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XXXXXXX.XXX, INC.
AND
XXXXX & COMPANY, INC.
AND
XXXXX SECURITIES CORPORATION
REPRESENTATIVES'
WARRANT AGREEMENT
DATED AS OF __________, 2000
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REPRESENTATIVES' WARRANT AGREEMENT dated as of ___________,
2000 between XXXXXXX.XXX, INC., a Delaware corporation (the "Company"), and
XXXXX & COMPANY, INC. and XXXXX SECURITIES CORPORATION (collectively,
hereinafter referred to variously as the "Holder" or "Holders" or the
"Representatives").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to the Representatives
warrants ("Warrants") to purchase up to an aggregate 422,489 shares of common
stock, $0.001 par value ("Common Stock"), of the Company and/or 422,489
non-redeemable Common Stock purchase warrants of the Company ("Underlying
Warrants"), each Underlying Warrant to purchase one additional share of Common
Stock; and
WHEREAS, the Representatives have agreed pursuant to the
underwriting agreement (the "Underwriting Agreement") dated as of the date
hereof between the Company, certain selling stockholders and the several
Underwriters listed therein to act as the Representatives in connection with the
Company's proposed public offering of up to 4,224,891 units ("Units"),
consisting of an aggregate 4,224,891 shares of Common Stock and 4,224,891
redeemable Common Stock purchase Warrants (the "Public Warrants") at a public
offering price of $___ per unit (the "Public Offering"); and
WHEREAS, the Warrants to be issued pursuant to this Agreement
will be issued on the Closing Date (as such term is defined in the Underwriting
Agreement) by the Company to the Representatives in consideration for, and as
part of the Representatives' compensation in connection with, the
Representatives acting as the Representatives pursuant to the Underwriting
Agreement;
NOW, THEREFORE, in consideration of the premises, the payment
by the Representatives to the Company of an aggregate forty-two dollars and
twenty-five cents ($42.25), the agreements herein set forth and other good and
valuable consideration, hereby acknowledged, the parties hereto agree as
follows:
1. Grant.
---------
The Representatives (or their designees) are hereby granted
the right to purchase, at any time from ___________, 2001 [twelve months after
the date of this Agreement], until 5:30 P.M., New York time, on ___________,
2005 [five years after the date of this Agreement], up to an aggregate of
422,289 shares of Common Stock and/or 422,289 Underlying Warrants at an initial
exercise price (subject to adjustment as provided in Section 8 hereof) of $____
per share of Common Stock [120% of the public offering price per share of Common
Stock], and $___ per Underlying Warrant [120% of the public offering price per
Underlying Warrant], subject to the terms and conditions of this Agreement. One
Underlying Warrant is exercisable to purchase one additional share of Common
Stock at an initial exercise price of $___ [150% of the public offering price]
from ________, 2001, until 5:30 p.m. New York time on _________, 2005, at which
time the Underlying Warrants shall expire. Except as set forth herein, the
shares of Common Stock and the Underlying Warrants issuable upon exercise of the
Warrants are in all respects identical to the shares of Common Stock and the
Public Warrants being purchased by the Underwriters for resale to the public
pursuant to the terms and provisions of the Underwriting Agreement, and
particularly except that the Underlying Warrants are non-redeemable, and the
Public Warrants are redeemable. The shares of Common Stock and the Underlying
Warrants issuable upon exercise of the Warrants are sometimes hereinafter
referred to collectively as the "Securities."
2. Warrant Certificates.
------------------------
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The warrant certificates (the "Warrant Certificates") delivered and to be
delivered pursuant to this Agreement shall be in the form set forth in Exhibit
A, attached hereto and made a part hereof, with such appropriate insertions,
omissions, substitutions, and other variations as required or permitted by this
Agreement.
3. Exercise of Warrant.
-----------------------
3.1 Method of Exercise.
-----------------------
The Warrants initially are exercisable at an aggregate initial
exercise price (subject to adjustment as provided in Section 8 hereof) per share
of Common Stock and per Underlying Warrant set forth in Section 6 hereof payable
by certified or official bank check in New York Clearing House funds, subject to
adjustment as provided in Section 8 hereof. Upon surrender of a Warrant
Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price (as hereinafter defined) for the
shares of Common Stock and/or the Underlying Warrants purchased at the Company's
principal executive offices in New York (presently located at 00 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 10004-2307) the registered holder of a Warrant Certificate
("Holder" or "Holders") shall be entitled to receive a certificate or
certificates for the shares of Common Stock so purchased and a certificate or
certificates for the Underlying Warrants so purchased. The purchase rights
represented by each Warrant Certificate are exercisable at the option of the
Holder thereof, in whole or in part (but not as to fractional shares of the
Common Stock and Underlying Warrants underlying the Warrants). In the event the
Company redeems all of the Public Warrants (other than the Underlying Warrants
underlying the Warrants, which are not redeemable), then the Warrants may only
be exercised if such exercise is accompanied by the simultaneous exercise of the
Underlying Warrant(s) underlying the Warrants being so exercised. Warrants may
be exercised to purchase all or part of the shares of Common Stock together with
an equal or unequal number
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of the Underlying Warrants represented thereby. In the case of the purchase of
less than all the shares of Common Stock and/or the Underlying Warrants
purchasable under any Warrant Certificate, the Company shall
cancel said Warrant Certificate upon the surrender thereof and shall execute and
deliver a new Warrant Certificate of like tenor for the balance of the shares of
Common Stock and Underlying Warrants purchasable thereunder.
3.2 Exercise by Surrender of Warrant.
-------------------------------------
In addition to the method of payment set forth in Section 3.1
and in lieu of any cash payment required thereunder, the Holder(s) of the
Warrants shall have the right at any time and from time to time to exercise the
Warrants in full or in part by surrendering the Warrant Certificate in the
manner specified in Section 3.1 hereof. The number of shares of Common Stock to
be issued pursuant to this Section 3.2 shall be equal to the difference between
(a) the number of shares of Common Stock in respect of which the Warrants are
exercised and (b) a fraction, the numerator of which shall be the number of
shares of Common Stock in respect of which the Warrants are exercised multiplied
by the Exercise Price and the denominator of which shall be the Market Price (as
defined in Section 3.3 hereof) of the shares of Common Stock. The number of
Underlying Warrants to be issued pursuant to this Section 3.2 shall be equal to
the difference between (a) the number of Underlying Warrants in respect of which
the Warrants are exercised and (b) a fraction, the numerator of which shall be
the number of Underlying Warrants in respect of which the Warrants are exercised
multiplied by the Exercise Price and the denominator of which shall be the
Market Price (as defined in Section 3.3 hereof) of the Underlying Warrants.
Solely for the purposes of this paragraph, Market Price shall be calculated
either (i) on the date on which the form of election attached hereto is deemed
to have been sent to the Company pursuant to Section 14 hereof ("Notice Date")
or (ii) as the average of the
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Market Prices for each of the five trading days preceding the Notice Date,
whichever of (i) or (ii) is greater.
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3.3 Definition of Market Price.
-------------------------------
As used herein, the phrase "Market Price" at any date shall be
deemed to be (i) when referring to the Common Stock, the last reported sale
price, or, in case no such reported sale takes place on such day, the average of
the last reported sale prices for the last three (3) trading days, in either
case as officially reported by the principal securities exchange on which the
Common Stock is listed or admitted to trading or by the Nasdaq SmallCap Market
("Nasdaq SmallCap") or by the National Association of Securities Dealers
Automated Quotation System ("Nasdaq"), or, if the Common Stock is not listed or
admitted to trading on any national securities exchange or quoted by Nasdaq, the
average closing bid price as furnished by the National Association of Securities
Dealers, Inc. ("NASD") through Nasdaq or similar organization if Nasdaq is no
longer reporting such information, or if the Common Stock is not quoted on
Nasdaq, as determined in good faith (using customary valuation methods) by
resolution of the members of the Board of Directors of the Company, based on the
best information available to it or (ii) when referring to a Underlying Warrant,
the last reported sales price, or, in the case no such reported sale takes place
on such day, the average of the last reported sale prices for the last three (3)
trading days, in either case as officially reported by the principal securities
exchange on which the Underlying Warrants are listed or admitted to trading or
by Nasdaq, or, if the Underlying Warrants are not listed or admitted to trading
on any national securities exchange or quoted by Nasdaq, the average closing bid
price as furnished by the NASD through Nasdaq or similar organization if Nasdaq
is no longer reporting such information, or if the Underlying Warrants are not
quoted on Nasdaq or are no longer outstanding, the Market Price of a Underlying
Warrant shall equal the difference between the Market Price of the Common Stock
and the Exercise Price of the Underlying Warrant.
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4. Issuance of Certificates.
----------------------------
Upon the exercise of the Warrants, the issuance of certificates for shares of
Common Stock and Underlying Warrants and/or other securities, properties or
rights underlying such Warrants and, upon the exercise of the Underlying
Warrants, the issuance of certificates for shares of Common Stock and/or other
securities, properties or rights underlying such Underlying Warrants shall be
made forthwith (and in any event within five (5) business days thereafter)
without charge to the Holder thereof including, without limitation, any tax
which may be payable in respect of the issuance thereof, and such certificates
shall (subject to the provisions of Sections 5 and 7 hereof) be issued in the
name of, or in such names as may be directed by, the Holder thereof; 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 issuance and delivery of any
such certificates in a name other than that of the Holder, and the Company shall
not be required to issue or deliver such certificates unless or until the person
or persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
The Warrant Certificates and the certificates representing the
shares of Common Stock and the Underlying Warrants underlying the Warrants and
the shares of Common Stock underlying the Underlying Warrants (and/or other
securities, property or rights issuable upon the exercise of the Warrants or the
Underlying Warrants) shall be executed on behalf of the Company by the manual or
facsimile signature of the then Chairman or Vice Chairman of the Board of
Directors or President or Vice President of the Company. Warrant Certificates
shall be dated the date of execution by the Company upon initial issuance,
division, exchange, substitution or transfer. Certificates representing the
shares of Common Stock and Underlying Warrants, and the shares of Common Stock
underlying each Underlying Warrant (and/or other securities, property or rights
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issuable upon exercise of the Warrants) shall be dated as of the Notice Date
(regardless of when executed or delivered) and dividend bearing securities so
issued shall accrue dividends from the Notice Date.
5. Restriction On Transfer of Warrants.
---------------------------------------
The Holder of a Warrant Certificate, by its acceptance thereof, covenants and
agrees that the Warrants are being acquired as an investment and not with a view
to the distribution thereof; that the Warrants may not be sold, transferred,
assigned, hypothecated or otherwise disposed of, in whole or in part, for a
period of one (1) year from the date hereof, except to officers of the
Representatives.
6. Exercise Price.
------------------
6.1 Initial and Adjusted Exercise Price.
----------------------------------------
Except as otherwise provided in Section 8 hereof, the initial
exercise price of each Warrant shall be $____ per share of Common Stock and $___
per Underlying Warrant. The adjusted exercise price shall be the price which
shall result from time to time from any and all adjustments of the initial
exercise price in accordance with the provisions of Section 8 hereof. Any
transfer of a Warrant shall constitute an automatic transfer and assignment of
the registration rights set forth in Section 7 hereof with respect to the
Securities or other securities, properties or rights underlying the Warrants.
6.2 Exercise Price.
-------------------
The term "Exercise Price" herein shall mean the initial
exercise price or the adjusted exercise price, depending upon the context or
unless otherwise specified.
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7. Registration Rights.
-----------------------
7.1 Registration Under the Securities Act of 1933.
-------------------------------------------------
The Warrants, the shares of Common Stock and Underlying
Warrants, or other securities issuable upon exercise of the Warrants, or other
securities issuable upon exercise of the Underlying Warrants (collectively, the
"Warrant Securities") have been registered under the Securities Act of 1933, as
amended (the "Act") pursuant to the Company's Registration Statement on Form S-1
(Registration No. 333-88065) (the "Registration Statement"). All of the
representations and warranties of the Company contained in the Underwriting
Agreement relating to the Registration Statement, the Preliminary Prospectus and
Prospectus (as such terms are defined in the Underwriting Agreement) and made as
of the dates provided therein, are incorporated by reference herein. The Company
agrees and covenants promptly to file post-effective amendments to such
Registration Statement as may be necessary in order to maintain its
effectiveness and otherwise to take such action as may be necessary to maintain
the effectiveness of the Registration Statement as long as any Warrants are
outstanding. In the event that, for any reason, whatsoever, the Company shall
fail to maintain the effectiveness of the Registration Statement, the
certificates representing the Warrant Securities shall bear the following
legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended
("Act"), and may not be offered or sold except pursuant to (i)
an effective registration statement under the Act, (ii) to the
extent applicable, Rule 144 under the Act (or any similar rule
under such Act relating to the disposition of securities), or
(iii) an opinion of counsel, if such opinion shall be
reasonably satisfactory to counsel to the issuer, that an
exemption from registration under such Act is available.
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7.2 Piggyback Registration.
---------------------------
If, at any time commencing after the date hereof and expiring
seven (7) years thereafter, the Company proposes to register any of its
securities under the Act (other than pursuant to Form X-0, Xxxx X-0 or a
comparable registration statement) it will give written notice by registered
mail, at least thirty (30) days prior to the filing of each such registration
statement, to the Representatives and to all other Holders of the Warrants
and/or the Warrant Securities of its intention to do so. If the Representatives
or other Holders of the Warrants and/or Warrant Securities notify the Company
within twenty (20) business days after receipt of any such notice of its or
their desire to include any such securities in such proposed registration
statement, the Company shall afford the Representatives and such Holders of the
Warrants and/or Warrant Securities the opportunity to have any such Warrant
Securities registered under such registration statement.
Notwithstanding the provisions of this Section 7.2, the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 7.2 (irrespective of whether a written request
for inclusion of any such securities shall have been made) to elect not to file
any such proposed registration statement, or to withdraw the same after the
filing but prior to the effective date thereof.
7.3 Demand Registration.
------------------------
(a) At any time commencing after the date hereof and expiring
five (5) years thereafter, the Holders of the Warrants and/or Warrant Securities
representing a "Majority" (as hereinafter defined) of such securities (assuming
the exercise of all of the Warrants) shall have the right (which right is in
addition to the registration rights under Section 7.2 hereof), exercisable by
written notice to the Company, to have the Company prepare and file with the
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Securities and Exchange Commission (the "Commission"), on one occasion, a
registration statement and such other documents, including a prospectus, as may
be necessary in the opinion of both counsel for the Company and counsel for the
Representatives and Holders, in order to comply with the provisions of the Act,
so as to permit a public offering and sale of their respective Warrant
Securities for nine (9) consecutive months by such Holders and any other Holders
of the Warrants and/or Warrant Securities who notify the Company within ten (10)
days after receiving notice from the Company of such request.
(b) The Company covenants and agrees to give written notice of
any registration request under this Section 7.3 by any Holder or Holders to all
other registered Holders of the Warrants and the Warrant Securities within ten
(10) days from the date of the receipt of any such registration request.
(c) Notwithstanding anything to the contrary contained herein,
if the Company shall not have filed a registration statement for the Warrant
Securities within the time period specified in Section 7.4(a) hereof pursuant to
the written notice specified in Section 7.3(a) of a Majority of the Holders of
the Warrants and/or Warrant Securities, the Company may, at its option, upon the
written notice of election of a Majority of the Holders of the Warrants and/or
Warrant Securities requesting such registration, repurchase (i) any and all
Warrant Securities of such Holders at the higher of the Market Price per share
of Common Stock and per Underlying Warrant, determined as of (x) the date of the
notice sent pursuant to Section 7.3(a) or (y) the expiration of the period
specified in Section 7.4(a) and (ii) any and all Warrants of such Holders at
such Market Price less the Exercise Price of such Warrant. Such repurchase shall
be in immediately available funds and shall close within two (2) days after the
later of (i) the expiration of the period specified in Section 7.4(a) or (ii)
the delivery of the written notice of election specified in this Section 7.3(c).
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7.4 Covenants of the Company With Respect to Registration.
----------------------------------------------------------
In connection with any registration under Section 7.2 or 7.3
hereof, the Company covenants and agrees as follows:
(a) The Company shall use its best efforts to file a
registration statement within thirty (30) days of receipt of any demand
therefor, shall use its best efforts to have any registration statements
declared effective at the earliest possible time, and shall furnish
each Holder desiring to sell Warrant Securities such number of prospectuses as
shall reasonably be requested.
(b) The Company shall pay all costs (excluding fees and
expenses of Holder(s)' counsel and any underwriting or selling commissions),
fees and expenses in connection with all registration statements filed pursuant
to Sections 7.2 and 7.3(a) hereof including, without limitation, the Company's
legal and accounting fees, printing expenses, blue sky fees and expenses.
(c) The Company will take all necessary action which may be
required in qualifying or registering the Warrant Securities included in a
registration statement for offering and sale under the securities or blue sky
laws of such states as reasonably are requested by the Holder(s), provided that
the Company shall not be obligated to execute or file any general consent to
service of process or to qualify as a foreign corporation to do business under
the laws of any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the Warrant
Securities to be sold pursuant to any registration statement and each person, if
any, who controls such Holders within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), against all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any
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claim whatsoever) to which any of them may become subject under the Act, the
Exchange Act or otherwise, arising from such registration statement but only to
the same extent and with the same effect as the provisions pursuant to which the
Company has agreed to indemnify each of the Underwriters contained in Section 8
of the Underwriting Agreement.
(e) The Holder(s) of the Warrant Securities to be sold
pursuant to a registration statement, and their successors and assigns, shall
severally, and not jointly, indemnify the Company, its officers and directors
and each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, against all loss, claim,
damage, expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from information furnished by or on behalf of such Holders, or their successors
or assigns, for specific inclusion in such registration statement to the same
extent and with the same effect as the provisions contained in Section 8 of the
Underwriting Agreement pursuant to which the Underwriters have agreed to
indemnify the Company.
(f) Nothing contained in this Agreement shall be construed as
requiring the Holder(s) to exercise their Warrants prior to the initial filing
of any registration statement or the effectiveness thereof.
(g) The Company shall not permit the inclusion of any
securities other than the Warrant Securities to be included in any registration
statement filed pursuant to Section 7.3 hereof, or permit any other registration
statement to be or remain effective during the effectiveness of a registration
statement filed pursuant to Section 7.3 hereof (other than (i) shelf
registrations effective prior thereto and (ii) registrations on Form S-4 or
S-8), without the prior
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written consent of the Holders of the Warrants and Warrant Securities
representing a Majority of such securities.
(h) The Company shall furnish to each Holder participating in
the offering and to each underwriter, if any, a signed counterpart, addressed to
such Holder or underwriter, of (i) an opinion of counsel to the Company, dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement) relating to the due incorporation of
the Company, the validity of the shares being issued, the due execution and
delivery of the underwriting agreement and Rule 10b-5, and (ii) if such
registration includes an underwritten public offering, a "cold comfort" letter
dated the effective date of such registration statement and a letter dated the
date of the closing under the underwriting agreement signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such registration statement, covering substantially the
same matters with respect to such registration statement (and the prospectus
included therein) and, with respect to events subsequent to the date of such
financial statements, as are customarily covered in accountants' letters
delivered to underwriters in underwritten public offerings of securities.
(i) The Company shall as soon as practicable after the
effective date of the registration statement, and in any event within 15 months
thereafter, make "generally available to its security holders" (within the
meaning of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the Act and covering a period of at
least 12 consecutive months beginning after the effective date of the
registration statement.
(j) The Company shall deliver promptly to each Holder
participating in the offering requesting the correspondence and memoranda
described below and to the managing underwriters, copies of all correspondence
between the Commission and the Company, its
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counsel or auditors and all memoranda relating to discussions with the
Commission or its staff with respect to the registration statement and permit
each Holder and underwriter to do such investigation, upon reasonable advance
notice, with respect to information contained in or omitted from the
registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the NASD. Such investigation shall
include access to books, records and properties and opportunities to discuss the
business of the Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as any such Holder
or underwriter shall reasonably request.
(k) The Company shall enter into an underwriting agreement with
the managing underwriters selected for such underwriting by Holders holding a
Majority of the Warrant Securities requested pursuant to Section 7.3(a) to be
included in such underwriting, which may be the Representatives. Such agreement
shall be reasonably satisfactory in form and substance to the Company, each
Holder and such managing underwriter(s), and shall contain such representations,
warranties and covenants by the Company and such other terms as are customarily
contained in agreements of that type used by the managing underwriter(s). The
Holders shall be parties to any underwriting agreement relating to an
underwritten sale of their Warrant Securities whether pursuant to Section 7.2 or
Section 7.3(a) and may, at their option, require that any or all of the
representations, warranties and covenants of the Company to or for the benefit
of such underwriter(s) shall also be made to and for the benefit of such
Holders. Such Holders shall not be required to make any representations or
warranties to or agreements with the Company or the underwriter(s) except as
they may relate to such Holders and their intended methods of distribution.
(l) For purposes of this Agreement, the term "Majority" in
reference to the Holders of Warrants or Warrant Securities, shall mean in excess
of fifty percent (50%) of the
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then outstanding Warrants or Warrant Securities that (i) are not held by the
Company, an affiliate, officer, creditor, employee or agent thereof or any of
their respective affiliates, members of their family, persons acting as nominees
or in conjunction therewith and (ii) have not been resold to the public pursuant
to a registration statement filed with the Commission under the Act.
8. Adjustments to Exercise Price and Number of Securities.
---------------------------------------------------------
8.1 Subdivision and Combination.
-------------------------------
In case the Company shall at any time subdivide or combine the
outstanding shares of Common Stock, the Exercise Price shall forthwith be
proportionately decreased in the case of subdivision or increased in the case of
combination.
8.2 Stock Dividends and Distributions.
--------------------------------------
In case the Company shall pay a dividend in, or make a
distribution of, shares of Common Stock or of the Company's capital stock
convertible into Common Stock, the Exercise Price shall forthwith be
proportionately decreased. An adjustment made pursuant to this Section 8.2 shall
be made as of the record date for the subject stock dividend or distribution.
8.3 Adjustment in Number of Securities.
---------------------------------------
Upon each adjustment of the Exercise Price pursuant to the
provisions of this Section 8, the number of Warrant Securities issuable upon the
exercise at the adjusted exercise price of each Warrant shall be adjusted to the
nearest full amount by multiplying a number equal to the Exercise Price in
effect immediately prior to such adjustment by the number of Warrant Securities
issuable upon exercise of the Warrants immediately prior to such adjustment and
dividing the product so obtained by the adjusted Exercise Price.
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8.4 Definition of Common Stock.
-------------------------------
For the purpose of this Agreement, the term "Common Stock"
shall mean (i) the class of stock designated as Common Stock in the Certificate
of Incorporation of the Company as may be amended as of the date hereof, or (ii)
any other class of stock resulting from successive changes or reclassifications
of such Common Stock consisting solely of changes in par value, or from par
value to no par value, or from no par value to par value.
8.5 Merger or Consolidation.
----------------------------
In case of any consolidation of the Company with, or merger of
the Company with, or merger of the Company into, another corporation (other than
a consolidation or merger which does not result in any reclassification or
change of the outstanding Common Stock), the corporation formed by such
consolidation or merger shall execute and deliver to the Holder a supplemental
warrant agreement providing that the holder of each Warrant then outstanding or
to be outstanding shall have the right thereafter (until the expiration of such
Warrant) to receive, upon exercise of such Warrant, the kind and amount of
shares of stock and other securities and property receivable upon such
consolidation or merger, by a holder of the number of securities of the Company
for which such Warrant might have been exercised immediately prior to such
consolidation, merger, sale or transfer. Such supplemental warrant agreement
shall provide for adjustments which shall be identical to the adjustments
provided in Section 8. The above provision of this subsection shall similarly
apply to successive consolidations or mergers.
8.6 No Adjustment of Exercise Price in Certain Cases.
-----------------------------------------------------
No adjustment of the Exercise Price shall be made if the
amount of said adjustment shall be less than two (2) cents per Warrant Security,
provided, however, that in such case any adjustment that would otherwise be
required then to be made shall be carried forward and shall be made at the time
of and together with the next subsequent adjustment which,
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together with any adjustment so carried forward, shall amount to at least two
(2) cents per Warrant Security.
9. Exchange and Replacement of Warrant Certificates.
----------------------------------------------------
Each Warrant Certificate is exchangeable without expense, upon
the surrender thereof by the registered Holder at the principal executive office
of the Company, for a new Warrant Certificate of like tenor and date
representing in the aggregate the right to purchase the same number of Warrant
Securities in such denominations as shall be designated by the Holder thereof at
the time of such surrender.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Warrants, if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor, in lieu thereof.
10. Elimination of Fractional Interests.
----------------------------------------
The Company shall not be required to issue certificates representing fractions
of shares of Common Stock or Underlying Warrants upon the exercise of the
Warrants, nor shall it be required to issue scrip or pay cash in lieu of
fractional interests, it being the intent of the parties that all fractional
interests shall be eliminated by rounding any fraction up to the nearest whole
number of shares of Common Stock or Underlying Warrants or other securities,
properties or rights.
11. Reservation and Listing of Securities.
-----------------------------------------
The Company shall at all times reserve and keep available out of its authorized
shares of Common Stock, solely for the purpose of issuance upon the exercise of
the Warrants and the
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Underlying Warrants, such number of shares of Common Stock or other securities,
properties or rights as shall be issuable upon the exercise thereof. The Company
covenants and agrees that, upon exercise of the Warrants and payment of the
Exercise Price therefor, all shares of Common Stock, Underlying Warrants and
other securities issuable upon such exercise shall be duly and validly issued,
fully paid, non-assessable and not subject to the preemptive rights of any
stockholder. The Company further covenants and agrees that upon exercise of the
Underlying Warrants underlying the Warrants and payment of the respective
Underlying Warrant exercise price therefor, all shares of Common Stock and other
securities issuable upon such exercises shall be duly and validly issued, fully
paid, non-assessable and not subject to the preemptive rights of any
stockholder. As long as the Warrants shall be outstanding, the Company shall use
its best efforts to cause all shares of Common Stock issuable upon the exercise
of the Warrants and Underlying Warrants and all Underlying Warrants underlying
the Warrants to be listed (subject to official notice of issuance) on all
securities exchanges on which the Common Stock or the Public Warrants issued to
the public in connection herewith may then be listed and/or quoted on Nasdaq
SmallCap or Nasdaq.
12. Notices to Warrant Holders.
-------------------------------
Nothing contained in this Agreement shall be construed as
conferring upon the Holders the right to vote or to consent or to receive notice
as a stockholder in respect of any meetings of stockholders for the election of
directors or any other matter, or as having any rights whatsoever as a
stockholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a dividend
or distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained
19
earnings or capital surplus (in accordance with applicable law), as indicated by
the accounting treatment of such dividend or distribution on the books of the
Company; or
(b) the Company shall offer to all the holders of its Common
Stock any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the Company, or
any option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company
(other than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall be
proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
13. Underlying Warrants.
------------------------
The form of the certificate representing Underlying Warrants
(and the form of election to purchase shares of Common Stock upon the exercise
of Underlying Warrants and the form of assignment printed on the reverse
thereof) shall be substantially as set forth in Exhibit "A" to the Warrant
Agreement dated as of the date hereof by and between the Company and Atlas Stock
Transfer Corporation (the "Underlying Warrant Agreement"). Each Underlying
20
Warrant issuable upon exercise of the Warrants shall evidence the right to
initially purchase a fully paid and non-assessable share of Common Stock at an
initial purchase price of $__ per share [150% of the public offering price per
share of Common Stock] from ____, 2001 [one year after the effective date of the
offering] until 5:30 p.m. New York time on ________, 2005 [five years after the
effective date of the offering] at which time the Underlying Warrants, unless
the exercise period has been extended, shall expire. The exercise price of the
Underlying Warrants and the number of shares of Common Stock issuable upon the
exercise of the Underlying Warrants are subject to adjustment, whether or not
the Warrants have been exercised and the Underlying Warrants have been issued,
in the manner and upon the occurrence of the events set forth in Section 8 of
the Underlying Warrant Agreement, which is hereby incorporated herein by
reference and made a part hereof as if set forth in its entirety herein. Subject
to the provisions of this Agreement and upon issuance of the Underlying Warrants
underlying the Warrants, each registered holder of such Underlying Warrant shall
have the right to purchase from the Company (and the Company shall issue to such
registered holders) up to the number of fully paid and non-assessable shares of
Common Stock (subject to adjustment as provided herein and in the Underlying
Warrant Agreement), free and clear of all preemptive rights of stockholders,
provided that such registered holder complies with the terms governing exercise
of the Underlying Warrants set forth in the Underlying Warrant Agreement, and
pays the applicable exercise price, determined in accordance with the terms of
the Underlying Warrant Agreement. Upon exercise of the Underlying Warrants, the
Company shall forthwith issue to the registered holder of any such Underlying
Warrants in his name or in such name as may be directed by him, certificates for
the number of shares of Common Stock so purchased. Except as otherwise provided
in this Agreement, the Underlying Warrants underlying the Warrants shall be
governed in all respects by the terms of the Underlying Warrant Agreement. The
Underlying Warrants
21
shall be transferable in the manner provided in the Underlying Warrant
Agreement, and upon any such transfer, a new Underlying Warrant Certificate
shall be issued promptly to the transferee. The Company covenants to, and agrees
with, the Holder(s) that without the prior written consent of the Holder(s),
which will not be unreasonably withheld, the Underlying Warrant Agreement will
not be modified, amended, canceled, altered or superseded, and that the Company
will send to each Holder, irrespective of whether or not the Warrants have been
exercised, any and all notices required by the Underlying Warrant Agreement to
be sent to holders of Underlying Warrants.
14. Notices.
------------
All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made and
sent when delivered, or mailed by registered or certified mail, return receipt
requested or by FedEx or other recognized overnight courier:
(a) If to the registered Holder of the Warrants, to the
address of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3
hereof or to such other address as the Company may designate by notice to the
Holders.
15. Supplements and Amendments.
-------------------------------
The Company and the Representatives may from time to time
supplement or amend this Agreement without the approval of any Holders of
Warrant Certificates (other than the Representatives) in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any provisions herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
and the Representatives may deem necessary or desirable and which the Company
and the
22
Representatives deem shall not adversely affect the interests of the
Holders of Warrant Certificates.
16. Successors.
---------------
All the covenants and provisions of this Agreement shall be
binding upon and inure to the benefit of the Company, the Holders and their
respective successors and assigns hereunder.
17. Termination.
----------------
This Agreement shall terminate at the close of business on
_______, 2007. Notwithstanding the foregoing, the indemnification provisions of
Section 7 shall survive such termination until the close of business on _____,
2013.
18. Governing Law; Submission to Jurisdiction.
----------------------------------------------
This Agreement and each Warrant Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of New York
and for all purposes shall be construed in accordance with the laws of said
State without giving effect to the rules of said State governing the conflicts
of laws.
The Company, the Representatives and the Holders hereby agree
that any action, proceeding or claim against it arising out of, or relating in
any way to, this Agreement shall be brought and enforced in the courts of the
State of New York or of the United States of America for the Southern District
of New York, and irrevocably submits to such jurisdiction, which jurisdiction
shall be exclusive. The Company, the Representatives and the Holders hereby
irrevocably waive any objection to such exclusive jurisdiction or inconvenient
forum. Any such process or summons to be served upon any of the Company, the
Representatives and the Holders (at the option of the party bringing such
action, proceeding or claim) may be served by transmitting a copy thereof, by
registered or certified mail, return receipt requested, postage
23
prepaid, addressed to it at the address set forth in Section 14 hereof.
Such mailing shall be deemed personal service and shall be legal and
binding upon the party so served in any action, proceeding or claim. The
Company, the Representatives and the Holders agree that the prevailing
party(ies) in any such action or proceeding shall be entitled to recover from
the other party(ies) all of its/their reasonable legal costs and expenses
relating to such action or proceeding and/or incurred in connection with the
preparation therefore.
19. Entire Agreement; Modification.
-----------------------------------
This Agreement (including the Underwriting Agreement and the
Underlying Warrant Agreement to the extent portions thereof are referred to
herein) contains the entire understanding between the parties hereto with
respect to the subject matter hereof and may not be modified or amended except
by a writing duly signed by the party against whom enforcement of the
modification or amendment is sought.
20. Severability.
-----------------
If any provision of this Agreement shall be held to be invalid
or unenforceable, such invalidity or unenforceability shall not affect any other
provision of this Agreement.
21. Captions.
-------------
The caption headings of the Sections of this Agreement are for
convenience of reference only and are not intended, nor should they be construed
as, a part of this Agreement and shall be given no substantive effect.
22. Benefits of this Agreement.
------------------------------
Nothing in this Agreement shall be construed to give to any
person or corporation other than the Company and the Representatives and any
other registered Holder(s) of the Warrant Certificates or Warrant Securities any
legal or equitable right, remedy or claim under this Agreement; and this
Agreement shall be for the sole benefit of the Company and the
24
Representatives and any other registered Holders of Warrant Certificates or
Warrant Securities.
23. Counterparts.
-----------------
This Agreement may be executed in any number of counterparts
and each of such counterparts shall for all purposes be deemed to be an
original, and such counterparts shall together constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, as of the day and year first above written.
XXXXXXX.XXX, INC.
By:
--------------------------
Name:
Title:
Attest:
----------------------------------
Secretary
XXXXX & COMPANY, INC
By:
--------------------------
Name:
Title:
XXXXX SECURITIES CORPORATION
By:
--------------------------
Name:
Title:
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME, ____, 2005
No. W-
Warrants to Purchase __ shares
of Common Stock and/or
_____ Underlying Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that __________________, or
registered assigns, is the registered holder of ___________ Warrants to purchase
initially, at any time from ______, 2001 until 5:30 p.m. New York time on
______, 2005 ("Expiration Date"), up to __________ fully-paid and non-assessable
shares of common stock, $0.001 par value ("Common Stock"), of XXXXXXX.XXX, INC.,
a Delaware corporation (the "Company"), and ___ Underlying Warrants of the
Company (one Underlying Warrant entitling the owner to purchase one fully-paid
and non-assessable share of Common Stock) at the initial exercise price, subject
to adjustment in certain events (the "Exercise Price"), of $_____ per share of
Common Stock and $_______ per Underlying Warrant upon surrender of this Warrant
Certificate and payment of the Exercise Price at an office or agency of the
Company, but subject to the conditions set forth herein and in the warrant
agreement dated as of ______, 2000 between the Company and XXXXX & COMPANY, INC.
and XXXXX SECURITIES CORPORATION (the "Warrant Agreement"). Payment of the
Exercise Price shall be made by certified or official bank check in New York
Clearing House funds payable to the order of the Company or by surrender of this
Warrant Certificate.
No Warrant may be exercised after 5:30 p.m., New York time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, hereby shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants issued pursuant to the Warrant Agreement,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the type and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter, or otherwise impair, the rights
of the holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Warrant Agreement, without any charge except for any tax or
other governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced
by this Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof
as the absolute owner(s) of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and for
all other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined
in the Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.
Dated as of ______, 2000
XXXXXXX.XXX, INC.
By: ________________________________
Name:
Title:
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1]
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to purchase:
o __________________ shares of Common Stock;
o __________________ Underlying Warrants;
o __________________ shares of Common Stock together with an equal
number of Underlying Warrants; or
o __________________ shares of Common Stock together with
o __________________ Underlying Warrants.
and herewith tenders in payment for such securities a certified or official bank
check payable in New York Clearing House Funds to the order of XxxxXXX.xxx, Inc.
in the amount of $_______________________, all in accordance with the terms of
Section 3.1 of the Representatives' Warrant Agreement dated as of ______, 2000
between XxxxXXX.xxx, Inc. and Xxxxx & Company, Inc and Xxxxx Securities
Corporation. The undersigned requests that a certificate for such securities be
registered in the name of whose address is ___________________ and that such
Certificate be delivered to whose address is _______________________.
Dated:
Signature ____________________________
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant
Certificate.)
___________________________________
(Insert Social Security or Other Identifying Number
of Holder)
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.2]
The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to purchase:
o __________________ shares of Common Stock;
o __________________ Underlying Warrants;
o __________________ shares of Common Stock together with an equal
number of Underlying Warrants; or
o __________________ shares of Common Stock together with
o __________________ Underlying Warrants.
and herewith tenders in payment for such securities ________ Warrants all in
accordance with the terms of Section 3.2 of the Representatives' Warrant
Agreement dated as of ______, 2000 between XxxxXXX.xxx, Inc. and Xxxxx &
Company, Inc and Xxxxx Securities Corporation. The undersigned requests that a
certificate for such securities be registered in the name of _____________ whose
address is______________and that such Certificate be delivered to ____________
whose address is ________________.
Dated:
Signature ___________________________
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant
Certificate.)
_____________________________________
(Insert Social Security or Other Identifying Number
of Holder)
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED ___________________________ hereby
sells, assigns and transfers unto
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated: Signature: __________________________
(Signature must conform in
all respects to name of
holder as specified on the
face of the Warrant
Certificate.)
Insert Social Security or Other Identifying Number
of Assignee)
