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Exhibit 4.7
THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE LAWS OF ANY STATE, AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER SUCH
ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT. THE
TRANSFER OF THIS WARRANT IS ALSO SUBJECT TO THE RESTRICTIONS SET FORTH
IN SECTION 3 HEREOF, AND NO TRANSFER OF THIS WARRANT SHALL BE VALID OR
EFFECTIVE UNLESS AND UNTIL THE TERMS AND CONDITIONS OF SECTION 3 HEREOF
HAVE BEEN COMPLIED WITH.
Warrant No. 1
WARRANT
To Purchase Common Stock of
SYMPOSIUM CORPORATION
Expiring January 28, 2005
This is to certify that, for value received, IMPERIAL CREDIT
INDUSTRIES, INC. ("ICII") as nominee for Coast Business Credit, a division of
Southern Pacific Bank, or registered assigns, is entitled to purchase from
Symposium Corporation, a Delaware corporation (the "Company"), at any time and
from time to time during the period commencing on the date hereof and ending on
January 28, 2005 (the "Exercise Period"), 300,000 duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock of the Company (the
"Common Stock"), at the Current Warrant Price (as hereinafter defined) in lawful
money of the United States of America. The purchase price hereunder at any time
of a single share of Common Stock is referred to herein as the "Current Warrant
Price". Initially, and until adjustment in the manner hereinafter provided, the
Current Warrant Price shall be 110% of the Current Market Price calculated as of
the Closing Date. The number of shares of Common Stock purchasable hereunder and
the Current Warrant Price are subject to adjustment from time to time in the
manner provided in Section 4 hereof.
This Warrant is issued in connection with a Loan and Security
Agreement, dated as of even date herewith, by and between the Company and Coast
Business Credit and any and all amendments, replacements, supplements and
modifications thereto (collectively, the "Credit Agreement"). Certain terms used
in this Warrant are defined in Section 5 hereof. Capitalized terms used herein
and not otherwise defined herein shall have the meaning assigned thereto in the
Credit Agreement.
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SECTION 1. EXERCISE OF WARRANTS.
SECTION 1.1 CASH EXERCISE. This Warrant may be exercised by the
Warrantholder by (i) the surrender of this Warrant to the Company at the Warrant
Office described in Section 2.1 with a duly-executed Exercise Form specifying
the number of Warrant Shares to be purchased, during normal business hours on
any Business Day during the Exercise Period and (ii) the delivery of payment to
the Company, for the account of the Company, by cash, wire transfer of
immediately available funds to a bank account specified by the Company, or by
certified or bank cashier's check, of the Current Warrant Price for the number
of Warrant Shares specified in the Exercise Form in lawful money of the United
States of America. The Company agrees that such Warrant Shares shall be deemed
to be issued to the Warrantholder as the record holder of such Warrant Shares as
of the close of business on the date on which this Warrant shall have been
surrendered and payment made for the Warrant Shares as aforesaid. A stock
certificate or certificates for the Warrant Shares specified in the Exercise
Form shall be delivered to the Warrantholder as promptly as practicable, and in
any event within seven (7) Business Days, thereafter. The stock certificate(s)
so delivered shall be in any such denominations as may be reasonably specified
by the Warrantholder in the Exercise Form.
SECTION 1.2 NET ISSUE EXERCISE. In lieu of exercising this Warrant
pursuant to Section 1.1, this Warrant may be exercised by the Warrantholder by
the surrender of this Warrant to the Company, with a duly executed Exercise Form
marked to reflect net issue exercise and specifying the number of Warrant Shares
to be purchased, during normal business hours on any Business Day during the
Exercise Period. The Company agrees that such Warrant Shares shall be deemed to
be issued to the Warrantholder as the record holder of such Warrant Shares as of
the close of business on the date on which this Warrant shall have been
surrendered. Upon such exercise, the Warrantholder shall be entitled to receive
shares equal to the value of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant to the Company together with notice of
such election in which event the Company shall issue to the Warrantholder a
number of shares of the Company's Common Stock computed as of the date of
surrender of this Warrant to the Company using the following formula:
X = Y(A-B)
-------
A
Where
X = the number of shares of Common Stock to be issued to
Warrantholder under this Section 1.2;
Y = the number of shares of Common Stock otherwise
purchasable under this Warrant (at the date of such
calculation);
A = the Current Market Price of shares of Common Stock to
be issued to the Warrantholder (at the date of such
calculation);
B = the Current Warrant Price.
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SECTION 1.3 WARRANT SHARES TO BE FULLY PAID AND NONASSESSABLE. All
shares of Common Stock issued upon the exercise of this Warrant shall be validly
issued, fully paid and nonassessable and, if the Common Stock is then listed on
a securities exchange, shall be duly listed thereon.
SECTION 1.4 PARTIAL EXERCISE; FRACTIONAL SHARES. If this Warrant shall
have been exercised only in part, the Company shall, at the time of delivery of
the stock certificate(s), deliver to the Warrantholder a new Warrant evidencing
the rights to purchase the remaining Warrant Shares, which new Warrant shall in
all other respects be identical with this Warrant. The Company shall not be
required upon any exercise of this Warrant to issue a certificate representing
any fraction of a share of Common Stock, but, in lieu thereof, shall pay to the
holder of this Warrant cash in an amount equal to a corresponding fraction
(calculated to the nearest 1/100 of a share) of the Current Market Price of one
share of Common Stock as of the date of receipt by the Company of notice of
exercise of this Warrant.
SECTION 1.5 ACKNOWLEDGMENT OF CONTINUING OBLIGATION. The Company will,
at the time of any exercise of this Warrant in whole or in part, upon request of
the Warrantholder, acknowledge in writing its then continuing obligation to the
Warrantholder in respect of any rights pursuant to this Warrant (including,
without limitation, any right to registration, if any, of the shares of Common
Stock issued upon such exercise) to which the Warrantholder shall continue to be
entitled after such exercise in accordance with this Warrant; provided, however,
that the failure of the Warrantholder to make any such request shall not affect
the continuing obligation of the Company to the Warrantholder in respect of such
rights.
SECTION 2. WARRANT OFFICE; TRANSFER, DIVISION OR COMBINATION OF WARRANTS.
SECTION 2.1 WARRANT OFFICE. The Company shall maintain an office for
certain purposes specified herein (the "Warrant Office"), which office shall
initially be the Company's office at 000 Xxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, XX
00000, and may subsequently be such other office of the Company or of any
transfer agent of the Common Stock in the continental United States as to which
written notice has previously been given to all of the Warrantholders.
SECTION 2.2 OWNERSHIP OF WARRANT. The Company may deem and treat the
person in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by anyone
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until presentation of this Warrant for registration of transfer
as provided in this Section 2.
SECTION 2.3 TRANSFER OF WARRANTS. The Company agrees to maintain at the
Warrant Office books for the registration and registration of transfer of the
Warrants, and, subject to the provisions of Section 3 hereof, this Warrant and
all rights hereunder are transferable, in whole or in part, on said books at
said office, upon surrender of this Warrant at said office, together with a
written assignment of this Warrant duly executed by the Warrantholder or his
duly authorized
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agent or attorney and funds sufficient to pay any transfer taxes payable upon
the making of such transfer. Upon such surrender and payment the Company shall
execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees and in the denominations specified in such instrument of assignment,
and this Warrant shall promptly be cancelled. A Warrant may be exercised by a
new holder for the purchase of shares of Common Stock without having a new
Warrant issued.
SECTION 2.4 DIVISION OR COMBINATION OF WARRANTS. This Warrant may be
divided or combined with other Warrants upon presentation hereof and of any
Warrant or Warrants with which this Warrant is to be combined at the Warrant
Office, together with a written notice specifying the names and denominations in
which new Warrants are to be issued, signed by the appropriate Warrantholders or
their respective duly authorized agents or attorneys. Subject to compliance with
SECTION 2.3 hereof as to any Transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or Warrants in
exchange for the Warrant or Warrants to be divided or combined in accordance
with such notice.
SECTION 2.5 EXPENSES OF DELIVERY OF WARRANTS. The Company shall pay all
expenses, taxes (other than transfer taxes) and other charges payable in
connection with the preparation, issuance and delivery of any Warrant hereunder.
SECTION 3. RESTRICTIONS ON EXERCISE AND TRANSFER; REGISTRATION RIGHTS.
SECTION 3.1 RESTRICTIONS ON EXERCISE AND TRANSFER. The Warrantholder
agrees that prior to any Transfer of this Warrant or of the related Warrant
Shares (other than pursuant to a registration under the Act), such holder will
give written notice to the Company of its intention to effect such Transfer. The
Warrantholder agrees not to Transfer the Warrants except pursuant to an
effective registration statement under the Act or an exemption from the
registration requirements of the Act. As a further condition to any such
Transfer, except in the event that such Transfer is made pursuant to an
effective registration statement under the Act, if in the reasonable opinion of
counsel to the Company, such Transfer would otherwise not be exempt from the
registration requirements of the Act, the Company may require the transferee to
furnish an investment representation letter to the Company setting forth such
representations as the Company may reasonably request to ensure compliance with
the Act. Upon delivery of any documents required by the Company pursuant to the
previous sentence, or immediately if no such documents are required, a
Warrantholder shall be entitled to Transfer this Warrant and/or such Warrant
Shares in accordance with the intended method of disposition specified in the
notice delivered by such holder to the Company; provided, however, that if such
method of disposition would, in the opinion of counsel to the Warrantholder,
require that the Company (as opposed to the Warrantholder) take any action
and/or execute and file with the Commission and/or any state securities
authority with jurisdiction and/or deliver to the Warrantholder or any other
person any form or document (other than a registration statement under the Act
or under any state securities laws) in order to establish the entitlement of the
Warrantholder to take advantage of such method
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of disposition, the Company agrees promptly, at its expense, to take any such
action and/or execute and file and/or deliver any such form or document.
SECTION 3.2 RESTRICTIVE LEGENDS. This Warrant (and each Warrant issued
in substitution for this Warrant issued pursuant to Sections 1.4 and 2) shall be
stamped or otherwise imprinted with a legend in substantially the following
form:
"THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF
THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR THE LAWS OF ANY STATE, AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT. THE TRANSFER OF
THIS WARRANT IS ALSO SUBJECT TO THE RESTRICTIONS SET FORTH IN
SECTION 3 HEREOF, AND NO TRANSFER OF THIS WARRANT SHALL BE
VALID OR EFFECTIVE UNLESS AND UNTIL THE TERMS AND CONDITIONS
OF SECTION 3 HEREOF HAVE BEEN COMPLIED WITH."
Except as otherwise permitted by this Section 3, each stock certificate
for Warrant Shares issued upon the exercise of any Warrant and each stock
certificate issued upon the direct or indirect Transfer of any such Warrant
Shares shall be stamped or otherwise imprinted with a legend in substantially
the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE LAWS OF ANY STATE, AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT."
Notwithstanding the foregoing, the Warrantholder may require the Company to
issue a stock certificate for Warrant Shares without a legend if: (a) such
Warrant Shares have been (i) registered for resale under the Securities Act and
the Warrantholder has a bona fide intention to sell such Warrant Shares in the
applicable registration or (ii) sold pursuant to Rule 144 or (b) the
Warrantholder delivers to the Company a written opinion of counsel for the
Warrantholder reasonably satisfactory to the Company, stating that such
registration is not required with respect to such Warrant Shares.
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SECTION 3.3 REPRESENTATIONS OF THE WARRANTHOLDER. ICII hereby
represents and warrants to the Company as follows:
(a) ICII is acquiring the Warrants for its own account, for
investment purposes only.
(b) ICII understands that an investment in the Warrants
involves a high degree of risk, and ICII has the financial ability to bear the
economic risk of this investment in the Warrants, including a complete loss of
such investment. ICII has adequate means for providing for its current financial
needs and has no need for liquidity with respect to this investment.
(c) ICII is an "accredited investor" as the term is defined in
Rule 501(a) under Regulation D promulgated pursuant to the Securities Act.
(d) ICII has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of an
investment in the Warrants.
(e) ICII understands that the Warrants have not been
registered under the Securities Act or under any state securities laws. ICII is
familiar with the provisions of the Securities Act and Rule 144 thereunder and
understands that the restrictions on Transfer placed on the Warrants may result
in ICII being required to hold the Warrants for an indefinite period of time.
(f) ICII believes that it has received all the information it
considers necessary or appropriate for deciding whether to invest in the
Warrants, and ICII has had an opportunity to ask questions and receive answers
from the Company and its officers and directors regarding the business,
prospects and financial condition of the Company.
SECTION 3.4 "PIGGYBACK REGISTRATIONS".
(a) If the Company at any time prior to January 28, 2005,
proposes to register any of its equity securities (as defined in the Act), other
than securities which are convertible into shares of Common Stock, under the Act
on Forms X-0, X-0 or S-3 (but not Form S-4 or S-8) or on any other form upon
which may be registered securities similar to the Warrants or the Warrant
Shares, it will at each such time give written notice at least 30 days prior to
the filing of the registration statement to all Warrantholders of its intention
so to do. Such notice shall specify the proposed date of the filing of the
registration statement and advise each Warrantholder of its right to participate
therein. Upon the written request of any Warrantholder given prior to the
proposed date of filing set forth in such notice, the Company will cause each
Warrant Share which the Company has been requested to register by such
Warrantholder to be registered under the Act, all to the extent requisite to
permit the sale or other disposition by such Warrantholder of the Warrant Shares
so registered.
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(b) If the registration relates to a firmly underwritten
public offering, the Warrantholder may include Warrant Shares in the
registration statement only if it agrees to sell such Warrant Shares to the
underwriters in connection with the offering. If, in the written opinion of the
underwriter or underwriters managing the public offering which is the subject of
a registration pursuant to clause (a) of this Section 3.4 (or in the event that
such distribution shall not be underwritten, in the written opinion of an
investment banking firm of recognized standing satisfactory to the
Warrantholders), the total amount of the securities to be so registered, when
added to the total amount of Warrant Shares which the Warrantholders have
requested to be registered pursuant to said clause (a), will exceed the maximum
amount of securities of the Company which can be marketed without otherwise
materially and adversely affecting the entire offering, then the Company shall
have the right to exclude from such registration such number of Warrant Shares
which it would otherwise be required to register pursuant to said clause (a) as
is necessary to reduce the total amount of securities to be so registered to the
maximum amount of securities which can be so marketed; provided, however, that
if the securities (other than the Warrant Shares) to be so registered for sale
are to be offered for the account of the Company and others, the Company may
only exclude Warrant Shares pro rata (on the basis of the number of securities
held by each) with the securities held by such other persons (it being agreed
that in the case where such registration is to be effected as a result of the
exercise by a holder of the Company's securities of such holder's right to cause
such securities to be so registered, such pro rata exclusion shall include the
Company and be based on the number of securities intended to be included in the
registration by each).
SECTION 3.5 COMPANY'S OBLIGATIONS IN REGISTRATION. The obligation of
the Company to register any Warrant Shares pursuant to Section 3.4 hereof
includes the obligation to register under the same registration statement the
related Warrants if such registration is necessary to effect the offer and sale
of Warrant Shares to the public. If and whenever the Company is obligated by the
provisions of this Section 3 to effect the registration of any Warrant Shares
under the Act, as expeditiously as possible the Company will:
(a) following the effectiveness of the applicable registration
statement, use its best efforts to cause such registration statement to remain
effective during the period required for the distribution of the securities
covered by the registration statement; provided, however, that in the event that
the Warrant Shares covered by such registration statement are not to be sold to
or through underwriters acting for the Company, the Company shall not be
required to keep such registration statement in effect, or to prepare and file
any amendments or supplements thereto, after the expiration of six months
following the date on which such registration statement becomes effective under
the Act or such longer period during which the Commission requires that such
registration statement be kept effective with respect to any of the Warrant
Shares so registered and, provided, further, that this Section 3.5(a) shall only
be effective for the period from the date hereof to that date which is two (2)
years from the date hereof;
(b) following the effectiveness of such registration
statement, and subject to Section 3.14, as expeditiously as possible, prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in
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connection therewith as may be necessary to keep such registration statement
effective and to comply with the provisions of the Act with respect to the
disposition of all Warrant Shares covered by such registration statement,
whenever the Warrantholders for whom such Warrant Shares are registered or are
to be registered shall desire to dispose of the same, subject, however, to the
two provisos contained in the immediately preceding clause (a); provided,
however, that in any event the Company's obligations under this Section 3.5(b)
shall terminate 90 days after the effective date of any such registration
statement if none of the Warrant Shares registered thereunder shall have been
sold;
(c) as expeditiously as possible, furnish to the
Warrantholders for whom such Warrant Shares are registered or are to be
registered and to any underwriter or underwriters such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as such Warrantholders may
reasonably request in order to facilitate the disposition of such Warrant
Shares;
(d) use its reasonable efforts to register or qualify the
Warrant Shares covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as the Warrantholders for whom
such Warrant Shares are registered or are to be registered shall reasonably
request, and do any and all other reasonable acts and things to so register or
qualify which may be necessary or advisable to enable such Warrantholders to
consummate the disposition in such jurisdictions of such Warrant Shares,
provided that the Company shall only incur this obligation if it registers and
qualifies the other securities included in the applicable registration
statement;
(e) furnish to the Warrantholders for whom such Warrant Shares
are registered at the time of the first disposition of Warrant Shares by such
Warrantholders an opinion of counsel for the Company (it being understood that
only one such opinion shall be required to be delivered) acceptable to such
Warrantholders to the effect that (i) a registration statement covering such
Warrant Shares has been filed with the Commission under the Act and has been
made effective by order of the Commission, (ii) to the best of such counsel's
knowledge such registration statement and the prospectus contained therein
comply as to form in all material respects with the requirements of the Act,
(iii) no facts have come to the attention of such counsel (without independent
investigation) which give such counsel reason to believe that such registration
statement or such prospectus contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made not misleading, (iv) to the best of such counsel's knowledge, no stop order
has been issued by the Commission suspending the effectiveness of such
registration statement and no proceedings for the issuance of such a stop order
are threatened or contemplated, (v) the Warrant Shares have been registered or
qualified or are exempt from registration or qualification under the applicable
provisions of the securities or blue sky laws of each state in which the Company
shall be required, pursuant to Section 3.5(d), to register or qualify such
Warrant Shares, and (vi) such other matters as such Warrantholders may
reasonably request.
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SECTION 3.6 PAYMENT OF REGISTRATION EXPENSES. The costs and expenses of
all registrations under the Act and of all other actions which the Company is
required to take or effect pursuant to this Section 3 shall be paid by the
Company (including, without limitation, all registration, qualification and
filing fees, printing expenses, expenses of distributing prospectuses and other
documents, fees and disbursements of counsel and accountants for the Company,
and expenses of any special audits incident to or required in connection with
any such registration hereof, but excluding the fees and disbursements of
special counsel for the Warrantholders, any consultants retained by the
Warrantholders and underwriters' or brokers' discounts or commissions applicable
to the Warrant Shares).
SECTION 3.7 INFORMATION FROM WARRANTHOLDERS. Each Warrantholder shall
furnish to the Company such information regarding such Warrantholder and the
distribution proposed by such Warrantholder as the Company may reasonably
request and as shall be reasonably required in connection with a registration
referred to in this Section 3.
SECTION 3.8 COMPANY'S INDEMNIFICATION. In the event of any registration
under the Act of any Warrant Shares pursuant to this Section 3, the Company
hereby agrees to indemnify and hold harmless each Warrantholder disposing of
such Warrant Shares and each other person, if any, who controls such
Warrantholder within the meaning of Section 15 of the Act and each other person
(including underwriters) who participates in the offering of such Warrant Shares
against any losses, claims, damages or liabilities, joint or several, to which
such Warrantholder or controlling person or participating person may become
subject under the Act or otherwise, in so far as such losses, claims, damages or
liabilities (or proceedings in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact contained,
on the effective date thereof, in any registration statement under which such
Warrant Shares were registered under the Act, in any preliminary prospectus or
final prospectus contained therein, or in 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 not misleading, and will reimburse such Warrantholder and
each such controlling person or participating person for any legal or any other
expenses incurred by such Warrantholder or such controlling person or
participating person in connection with investigating or defending any such
loss, claim, damage, liability or proceeding; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon (a) an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, said preliminary or final prospectus or said
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Warrantholder or such controlling or participating person, as the case may be,
specifically for use in the preparation thereof or (b) an untrue statement or
alleged untrue statement, omission or alleged omission in a prospectus if such
untrue statement or alleged untrue statement, omission or alleged omission is
corrected in an amendment or supplement to the prospectus which amendment or
supplement is delivered to such Warrantholder and such Warrantholder thereafter
fails to deliver such prospectus as so amended or supplemented prior to or
concurrently with the sale of Warrant Shares to the person asserting such loss,
claim, damage, liability or expense.
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SECTION 3.9 WARRANTHOLDER'S INDEMNIFICATION. It shall be a condition of
the Company's obligation under this Section 3 to effect any registration under
the Act that there shall have been delivered to the Company an agreement or
agreements duly executed by each Warrantholder for whom Warrant Shares are to be
so registered, whereby such Warrantholder agrees to indemnify and hold harmless
the Company, each other person referred to in subparts (1), (2) and (3) of
Section 11(a) of Section 15 of the Act in respect of such registration statement
and each other person, if any, which controls the Company within the meaning of
the Act against any losses, claims, damages or liabilities, joint or several, to
which the Company or such other person or such person controlling the Company
may become subject under the Act or otherwise, but only to the extent that such
losses, claims, damages or liabilities (or proceeding in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in any registration
statement under which such Warrant Shares were registered under the Act, in any
preliminary prospectus or final prospectus contained therein or in 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 not misleading, which, in each such
case, has been made in or omitted from such registration statement, said
preliminary or final prospectus or said amendment or supplement in reliance
upon, and in conformity with, written information furnished to the Company by an
instrument duly executed by such Warrantholder specifically for use in the
preparation thereof. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, to the same extent as provided
above, with respect to information with respect to such persons so furnished in
writing by such persons specifically for inclusion in any prospectus or
registration statement.
SECTION 3.10 CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person
entitled to indemnification hereunder will (a) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
and (b) unless, in such indemnified party's reasonable judgment, a conflict of
interest may exist between such indemnified and indemnifying parties with
respect to such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified party;
provided, however, that the failure of an indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under this SECTION 3.10 with respect to such indemnified party, except to the
extent that the indemnifying party is actually prejudiced by such failure.
Whether or not such defense is assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld). No
indemnifying party will consent to the entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of the claim against the
indemnified party, will not be obligated to pay the fees and expenses of more
than one counsel for all parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest may exist between such indemnified party and any
other such indemnified parties with
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respect to such claim, in which event the indemnifying party shall be obligated
to pay the fees and expenses of such additional counsel or counsels.
If for any reason the indemnification provided for in the preceding
sections 3.8 and 3.9 hereof is unavailable to an indemnified party as
contemplated thereby, the indemnifying party shall contribute to the amount paid
or payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable considerations. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of fraudulent
misrepresentation.
SECTION 3.11 UNDERWRITING AGREEMENT INDEMNIFICATION PROVISIONS.
Notwithstanding the provisions of sections 3.8, 3.9 and 3.10 hereof, if an
underwriting agreement executed by the Company pursuant to section 3.6(f) hereof
shall contain indemnification, contribution and related procedural provisions in
a form customary to the underwriter which are substantially to the same effect
as the provisions provided for in sections 3.8, 3.9 and 3.10 hereof, such
customary indemnification provisions shall be incorporated in such underwriting
agreement in lieu of those provided for in sections 3.8, 3.9 and 3.10
hereof.
SECTION 3.12 PUBLIC INFORMATION. The Company covenants and agrees that
if and so long as the Common Stock shall be registered under Section 12 of the
Exchange Act, at any time when any Warrantholder so entitled desires to make
sales of any Warrant Shares in reliance on Rule 144 or Rule 144A under the Act
either (i) there will be available adequate current public information with
respect to the Company as required by said Rules, or (ii) if such information is
not available the Company will use its best efforts to make such information
available without delay. Without limiting the foregoing, after the time of any
such registration the Company will timely file with the Commission all reports
required to be filed under Sections 13 and 15(d) of the Exchange Act and will
promptly furnish to any Warrantholder so requesting a written statement that the
Company has complied with all such reporting requirements.
SECTION 3.13 NO CONFLICTING REGISTRATION RIGHTS. The Company covenants
and agrees that if and so long as any Warrants or any Warrant Shares shall
remain outstanding and the holders thereof shall have any rights under this
Section 3, it will not enter into any agreement with any person creating any
rights with respect to any shares of Common Stock or any other security in
conflict with or inconsistent with any rights retained by any holder of Warrants
or Warrant Shares pursuant to this Section 3.
SECTION 3.14 LIMITED COVENANTS NOT TO SELL. Following the effectiveness
of a registration statement that includes Warrant Shares, upon receipt from the
Company of a notice that the registration statement contains an untrue statement
of material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light of
the circumstances under which they were made, the Warrantholder will immediately
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discontinue disposition of Warrant Shares pursuant to the Registration Statement
until such time as the registration statement has been amended or supplement so
as to comply with the Exchange Act. The Company covenants and agrees that (i) if
such misstatement or omission relates to a historical fact, then immediately,
(ii) if such misstatement or omission relates to a pending material transaction,
then as soon as practicable in the Company's reasonable judgment and (iii) if
such misstatement or omission relates to a current development, then reasonably
promptly, after becoming aware of any such statement or omission it shall take
all necessary action, including the filing of any amendments or supplements to
such registration statement, as required to bring the registration statement
into compliance with applicable securities laws and to allow disposition of the
Warrant Shares thereunder and shall keep the Warrantholders informed at all
times of the actions it is taking in this regard and immediately notify them at
such time as they may resume disposition of the Warrant Shares under such
registration statement. The six month period referred to in Section 3.5(a) and
the ninety day period referred to in Section 3.5(b) shall be tolled during any
period from the time the Company has notified the Warrantholders as set forth in
the first sentence of this Section and shall begin to run again at such time as
the Company has notified the Warrantholders that they may resume disposition of
their Warrant Shares.
If requested by the Company and an underwriter of Common Stock of the
Company, the Warrantholder shall not sell or otherwise Transfer or dispose of
any Warrant Shares held by such Warrantholder (other than those included in the
registration) during the one hundred twenty (120) day period following the
effective date of a registration statement of the Company filed under the
Securities Act, including securities to be sold on its behalf to the public in
an underwritten offering provided that (1) such agreement shall only apply to
the first such registration statement of the Company and (2) all officers and
directors of the Company shall have entered and be bound by similar agreements.
The provisions of this Section 3.14 shall not apply to securities purchased by a
Warrantholder in the Company's first underwritten public offering.
SECTION 4. ANTI-DILUTION PROVISIONS.
SECTION 4.1 ADJUSTMENT OF CURRENT WARRANT PRICE AND NUMBER OF SHARES
PURCHASABLE. The Current Warrant Price and the number of shares of Common Stock
purchasable upon the exercise of each Warrant shall be subject to adjustment
from time to time as hereinafter provided in this Section 4. Upon each
adjustment of the Current Warrant Price, the holder of this Warrant shall
thereafter be entitled to purchase at the Current Warrant Price resulting from
such adjustment, the number of shares (calculated to the nearest whole share) of
Common Stock calculated by multiplying the Current Warrant 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 Current Warrant Price resulting from such adjustment.
Notwithstanding any other provision herein, in the event that the
Current Warrant Price is less than the Current Market Price, the holder of this
Warrant may, at its sole election, purchase the shares of Common Stock under
this Warrant at the Current Market Price.
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SECTION 4.2 CALCULATION OF ADJUSTMENTS. (a) In case on any date on or
after the Closing Date any shares of Common Stock, other than Warrant Shares and
shares issuable upon the exercise of options or warrants outstanding on the date
hereof, shall be issued by the Company for a consideration per share or (in the
case of any transaction of a type described in section 4.2(b)(iii) or
section 4.2(b)(iv) hereof) shall be deemed to be issued for a Presumed
Consideration per share less than the Current Warrant Price on such date (any
such issuance or deemed issuance of shares being hereinafter referred to as an
"Adjustment Event"), the Current Warrant Price shall be reduced to the price
(calculated to the nearest one-hundredth of a cent (0.001)) determined by
multiplying (i) the Current Warrant Price in effect immediately prior to such
Adjustment Event by (ii) a fraction, (x) the numerator of which shall be the sum
of (1) the number of shares of Common Stock outstanding (excluding as a result
of the Warrants) and deemed to be outstanding immediately prior to such
Adjustment Event multiplied by the Current Warrant Price immediately prior to
such Adjustment Event and (2) the consideration, if any, received and/or any
Presumed Consideration deemed received by the Company upon such Adjustment
Event, and (y) the denominator of which shall be the number of shares of Common
Stock outstanding (excluding as a result of the Warrants) and deemed to be
outstanding (including any shares of capital stock, warrants or options issuable
after giving effect to any anti-dilution provisions of the Company's other
securities as a result of such Adjustment Event) after giving effect to such
Adjustment Event multiplied by the Current Warrant Price immediately prior to
such Adjustment Event.
(b) For the purpose of this section 4.2, the following provisions shall
be applicable with respect to the issuance of additional shares of Common Stock
and the computation provided for in section 4.2(a) hereof:
(i) Treasury Shares. The sale or other disposition of any
shares of Common Stock at the time held in the Company's treasury shall
be treated hereunder as an issuance of shares.
(ii) Dividends. In case any shares of Common Stock shall be
issued as a dividend on Common Stock, the Current Warrant Price shall
be adjusted as provided in section 4.3 hereof. In case any shares of
Common Stock shall be issued as a dividend on any security other than
Common Stock, or in case any security convertible into or exchangeable
for shares of Common Stock (such convertible or exchangeable security
being hereinafter called "Convertible Securities") shall be issued as a
dividend on any security, such shares or Convertible Securities shall
be considered to have been issued without consideration at the
commencement of the day next succeeding the record date for the
determination of stockholders entitled to such dividend.
(iii) Rights, Warrants or Options. In case the Company shall
grant any rights, warrants or options (other than the Warrants) to
subscribe for or to purchase shares of Common Stock or Convertible
Securities, the maximum number of shares of Common Stock issuable
pursuant to such rights, warrants or options or necessary to effect the
conversion or exchange of all such Convertible Securities (computed
without regard to the possible future effect of anti-dilution
provisions) shall be deemed to have been issued
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as of the date of the granting of such rights, warrants or options, and
the Company shall be deemed to have received the Presumed Consideration
therefor. No further adjustment (except as provided in section
4.2(b)(v) hereof) shall be made in respect of the actual issuance of
Common Stock or Convertible Securities upon the exercise of rights or
options, warrants or the conversion of Convertible Securities referred
to in this section 4.2(b)(iii).
(iv) Convertible Securities. In case the Company shall issue
any Convertible Securities (other than pursuant to the exercise of
rights, warrants or options referred to in section 4.2(b)(iii) hereof),
then the maximum number of shares of Common Stock necessary to effect
the conversion or exchange of all such Convertible Securities (computed
without regard to the possible future effect of anti-dilution
provisions) shall be deemed to have been issued as of the date of
issuance of such Convertible Securities, and the Company shall be
deemed to have received the Presumed Consideration therefor. No further
adjustment (except as provided in section 4.2(b)(v) hereof) shall be
made in respect of the actual issuance of Common Stock upon the
conversion of Convertible Securities referred to in this
section 4.2(b)(iv).
(v) Superseding Adjustments. If, at any time after any
adjustment of the Current Warrant Price shall have been made by reason
of the provisions of section 4.2(b)(iii) or section 4.2(b)(iv) hereof
on the basis of the granting of certain rights, warrants or options or
the issuance of certain Convertible Securities, or after any new
adjustment of the Current Warrant Price shall have been made with
respect to such rights, warrants or options or Convertible Securities
by reason of the provisions of this section 4.2(b)(v), such rights,
warrants or options or the right of conversion or exchange in any such
Convertible Securities shall expire, and all or a portion of such
rights, warrants or options, or the right of conversion or exchange in
respect of all or a portion of such Convertible Securities, as the case
may be, shall not have been exercised, then such previous adjustment
shall be rescinded and annulled, and the shares of Common Stock which
were deemed to have been issued by virtue of the computation made in
connection with the adjustment so rescinded and annulled shall no
longer be deemed to have been issued by virtue of such computation.
Thereupon, a recomputation shall be made of the effect of issuance of
such rights, warrants or options or such Convertible Securities on the
basis of
(A) treating the number of shares of Common Stock, if
any, theretofore actually issued pursuant to the exercise of
such expired rights, warrants or options, or such expired
right of conversion or exchange, as having been issued as of
the date of the granting of such rights, warrants or options
or the date of issuance of such Convertible Securities for the
consideration actually received therefor (computed as provided
in section 4.2(b)(vii) hereof), and
(B) deeming the maximum number of shares of Common
Stock, if any, thereafter issuable pursuant to the conversion
or exchange of any Convertible Securities actually issued or
issuable pursuant to the exercise of such rights or options
(computed without regard to the possible future effect of
anti-dilution
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provisions) as having been issued as of the date of the
granting of such rights or options and for the Presumed
Consideration deemed to have been received as of such date;
and on such basis, such new adjustment, if any, of the Current
Warrant Price shall be made as may be required by
section 4.2(a) hereof, which new adjustment shall take into
account a recomputation of all adjustments made pursuant to
this Section 4 subsequent to the date of the granting of such
rights, warrants or options or the date of issuance of such
Convertible Securities, and which new adjustment shall
supersede the previous adjustment so rescinded and annulled
and all such subsequent adjustments for all subsequent
exercises of Warrants.
(vi) Effect of "Split-up" on "Deemed Issued" Shares. Upon any
subdivision or reverse stock split of the Common Stock of the character
described in section 4.3 hereof, including the issuance of a stock
dividend which is treated as such a subdivision under section
4.2(b)(ii) hereof, the number of the shares of Common Stock which are
at the time deemed to have been issued by virtue of section
4.2(b)(iii), section 4.2(b)(iv) or section 4.2(b)(v) hereof, but have
not actually been issued, shall be deemed to be increased or decreased
proportionately, as applicable.
(vii) Computation of Consideration and Presumed Consideration.
For the purposes of this section 4.2(b):
(A) The consideration received by the Company upon
the actual issuance of shares of Common Stock shall be the sum
of the amount of cash and the fair value of property (as
determined by resolution of the Board of Directors of the
Company as at the time of issuance or "deemed issuance" in the
case of section 4.2(b)(vii)(B)) received by the Company as the
consideration or part of the consideration (1) for the
issuance of any rights, warrants or options upon the exercise
of which such Common Stock was issued, (2) for the issuance of
any rights, warrants or options to purchase Convertible
Securities upon the conversion of which such Common Stock was
issued, (3) for the issuance of the Convertible Securities
upon conversion of which such Common Stock was issued, and (4)
at the time of the actual exercise of such rights, warrants,
options or conversion privileges upon the exercise of which
such Common Stock was issued, in each case without deduction
for commissions and expenses incurred by the Company for any
underwriting of, or otherwise in connection with the issue or
sale of, such rights, warrants, options, Convertible
Securities or Common Stock, but after deduction of any sums
paid by the Company in cash upon the exercise of, and pursuant
to, such rights, warrants, options or conversion privileges in
respect of fractional shares of Common Stock;
(viii) The consideration deemed to have been received by the
Company for shares of Common Stock deemed to be issued
pursuant to rights, warrants, options, and/or conversion
privileges by reason of transactions of the character
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described in section 4.2(b)(iii), section 4.2(b)(iv), or
section 4.2(b)(v)(B) hereof (herein called the "Presumed
Consideration" therefor) shall be the consideration
(determined as provided in section 4.2(b)(vii)(A) hereof)
which would have been received by the Company at or prior to
the actual issuance of such shares of Common Stock so deemed
to be issued, if all rights, warrants, options and/or
conversion privileges necessary to effect the actual issuance
of the number of shares deemed to have been issued had been
exercised (successively exercised in the case of rights,
warrants or options to purchase Convertible Securities) and
the minimum consideration received or receivable by the
Company upon such exercise had been received (all computed
without regard to the possible future effect of anti-dilution
provisions in such rights, warrants, options and/or conversion
privileges).
SECTION 4.3 EFFECT OF "SPLIT-UPS" AND STOCK DIVIDENDS. In case at any
time or from time to time the Company shall subdivide or combine as a whole, by
reclassification, by the issuance of a stock dividend on the Common Stock
payable in Common Stock, or otherwise, the number of shares of Common Stock then
outstanding into a greater or lesser number of shares of Common Stock, with or
without par value, the Current Warrant Price shall be reduced or increased (as
applicable) proportionately. The issuance of such a stock dividend shall be
treated as a subdivision of the whole number of shares of Common Stock
outstanding immediately prior to such dividend into a number of shares equal to
such whole number of shares so outstanding plus the number of shares issued as a
stock dividend. Upon any such adjustment, the number of shares shall be rounded
upward to the nearest whole share.
SECTION 4.4 EFFECT OF MERGER OR CONSOLIDATION. In case the Company
shall, while this Warrant remains outstanding, enter into any consolidation with
or merger into any other corporation wherein the Company is not the surviving
corporation, or wherein securities of a corporation other than the Company are
distributable to holders of Common Stock, or sell or convey its property as an
entirety or substantially as an entirety followed by distribution of any or all
of the proceeds thereof to shareholders, and in connection with such
consolidation, merger, sale or conveyance, shares of stock or other securities
or property shall be issuable or deliverable in exchange for the Common Stock,
then, as a condition of such consolidation, merger, sale or conveyance, lawful
and adequate provision shall be made whereby Warrantholder shall thereafter be
entitled to purchase pursuant to this Warrant (in lieu of the number of shares
of Common Stock which such holder would have been entitled to purchase
immediately prior to such consolidation, merger, sale or conveyance) the shares
of stock or other securities or property to which such number of shares of
Common Stock would have been entitled at the time of such consolidation, merger,
sale or conveyance, at an aggregate purchase price equal to that which would
have been payable if such number of shares of Common Stock had been purchased by
exercise of this Warrant immediately prior thereto. In case of any such
consolidation, merger, sale or conveyance, appropriate provision shall be made
with respect to the rights and interests thereafter of the Warrantholders, to
the end that all the provisions of the Warrants (including the provisions of
this Section 4) shall thereafter be applicable, as nearly as practicable, to
such stock or other securities or property thereafter deliverable upon the
exercise of the Warrants. The Company shall not effect any such consolidation,
merger, sale or conveyance unless prior to or
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simultaneously with the consummation thereof the successor corporation (if other
than the Company) resulting from such consolidation or merger or purchasing such
assets shall assume by written instrument, executed and mailed or delivered to
each holder of Warrants, the obligation to deliver to such holder such shares of
stock or other securities or property as, in accordance with the foregoing
provisions, such Warrantholder may be entitled to receive, which instrument
shall contain the express assumption by such successor corporation of the due
and punctual performance and observance of every provision of this Warrant to be
performed and observed by the Company and of all liabilities and obligations of
the Company hereunder. Notwithstanding the foregoing, if the Company shall
consolidate or merge with another Person in a transaction in which all of the
holders of Common Stock of the Company receive in consideration of their shares
only cash consideration and such cash consideration per share is greater than
the Current Warrant Price, the Company's obligations under this Section 4.4
shall be satisfied to any Warrantholder (i) such Warrantholder's Warrants are
purchased for cash in an amount equal to (A) the price per share of common stock
(and/or any other security, right or asset) of the Company paid to the holders
of the Company's Common Stock (and/or any other such security, right or asset)
in connection with such merger or consolidation, multiplied by the number of
Warrant Shares (and/or the amount or number of any other securities, assets or
rights) underlying such Warrantholder's Warrant(s) minus (B) the aggregate
Current Warrant Price for all Warrant Shares underlying such Warrant(s) or (ii)
a bona fide, binding offer is made to purchase such Warrantholder's Warrants for
the amount set forth in clause (i), the offeror has the demonstrated ability to
pay such amount in cash and the Warrantholders refuses to accept such offer.
SECTION 4.5 EFFECT OF CERTAIN DIVIDENDS. Except as provided in
section 4.4, in case on any date the Company makes a distribution to holders of
its Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing corporation) of
evidences of its indebtedness or assets of the Company (excluding cash dividends
and rights, warrants or options to purchase shares of Common Stock or
Convertible Securities which are exercisable only for 45 days after such date),
the Company shall pay the distribution that would be payable to holders of the
Warrants if the Warrant Shares had been outstanding as of the record date (the
"Distribution") to an escrow holder who shall be a national banking institution
with at least $200 million of net worth to hold in escrow (together with
proceeds from the distribution). Upon any exercise of the Warrants, the escrow
holder will distribute the evidence of indebtedness or assets held in escrow
relating to the exercised Warrants together with the proceeds therefrom
(including interest) to the Warrantholder. If one or more Warrants terminates,
the escrow holder will distribute to the Company any evidence of indebtedness or
assets held in escrow relating to the terminated Warrants together with the
proceeds therefrom (including interest). Payments of amounts held in escrow to
the holders of the Warrants shall not be subject to restriction by agreement or
operation of law except as provided in this section 4.5.
SECTION 4.6 REORGANIZATION OR RECLASSIFICATION. In case of any capital
reorganization or any reclassification of the capital stock of the Company
(except for a reorganization or reclassification covered by sections 4.3 or
4.4 hereof) while this Warrant remains outstanding, then, as a condition of such
reorganization or reclassification, lawful and adequate provision shall be made
whereby the Warrantholder shall thereafter be entitled to purchase pursuant to
this Warrant
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(in lieu of the number of shares of Common Stock which such holder would have
been entitled to purchase immediately prior to such reorganization or
reclassification) the shares of stock of any class or classes or other
securities or property to which such number of shares of Common Stock would have
been entitled at the time of such reorganization or reclassification, at an
aggregate purchase price equal to that which would have been payable if such
number of shares of Common Stock had been purchased immediately prior to such
reorganization or reclassification. In case of any such capital reorganization
or reclassification, appropriate provision shall be made with respect to the
rights and interests thereafter of the holders of Warrants, to the end that all
the provisions of the Warrants (including the provisions of this Section 4)
shall thereafter be applicable, as nearly as practicable, to such stock or other
securities or property thereafter deliverable upon the exercise of the Warrants.
SECTION 4.7 STATEMENT OF ADJUSTMENT. Upon each adjustment of the
Current Warrant Price and the number of shares of Common Stock purchasable
hereunder, and in the event of any change in the rights of the Warrantholder by
reason of other events herein set forth, then and in each such case the Company
will promptly prepare a schedule setting forth the adjusted Current Warrant
Price and the adjusted number of shares purchasable hereunder, or specifying the
other shares of stock, other securities or property and the amount thereof
receivable as a result of such change in rights, and setting forth in reasonable
detail the method of calculation and the facts upon which such calculation is
base. The Company will promptly mail a copy of such schedule to each
Warrantholder.
SECTION 4.8 DETERMINATIONS BY THE BOARD OF DIRECTORS. All
determinations by the Board of Directors of the Company under this Warrant shall
be made in good faith with due regard to the interests of the Warrantholders and
the other holders of securities of the Company and in accordance with good
financial practice, and all valuations made by the Board of Directors of the
Company under the terms of this Warrant must be made with due regard to any
market quotations of securities involved in, or related to, the subject of such
valuation.
SECTION 4.9 NOTIFICATIONS BY THE COMPANY. As long as any Warrant is
outstanding, in case at any time the Company proposes:
(a) to pay any dividend payable in stock (of any class or
classes) or in Convertible Securities upon Common Stock or make any distribution
to the holders of the Common Stock; or
(b) to make an offer for subscription pro rata to the holders
of Common Stock of any additional shares of stock of any class or other rights
or to grant to the holders of Common Stock generally any rights, warrants or
options; or
(c) to effect 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
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(d) to effect a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then, in any one or more such cases, the Company shall give written notice to
each Warrantholder of the date on which (i) the transfer books of the Company
shall close or a record date shall be taken for such dividend, distribution,
subscription rights or grant, or (ii) a record date shall be taken to determine
stockholders entitled to notice of and to vote at any meeting of stockholders at
which any such proposed reorganization, reclassification, consolidation, merger,
sale of assets, dissolution, liquidation or winding-up is to be considered, or
(iii) such reorganization, reclassification, consolidation, merger, sale of
assets, 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, subscription
rights or grant, or shall be entitled to vote on or exchange their Common Stock
for securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale of assets, dissolution,
liquidation or winding-up, as the case may be. Such written notice shall be
given not less than 20 days and not more than 60 days prior to such date on
which the transfer books of the Company shall close or a record date shall be
taken or any event shall occur, as the case may be, and such notice may state
that any such action will be taken only if certain events specified in such
notice (such as the clearing of proxy material by the Commission or an
affirmative vote of stockholders) occur prior thereto.
SECTION 5. CERTAIN DEFINITIONS.
For all purposes of this Warrant, unless the context otherwise
requires, the following terms shall have the following respective meanings:
"Act": the Securities Act of 1933, as amended from time to time, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Adjustment Event": see Section 4.2(a) hereof.
"Affiliate" of an entity: any person controlling, controlled by or
under common control with such entity or who participates in a group within the
meaning of Section 13(d) of the Exchange Act which owns, including, but not
limited to (i) any director or officer of such entity or any of its subsidiaries
and (ii) any person who owns beneficially or of record 5% or more of the shares
of the capital stock of such entity or any of its subsidiaries or of which such
entity, directly or indirectly, owns beneficially or of record 5% or more of the
shares of capital stock.
"Business Day": means any day other than a Saturday, Sunday or a day on
which national banks are authorized by law to close in California.
"Closing Date": January 28, 2000.
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"Commission": the Securities and Exchange Commission, or any other
federal agency then administering the Act.
"Common Stock": the Company's authorized Common Stock, as such class
existed on the Closing Date, including stock of the Company of any class
thereafter authorized which ranks, or is generally entitled to a participation,
as to assets or dividends substantially on a parity with Common Stock and
generally enjoys voting rights on a parity with Common Stock.
"Company": Symposium Corporation, and any other corporation assuming
the Warrants pursuant to Section 4.4 hereof.
"Convertible Securities": see Section 4.2(b)(ii) hereof.
"Current Market Price" (per share of Common Stock at any date): the per
share fair market value of the Common Stock (i) determined by the average of the
daily "market prices" over a period of five (5) consecutive business days before
such date or (ii) if and so long as there is no exchange or over-the-counter
market for the Common Stock of the Company, the price per share which the
Company could obtain from a willing buyer for the shares sold by the Company
from authorized but unissued shares, as such price shall be determined in good
faith by the Board of Directors of the Company and the Warrantholder, provided
if the Company and the holder can not agree on a value, the Company and the
holder(s) of the majority of the Warrants shall retain an independent investment
banking firm, to determine the per share fair market value of the Common Stock.
If the Current Market Price as determined by the investment banker is more than
10% greater than the price as determined by the Board of the Directors of the
Company, the Company shall pay the fees and expenses of such investment banker,
if the price as determined by such investment banker is less than 5% greater
than the price as determined by the Board of Directors, the Warrantholders
disputing the price shall pay the fees and expenses of such investment banker,
if the price as determined by the investment banker is between 5% and 10%
greater than the price as determined by the Board of Directors, the Company and
such Warrantholders shall each be responsible for one half of the investment
banker's fees and expenses. The market price referred to in clause (i) above for
each such business day shall be the last sale price on such day on the principal
securities exchange on which the Common Stock is then listed or admitted to
trading, or, if no sale takes place on such day on any such exchange, the
average of the closing bid and asked prices on such day as officially quoted on
any such exchange, or if the Common Stock is not then listed or admitted on any
stock exchange, the market price for each such business day shall be the last
sale price on such day, or, if no sale takes place on such day, the average of
the closing bid and asked prices on such day in the over-the-counter market, in
either case as reported through NASDAQ, or, if such prices are not at the time
so reported, as furnished by any member of the National Association of
Securities Dealers, Inc. selected by the Company.
"Credit Agreement": see the second paragraph of this Warrant.
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"Current Warrant Price" (per share of Common Stock at any date): the
price at which one share of Common Stock may be purchased hereunder at any time;
initially, the Current Warrant Price shall be 110% of the Current Market Price
calculated as of the Closing Date and, thereafter, the Current Warrant Price
shall be such price as may be determined from time to time pursuant to Section 4
hereof.
"Exchange Act": the Securities Exchange Act of 1934, as amended from
time to time, or any successor federal statute, and the rules and regulations of
the Commission thereunder.
"Exercise Form": means an Exercise Form in the form annexed hereto as
Exhibit A.
"Outstanding": when used with reference to Common Stock at any date,
all issued shares of Common Stock (including, but without duplication, shares
deemed issued pursuant to Section 4 hereof) at such date, except shares then
held in the treasury of the Company.
"person": an individual, corporation, partnership, joint venture, trust
estate, unincorporated organization or government or an agency or political
subdivision thereof.
"Presumed Consideration": see Section 4.2(b)(vii)(B) hereof.
"Total Warrants": the sum of the aggregate number of shares of (i)
Common Stock purchasable by the holder(s) upon exercise of all Warrants then
outstanding and (ii) Warrant Shares which had been issued pursuant to the
exercise of Warrants.
"Transfer": a sale, assignment, transfer, pledge, grant of a security
interest in or other disposition.
"Warrant Office": see Section 2.1 hereof.
"Warrant Shares": the shares of Common Stock purchasable or purchased
by the Warrantholders upon the exercise of the Warrants. Unless otherwise
expressly stated herein, Warrant Shares shall not include shares of Common Stock
purchased upon exercise of a Warrant which have been sold by a Warrantholder
pursuant to a registration statement under the Act.
"Warrantholder": the registered holder of a Warrant or Warrants or any
related Warrant Shares.
"Warrants": the warrants (of which this Warrant is one) originally
issued by the Company pursuant to the Credit Agreement evidencing the right
initially to purchase an aggregate of 300,000 shares of Common Stock and all
warrants issued in substitution, combination or subdivision of any thereof.
SECTION 6. CERTAIN COVENANTS OF THE COMPANY
The Company covenants and agrees that as long as any Warrant is
outstanding:
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(a) it will reserve and set apart and have at all times, free
from preemptive rights, a number of shares of authorized but unissued Common
Stock or other securities or property deliverable upon the exercise of the
Warrants sufficient to enable it at any time to fulfill all its obligations
thereunder;
(b) before taking any action which would cause an adjustment
reducing the Current Warrant Price below the then par value of the shares of
Common Stock issuable upon exercise of the Warrants, it will take any corporate
action which may be necessary in order that the Company may validly and legally
issue fully paid and nonassessable shares of such Common Stock at such adjusted
Current Warrant Price;
(c) if any shares of Common Stock required to be reserved for
the purposes of the exercise of this Warrant require registration with or
approval of any governmental authority under any federal law (other than the
Act) or under any state law before such shares may be issued upon exercise of
this Warrant, the Company will, at its expense, as expeditiously as possible,
cause such shares to be duly registered or approved, as the case may be,
provided, that if the issuance of such shares requires the Company to go through
a full qualification process in any state other than California, New York or
Delaware, the Company shall not be required to undertake such process unless the
Warrantholders agree to pay the Company's reasonable expenses incurred in
connection therewith;
(d) if and so long as the Common Stock is listed on any
national securities exchange (as defined in the Exchange Act), it will, at its
expense, obtain and maintain the approval for listing upon official notice of
issuance of all shares of Common Stock issuable upon the exercise of the
Warrants at the time outstanding and maintain the listing of such shares after
their issuance; and the Company will so list on such national securities
exchange, will register under the Exchange Act (or any similar statute then in
effect) and will maintain such listing of any other securities that at any time
are issuable upon exercise of the Warrants if, and at the time that, any
securities of the same class shall be listed on such national securities
exchange by the Company;
(e) it will review its stock ledgers, stock transfer books and
other corporate records periodically (and not less often than once in each
calendar quarter) in order to determine whether any Warrantholder, based solely
on the number of Warrant Shares owned of record and which may be acquired by the
Warrantholder, is or shall have become, directly or indirectly, the beneficial
owner of more than such percentage of any class of its equity securities (as
defined in the Exchange Act) as shall cause such Warrantholder to be required to
make any filings or declarations to the Company, the Commission or any national
securities exchange pursuant to the provisions of the Exchange Act or any
comparable federal statute, and the Company will give prompt notice to such
Warrantholder whenever it shall have determined, upon the basis of the
information disclosed by any such review, that such Warrantholder is or has
become such a holder, which notice shall also specify the information upon which
the Company bases such determination; provided, however, that the Company shall
give such notice only once in each fiscal year to any Warrantholder whose
percentage of beneficial ownership of the Company's
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equity securities has not changed since the date of the giving of the
immediately preceding notice;
(f) so long as any of the Warrants representing at least
100,000 Warrant Shares (as adjusted for stock splits, reverse stock splits and
the like) are outstanding and owned by ICII or the Credit Agreement is in
effect, the Company will provide to ICII at least 10 days' notice of and all
information given to the directors of the Company with respect to each regular
meeting of the Board of Directors and such notice as is reasonable under the
circumstances and all information given to the directors of the Company with
respect to each special or emergency meeting of the Board of Directors, the
Company shall also provide to ICII a copy of any written action by the Board of
Directors of the Company in lieu of a meeting thereof; and within 30 days of
each meeting of the Board of Directors, copies of the minutes of such meeting;
and
(g) unless purchased for cash in accordance with Section 4.4,
this Warrant shall be binding upon any corporation succeeding to the Company by
merger, consolidation or acquisition of all or substantially all of the
Company's assets.
SECTION 7. NOTICE.
Any notice or other document required to be given or delivered to the
Warrantholders shall be delivered at, or sent by certified or registered mail
to, each such Warrantholder at the last address shown on the books of the
Company maintained at the Warrant Office for the registration and registration
of transfer of the Warrants or at any more recent address of which any
Warrantholder shall have notified the Company in writing. Any notice or other
document required or permitted to be given or delivered to holders of record of
outstanding Warrant Shares shall be delivered at, or sent by certified or
registered mail to, each such holder at such holder's address as the same
appears on the stock records of the Company. Any notice or other document
required or permitted to be given or delivered to the Company, other than such
notice or documents required to be delivered to the Warrant Office, shall be
delivered at, or sent by certified or registered mail to, the office of the
Company at 000 Xxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, XX 00000, or such other address
within the United States of America as shall have been furnished by the Company
to the Warrantholders and the holders of record of Warrant Shares. Any notice or
other document sent by certified or registered mail, return receipt requested,
shall be deemed to have been delivered and received three business days
following deposit in the U.S. mail. Notices or documents delivered in any other
manner shall be deemed to have been delivered only when and if received.
SECTION 8. LIMITATIONS OF LIABILITY; NOT STOCKHOLDERS.
No provision of this Warrant shall be construed as conferring upon any
Warrantholder hereof the right to vote, consent, receive dividends or receive
notice other than as herein expressly provided in respect of meetings of
stockholders for the election of directors of the Company or any other matter
whatsoever as a stockholder of the Company. No provision hereof, in the absence
of affirmative action any Warrantholder to purchase shares of Common Stock, and
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no mere enumeration herein of the rights or privileges of the holder hereof,
shall give rise to any liability of such Warrantholder for the purchase price of
any Warrant Shares or as a stockholder of the Company, whether such liability is
asserted by the Company or by creditors of the Company.
SECTION 9. LOSS, DESTRUCTION, ETC. OF WARRANTS.
Upon receipt of evidence satisfactory to the Company of the loss,
theft, mutilation or destruction of any Warrant, and in the case of any such
loss, theft or destruction upon delivery of a bond of indemnity in such form and
amount as shall be reasonably satisfactory to the Company, or in the event of
such mutilation upon surrender and cancellation of the Warrant, the Company will
make and deliver a new Warrant, of like tenor, in lieu of such lost, stolen,
destroyed or mutilated Warrant; provided, however, that neither ICII nor any
other financial institution having combined net capital, capital surplus and
undivided profits in excess of $50,000,000 which shall become a Warrantholder
shall be required to provide any such bond of indemnity (but shall be required
to provide an indemnity). Any Warrant issued under the provisions of this
Section 9 in lieu of any Warrant alleged to be lost, destroyed or stolen, or in
lieu of any mutilated Warrant, shall constitute an original contractual
obligation on the part of the Company.
SECTION 10. LAW GOVERNING.
This Warrant shall be governed by, and construed and enforced in
accordance with, the law of the State of California.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed in
its name by its Chairman of the Board, President or a Vice President and its
corporate seal to be impressed hereon and attested by its Secretary or an
Assistant Secretary.
Dated: January 28, 2000
Symposium Corporation
By: /s/ Xxxxxx Xxxxxxx
---------------------------
Title: Chief Operating Officer
[Corporate Seal]
Attest:
/s/
----------------------------
Secretary
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EXHIBIT A
EXERCISE FORM
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant, to purchase Warrant Shares and (check one):
herewith tenders payment for _______ of the Warrant Shares to
the order of ________in the amount of $_________ in accordance
with the terms of this Warrant; or
herewith tenders this Warrant for _______ Warrant Shares
pursuant to the Net Issue Exercise provisions of Section 1.3
of this Warrant.
The undersigned requests that a certificate (or certificates) for such Warrant
Shares be registered in the name of the undersigned and that such certificate
(or certificates) be delivered to the undersigned's address below.
In exercising this Warrant, the undersigned hereby makes each of the
representations and warranties set forth in Section 3.3 of the Warrant as to
itself and as of the date hereof.
Dated: ___________________.
Signature
-------------------
-------------------
(Print Name)
-------------------
(Street Address)
-------------------
(City) (State) (Zip Code)
If said number of shares shall not be all the shares purchasable under the
within Warrant, a new Warrant is to be issued in the name of said undersigned
for the balance remaining of the shares purchasable thereunder.
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ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ______________________ the rights represented by the foregoing Warrant of
[__________________] and appoints _____________________________ attorney to
transfer said rights on the books of said corporation, with full power of
substitution in the premises. The portion of the Warrant transferred is as set
forth below (all share numbers are based on shares outstanding as of the Closing
Date and should be adjusted accordingly).
Warrants to purchase __________ shares
_____________________________
Signature:
Dated:
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