Contract
Exhibit
4.6
NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION (TO THE EXTENT REQUESTED BY
COUNSEL OF THE COMPANY) OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE
SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE
SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY
BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH
SECURITIES.
XXXXXXXXXX
PLACEMENT
WARRANT
| Warrant No. PW-__ |
Original
Issue Date: May 24,
2007
|
Xxxxxxxxxx,
a California corporation (the “Company”),
hereby certifies that, for value received and pursuant to the terms of the
Engagement Agreement, Holder is entitled to purchase from the Company up to
a
total of _______ shares of Common Stock (each such share, a “Warrant
Share”
and
all
such shares, the “Warrant
Shares”),
at
any time and from time to time from and after the Original Issue Date and
through and including May 24, 2012 (the “Expiration
Date”),
and
subject to the following terms and conditions:
1. Definitions.
As used
in this Warrant, the following terms shall have the respective definitions
set
forth in this Section
1.
“Alternate
Consideration”
shall
have the meaning set forth in Section 9(b).
“Business
Day”
shall
mean any day other than Saturday, Sunday or other day on which commercial banks
in the State of California are authorized or required by law to remain
closed.
“Buy-In”
shall
have the meaning set forth in Section
5(c).
“Common
Stock”
shall
mean the Company’s common stock, no par value per share.
“Date
of Exercise”
shall
have the meaning set forth in Section 5(a).
“Engagement
Agreement”
shall
mean that certain letter agreement dated October 18, 2006 by and
between the Company’s Subsidiary, X. X. Xxxxxxxxxx (formerly, Xxxxxxxxxx),
and X. Xxxxx & Co., and which obligations of
X. X. Xxxxxxxxxx pursuant to the terms of the Engagement Agreement
have been assigned to and assumed by the Company pursuant to a certain
Assignment Agreement by and between the Company and the Company's Subsidiary
X.
X. Xxxxxxxxxx dated May 24, 2007.
“Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended, or any successor law,
and
regulations and rules issued pursuant to that Act or any successor
law.
“Exercise
Price”
shall
mean $2.42, subject to adjustment in accordance with Section 9.
“Fundamental
Transaction”
shall
mean any of the following: (i) the Company effects any merger or consolidation
of the Company with or into another Person pursuant to which the Common Stock
is
converted into a right to receive other securities or property (other than
a
migratory merger conducted solely for the purpose of changing the Company’s
state of incorporation), (ii) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions,
(iii) any tender offer or exchange offer (whether by the Company or another
Person) is completed pursuant to which holders of Common Stock are permitted
to
tender or exchange their shares for other securities, cash or property, or
(iv)
the Company effects any reclassification of the Common Stock or any compulsory
share exchange pursuant to which the Common Stock is effectively converted
into
or exchanged for other securities, cash or property.
“Holder”
or
“Holders”
shall
mean the holder or holders, as the case may be, from time to time, whether
direct or beneficially, of Registrable Securities pursuant to this Warrant,
including, without limitation, ___________ and any of its permitted
transferees.
“Indemnified
Party”
shall
have the meaning set forth in Section 12(c)(iii).
“Indemnifying
Party”
shall
have the meaning set forth in Section 12(c)(iii).
“Losses”
shall
have the meaning set forth in Section 12(c)(i).
“Person”
shall
mean an individual or a corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.
“New
Warrant”
shall
have the meaning set forth in Section 3.
“Original
Issue Date”
shall
mean the Original Issue Date first set forth on the first page of this
Warrant.
“Proceeding”
shall
mean an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
“Prospectus”
shall
mean the final prospectus filed with respect to the Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act),
as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including one or more other final prospectuses filed with respect
to
post-effective amendments, and all material incorporated by reference in such
Prospectus.
-2-
“Registrable
Securities”
shall
mean: (i) the Warrant Shares; and (ii) any securities issued or
issuable with respect to such Warrant Shares by way of a stock dividend or
stock
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization with respect to any of the securities
referenced above.
“Registration
Statement”
shall
mean the registration statements contemplated by Section 12,
including the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference in such
registration statement.
“Rule
144”
shall
mean Rule 144 promulgated by the SEC pursuant to the Securities Act, as such
Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC having substantially the same effect as such
Rule.
“SEC”
shall
mean the United States Securities and Exchange Commission.
“Securities
Act”
shall
mean the Securities Act of 1933, as amended, or any successor law, and
regulations and rules issued pursuant to that Act or any successor
law.
“Subsidiary”
shall
mean any direct or indirect subsidiary of the Company.
“Trading
Day”
means
a
day on which the Common Stock is traded on a Trading Market; provided, that
in
the event that the Common Stock is not listed or quoted on a Trading Market,
then Trading Day shall mean a Business Day.
“Trading
Market”
means
whichever of the New York Stock Exchange, the American Stock Exchange, the
NASDAQ Global Market, the NASDAQ Capital Market, the OTC Bulletin Board or
the
Pink Sheets, LLC on which the Common Stock is listed or quoted for trading
on
the date in question.
“Warrant
Register”
shall
have the meaning set forth in Section 2.
2. Registration
of Warrant.
The
Company shall register this Warrant upon records to be maintained by the Company
for that purpose (the “Warrant
Register”),
in
the name of the record Holder hereof from time to time. The Company may deem
and
treat the registered Holder of this Warrant as the absolute owner hereof for
the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.
3. Registration
of Transfers.
The
Company shall register the transfer of any portion of this Warrant in the
Warrant Register, upon surrender of this Warrant, with the Form of Assignment
attached hereto duly completed and signed, to the Company at its address
specified herein. Upon any such registration or transfer, a new Warrant to
purchase Common Stock, in substantially the form of this Warrant (any such
new
Warrant, a “New
Warrant”),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations of a holder
of a Warrant.
-3-
4. Exercise
and Duration of Warrants.
This
Warrant shall be exercisable by the registered Holder at any time and from
time
to time on or after the Original Issue Date through and including the Expiration
Date. At 5:00 p.m., California time on the Expiration Date, the portion of
this
Warrant not exercised prior thereto shall be and become void and of no value.
The Company may not call or redeem any portion of this Warrant without the
prior
written consent of the affected Holder.
5. Delivery
of Warrant Shares.
(a) To
effect
exercises hereunder, the Holder shall not be required to physically surrender
this Warrant unless the aggregate Warrant Shares represented by this Warrant
is
being exercised. Upon delivery of the Exercise Notice (in the form attached
hereto) to the Company (with the attached Warrant Shares Exercise Log) at its
address for notice set forth herein and upon payment of the Exercise Price
multiplied by the number of Warrant Shares that the Holder intends to purchase
hereunder, the Company shall promptly (but in no event later than three (3)
Business Days after the Date of Exercise) issue and deliver to the Holder,
a
certificate for the Warrant Shares issuable upon such exercise, which, shall
contain the following restrictive securities legend:
THESE
SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”),
OR
ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT
TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.
The
Company shall, upon request of the Holder and subsequent to the date on which
the Registration Statement covering the resale of the Warrant Shares has been
declared effective by the SEC, use its reasonable best efforts to deliver
Warrant Shares hereunder electronically through the Depository Trust Corporation
or another established clearing corporation performing similar functions, if
available, provided, that, the Company may, but will not be required to change
its transfer agent if its current transfer agent cannot deliver Warrant Shares
electronically through the Depository Trust Corporation. A “Date
of Exercise”
means
the date on which the Holder shall have delivered to the Company: (i) the
Exercise Notice (with the Warrant Exercise Log attached to it), appropriately
completed and duly signed and (ii) if the Holder is not utilizing the cashless
exercise provisions set forth in Section 10(b),
payment
of the Exercise Price for the number of Warrant Shares so indicated by the
Holder to be purchased.
-4-
(b) If
by the
third (3rd)
Business Day after a Date of Exercise the Company fails to deliver the required
number of Warrant Shares in the manner required pursuant to Section 5(a),
then
the Holder will have the right to rescind such exercise.
(c) If
by the
third (3rd)
Business Day after a Date of Exercise the Company fails to deliver the required
number of Warrant Shares in the manner required pursuant to Section 5(a),
and if
after such third (3rd)
Business Day and prior to the receipt of such Warrant Shares, the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock
to
deliver in satisfaction of a sale by the Holder of the Warrant Shares which
the
Holder anticipated receiving upon such exercise (a “Buy-In”),
then
the Company shall (1) pay in cash to the Holder the amount by which (x) the
Holder’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased exceeds (y) the amount obtained by
multiplying (A) the number of Warrant Shares that the Company was required
to
deliver to the Holder in connection with the exercise at issue by (B) the
closing sale price of the Common Stock at the time of the obligation giving
rise
to such purchase obligation and (2) at the option of the Holder, either
reinstate the portion of the Warrant and equivalent number of Warrant Shares
for
which such exercise was not honored or deliver to the Holder the number of
shares of Common Stock that would have been issued had the Company timely
complied with its exercise and delivery obligations hereunder. The Holder shall
provide the Company written notice and supporting documentation indicating
the
amounts payable to the Holder in respect of the Buy-In.
(d) The
Company’s obligations to issue and deliver Warrant Shares in accordance with the
terms hereof are absolute and unconditional, irrespective of any action or
inaction by the Holder to enforce the same, any waiver or consent with respect
to any provision hereof, the recovery of any judgment against any Person or
any
action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation
of
law by the Holder or any other Person, and irrespective of any other
circumstance which might otherwise limit such obligation of the Company to
the
Holder in connection with the issuance of Warrant Shares. Nothing herein shall
limit a Xxxxxx’s right to pursue any other remedies available to it hereunder,
at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to
timely deliver certificates representing Warrant Shares upon exercise of the
Warrant as required pursuant to the terms hereof.
6. Charges,
Taxes and Expenses.
Issuance and delivery of Warrant Shares upon exercise of this Warrant shall
be
made without charge to the Holder for any issue or transfer tax, withholding
tax, transfer agent fee or other incidental tax or expense in respect of the
issuance of such certificates, all of which taxes and expenses shall be paid
by
the Company; provided,
however,
that
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the registration of any certificates for Warrant
Shares or Warrants in a name other than that of the Holder. The Holder shall
be
responsible for all other tax liability that may arise as a result of holding
or
transferring this Warrant or receiving Warrant Shares upon exercise
hereof.
-5-
7. Replacement
of Warrant.
If this
Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or
cause to be issued in exchange and substitution for and upon cancellation
hereof, or in lieu of and substitution for this Warrant, a New Warrant, but
only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction and customary and reasonable indemnity (which shall not
include a surety bond), if requested. Applicants for a New Warrant under such
circumstances shall also comply with such other reasonable regulations and
procedures and pay such other reasonable third-party costs as the Company may
prescribe. If a New Warrant is requested as a result of a mutilation of this
Warrant, then the Holder shall deliver such mutilated Warrant to the Company
as
a condition precedent to the Company’s obligation to issue the New
Warrant.
8. Reservation
of Warrant Shares.
The
Company covenants that it will at all times reserve and keep available out
of
the aggregate of its authorized but unissued and otherwise unreserved Common
Stock, solely for the purpose of enabling it to issue Warrant Shares upon
exercise of this Warrant as herein provided, the number of Warrant Shares which
are then issuable and deliverable upon the exercise of this entire Warrant,
free
from preemptive rights or any other contingent purchase rights of Persons other
than the Holder (taking into account the adjustments and restrictions of
Section
9).
The
Company covenants that all Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid
and
nonassessable.
9. Certain
Adjustments.
The
Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this
Section
9.
(a) Stock
Dividends and Splits.
If the
Company, at any time while this Warrant is outstanding, (i) pays a stock
dividend on its Common Stock or otherwise makes a distribution on any class
of
capital stock that is payable in shares of Common Stock, (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, or (iii)
combines outstanding shares of Common Stock into a smaller number of shares,
then in each such case the Exercise Price shall be multiplied by a fraction
of
which the numerator shall be the number of shares of Common Stock outstanding
immediately before such event and of which the denominator shall be the number
of shares of Common Stock outstanding immediately after such event. Any
adjustment made pursuant to clause (i) of this paragraph shall become effective
immediately after the payment of the dividend or the making of the distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination.
-6-
(b) Fundamental
Transactions.
If, at
any time while this Warrant is outstanding there is a Fundamental Transaction,
then the Holder shall have the right thereafter to receive, upon exercise of
this Warrant, the same amount and kind of securities, cash or property as it
would have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of the number of Warrant Shares then issuable upon exercise in full
of this Warrant (the “Alternate
Consideration”).
For
purposes of any such exercise, the determination of the Exercise Price shall
be
appropriately adjusted to apply to such Alternate Consideration based on the
amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the
Exercise Price among the Alternate Consideration in a reasonable manner
reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the
securities, cash or property to be received in a Fundamental Transaction, then
the Holder shall be given the same choice as to the Alternate Consideration
it
receives upon any exercise of this Warrant following such Fundamental
Transaction. At the Holder’s option and request, any successor to the Company or
surviving entity in such Fundamental Transaction shall issue to the Holder
a new
warrant substantially in the form of this Warrant and consistent with the
foregoing provisions and evidencing the Holder’s right to purchase the Alternate
Consideration for the aggregate Exercise Price upon exercise thereof. The terms
of any agreement pursuant to which a Fundamental Transaction is effected shall
include terms requiring any such successor or surviving entity to comply with
the provisions of this paragraph (b) and insuring that the Warrant (or any
such
replacement security) will be similarly adjusted upon any subsequent transaction
analogous to a Fundamental Transaction.
(c) Number
of Warrant Shares.
Simultaneously with any adjustment to the Exercise Price pursuant to this
Section
9,
the
number of Warrant Shares that may be purchased upon exercise of this Warrant
shall be increased or decreased proportionately, so that after such adjustment
the aggregate Exercise Price payable hereunder for the adjusted number of
Warrant Shares shall be the same as the aggregate Exercise Price in effect
immediately prior to such adjustment.
(d) Calculations.
All
calculations under this Section
9
shall be
made to the nearest cent or the nearest 1/100th of a share, as applicable.
The
number of shares of Common Stock outstanding at any given time shall not include
shares owned or held by or for the account of the Company, and the disposition
of any such shares shall be considered an issue or sale of Common
Stock.
(e) Notice
of Adjustments.
Upon
the occurrence of each adjustment pursuant to this Section
9,
the
Company at its expense will promptly compute such adjustment in accordance
with
the terms of this Warrant and prepare a certificate setting forth such
adjustment, including a statement of the adjusted Exercise Price and adjusted
number or type of Warrant Shares or other securities issuable upon exercise
of
this Warrant (as applicable), describing the transactions giving rise to such
adjustments and showing in detail the facts upon which such adjustment is based.
Upon written request, the Company will promptly deliver a copy of each such
certificate to the Holder and to the Company’s transfer agent.
-7-
(f) Notice
of Corporate Events.
If the
Company (i) declares a dividend or any other distribution of cash, securities
or
other property in respect of its Common Stock, including without limitation
any
granting of rights or warrants to subscribe for or purchase any capital stock
of
the Company or any Subsidiary, (ii) authorizes or approves, enters into any
agreement contemplating or solicits shareholder approval for any Fundamental
Transaction or (iii) authorizes the voluntary dissolution, liquidation or
winding up of the affairs of the Company, then the Company shall deliver to
the
Holder a notice describing the material terms and conditions of such transaction
(but only to the extent such disclosure would not result in the dissemination
of
material, non-public information to the Holder) at least ten (10) calendar
days
prior to the applicable record or effective date on which a Person would need
to
hold Common Stock in order to participate in or vote with respect to such
transaction, and the Company will take all steps reasonably necessary in order
to insure that the Holder is given the practical opportunity to exercise this
Warrant prior to such time so as to participate in or vote with respect to
such
transaction; provided, however, that the failure to deliver such notice or
any
defect therein shall not affect the validity of the corporate action required
to
be described in such notice.
10. Payment
of Exercise Price.
The
Holder may pay the Exercise Price in one of the following manners:
(a) the
Holder may deliver immediately available funds; or
(b) if
the
Company’s Common Stock is traded on a Trading Market, the Holder may notify the
Company in an Exercise Notice of its election to utilize cashless exercise,
in
which event the Company shall issue to the Holder the number of Warrant Shares
determined as follows:
X
= Y
[(A-B)/A]
where:
X
= the
number of Warrant Shares to be issued to the Holder.
Y
= the
number of Warrant Shares with respect to which this Warrant is being
exercised.
A
= the
average of the closing sale prices for the five (5) Trading Days immediately
prior to (but not including) the Exercise Date.
B
= the
Exercise Price.
For
purposes of Rule 144, it is intended, understood and acknowledged that the
Warrant Shares issued in a cashless exercise transaction shall be deemed to
have
been acquired by the Holder, and the holding period for the Warrant Shares
shall
be deemed to have commenced, on the date this Warrant was originally
issued.
11. No
Fractional Shares.
No
fractional shares of Warrant Shares will be issued in connection with any
exercise of this Warrant. In lieu of any fractional shares which would,
otherwise be issuable, the Company shall pay cash equal to the product of such
fraction multiplied by the closing sale price of one Warrant Share as reported
by the applicable Trading Market on the date of exercise.
-8-
12. Registration
Rights.
(a) Incidental
Registration.
(i) If
at any
time prior to the Expiration Date the Company shall determine to prepare and
file with the SEC a registration statement relating to an offering for its
own
account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated
under the Securities Act) or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity
or business or equity securities issuable in connection with the stock option
or
other employee benefit plans (the “Registration
Statement”),
then
the Company shall send to each Holder written notice of such determination
and,
if within fifteen (15) days after receipt of such notice, any such Holder shall
so request in writing, the Company shall include in such Registration Statement
all or any part of such Registrable Securities such holder requests to be
registered.
(ii) If
a
registration pursuant to this Section 12
involves
an underwritten offering and the managing underwriter advises the Company in
writing that, in its opinion, the number of securities which the Company, the
Holder and any other persons intend to include in such registration exceeds
the
number which would have an adverse effect on such offering, including the price
at which such securities can be sold, the Company will include in such
registration (i) first, all the securities the Company proposes to sell for
its own account, and (ii) second, a number of such securities equal to the
number, in the opinion of such underwriters, which can be sold without having
the adverse effect referred to above.
(b) Registration
Expenses.
All
fees and expenses incident to the performance of or compliance with Section 12
this
Agreement by the Company, except as and to the extent specified in this
Section 12(b),
shall
be borne by the Company whether or not the Registration Statement is filed
or
becomes effective and whether or not any Registrable Securities are sold
pursuant to the Registration Statement. The fees and expenses referred to in
the
foregoing sentence shall include, without limitation: (A) all registration
and
filing fees; (B) printing expenses (including, without limitation, expenses
of printing certificates for Registrable Securities and of printing prospectuses
if the printing of prospectuses is requested by the holders of a majority of
the
Registrable Securities included in the Registration Statement);
(C) messenger, telephone and delivery expenses; (D) fees and
disbursements of counsel for the Company; (E) Securities Act liability
insurance, if the Company so desires such insurance; and (F) fees and
expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Section
12,
including, without limitation, the Company’s independent public accountants
(including the expenses of any comfort letters or costs associated with the
delivery by independent public accountants of a comfort letter or comfort
letters). Except as otherwise expressly provided in this Agreement, any fees
or
expenses incurred by Holder or its legal counsel or Xxxxxx’s other advisors or
consultants in connection with any review of the Registration Statement or
with
respect to any other matters related to this Agreement shall be borne solely
by
Holder.
-9-
(c) Indemnification.
(i) Indemnification
by the Company.
The
Company shall, notwithstanding any termination of this Warrant, indemnify and
hold harmless the Holder, the officers, directors, agents, brokers (including
brokers who offer and sell Registrable Securities as principal as a result
of a
pledge or any failure to perform under a margin call of Common Stock),
investment advisors and employees of each of them, each Person who controls
the
Holder (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) and the officers, directors, agents and
employees of each such controlling Person, to the fullest extent permitted
by
applicable law, from and against any and all losses, claims, damages,
liabilities, costs (including, without limitation, costs of preparation and
attorneys’ fees) and expenses (collectively, “Losses”)
(as
determined by a court of competent jurisdiction in a final judgment not subject
to appeal or review), as incurred, arising out of or based upon any untrue
or
alleged untrue statement of a material fact contained in the Registration
Statement, any related Prospectus or any form of prospectus or in any amendment
or supplement thereto or in any preliminary prospectus, or arising solely out
of
or based upon any omission or alleged omission of a material fact required
to be
stated therein or necessary to make the statements therein (in the case of
any
related Prospectus or form of prospectus or supplement thereto, in the light
of
the circumstances under which they were made) not misleading, except to the
extent, but only to the extent, that such untrue statements or omissions are
based upon information regarding the Holder furnished in writing to the Company
by the Holder expressly for use therein. The Company shall notify the Holder
promptly of the institution, threat or assertion of any Proceeding
of which the Company is aware in connection with the transactions contemplated
by this Agreement.
(ii) Indemnification
by Xxxxxx.
The
Holder shall indemnify and hold harmless the Company, the directors, officers,
agents and employees, each Person who controls the Company (within the meaning
of Section 15 of the Securities Act and Section 20 of the Exchange
Act), and the directors, officers, agents or employees of such controlling
Persons, to the fullest extent permitted by applicable law, from and against
all
Losses (as determined by a court of competent jurisdiction in a final judgment
not subject to appeal or review), as incurred, arising solely out of or based
solely upon any untrue statement or alleged untrue statement of a material
fact
contained in the Registration Statement, any related Prospectus, or any form
of
prospectus or form of prospectus or in any amendment or supplement thereto
or in
any preliminary prospectus, or arising solely out of or based solely upon any
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any related Prospectus or supplement
thereto, in the light of the circumstances under which they were made) not
misleading, to the extent, but only to the extent, that such untrue statement
or
omission or alleged untrue statement or omission is contained in information
so
furnished by the Holder in writing to the Company expressly for inclusion in
the
Registration Statement or such related Prospectus. In no event shall the
liability of the Holder hereunder be greater in amount than the dollar amount
of
the net proceeds received by the Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation.
-10-
(iii) Conduct
of Indemnification Proceedings.
If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an “Indemnified
Party”),
such
Indemnified Party promptly shall notify the Person from whom indemnity is sought
(the “Indemnifying
Party”)
in
writing, and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party
and
the payment of all fees and expenses incurred in connection with defense
thereof; provided,
however,
that
the failure of any Indemnified Party to give such notice shall not relieve
the
Indemnifying Party of its obligations or liabilities pursuant to this Agreement,
except to the extent that such failure shall have proximately and materially
adversely prejudiced the Indemnifying Party.
An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (x) the Indemnifying Party has agreed in writing to pay such fees and
expenses; or (y) the Indemnifying Party shall have failed promptly to assume
the
defense of such Proceeding and to employ counsel reasonably satisfactory to
such
Indemnified Party in any such Proceeding; or (z) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified
Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a conflict of interest is likely to exist if the same counsel
were to represent such Indemnified Party and the Indemnifying Party (in which
case, if such Indemnified Party notifies the Indemnifying Party in writing
that
it elects to employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld or delayed. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from
all
liability on claims that are the subject matter of such Proceeding.
All
fees
and expenses of the Indemnified Party (including reasonable fees and expenses
to
the extent incurred in connection with investigating or preparing to defend
such
Proceeding in a manner not inconsistent with this Section 12(c))
shall
be paid to the Indemnified Party, as incurred, within ten (10) Business Days
of
written notice thereof to the Indemnifying Party (regardless of whether it
is
ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided,
however,
that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
-11-
(iv) Contribution.
If a
claim for indemnification under Section 12(c)(i)
or
Section 12(c)(ii)
is
unavailable to an Indemnified Party (by reason of public policy or otherwise),
then each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as
a
result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions, statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission
of a
material fact, has been taken or made by, or relates to information supplied
by,
such Indemnifying, Party or Indemnified Party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 12(c)(iii),
any
reasonable attorneys’ or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have
been
indemnified for such fees or expenses if the indemnification provided for in
this Section was available to such party in accordance with its
terms.
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 12(c)(iv)
were
determined by pro rata allocation or by any other method of allocation that
does
not take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding
the provisions of this Section 12(c)(iv),
no
Holder shall be required to contribute, in the aggregate, any amount in excess
of the amount of the proceeds actually received by such Holder from the sale
of
the Registrable Securities subject to the proceeding. No
Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any Person who
was
not guilty of such fraudulent misrepresentation.
The
indemnity and contribution agreements contained in this Section are in addition
to any liability that the Indemnifying Parties may have to the Indemnified
Parties. Notwithstanding the foregoing, the obligations of the Holders herein
shall be the several, and not joint, obligation of each Holder as to itself
and
not as to any other Holder.
-12-
13. Notices.
Any and
all notices or other communications or deliveries hereunder (including, without
limitation, any Exercise Notice) shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if such notice
or
communication is delivered via facsimile at the facsimile number specified
in
this Section prior to 5:00 p.m. (California time) on a Business Day, (ii) the
next Business Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified
in
this Section on a day that is not a Business Day or later than 5:00 p.m.
(California time) on any Business Day, (iii) the Business Day following the
date
of mailing, if sent by nationally recognized overnight courier service, or
(iv)
upon actual receipt by the party to whom such notice is required to be given.
The addresses for such communications shall be: (i) if to the Company, to
Xxxxxxxxxx, 000 Xxxxxxx Xxxx, Xxx Xxxx Xxxxxx, Xxxxxxxxxx 00000, Attn:
President, or to Facsimile No.: (000) 000-0000 (or such other address as the
Company shall indicate in writing in accordance with this Section), or (ii)
if
to the Holder, to the address or facsimile number appearing on the Warrant
Register or such other address or facsimile number as the Holder may provide
to
the Company in accordance with this Section.
14. Warrant
Agent.
The
Company shall serve as warrant agent under this Warrant. Upon ten (10) days’
notice to the Holder, the Company may appoint a new warrant agent. Any
corporation into which the Company or any new warrant agent may be merged or
any
corporation resulting from any consolidation to which the Company or any new
warrant agent shall be a party or any corporation to which the Company or any
new warrant agent transfers substantially all of its corporate trust or
shareholders services business shall be a successor warrant agent under this
Warrant without any further act. Any such successor warrant agent shall promptly
cause notice of its succession as warrant agent to be mailed (by first class
mail, postage prepaid) to the Holder at the Holder’s last address as shown on
the Warrant Register.
15. Holder
Status.
The
Holder is an “accredited investor” as defined in Rule 501(a) under the
Securities Act or a “qualified institutional buyer” as defined in Rule 144A(a)
under the Securities Act.
16. Miscellaneous.
(a) This
Warrant shall be binding on and inure to the benefit of the parties hereto
and
their respective successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any Person other than
the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing signed by the
Company and the Holder and their successors and assigns.
-13-
(b) THE
CORPORATE LAWS OF THE STATE OF CALIFORNIA SHALL GOVERN ALL ISSUES CONCERNING
THE
RELATIVE RIGHTS OF THE COMPANY AND ITS SHAREHOLDERS. ALL QUESTIONS CONCERNING
THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF
CALIFORNIA. THE COMPANY AND HOLDER HEREBY IRREVOCABLY SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE COUNTY
OF ORANGE, STATE OF CALIFORNIA, FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT
BY
THE COMPANY OR HOLDER HEREUNDER, IN CONNECTION HEREWITH OR WITH ANY TRANSACTION
CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE
ENFORCEMENT OF THIS WARRANT, AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO
ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR ANY HOLDER,
ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH
COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY HEREBY
IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING
SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA
REGISTERED OR CERTIFIED MAIL OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY)
TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT
AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF
PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT
IN
ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE
COMPANY AND HOLDER HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.
(c) The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.
(d) In
case
any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
(e) Prior
to
exercise of this Warrant, the Holder hereof shall not, by reason of by being
a
Holder, be entitled to any rights of a shareholder with respect to the Warrant
Shares.
(f) This
Warrant may be transferred by the original Holder to any other Person provided
such Person is an “accredited investor” as defined in Rule 501(a) under the
Securities Act or a “qualified institutional buyer” as defined in Rule 144A(a)
under the Securities Act.
-14-
IN
WITNESS WHEREOF, each of the Company and Xxxxxx has caused this Warrant to
be
duly executed by its authorized officer as of the date first indicated
above.
|
XXXXXXXXXX
|
|
|
By: /s/ Xxxxxxx
Xxxxx
Xxxxxxx
Xxxxx, Chief Financial Officer
|
|
|
[___________]
By:________________________________________
____________________,
______________________
|
-15-
EXERCISE
NOTICE
XXXXXXXXXX
WARRANT
DATED MAY 24, 2007
The
undersigned Holder hereby irrevocably elects to purchase _____________ shares
of
Common Stock pursuant to the above referenced Warrant. Capitalized terms used
herein and not otherwise defined have the respective meanings set forth in
the
Warrant.
|
(1)
|
The
undersigned Holder hereby exercises its right to purchase
_________________ Warrant Shares pursuant to the
Warrant.
|
|
(2)
|
The
Holder intends that payment of the Exercise Price shall be made as
(check
one):
|
|
____
|
“Cash
Exercise” under Section
10(a).
|
|
____
|
“Cashless
Exercise” under Section
10(b).
|
|
(3)
|
If
the Holder has elected a Cash Exercise, the Holder shall pay the
sum of
$____________ to the Company in accordance with the terms of the
Warrant.
Payment shall take the form of lawful money of the United States
in
immediately available funds.
|
|
(4)
|
Pursuant
to this Exercise Notice, the Company shall deliver to the Holder
_______________ Warrant Shares in accordance with the terms of the
Warrant.
|
|
(5)
|
The
undersigned represents that it has and will comply with the prospectus
delivery requirements, if any, of the Securities
Act.
|
|
Dated:________________________,
____
|
Name
of Holder:
|
| ________________________________________________ | |
|
(Print)
|
|
|
By:____________________________________________________
|
|
|
Name:__________________________________________________
|
|
|
Title:___________________________________________________
|
|
|
(Signature
must conform in all respects to name of holder
as
specified on the face of the
Warrant)
|
-16-
Warrant
Shares Exercise Log
|
Date
|
Number
of Warrant Shares
Available
to be Exercised
|
Number
of Warrant
Shares
Exercised
|
Number
of Warrant Shares Remaining to be Exercised
|
-17-
XXXXXXXXXX
PLACEMENT
WARRANT ORIGINALLY ISSUED MAY 24, 2007
WARRANT
NO. PW-__
FORM
OF
ASSIGNMENT
[To
be
completed and signed only upon transfer of Warrant]
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________ the right represented by the above-captioned
Warrant to purchase ____________ shares of Common Stock to which such Warrant
relates and appoints ________________ attorney to transfer said right on the
books of the Company with full power of substitution in the
premises.
Dated: _______________,
____
|
__________________________________________
(Signature
must conform in all respects to name of holder
as
specified on the face of the Warrant)
|
|
|
__________________________________________
Address of Transferee
|
|
| __________________________________________ | |
| __________________________________________ | |
|
In the presence of:
____________________________
____________________________
|
-18-
