the notice delivered by such holder to the Company. An appropriate legend, if
any, respecting the aforesaid restrictions on transfer and disposition may be
endorsed on this Warrant or the certificates for such shares.
7. Transferability. Subject to the provisions of paragraph 2 and
paragraph 6 hereof, this Warrant and all rights hereunder are transferable, in
whole or in part, at the principal office of the Company by the holder hereof in
person or by duly authorized attorney, upon surrender of this Warrant properly
endorsed.
This Warrant is exchangeable, upon the surrender hereof by the
holder hereof at the principal office of the Company, for new Warrants of like
tenor representing in the aggregate the right to subscribe for and purchase the
number of shares which may be subscribed for and purchased hereunder, each of
such new Warrants to represent the right to subscribe for and purchase such
number of shares as shall be designated by said holder hereof at the time of
such surrender.
8. Registration Rights. The holder of this Warrant and of the
Common Stock issuable or issued upon the exercise hereof shall, subject to the
terms and conditions of Exhibit A, be entitled to the registration rights set
forth in Exhibit A attached hereto.
9. Governing Law. All questions concerning this Warrant will be
governed and interpreted and enforced in accordance with the internal law of the
State of Oregon without regard for principles of conflicts of law.
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10. Notices. All notices required or permitted to be given under
this Warrant or the associated registration rights shall be in writing. Notices
may be served by certified or registered mail, postage paid with return receipt
requested; by private courier, prepaid; by telex, facsimile or other
telecommunication device capable of transmitting or creating a written record;
or personally. Mailed notices shall be deemed received five days after mailing,
properly addressed. Couriered notices shall be deemed received on the date that
the courier warrants that delivery will occur. Telex or telecommunicated notices
shall be deemed received when receipt is either confirmed by confirming
transmission equipment or acknowledged by the addressee or its office. Personal
delivery shall be effective when accomplished.
11. "Holder". All references herein to the "holder" of this
Warrant shall refer to the registered holder of this Warrant as reflected on the
books and records of the Company. The Company may deem and treat the registered
holder of this Warrant as the absolute owner hereof for the purpose of any
exercise hereof and for all other purposes, and the Company shall not be
affected by any notice to the contrary.
12. Investment Intent; Accredited Investor Status. By accepting
this Warrant, the holder represents that it is (a) acquiring this Warrant and
the shares of stock issuable upon exercise hereof for investment for its own
account and not with a view to, or for sale in connection with, any distribution
thereof, (b) an "accredited investor," as defined in Rule 501 under the
Securities Act of 1933, as amended, and (c) a resident of the State of
___________. By accepting this Warrant, the holder acknowledges that neither
this Warrant nor the shares of stock issuable upon exercise hereof have been
registered under the Securities Act of 1933, as amended.
13. Amendments. This Warrant may be amended, supplemented or
modified only by means of a writing signed by the Company and the holder.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer and this Warrant to be dated as of
______________, 1999.
G.I. JOE'S, INC.
By:________________________________
Title:_____________________________
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RESTRICTION ON TRANSFER
In addition to the other restrictions on transfer provided in this
Warrant, this Warrant or the shares of Common Stock issuable upon exercise
hereof may not be resold or transferred unless such resale or transfer is
exempted from the registration requirements of the Securities Act of 1933, as
amended (the "Act"), and any applicable state securities laws ("Laws"), and the
Company receives, prior to resale or transfer, written representations of the
holder and proposed transferee satisfactory to the Company regarding such
transfer or, at the election of the Company, an opinion in form and from counsel
reasonably satisfactory to the Company to the effect that the proposed transfer
of this Warrant or of such shares may be effected without registration under the
Act or qualification under the Laws, or the resale or transfer of this Warrant
or of such shares is registered under the Act and any applicable Laws. Each
certificate representing shares of Common Stock issuable upon exercise of the
Warrant may, at the Company's election, bear a legend substantially in
accordance with the foregoing sentence.
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FORM OF ASSIGNMENT
(TO BE SIGNED ONLY UPON ASSIGNMENT)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _____________________________________ this Warrant, and appoints
_____________________________________ to transfer this Warrant on the books of
the Company with the full power of substitution in the premises.
Dated:
In the presence of:
Signature:_________________________
NOTE: The signature must conform in all
respects to the name of the holder as
written on the face of this Warrant
without alteration, enlargement or any
change whatsoever, and the signature must
be guaranteed in the usual manner.
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SUBSCRIPTION FORM
TO BE EXECUTED BY THE HOLDER OF THIS WARRANT IF SUCH HOLDER
DESIRES TO EXERCISE THIS WARRANT IN WHOLE OR IN PART:
To: G.I. Joe's, Inc. (the "Company")
The undersigned ______________________ (please insert Social
Security or other identifying number of Subscriber) ____________
______________________, hereby irrevocably elects to exercise the right of
purchase represented by this Warrant for, and to purchase thereunder, _______
shares of the Common Stock provided for therein and tenders payment herewith to
the order of the Company in the amount of $___________, such payment being made
as provided on the face of this Warrant.
The undersigned requests that certificates for such shares of Common
Stock be issued as follows:
Name: _________________________________
Address: ______________________________
Deliver to: ___________________________
Address: ______________________________
and, if such number of shares of Common Stock shall not be all the shares of
Common Stock purchasable hereunder, that a new Warrant for the balance remaining
of the shares of Common Stock purchasable under this Warrant be registered in
the name of, and delivered to, the undersigned at the address stated above.
Dated:
Signature:_________________________
Note: The signature must conform in all
respects to the name of the holder as
written on the face of this Warrant
without alteration, enlargement or any
change whatsoever.
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EXHIBIT A to Warrant
REGISTRATION RIGHTS
1. Incidental Registration. Subject to Section 7 hereof, each time the
Company shall determine to proceed with the actual preparation and filing of a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), in connection with the proposed offer and sale for cash of
any of its securities by it or any of its security holders (other than a
registration statement on Form S-8 relating to shares issuable under an employee
stock option or other employee benefit plan, or a registration statement on a
form that does not permit the inclusion of the Purchased Stock), the Company
will give written notice of its determination to all record holders of Purchased
Stock (as hereinafter defined). Upon the written request of a record holder of
any shares of Purchased Stock given within 15 days after receipt of any such
notice from the Company, the Company will, except as herein provided, cause all
such shares of Purchased Stock, the record holders of which have so requested
registration thereof, to be included in such registration statement; provided,
however, that nothing herein shall prevent the Company from, at any time,
abandoning or delaying any registration. If any registration pursuant to this
Section 1 shall be underwritten in whole or in part, the Company may require, as
a condition to the inclusion of Purchased Stock in any registration under this
Section 1, that the Purchased Stock requested for inclusion pursuant to this
Section 1 be included in the underwriting on the same terms and conditions as
the securities otherwise being sold through the underwriters. If in the good
faith judgment of the managing underwriter of such public offering the inclusion
of all of the Purchased Stock originally covered by a request for registration
would reduce the number of shares to be offered by the Company and/or other
selling shareholders or interfere with the successful marketing of the shares of
stock offered by the Company and/or other selling shareholders, the number of
shares of Purchased Stock otherwise to be included in the underwritten public
offering may be reduced pro rata (by number of shares) among the holders of
Purchased Stock requesting such registration and the shares to be included in
the registration shall be allocated (x) first, to the Company and/or any selling
shareholders with registration rights, granted prior to March ___, 1999, that
entitled them to have shares included in the registration in preference to
shares of the Purchased Stock and (y) then, pro rata (by number of shares
requested to be included in such registration) among the holders of Purchased
Stock and any other selling shareholders in such registration (other than the
selling shareholders described in clause (x) above) pro rata (by number of
shares requested to be included in such registration) among such holders of
Purchased Stock and other selling shareholders.
The rights granted by this Section 1 may be transferred to and are
exercisable by subsequent transferee of any shares of Purchased Stock, provided
that the Company is, within a reasonable period of time after such transfer,
furnished with written notice the name and address of such transferee and the
securities with respect to which such registration rights are being transferred;
and provided, further, that such transfer shall be effective only if immediately
following such transfer the further disposition of such securities by the
transferee
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is restricted under the Securities Act and that the transferee is (i) a
director, officer or partner of [Cruttenden Xxxx Incorporated] [Black & Company,
Inc.], (ii) a member of the selling group for the Company's initial public
offering or an officer or partner of such member, or (iii) as a result of such
transfer the holder of at least 25,000 shares of Purchased Stock.
2. Required Registration at Company's Expense.
(a) If the Company shall receive a written request therefor from
any record holder or holders of an aggregate of at least a majority of the
shares of Purchased Stock then outstanding that the Company file a
registration statement under the Securities Act covering the registration
of at least a majority of the shares of the Purchased Stock having an
aggregate offering price to the public of not less than $500,000, the
Company shall, subject to Section 7, prepare and file on one occasion a
registration statement under the Securities Act covering the shares of
Purchased Stock which are the subject of such request and shall use its
best efforts to cause such registration statement to become effective. In
addition, upon the receipt of such request, the Company shall promptly
give written notice to all other record holders of shares of Purchased
Stock then outstanding that such registration is to be effected. The
Company shall include in such registration statement such shares of
Purchased Stock for which it has received written requests to register by
such other record holders within 15 days after the delivery of the
Company's written notice to such other record holders. The Company shall
be obligated to prepare, file and cause to become effective only one
registration statement pursuant to this Section 2.
(b) In the event that the holders of a majority of the Purchased
Stock for which registration has been requested pursuant to Section 2(a)
determine for any reason not to proceed with a registration at any time
before a registration statement has been declared effective by the
Securities and Exchange Commission (the "Commission"), and such
registration statement, if theretofore filed with the Commission, is
withdrawn with respect to the Purchased Stock covered thereby, and the
holders of such Purchased Stock agree to bear their own expenses incurred
in connection therewith and to reimburse the Company for the expenses
incurred by it attributable to the registration of such Purchased Stock,
then the holders of such Purchased Stock shall not be deemed to have
exercised their right to require the Company to register Purchased Stock
pursuant to Section 2(a).
(c) If at any time any written request for registration is
received by the Company pursuant to Section 2(a), and the Company has
determined to proceed with the actual preparation and filing of a
registration statement under the Securities Act in connection with the
proposed offer and sale for cash of any of its securities by it or any of
its security holders, such written request shall be deemed to have been
given pursuant to Section 1 hereof rather than Section 2(a), and the
rights of the holders of Purchased Stock covered by such written request
shall be governed by Section 1 hereof.
(d) Without the written consent of the holders of a majority of
the Purchased Stock for which registration has been requested pursuant to
Sections 2(a), neither the Company nor
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any other holder of securities of the Company may include securities in
such registration if in the good faith judgment of the managing
underwriter, if any, of such public offering determines that the inclusion
of such securities would interfere with the successful marketing of the
Purchased Stock or require the exclusion of any portion of the Purchased
Stock to be registered.
(e) The rights granted by Sections 2(a) may be transferred to and
are exercisable by subsequent transferee of any shares of Purchased Stock
provided that the Company is, within a reasonable period of time after
such transfer, furnished with written notice of the name and address of
such transferee and the securities with respect to which such registration
rights are being transferred; and, provided, further, that such transfer
shall be effective only if immediately following such transfer the further
disposition of such securities by the transferee is restricted under the
Securities Act and that such transferee is the transferee of at least
25,000 shares of the Purchased Stock.
(f) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to Sections 2(a):
(i) if the Company, within 15 days after the receipt of a
request for registration pursuant to Section 2(a), gives notice to
the holders of Purchased Stock of its bona fide intention to effect
the filing of a registration with the Commission, pertaining to an
underwritten public offering of securities for the account of the
Company, within 90 days after receipt of such request (other than
with respect to a registration statement relating to a Rule 145
transaction, an offering solely to employees or any other
registration which is not appropriate for the registration of
Purchased Stock); or
(ii) during the period starting with the date 60 days prior
to the Company's good faith estimate of the date of filing of, and
ending on a date three months following the effective date of, a
registration statement, pertaining to an underwritten public
offering of securities for the account of the Company (other than
with respect to a registration statement relating to a Rule 145
transaction, an offering solely to employees or any other
registration which is not appropriate for the registration of
Purchased Stock), provided that the Company is actively employing in
good faith all reasonable efforts to cause such registration
statement to become effective; or
(iii) if the Company shall furnish to such requesting parties
a certificate signed by the President of the Company stating that in
the good faith judgment of the Board of Directors it would be
seriously detrimental to the Company or its shareholders for a
registration statement to be filed in the near future or for certain
disclosure to be made that, in the opinion of the Board of Directors
duly advised by counsel, is required to be made in connection with
the offer or sale of securities pursuant to such registration,
provided that the
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Company's obligation to use its best efforts to file a registration
statement shall be deferred for a period not to exceed 90 days from
the receipt of the request to file such registration by such
requesting parties, and provided, further, that the Company shall
not exercise its rights under this clause to defer such obligation
more than once in any twelve-month period; or
(iv) if the Company is not then eligible to register an
offering of the Purchased Stock on a Form S-3 Registration Statement
for any reason other than its failure to meet registrant
requirements I.A.3. or I.A.5. (or any successor thereto) in the
General Instructions related to Form S-3.
3. Registration Procedures. If and whenever the Company files a
registration statement pursuant to the provisions of Sections 1 or 2 hereof to
effect the registration of shares of Purchased Stock under the Securities Act,
the Company will:
(a) prepare and file with the Commission a registration statement
with respect to such securities, and use its best efforts to cause such
registration statement to become and remain effective for such period as
may be reasonably necessary to effect the sale of such securities, not to
exceed six months;
(b) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein
as may be necessary to comply with the provisions of the Securities Act,
with respect to the disposition of the shares of stock subject to such
registration statement;
(c) furnish to the holders of Purchased Stock participating in
such registration and to the underwriters of the securities being
registered such reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as such
underwriters may reasonably request in order to facilitate the public
offering of such securities;
(d) use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue
sky laws of such jurisdictions as such participating holders may
reasonably request in writing within 20 days following the original filing
of such registration statement, except that the Company shall not for any
purpose be required (i) to execute a general consent to service of process
or to qualify to do business as a foreign corporation in any jurisdiction
wherein it is not so qualified; (ii) to register or qualify the securities
covered by such registration statement under the securities or blue sky
laws of any state in which such registration or qualification would
require merit review of the offering;
(e) notify the holders of Purchased Stock participating in such
registration, promptly after it shall receive notice thereof, of the time
when such registration
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statement has become effective or a supplement to any prospectus forming a
part of such registration statement has been filed;
(f) notify such holders promptly of any request by the Commission
for the amending or supplementing of such registration statement or
prospectus or for additional information;
(g) for a period not to exceed six months following the
effectiveness of such registration statement, prepare and file with the
Commission, promptly upon the request of any such holders, any amendments
or supplements to such registration statement or prospectus which, in the
opinion of counsel for such holders (and concurred in by counsel for the
Company), is required under the Securities Act or the rules and
regulations thereunder in connection with the distribution of the
Purchased Stock by such holder;
(h) for a period not to exceed six months following the
effectiveness of such registration statement, prepare and promptly file
with the Commission such amendment or supplement to such registration
statement or prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such securities is
required to be delivered under the Securities Act, any event shall have
occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they were
made, not misleading;
(i) advise such holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration statement or
the initiation or threatening of any proceeding for that purpose and
promptly use its best efforts to prevent the issuance of any stop order or
to obtain its withdrawal if such stop order should be issued;
(j) at the request of any such holder, furnish (i) an opinion,
dated as of the closing date, of the counsel representing the Company for
the purposes of such registration, addressed to the underwriters, with a
copy to the holder or holders making such request, covering such matters
as such underwriters may reasonably request; and (ii) letters dated as of
the effective date of the registration statement and as of the closing
date, from the independent certified public accountants of the Company,
addressed to the underwriters, with a copy to the holder or holders making
such request, covering such matters as such underwriters may reasonably
request.
4. Expenses. With respect to Sections 1 and 2 hereof, the Company shall
bear the following fees, costs and expenses: all registration and filing fees
payable to the Securities and Exchange Commission and any state securities
division, printing expenses, fees and disbursements of counsel and accountants
for the Company, fees and disbursements of counsel
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for the underwriter or underwriters of such securities (but only if and to the
extent the Company is otherwise required to bear such fees and disbursements),
all internal Company expenses, all legal fees and disbursements and other
expenses of the Company in complying with state securities or blue sky laws of
any jurisdictions in which the securities to be offered are to be registered or
qualified, and the premiums and other costs of policies of insurance issued to
the Company against liability (if any) arising out of such public offering. Fees
and disbursements of counsel and accountants for the selling security holders,
underwriting discounts and commissions and transfer taxes relating to the shares
included in the offering by the selling security holders, and any other expenses
incurred by the selling security holders not expressly included above, shall be
borne pro rata by the selling security holders.
5. Indemnification.
(a) The Company will indemnify and hold harmless each holder of
shares of Purchased Stock which are included in a registration statement
pursuant to the provisions of Sections 1 or 2 hereof, its directors and
officers, any underwriter (as defined in the Securities Act) for such
holder and each person, if any, who controls such holder or such
underwriter within the meaning of the Securities Act, from and against,
and will reimburse such holder and each such underwriter and controlling
person with respect to, any and all loss, damage, liability, cost and
expense to which such holder or any such underwriter or controlling person
may become subject under the Securities Act or otherwise, insofar as such
losses, damages, liabilities, costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained in
such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading; provided,
however, that the Company will not be liable in any such case to the
extent that any such loss, damage, liability, cost or expense arises out
of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with information
furnished by such holder, such underwriter or such controlling person in
writing specifically for use in the preparation of such registration
statement, prospectus or amendment or supplement thereto; provided,
however, that the indemnity agreement contained in this Section 5(a) shall
not apply to amounts paid in settlement of any such loss, damage,
liability, cost or expense if such settlement is effected without the
consent of the Company, which consent shall not be unreasonably withheld.
(b) Each holder of shares of Purchased Stock which are included in
a registration pursuant to the provisions of Sections 1 or 2 hereof will
indemnify and hold harmless the Company, its directors and officers, any
controlling person and any underwriter from and against, and will
reimburse the Company, its directors and officers, any controlling person
and any underwriter with respect to, any and all loss, damage, liability,
cost or expense to which the Company or any controlling person
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and/or any underwriter may become subject under the Securities Act or
otherwise, insofar as such losses, damages, liabilities, costs or expenses
are caused by any untrue or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained therein
or any amendment or supplement thereto, or arise 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,
in light of the circumstances in which they were made, not misleading, in
each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was
so made in reliance upon and in strict conformity with written information
furnished by such holder specifically for use in the preparation of such
registration statement, prospectus or amendment or supplement thereto;
provided, however, that the indemnity agreement contained in this Section
5(b) shall not apply to amounts paid in settlement of any such loss,
damage, liability, cost or expense if such settlement is effected without
the consent of such holder, which consent shall not be unreasonably
withheld.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of paragraph (a) or (b) of this Section 5 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to
be made against the indemnifying party pursuant to the provisions of said
paragraph (a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party
will not relieve it from any liability which it may have to any
indemnified party otherwise than hereunder. In case such action is brought
against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party shall have the right 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,
provided, however, if the defendants in any action include both the
indemnified party and counsel to the indemnified party shall have
reasonably concluded that there may be legal defenses available to the
indemnified party and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, or if
there is a conflict of interest which would prevent counsel for the
indemnifying party from also representing the indemnified party, the
indemnified party or parties shall have the right to select separate
counsel to participate in the defense of such action on behalf of such
indemnified party or parties. 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
pursuant to the provisions of said paragraph (a) or (b) for any legal or
other expense subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, unless (i) the indemnified party shall have employed
counsel in accordance with the proviso of the preceding sentence, (ii) the
indemnifying party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party within a
reasonable time after the notice of the commencement of
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the action, or (iii) the indemnifying party has authorized the employment
of counsel for the indemnified party at the expense of the indemnifying
party;
(d) In the event of a conflict between the provisions of Sections
5(a) and 5(b) governing the indemnification of an underwriter and any
person controlling such underwriter, and the corresponding provisions of
an underwriting agreement between the Company, the holders of the
Purchased Stock and such underwriter, the underwriting agreement shall
control; provided, however, that the Company shall indemnify the
underwriter and any person controlling such underwriter as set forth in
Section 5(a) if necessary to reach agreement on the terms of an
underwriting agreement.
6. Special Definition. "Purchased Stock" shall mean, collectively, the
Common Stock of the Company issued or issuable upon exercise of the Warrants
dated as of March ___, 1999 issued by the Company to Cruttenden Xxxx
Incorporated and Black & Company, Inc., respectively (together with any warrant
or warrants issued in substitution or exchange therefor, the "Warrant"), to
purchase a total of 250,000 shares of Common Stock of the Company, and all
shares of Common Stock of the Company issued in a stock split or
reclassification of, or a stock dividend or other distribution on or in
substitution or exchange for any of the foregoing securities. Notwithstanding
the foregoing, any Purchased Stock shall cease to be Purchased Stock when (x) a
registration statement covering such Purchased Stock has been declared effective
and such Purchased Stock has been disposed of pursuant to such effective
registration statement, (y) such Purchased Stock is sold or otherwise
transferred by a person in a transaction in which the rights under the
provisions of Section 1 and 2 are not transferred as specified therein or (z)
such Purchased Stock may be sold within any 90-day period (commencing on or
after the first anniversary of the Effective Date) pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act. For purposes hereof,
the record holder of the Warrant shall be treated as the record holder of the
related Common Stock then issuable upon the exercise thereof. Nothing in this
Section 6 shall, however, be deemed to require the Company to register the
Warrant, it being understood that the registration rights granted hereby relate
only to shares of Purchase Stock.
7. Availability of Registration Rights. The right to registration
pursuant hereto shall commence on the first anniversary of the Effective Date
(as defined in the Warrant to which these Registration Rights are attached) and
shall terminate, with respect to the provisions of Sections 1 and 2 hereof, on
the fifth anniversary of the Effective Date.
8. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Exhibit A that
the selling holders of Purchased Stock shall furnish to the Company such
information regarding themselves, the Purchased Stock held by them and the
intended method of disposition of such securities as shall be reasonably
required to effect the registration of their Purchased Stock and to execute such
documents in connection with such registration as the Company may reasonably
request.
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9. Delay of Registration. No holder of Purchased Stock shall have any
right to obtain or seek an injunction restraining or otherwise delaying any
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Exhibit A.
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