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WARRANT AGREEMENT
Dated as of _______________ __, 1997
by and between
COLOR SPOT NURSERIES, INC.
and
AMERICAN STOCK TRANSFER AND TRUST COMPANY,
as Warrant Agent
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WARRANT AGREEMENT, dated as of ______________ __, 1997, between Color
Spot Nurseries, Inc., a Delaware corporation (the "COMPANY"), and American Stock
Transfer and Trust Company, as warrant agent (the "WARRANT AGENT").
WHEREAS, the Company has entered into an underwriting agreement (the
"UNDERWRITING AGREEMENT"), dated _____________ __, 1997 with BT Alex. Xxxxx (the
"UNDERWRITER") in which the Company has agreed to sell to the Underwriter
$40,000,000 aggregate principal amount of units (the "UNITS"), consisting of
40,000 shares of the Company's __% Series A Cumulative Preferred Stock (the
"PREFERRED STOCK") and 825,000 warrants, as hereinafter described (the
"WARRANTS"), to purchase up to an aggregate of 825,000 shares of common stock,
par value $0.001 per share (the "COMMON STOCK"), of the Company (the Common
Stock issuable upon exercise of the Warrants being referred to herein as the
"WARRANT SHARES"). The Preferred Stock will be governed by the Company's
Certificate of Designation, Preferences and Relative, Participating, Optional
and Other Special Rights of Preferred Stock and Qualifications, Limitations and
Restrictions relating to the Preferred Stock (the "CERTIFICATE OF DESIGNATION").
The transfer agent for the Preferred Stock will be American Stock Transfer and
Trust Company (the "TRANSFER AGENT") unless and until a successor is selected by
the Company pursuant to the Certificate of Designation. Each Unit shall consist
of one share of Preferred Stock and 20.625 Warrants. Each Warrant entitles the
holder of the Warrant upon exercise to receive from the Company, as adjusted as
provided herein, one fully paid and nonassessable share of Common Stock of the
Company in exchange for the Exercise Price (as hereinafter defined), as provided
herein;
WHEREAS, the Warrants and the Preferred Stock will be sold in units
and shall be immediately separately transferable; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance of Warrant Certificates (as hereinafter defined) and other matters as
provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. APPOINTMENT OF WARRANT AGENT. The Company hereby appoints
the Warrant Agent to act as agent for the Company in accordance with the
instructions set forth hereinafter in this Agreement, and the Warrant Agent
hereby accepts such appointment.
SECTION 2. ISSUANCE OF WARRANTS. Warrants shall be originally issued
in connection with the issuance of the Units and shall be immediately separately
transferable from the Preferred Stock.
SECTION 3. WARRANT CERTIFICATES. The Warrants will be issued in
global form (the "GLOBAL WARRANTS"), substantially in the form of Exhibit A
(including the text accompanying footnotes 1 and 2 thereto but excluding such
footnotes), and in definitive form (the "DEFINITIVE WARRANTS"), substantially in
the form of Exhibit A (not including footnotes 1 and 2 thereto or the text
accompanying such footnotes). Each Definitive Warrant shall represent such of
the outstanding Warrants as shall be specified therein and each Global Warrant
shall provide that it shall represent the aggregate amount of outstanding
Warrants from time to time endorsed thereon and that the aggregate amount of
outstanding Warrants represented thereby may from time to time be reduced or
increased, as appropriate. Any endorsement of a Global Warrant to reflect the
amount of any increase or decrease in the amount of outstanding Warrants
represented thereby shall be made by the Warrant Agent and the depositary with
respect to the Global Warrants (the "DEPOSITARY") in accordance with
instructions given by the holder
thereof. The Depository Trust Company shall act as the Depositary until a
successor shall be appointed by the Company and the Warrant Agent. Upon
request, a holder may receive from the Depositary and the Warrant Agent
separate Definitive Warrants as set forth in Section 7 below. Any
certificates (the "WARRANT CERTIFICATES") evidencing the Global Warrants or
the Definitive Warrants to be delivered pursuant to this Agreement shall be
substantially in the form set forth in Exhibit A attached hereto.
SECTION 4. EXECUTION OF WARRANT CERTIFICATES. Warrant Certificates
shall be signed on behalf of the Company by its Chairman of the Board, Chief
Executive Officer, Chief Financial Officer, President or Vice President and
Secretary or an Assistant Secretary. Each such signature upon the Warrant
Certificates may be in the form of a facsimile signature of the present or any
future Chairman of the Board, Chief Executive Officer, Chief Financial Officer,
President or Vice President and Secretary or Assistant Secretary and may be
imprinted or otherwise reproduced on the Warrant Certificates and for that
purpose the Company may adopt and use the facsimile signature of any person who
shall have been Chairman of the Board, Chief Executive Officer, Chief Financial
Officer, President or Vice President and Secretary or Assistant Secretary,
notwithstanding the fact that at the time the Warrant Certificates shall be
countersigned and delivered or disposed of he or she shall have ceased to hold
such office.
In case any officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer before the Warrant
Certificates so signed shall have been countersigned by the Warrant Agent, or
disposed of by the Company, such Warrant Certificates nevertheless may be
countersigned and delivered or disposed of as though such person had not ceased
to be such officer of the Company; and any Warrant Certificate may be signed on
behalf of the Company by any person who, at the actual date of the execution of
such Warrant Certificate, shall be a proper officer of the Company to sign such
Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such officer.
Warrant Certificates shall be dated the date of countersignature by
the Warrant Agent.
SECTION 5. LEGENDING OF WARRANTS.
Upon original issuance, the Warrant Certificates will bear the
following legend (the "WARRANT LEGEND"):
THE COMMON STOCK, PAR VALUE $0.001, OF THE COMPANY (THE "COMMON
STOCK") FOR WHICH THIS WARRANT IS EXERCISABLE MAY NOT BE OFFERED OR SOLD IN
THE UNITED STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND ANY APPLICABLE STATE SECURITIES LAWS OR
AN APPLICABLE EXEMPTION FROM REGISTRATION REQUIREMENTS. ACCORDINGLY, NO
WARRANT HOLDER SHALL BE ENTITLED TO EXERCISE SUCH HOLDER'S WARRANTS AT ANY
TIME UNLESS, AT THE TIME OF EXERCISE, (i) A REGISTRATION STATEMENT UNDER
THE SECURITIES ACT RELATING TO THE SHARES OF COMMON STOCK ISSUABLE UPON THE
EXERCISE OF THIS WARRANT (THE "WARRANT SHARES") HAS BEEN FILED WITH, AND
DECLARED EFFECTIVE BY, THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"),
AND NO STOP ORDER SUSPENDING THE EFFECTIVENESS OF SUCH REGISTRATION
STATEMENT HAS BEEN ISSUED BY THE SEC OR (ii) THE ISSUANCE OF THE WARRANT
SHARES IS PERMITTED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT.
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SECTION 6. REGISTRATION AND COUNTERSIGNATURE. The Warrant Agent, on
behalf of the Company, shall number and register the Warrant Certificates in a
register as they are issued by the Company.
Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. The
Warrant Agent shall, upon written instructions of the Chairman of the Board,
Chief Executive Officer, President, Vice President or the Chief Financial
Officer of the Company, initially countersign and deliver Warrants entitling the
holders thereof to purchase not more than the number of Warrant Shares referred
to above in the first recital hereof and shall countersign and deliver Warrants
as otherwise provided in this Agreement.
The Company and the Warrant Agent may deem and treat the registered
holder(s) of the Warrant Certificates as the absolute owner(s) thereof
(notwithstanding any notation of ownership or other writing thereon made by
anyone), for all purposes, and neither the Company nor the Warrant Agent shall
be affected by any notice to the contrary.
SECTION 7. REGISTRATION OF TRANSFERS AND EXCHANGES.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE WARRANTS. When Definitive
Warrants are presented to the Warrant Agent with a request:
(i) to register the transfer of the Definitive Warrants; or
(ii) to exchange such Definitive Warrants for an equal number of Definitive
Warrants of other authorized denominations,
the Warrant Agent shall register the transfer or make the exchange as requested
if its requirements for such transactions are met; PROVIDED, HOWEVER, that the
Definitive Warrants presented or surrendered for registration of transfer or
exchange shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Warrant Agent, duly executed by the holder
thereof or by his attorney, duly authorized in writing. Upon any such
registration of transfer, a new Definitive Warrant shall be issued to the
transferee(s) and the surrendered Definitive Warrant shall be cancelled by the
Warrant Agent. Cancelled Definitive Warrants shall thereafter be disposed of in
a manner satisfactory to the Company.
(b) EXCHANGE OR TRANSFER OF A DEFINITIVE WARRANT FOR A BENEFICIAL
INTEREST IN A GLOBAL WARRANT. A Definitive Warrant may be exchanged for a
beneficial interest in a Global Warrant upon satisfaction of the requirements
set forth below. Upon receipt by the Warrant Agent of a Definitive Warrant,
duly endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Warrant Agent, together with written instructions directing
the Warrant Agent to make, or to direct the Depositary to make, an endorsement
on the Global Warrant to reflect an increase in the number of Warrants
represented by the Global Warrant, then the Warrant Agent shall cancel such
Definitive Warrant and cause, or direct the Depositary to cause, in accordance
with the standing instructions and procedures existing between the Depositary
and the Warrant Agent, the number of Warrants represented by the Global Warrant
to be increased accordingly. If no Global Warrants are then outstanding, the
Company shall issue and the Warrant Agent shall countersign a new Global Warrant
representing the appropriate number of Warrants and Warrant Shares.
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(c) TRANSFER AND EXCHANGE OF GLOBAL WARRANTS. The transfer and
exchange of Global Warrants or beneficial interests therein shall be effected
through the Depositary, in accordance with this Warrant Agreement and the
procedures of the Depositary therefor.
(d) EXCHANGE OF A BENEFICIAL INTEREST IN A GLOBAL WARRANT FOR A
DEFINITIVE WARRANT.
(i) Any person having a beneficial interest in a Global Warrant may upon
request exchange such beneficial interest for a Definitive Warrant.
Upon receipt by the Warrant Agent of written instructions or such
other form of instructions as is customary for the Depositary from the
Depositary or its nominee on behalf of any person having a beneficial
interest in a Global Warrant then the Warrant Agent shall cause, in
accordance with the standing instructions and procedures existing
between the Depositary and Warrant Agent, the number of Warrants
represented by the Global Warrant to be reduced and, following such
reduction, the Company shall execute and the Warrant Agent shall
countersign and deliver to the transferee a Definitive Warrant.
(ii) Definitive Warrants issued in exchange for a beneficial interest in a
Global Warrant pursuant to this Section 7(d) shall be registered in
such names as the Depositary, pursuant to instructions from its direct
or indirect participants or otherwise, shall instruct the Warrant
Agent. The Warrant Agent shall deliver such Definitive Warrants to
the persons in whose names such Warrants are so registered.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL WARRANTS.
Notwithstanding any other provisions of this Warrant Agreement (other than the
provisions set forth in subsection (f) of this Section 7), a Global Warrant may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) COUNTERSIGNING OF DEFINITIVE WARRANTS IN ABSENCE OF DEPOSITARY.
If at any time:
(i) the Depositary for the Global Warrants notifies the Company that the
Depositary is unwilling or unable to continue as Depositary for the
Global Warrants and a successor Depositary for the Global Warrants is
not appointed by the Company within 90 days after delivery of such
notice; or
(ii) the Company, in its sole discretion, notifies the Warrant Agent in
writing that it elects to cause the issuance of Definitive Warrants
under this Warrant Agreement,
then the Company shall execute, and the Warrant Agent, upon written instructions
signed by two officers of the Company, shall countersign and deliver Definitive
Warrants, in an aggregate number equal to the number of Warrants represented by
Global Warrants, in exchange for such Global Warrants.
(g) CANCELLATION OF GLOBAL WARRANT. At such time as all beneficial
interests in Global Warrants have either been exchanged for Definitive Warrants,
redeemed, repurchased or cancelled, all Global Warrants shall be returned to or
retained and cancelled by the Warrant Agent.
(h) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF WARRANTS.
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(i) To permit registrations of transfers and exchanges, the Company shall
execute and the Warrant Agent is hereby authorized to countersign, in
accordance with the provisions of Section 6 and this Section 7,
Definitive Warrants and Global Warrants as required pursuant to the
provisions of this Section 7.
(ii) All Definitive Warrants and Global Warrants issued upon any
registration of transfer or exchange of Definitive Warrants or Global
Warrants shall be the valid obligations of the Company, entitled to
the same benefits under this Warrant Agreement, as the Definitive
Warrants or Global Warrants surrendered upon such registration of
transfer or exchange.
(iii) Prior to due presentment for registration of transfer of any
Warrant, the Warrant Agent and the Company may deem and treat the
person in whose name any Warrant is registered as the absolute
owner of such Warrant and neither the Warrant Agent nor the
Company shall be affected by notice to the contrary.
(iv) No service charge shall be made to a holder for any registration,
transfer or exchange.
SECTION 8. TERMS OF WARRANTS; EXERCISE OF WARRANTS. Subject to the
terms of this Agreement, each Warrant holder shall have the right, which may be
exercised until 5:00 p.m., New York, New York time on __________ __, 2002 (the
"EXPIRATION DATE"), to exercise each Warrant and receive from the Company the
number of fully paid and nonassessable Warrant Shares which the holder may at
the time be entitled to receive on exercise of such Warrants and payment of the
Exercise Price then in effect for such Warrant Shares; PROVIDED, HOWEVER, that
no Warrant holder shall be entitled to exercise such holder's Warrants at any
time unless, at the time of exercise, (i) a registration statement under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), relating to the
Warrant Shares has been filed with, and declared effective by, the Securities
and Exchange Commission (the "SEC"), and no stop order suspending the
effectiveness of such registration statement has been issued by the SEC or (ii)
the issuance of the Warrant Shares is permitted pursuant to an exemption from
the registration requirements of the Securities Act. Each Warrant, when
exercised, will entitle the holder thereof to purchase one fully paid and
nonassessable share of Common Stock at the Exercise Price. Any Warrant not
exercised prior to the Expiration Date shall become void and all rights
thereunder and all rights in respect thereof under this Agreement shall cease as
of such time. No adjustments as to dividends will be made upon exercise of the
Warrants.
The Warrants may be exercised by surrendering to the Warrant Agent the
Warrant Certificates evidencing the Warrants to be exercised with the
accompanying form of election to purchase properly completed and executed,
together with payment of the Exercise Price. Payment of the Exercise Price may
be made (A) by tendering Warrants having a fair market value equal to the
Exercise Price, (B) in the form of cash or by certified or official bank check
payable to the order of the Company or (C) by any combination of Warrants and
cash. For purposes of clause (A) above, the fair market value of the Warrants
shall be determined as follows: (A) if the Common Stock is publicly traded and
listed on the Nasdaq National Market or a national securities exchange, the fair
market value shall be equal to the number of shares represented by such Warrant
multiplied by the greater of (1) the difference between (a) the average closing
price as quoted on the Nasdaq National Market of the Common Stock for each of
the ten trading days immediately prior to the exercise date (or, if the Common
Stock is listed on a national securities exchange, the average closing price as
reported on such national securities exchange during such ten trading day
period) and (b) the Exercise Price, and (2) zero; or (B) if the Common Stock is
not publicly traded, or otherwise is not listed on a national securities
exchange, the fair market value of the Warrants
5
shall be equal to the value per share as determined in good faith by the
Board of Directors of the Company (the "BOARD OF DIRECTORS").
In the event that Warrants are surrendered by a Warrant holder in
payment of the Exercise Price, the Warrant Agent shall notify the Company of
such, which notice shall also include the amount of the Exercise Price and the
amount of cash, if any, received by the Warrant Agent as partial payment of the
Exercise Price. Within a reasonable time of receiving such notice, the Company
shall advise the Warrant Agent whether the Warrant Agent has received payment in
full of the Exercise Price.
Subject to the provisions of Section 10 hereof, upon such surrender of
Warrants and payment of the Exercise Price, the Company shall issue and cause to
be delivered with all reasonable dispatch to or upon the written order of the
holder and in such name or names as the Warrant holder may designate, a
certificate or certificates for the number of full Warrant Shares issuable upon
the exercise of such Warrants together with cash, if any, as provided in Section
16 hereof; PROVIDED, HOWEVER, that if any consolidation, merger or lease or sale
of assets is proposed to be effected by the Company as described in subsection
(i) of Section 14 hereof, or a tender offer or an exchange offer for shares of
Common Stock of the Company shall be made, upon such surrender of Warrants and
payment of the Exercise Price as aforesaid, the Successor (as hereinafter
defined), the Company or the Warrant Agent, as applicable, shall, as soon as
possible, but in any event not later than two business days thereafter, issue
and cause to be delivered the full number of Warrant Shares issuable upon the
exercise of such Warrants in the manner described in this sentence together with
cash, if any, as provided in Section 16 hereof. Such certificate or
certificates shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record of such
Warrant Shares as of the date of the surrender of such Warrants and payment of
the Exercise Price. No fractional shares shall be issued upon exercise of any
Warrants in accordance with Section 16 hereof. The Company will pay to the
holder of the Warrant at the time of exercise an amount in cash equal to the
current market value of any such fractional share of Common Stock less a
corresponding fraction of the Exercise Price.
The Warrants shall be exercisable, at the election of the holders
thereof, either in full or from time to time in part (in whole shares) and, in
the event that a certificate evidencing Warrants is exercised in respect of
fewer than all of the Warrant Shares issuable on such exercise at any time prior
to the Expiration Date, a new certificate evidencing the remaining Warrant or
Warrants will be issued, and the Warrant Agent is hereby irrevocably authorized
to countersign and to deliver the required new Warrant Certificate or
Certificates pursuant to the provisions of this Section and of Section 4 of this
Agreement, and the Company, whenever required by the Warrant Agent, will supply
the Warrant Agent with Warrant Certificates duly executed on behalf of the
Company for such purpose.
All Warrant Certificates surrendered upon exercise of Warrants shall
be cancelled by the Warrant Agent. Such cancelled Warrant Certificates shall be
held by the Warrant Agent until termination of its duties hereunder, at which
time it shall deliver such cancelled Warrants to any successor Warrant Agent, if
applicable, otherwise to the Company. Upon receipt by the Company, such
cancelled Warrant Certificates shall then be disposed of by the Company in
accordance with applicable law. The Warrant Agent shall account promptly to the
Company with respect to Warrants exercised and concurrently pay to the Company
all monies received by the Warrant Agent for the purchase of the Warrant Shares
through the exercise of such Warrants.
All certificates representing Warrant Shares issued in a transaction
exempt from registration under the Securities Act pursuant to Section 4(2)
thereof shall bear the following legend:
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THIS SECURITY MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED AND ANY
APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM
REGISTRATION REQUIREMENTS.
The Warrant Agent shall keep copies of this Agreement and any notices
given or received hereunder available for inspection by the holders during
normal business hours at its office. The Company shall supply the Warrant Agent
from time to time with such numbers of copies of this Agreement as the Warrant
Agent may request.
SECTION 9. REPORTS. Whether or not required by the rules and
regulations of the SEC, so long as any Warrants are outstanding, the Company
shall furnish to the Warrant Agent and mail to the holders of Warrants within 15
days after it files them with the Commission copies of the annual and quarterly
reports and the information, documents, and other reports that the Company is
required to file with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act ("SEC Reports"). In the event the Company is not required or shall
cease to be required to file SEC Reports, pursuant to the Securities Exchange
Act of 1934, as amended from time to time (the "Exchange Act"), the Company will
nevertheless continue to file such reports with the Commission (unless the
Commission will not accept such a filing). In the event the Company is not
required or shall cease to be required to file SEC Reports and the Commission
will not accept the filing of SEC Reports, so long as any Warrants are
outstanding, the Company will furnish copies of such SEC Reports to the holders
of Warrants at the time the Company is required to make such information
available to investors who request it in writing.
SECTION 10. PAYMENT OF TAXES. No service charge shall be made to any
holder of a Warrant for any exercise, exchange or registration of transfer of
Warrant Certificates, and the Company will pay all documentary stamp taxes
attributable to the initial issuance of Warrant Shares upon the exercise of
Warrants; PROVIDED, HOWEVER, that the Company shall not be required to pay any
tax or taxes which may be payable in respect of any transfer involved in the
issue of any Warrant Certificates or any certificates for Warrant Shares in a
name other than that of the registered holder of a Warrant Certificate
surrendered upon the exercise of a Warrant, and the Company shall not be
required to issue or deliver such Warrant 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.
SECTION 11. MUTILATED OR MISSING WARRANT CERTIFICATES. If any of the
Warrant Certificates shall be mutilated, lost, stolen or destroyed, the Company
may in its discretion issue and the Warrant Agent may countersign, in exchange
and substitution for and upon cancellation of the mutilated Warrant Certificate,
or in lieu of and in substitution for the Warrant Certificate lost, stolen or
destroyed, a new Warrant Certificate of like tenor and representing an
equivalent number of Warrants, but only upon receipt of evidence satisfactory to
the Company and the Warrant Agent of such loss, theft or destruction of such
Warrant Certificate and indemnity and security therefor, if requested, also
satisfactory to them. Applicants for such substitute Warrant Certificates shall
also comply with such other reasonable regulations and pay such other reasonable
charges as the Company or the Warrant Agent may prescribe.
SECTION 12. RESERVATION OF WARRANT SHARES. The Company will at all
times reserve and keep available, free from preemptive rights, out of the
aggregate of its authorized but unissued Common Stock or authorized and issued
Common Stock held in its treasury, for the purpose of enabling it to satisfy
7
any obligation to issue Warrant Shares upon exercise of Warrants, the maximum
number of shares of Common Stock which may then be deliverable upon the
exercise of all outstanding Warrants.
The Company or the transfer agent for the Common Stock (the "COMMON
STOCK TRANSFER AGENT") and every subsequent transfer agent for any shares of the
Company's capital stock issuable upon the exercise of any of the rights of
purchase represented by the Warrants will be irrevocably authorized and directed
at all times to reserve such number of authorized shares as shall be required
for such purpose. The Company will keep a copy of this Agreement on file with
the Common Stock Transfer Agent and with every subsequent transfer agent for any
shares of the Company's capital stock issuable upon the exercise of the rights
of purchase represented by the Warrants. The Warrant Agent is hereby
irrevocably authorized to requisition from time to time from such Common Stock
Transfer Agent the stock certificates required to honor outstanding Warrants
upon exercise thereof in accordance with the terms of this Agreement. The
Company will supply such Common Stock Transfer Agent with duly executed
certificates for such purposes and will provide or otherwise make available any
cash which may be payable as provided in Section 16 hereof. The Company will
furnish such Common Stock Transfer Agent a copy of all notices of adjustments
and certificates related thereto, transmitted to each holder pursuant to Section
17 hereof.
The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants will be, upon payment of the Exercise Price and issuance
thereof, fully paid, nonassessable, free of preemptive rights and free from all
taxes, liens, charges and security interests with respect to the issue thereof.
SECTION 13. OBTAINING STOCK EXCHANGE LISTINGS. The Company shall also
from time to time take all action necessary so that the Warrant Shares, promptly
upon their issuance upon the exercise of Warrants, will be listed on the Nasdaq
National Market or such other principal securities exchanges, interdealer
quotation systems and markets within the United States of America, if any, on
which other shares of Common Stock are then listed or quoted.
SECTION 14. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES
ISSUABLE. The Exercise Price and the number of Warrant Shares issuable upon the
exercise of each Warrant are subject to adjustment from time to time upon the
occurrence of the events enumerated in this Section 14. For purposes of this
Section 14, "COMMON STOCK" means the Common Stock and any other stock of the
Company, however designated, that has the right (subject to any prior rights of
any class or series of preferred stock) to participate in any distribution of
the assets or earnings of the Company without limit as to per share amount.
(a) ADJUSTMENT FOR CHANGE IN CAPITAL STOCK.
If the Company:
(i) pays a dividend or makes a distribution on its Common Stock
in shares of its Common Stock;
(ii) subdivides its outstanding shares of Common Stock into a
greater number of shares;
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(iii) combines its outstanding shares of Common Stock into a
smaller number of shares;
(iv) makes a distribution on its Common Stock in shares of its
capital stock other than Common Stock; or
(v) issues by reclassification of its Common Stock any shares
of its capital stock,
then the Exercise Price and the number and kind of shares of capital stock of
the Company issuable upon the exercise of a Warrant (as in effect immediately
prior to such action) shall be proportionately adjusted so that the holder of
any Warrant thereafter exercised may receive the aggregate number and kind of
shares of capital stock of the Company which he would have owned immediately
following such action if such Warrant had been exercised immediately prior to
such action.
The adjustment shall become effective immediately after the record
date in the case of a dividend or distribution and immediately after the
effective date in the case of a subdivision, combination or reclassification.
If after an adjustment a holder of a Warrant upon exercise may receive
shares of two or more classes or series of capital stock of the Company, the
Company shall determine the allocation of the adjusted Exercise Price between
the classes or series of capital stock. After such allocation, the exercise
privilege and the Exercise Price of each class or series of capital stock shall
thereafter be subject to adjustment on terms comparable to those applicable to
Common Stock in this Section 14.
Such adjustment shall be made successively whenever any event listed
above shall occur.
(b) ADJUSTMENT FOR RIGHTS ISSUE.
If the Company distributes any rights, options or warrants to all
holders of its Common Stock entitling them for a period expiring within 60 days
after the record date mentioned below to purchase shares of Common Stock or
securities convertible into, or exchangeable or exercisable for, Common Stock at
a price per share (or with an initial conversion, exchange or exercise price)
less than the current market price per share on that record date, the Exercise
Price shall be adjusted in accordance with the following formula:
O + N X P
-----
E1 = E x M
---------
O + N
where:
E1 = the adjusted Exercise Price.
E = the current Exercise Price.
O = the number of shares of Common Stock outstanding on the record date.
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N = the number of additional shares of Common Stock offered.
P = the offering price per share of the additional shares.
M = the current market price per share of Common Stock on the record date.
The adjustment pursuant to this subsection (b) shall be made
successively whenever any such rights, options or warrants are issued and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive the rights, options or warrants. If at the end
of the period during which such rights, options or warrants are exercisable, not
all rights, options or warrants shall have been exercised, the Exercise Price
shall be immediately readjusted to what it would have been if "N" in the above
formula had been the number of shares actually issued.
(c) ADJUSTMENT FOR OTHER DISTRIBUTIONS.
If the Company distributes to all holders of its Common Stock any of
its assets (including cash), debt securities, preferred stock or any rights or
warrants to purchase debt securities, assets or other securities of the Company,
the Exercise Price shall be adjusted in accordance with the following formula:
E1 = E x M - F
-----
M
where:
E1 = the adjusted Exercise Price.
E = the current Exercise Price.
M = the current market price per share of Common Stock on the record date
mentioned below.
F = the fair market value on the record date of the assets, securities,
rights or warrants applicable to one share of Common Stock. The Board
of Directors shall determine the fair market value.
The adjustment pursuant to this subsection (c) shall be made
successively whenever any such distribution is made and shall become effective
immediately after the record date for the determination of stockholders entitled
to receive the distribution.
Notwithstanding the foregoing, if "F" in the above formula equals or
exceeds "M" in the above formula, then "M" in the above formula shall be equal
to the fair market value per share of the Common Stock on the record date as
determined in good faith by the Board of Directors and described in a Board
resolution which shall be filed with the Warrant Agent.
This subsection (c) does not apply to rights, options or warrants
referred to in subsection (b) of this Section 14.
10
(d) CURRENT MARKET PRICE.
In subsections (b) and (c) of this Section 14 and in Section 16 the
current market price per share of Common Stock on any date is the average of
the Quoted Prices of the Common Stock for 30 consecutive trading days
commencing 45 trading days before the date in question. The "QUOTED PRICE"
of the Common Stock is the last reported sales price of the Common Stock as
reported by the Nasdaq National Market or if the Common Stock is listed on a
securities exchange, the last reported sales price of the Common Stock on
such exchange which shall be for consolidated trading if applicable to such
exchange, or if not so reported or listed, the last reported bid price of the
Common Stock. In the absence of one or more such quotations, the Board of
Directors shall determine the current market price on such basis as it in
good faith considers appropriate.
(e) WHEN DE MINIMIS ADJUSTMENT MAY BE DEFERRED.
No adjustment in the Exercise Price need be made unless the
adjustment would require an increase or decrease of at least 1% in the
Exercise Price. Any adjustments that are not made shall be carried forward
and taken into account in any subsequent adjustment.
All calculations under this Section 14 shall be made to the nearest
1/1000th of a cent or to the nearest 1/1000th of a share, as the case may be.
(f) WHEN NO ADJUSTMENT REQUIRED.
No adjustment need be made for a transaction referred to in
subsections (a), (b) or (c) of this Section 14 if Warrant holders are to
participate in the transaction on a basis and with notice that the Board of
Directors determines to be fair and appropriate in light of the basis and
notice on which holders of Common Stock participate in the transaction.
No adjustment need be made for rights to purchase Common Stock
pursuant to any of the Company's plan for reinvestment of dividends or
interest.
No adjustment need be made for a change in the par value, or from
par value to no par value, or from no par value to par value, of the Common
Stock.
To the extent the Warrants become convertible into cash, no
adjustment need be made thereafter as to the cash. Interest will not accrue
on the cash.
Notwithstanding any other provision of this Section 14, if an
adjustment to the Exercise Price would reduce the Exercise Price below the
then par value per share of the Common Stock, then the Company shall prior to
such adjustment to the Exercise Price reduce the par value per share of the
Common Stock so that the Exercise after such adjustment would exceed the par
value per share of Common Stock. The Company hereby covenants not to take
any action to increase the par value per share of the Common Stock.
(g) NOTICE OF ADJUSTMENT.
Whenever the Exercise Price or the number of Warrants issuable upon
exercise of each Warrant is adjusted, the Company shall provide the notices
required by Section 17 hereof.
11
(h) NOTICE OF CERTAIN TRANSACTIONS.
If:
(i) The Company takes any action that would require an
adjustment in the Exercise Price pursuant to subsections (a), (b) or (c) of
this Section 14 and if the Company does not arrange for Warrant holders to
participate pursuant to subsection (f) of this Section 14;
(ii) The Company takes any action that would require a
supplemental Warrant Agreement pursuant to subsection (i) of this Section
14; or
(iii) there is a liquidation or dissolution of the Company,
the Company shall mail to Warrant holders and the Warrant Agent a notice
stating the proposed record date for a dividend or distribution or the
proposed effective date of a subdivision, combination, reclassification,
consolidation, merger, transfer, lease, liquidation or dissolution. The
Company shall mail the notice at least 15 days before such date. Failure to
mail the notice or any defect in it shall not affect the validity of the
transaction.
(i) REORGANIZATION OF THE COMPANY.
(1) If the Company consolidates or merges with or into, or
transfers or leases all or substantially all its assets to, any person,
upon consummation of such transaction the Warrants shall automatically
become exercisable for the kind and amount of securities, cash or other
assets which the holder of a Warrant would have owned immediately after the
consolidation, merger, transfer or lease if the holder had exercised the
Warrant immediately before the record date (or, if none, the effective
date) of the transaction. Concurrently with the consummation of such
transaction, the corporation formed by or surviving any such consolidation
or merger if other than the Company, or the person to which such sale or
conveyance shall have been made (any such person, the "SUCCESSOR"), shall
enter into a supplemental Warrant Agreement so providing and further
providing for adjustments which shall be as nearly equivalent as may be
practical to the adjustments provided for in this Section 14. The
Successor shall mail to Warrant holders a notice describing the
supplemental Warrant Agreement. If the issuer of securities deliverable
upon exercise of Warrants under the supplemental Warrant Agreement is an
affiliate of the formed, surviving, transferee or lessee corporation, that
issuer shall join in the supplemental Warrant Agreement.
(2) If this subsection (i) applies, subsections (a), (b) and (c)
of this Section 14 do not apply.
(j) WARRANT AGENT'S DISCLAIMER.
The Warrant Agent has no duty to determine when an adjustment under
this Section 14 should be made, how it should be made or what it should be.
The Warrant Agent has no duty to determine whether any provisions of a
supplemental Warrant Agreement under subsection (i) of this Section 14 are
correct. The Warrant Agent makes no representation as to the validity or
value of any securities or assets issued upon exercise of Warrants. The
Warrant Agent shall not be responsible for the Company's failure to comply
with this Section 14.
12
(k) WHEN ISSUANCE OR PAYMENT MAY BE DEFERRED.
In any case in which this Section 14 shall require that an
adjustment in the Exercise Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event (i) issuing to the holder of any Warrant exercised after such record
date the Warrant Shares and other capital stock of the Company, if any,
issuable upon such exercise over and above the Warrant Shares and other
capital stock of the Company, if any, issuable upon such exercise on the
basis of the Exercise Price and (ii) paying to such holder any amount in cash
in lieu of a fractional share pursuant to Section 16 hereof; PROVIDED,
HOWEVER, that the Company shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to receive such
additional Warrant Shares, other capital stock and cash upon the occurrence
of the event requiring such adjustment.
(l) ADJUSTMENT IN NUMBER OF SHARES.
Upon each adjustment of the Exercise Price pursuant to this Section
14, each Warrant outstanding prior to the making of the adjustment in the
Exercise Price shall thereafter evidence the right to receive upon payment of
the adjusted Exercise Price that number of shares of Common Stock (calculated
to the nearest thousandth) obtained from the following formula:
N(1)= N x E
-------
E(1)
where:
N(1) = the adjusted number of Warrant Shares issuable upon exercise of a
Warrant by payment of the adjusted Exercise Price.
N = the number of Warrant Shares previously issuable upon exercise of a
Warrant by payment of the Exercise Price prior to adjustment.
E(1) = the adjusted Exercise Price.
E = the Exercise Price prior to adjustment.
(m) FORM OF WARRANTS.
Irrespective of any adjustments in the Exercise Price or the number
or kind of shares purchasable upon the exercise of the Warrants, Warrants
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
SECTION 15. NO DILUTION OR IMPAIRMENT. (a) If any event shall
occur as to which the provisions of Section 14 are not strictly applicable
but the failure to make any adjustment would adversely affect the purchase
rights represented by the Warrants in accordance with the essential intent
and principles of such Section 14, then, in each such case, the Company shall
appoint an investment banking firm of recognized national standing, or any
other financial expert that does not (or whose directors, officers,
employees, affiliates or stockholders do not) have a direct or material
indirect financial interest in the
13
Company or any of its subsidiaries, who has not been, and, at the time it is
called upon to give independent financial advice to the Company, is not (and
none of its directors, officers, employees, affiliates or stockholders are) a
promoter, director or officer of the Company or any of its subsidiaries,
which shall give their opinion upon the adjustment, if any, on a basis
consistent with the essential intent and principles established in Section
14, necessary to preserve, without dilution, the purchase rights, represented
by the Warrants. Upon receipt of such opinion, the Company will promptly
mail a copy thereof to the holders of the Warrants and shall make the
adjustments described therein.
(b) The Company will not, by amendment of its certificate of
incorporation or through any consolidation, merger, reorganization, transfer
of assets, dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the
terms of the Warrants, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the holder of the
Warrants against dilution or other impairment. Without limiting the
generality of the foregoing, the Company (1) will take all such action as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock on the exercise of
the Warrants from time to time outstanding and (2) will not take any action
which results in any adjustment of the Exercise Price if the total number of
Warrant Shares issuable after the action upon the exercise of all of the
Warrants would exceed the total number of shares of Common Stock then
authorized by the Company's certificate of incorporation and available for
the purposes of issue upon such exercise. A consolidation, merger,
reorganization or transfer of assets involving the Company covered by Section
14(i) shall not be prohibited by or require any adjustment under this Section
15.
SECTION 16. FRACTIONAL INTERESTS. The Company shall not be
required to issue fractional Warrant Shares on the exercise of Warrants. If
more than one Warrant shall be presented for exercise in full at the same
time by the same holder, the number of full Warrant Shares which shall be
issuable upon the exercise thereof shall be computed on the basis of the
aggregate number of Warrant Shares purchasable on exercise of the Warrants so
presented. If any fraction of a Warrant Share would, except for the
provisions of this Section 16, be issuable on the exercise of any Warrants
(or specified portion thereof), the Company shall notify the Warrant Agent in
writing of the amount to be paid in lieu of the fraction of a Warrant Share
and concurrently pay or provide to the Warrant Agent for payment to the
Warrant holder an amount in cash equal to the product of (i) such fraction of
a Warrant Share and (ii) the difference of the current market price of a
share of Common Stock over the Exercise Price.
SECTION 17. NOTICES TO WARRANT HOLDERS. Upon any adjustment of the
Exercise Price or the number of Warrant Shares issuable upon the exercise of
each Warrant pursuant to Section 14 hereof, the Company shall within 15 days
thereafter (i) cause to be filed with the Warrant Agent a certificate of a
firm of independent public accountants of recognized standing selected by the
Board of Directors (who may be the regular auditors of the Company) setting
forth the Exercise Price after such adjustment and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculations are based and setting forth the number of Warrant Shares (or
portion thereof) issuable after such adjustment in the Exercise Price, upon
exercise of a Warrant and payment of the adjusted Exercise Price, which
certificate shall be conclusive evidence of the correctness of the matters
set forth therein, and (ii) cause to be given to each of the registered
holders of the Warrant Certificates at such registered holder's address
appearing on the Warrant register written notice of such adjustments by
first-class mail, postage prepaid. Where appropriate, such notice may be
given in advance and included as a part of the notice required to be mailed
under the other provisions of this Section 17.
14
In case:
(a) the Company shall authorize the issuance to all holders of
shares of Common Stock of rights, options or warrants to subscribe for or
purchase shares of Common Stock or of any other subscription rights or
warrants; or
(b) the Company shall authorize the distribution to all holders of
shares of Common Stock of evidences of its indebtedness or assets (other than
cash dividends or cash distributions payable out of consolidated earnings or
earned surplus or dividends payable in shares of Common Stock or
distributions referred to in subsection (a) of Section 14 hereof); or
(c) of any consolidation or merger to which the Company is a party
and for which approval of any shareholders of the Company is required, or of
the conveyance or transfer of the properties and assets of the Company
substantially as an entirety, or of any reclassification or change of Common
Stock issuable upon exercise of the Warrants (other than a change in par
value, or from par value to no par value, or from no par value to par value,
or as a result of a subdivision or combination), or a tender offer or
exchange offer for shares of Common Stock; or
(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company; or
(e) the Company or any subsidiary of the Company shall authorize a
tender offer for all or any portion of the Common Stock;
(f) a Change of Control (as defined in the Certificate of
Designation) occurs; or
(g) the Company proposes to take any action (other than actions of
the character described in Section 14(a)) which would require an adjustment
of the Exercise Price pursuant to Section 14;
then the Company shall cause to be filed with the Warrant Agent and shall
cause to be given to each of the registered holders of the Warrant
Certificates at his address appearing on the Warrant register, at least 15
days prior to the applicable record date hereinafter specified, or promptly
in the case of events for which there is no record date, by first-class mail,
postage prepaid, a written notice stating (i) the date as of which the
holders of record of shares of Common Stock to be entitled to receive any
such rights, options, warrants or distribution are to be determined, or (ii)
the initial expiration date set forth in any tender offer or exchange offer
for shares of Common Stock, or (iii) the date on which any such
consolidation, merger, conveyance, transfer, dissolution, liquidation or
winding up is expected to become effective or consummated, and the date as of
which it is expected that holders of record of shares of Common Stock shall
be entitled to exchange such shares for securities or other property, if any,
deliverable upon such reclassification, consolidation, merger, conveyance,
transfer, dissolution, liquidation or winding up. The failure to give the
notice required by this Section 17 or any defect therein shall not affect the
legality or validity of any distribution, right, option, warrant,
consolidation, merger, conveyance, transfer, lease, dissolution, liquidation
or winding up, or the vote upon any action.
Nothing contained in this Agreement or in any of the Warrant
Certificates shall be construed as conferring upon the holders thereof the
right to vote or to consent or to receive notice as
15
shareholders in respect of the meetings of shareholders or the election of
Directors of the Company or any other matter, or any rights whatsoever as
shareholders of the Company.
SECTION 18. MERGER, CONSOLIDATION OR CHANGE OF NAME OF WARRANT
AGENT. Any corporation into which the Warrant Agent may be merged or with
which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any corporation
succeeding to the business of the Warrant Agent, shall be the successor to
the Warrant Agent hereunder without the execution or filing of any paper or
any further act on the part of any of the parties hereto, PROVIDED that such
corporation would be eligible for appointment as a successor warrant agent
under the provisions of Section 21 hereof. In case at the time such
successor to the Warrant Agent shall succeed to the agency created by this
Agreement, and in case at that time any of the Warrant Certificates shall
have been countersigned but not delivered, any such successor to the Warrant
Agent may adopt the countersignature of the original Warrant Agent; and in
case at that time any of the Warrant Certificates shall not have been
countersigned, any successor to the Warrant Agent may countersign such
Warrant Certificates either in the name of the predecessor Warrant Agent or
in the name of the successor to the Warrant Agent; and in all such cases such
Warrant Certificates shall have the full force and effect provided in the
Warrant Certificates and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed
and at such time any of the Warrant Certificates shall have been
countersigned but not delivered, the Warrant Agent whose name has been
changed may adopt the countersignature under its prior name, and in case at
that time any of the Warrant Certificates shall not have been countersigned,
the Warrant Agent may countersign such Warrant Certificates either in its
prior name or in its changed name, and in all such cases such Warrant
Certificates shall have the full force and effect provided in the Warrant
Certificates and in this Agreement.
SECTION 19. WARRANT AGENT. The Warrant Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Warrants, by their
acceptance thereof, shall be bound:
(a) The statements contained herein and in the Warrant
Certificates shall be taken as statements of the Company. The Warrant
Agent assumes no responsibility for the correctness of any of the same
except such as describe the Warrant Agent or action taken or to be taken by
it. The Warrant Agent assumes no responsibility with respect to the
distribution of the Warrant Certificates except as herein otherwise
provided.
(b) The Warrant Agent shall not be responsible for any failure
of the Company to comply with any of the covenants contained in this
Agreement or in the Warrant Certificates to be complied with by the
Company.
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant
Agent shall incur no liability or responsibility to the Company or to any
holder of any Warrant Certificate in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with the opinion
or the advice of such counsel.
(d) The Warrant Agent shall incur no liability or responsibility
to the Company or to any holder of any Warrant Certificate for any action
taken in reliance on any Warrant Certificate, certificate of shares of
Common Stock, notice, resolution, waiver, consent, order,
16
certificate, or other paper, document or instrument believed by it to be
genuine and to have been signed, sent or presented by the proper party or
parties. The Warrant Agent shall not be bound by any notice or demand, or
any waiver, modification, termination or revision of this Agreement or any
of the terms hereof, unless evidenced by a writing between the Company and
the Warrant Agent.
(e) The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the
execution of this Agreement and the performance of its responsibilities
hereunder, to reimburse the Warrant Agent for all expenses, taxes
(including withholding taxes) and governmental charges and other charges of
any kind and nature incurred by the Warrant Agent in the execution,
delivery and performance of its responsibilities under this Agreement and
to indemnify the Warrant Agent and save it harmless against any and all
liabilities, including judgments, costs and counsel fees, for anything done
or omitted by the Warrant Agent in the execution, delivery and performance
of its responsibilities under this Agreement except as a result of its
gross negligence or bad faith.
(f) The Warrant Agent shall be under no obligation to institute
any action, suit or legal proceeding or to take any other action likely to
involve expense unless the Company or one or more registered holders of
Warrant Certificates shall furnish the Warrant Agent with reasonable
security and indemnity for any costs and expenses which may be incurred,
but this provision shall not affect the power of the Warrant Agent to take
such action as it may consider proper, whether with or without any such
security or indemnity. All rights of action under this Agreement or under
any of the Warrants may be enforced by the Warrant Agent without the
possession of any of the Warrant Certificates or the production thereof at
any trial or other proceeding relative thereto, and any such action, suit
or proceeding instituted by the Warrant Agent shall be brought in its name
as Warrant Agent and any recovery of judgment shall be for the ratable
benefit of the registered holders of the Warrants, as their respective
rights or interests may appear.
(g) Except as prohibited by law, the Warrant Agent, and any
stockholder, director, officer or employee of the Warrant Agent, may buy,
sell or deal in any of the Warrants or other securities of the Company or
become pecuniarily interested in any transaction in which the Company may
be interested, or contract with or lend money to the Company or otherwise
act as fully and freely as though it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in
any other capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent for
the Company, and its duties shall be determined solely by the provisions
hereof. The Warrant Agent shall not be liable for anything which it may do
or refrain from doing in connection with this Agreement except for its own
gross negligence or bad faith.
(i) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of any Warrant Certificate to make or cause to
be made any adjustment of the Exercise Price or number of the Warrant
Shares or other securities or property deliverable as provided in this
Agreement, or to determine whether any facts exist which may require any of
such adjustments, or with respect to the nature or extent of any such
adjustments, when made, or with respect to the method employed in making
the same. The Warrant Agent shall not be
17
accountable with respect to the validity or value or the kind or amount of
any Warrant Shares or of any securities or property which may at any time
be issued or delivered upon the exercise of any Warrant or with respect to
whether any such Warrant Shares or other securities will when issued be
validly issued and fully paid and nonassessable, and makes no
representation with respect thereto.
(j) In the absence of bad faith on its part, the Warrant Agent
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Warrant Agent and conforming to the requirements
of this Warrant Agreement. However, the Warrant Agent shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Agreement.
(k) The Warrant Agent may rely and shall be fully protected in
relying upon any document believed by it to be genuine and to have been
signed or presented by the proper person.
SECTION 20. REGISTRATION RIGHTS.
(a) PIGGY-BACK REGISTRATION. If at any time the Company shall
determine to file a registration statement under the Securities Act relating to
a proposed sale to the public of Common Stock either for its own account or the
account of a holder or holders (other than on Form S-8 or S-4 or any successor
form), the Company shall:
(1) promptly give to each holder of a Warrant or Warrant Share
written notice thereof (which notice will include a list of the
jurisdictions in which the Company intends to attempt to qualify such
securities under the applicable blue sky or other state securities laws,
the proposed offering price, and the plan of distribution);
(2) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all the Warrant Shares specified in a written request or requests,
made within 20 days after such written notice from the Company, by any
holder or holders of Warrant Shares;
(3) use its best efforts to cause the managing underwriter or
underwriters of such proposed underwritten offering to permit the Warrant
Shares requested to be included in the registration statement for such
offering to be included on the same terms and conditions as the Common
Stock included therein. Notwithstanding the foregoing, if the managing
underwriter or underwriters of such offering deliver a written opinion to
the holders of such Warrant Shares that marketing considerations require a
limitation on the number of shares of Common Stock offered pursuant to any
registration statement subject to this Section 20(a), then subject to the
advice of said managing underwriter or underwriters as to the size and
composition of the offering, the Company will include Common Stock in such
registration in accordance with the following priorities: (i) first,
Common Stock to be sold for the account of the Company; (ii) second, Common
Stock to be sold for the account of any holder who has exercised demand
registration rights, and (iii) third, pro rata with respect to all holders
of Common Stock of the Company who have requested to be included in the
registration pursuant to this Section or pursuant to other, analogous
piggy-back registration provisions of other agreements, in proportion to
the number of shares each such holder requested to be included in the
offering pursuant to their piggy-back
18
rights. The Company will bear all Registration Expenses (as hereinafter
defined) in connection with a piggy-back registration.
Holders of Warrant Shares may exercise piggy-back registration
rights under this Section at any time or from time to time.
(b) DEMAND REGISTRATION RIGHTS.
(i) After the initial underwritten public offering of the Common
Stock, when the Company receives from the holder(s) of 50% or more of the
outstanding Warrants Shares a written request that the Company effect a
registration or qualification of such Warrant Shares (a "Demand Registration"),
the Company will:
(1) promptly give written notice of the proposed registration or
qualification to all other holders of Warrants and Warrant Shares, which
holders of Warrant Shares may request in writing within 10 days after
receipt of such notice that the Warrant Shares held by them be included in
such Demand Registration, and the number of Warrant Shares requested to be
so included shall be deemed a part of such Demand Registration; and
(2) as soon as practicable, use its best efforts to effect such
registration or qualification (including, without limitation, the execution
of an undertaking to file post-effective amendments, appropriate
qualification under the applicable blue sky or other state securities laws
and appropriate compliance with exemptive regulations issued under the
Securities Act and any other governmental requirements or regulations) as
may be so requested and as is reasonably necessary to permit or facilitate
the sale and distribution of all or such portion of such holder's or
holders' Warrant Shares as is specified in such request; PROVIDED that the
Company will not be obligated to effect more than one Demand Registration
pursuant to a request under this Section.
Subject to the foregoing provisions, the Company will file a
registration statement covering the Warrant Shares so requested to be
registered as soon as practicable (which shall be on Form S-3, if available,
unless the Company otherwise elects), but in any event within three months,
after receipt of the request or requests of the initiating holders.
(ii) If the holder or holders of a majority in number of the Warrant
Shares to be registered in a Demand Registration under this Section 20(b) so
elect, the offering of such Warrant Shares pursuant to such Demand
Registration shall be in the form of an underwritten offering. In such
event, if the managing underwriter or underwriters of such offering advise
the Company and the holders in writing that in their opinion the number of
Warrant Shares requested to be included in such offering is sufficiently
large so as to adversely affect the success of the offering, then the Company
will include in such registration the maximum amount of Warrant Shares which
in the opinion of such managing underwriter or underwriters can be sold
without any such adverse effect. Subject to the advice of the managing
underwriter or underwriters concerning the size and composition of the
offering, the Company will include in such registration, first, Warrant
Shares, allocated PRO RATA among such holders (based upon the number of
Warrant Shares requested to be included in such Demand Registration). If all
Warrant Shares requested to be sold are included therein, the Company may
include other shares of Common Stock in such offering as determined by the
Company.
19
(iii) If any Demand Registration is to be in the form of an
underwritten offering, the investment banker or bankers and manager or
managers that will administer the offering will be selected by the Company;
PROVIDED that such investment bankers and managers must be reasonably
satisfactory to the holders of a majority in number of the Warrant Shares to
be included in such offering.
(iv) A registration of Warrant Shares will not count as a Demand
Registration (A) until it has become effective and has remained effective for
180 days or until all Warrant Shares included therein have been sold, if
earlier, and (B) if any of the Warrant Shares requested to be included
therein may not be included in such registration under the circumstances
contemplated by Section 20(b)(ii). The Company will pay all Registration
Expenses in connection with any registration initiated as a Demand
Registration, whether or not it becomes effective.
(c) RESTRICTIONS ON PUBLIC SALE BY HOLDERS OF WARRANT SHARES. Each
holder of Warrants or Warrant Shares whether or not its Warrant Shares are
covered by a registration statement filed pursuant to Section 20(a) or (b)
agrees not to effect any public sale or distribution of securities of the
Company of the same class as the securities included in such registration
statement, including a sale pursuant to Rule 144 under the Securities Act
(except as part of such underwritten registration), during the 90-day period
following, the effective date of the registration statement for each
underwritten offering made pursuant to such registration statement unless the
Company and the managing underwriter otherwise agree in writing. The
foregoing provisions shall not apply, however, to any holder of Warrant
Shares if such holder is prevented by an applicable statute or regulation
from entering into any such agreement.
(d) REGISTRATION PROCEDURES.
In connection with the Company's registration obligations pursuant
to Section 20 hereof, the Company will use its best efforts to effect such
registration to permit the sale of such Common Stock in accordance with the
intended method or methods of disposition thereof, and pursuant thereto the
Company will as expeditiously as possible:
(i) before filing a registration statement or prospectus or any
amendments or supplements thereto, furnish to the holders of the Common Stock
covered by such registration statement and the underwriters, if any, copies
of all such documents proposed to be filed, which documents will be made
available for prior review by such holders and underwriters, and the Company
will not file any registration statement or amendment thereto or any
prospectus or any supplement thereto to which the holders of a majority in
number of the Common Stock covered by such registration statement or the
underwriters, if any, shall reasonably object; provided that in the event the
Company seeks confidential treatment with the SEC for any document to be
filed, the Company need not provide such document to any such holder unless
such holder enters into an appropriate confidentiality agreement;
(ii) prepare and file with the SEC such amendments and
post-effective amendments to any registration statement, and such supplements
to the prospectus, as may be reasonably requested by any holder of Common
Stock or any underwriter of Common Stock or as may be required by the rules,
regulations or instructions applicable to the registration form utilized by
the Company or by the Securities Act or otherwise necessary to keep such
registration statement effective for the applicable period and cause the
prospectus as so supplemented to be filed pursuant to Rule 424 under the
Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during the applicable period in accordance with the intended
methods of disposition by the sellers thereof set forth in such registration
statement or supplement to the prospectus;
20
(iii) notify the selling holders of Common Stock and the managing
underwriters, if any, promptly, and (if requested by any such person) confirm
such advice in writing,
(1) when the prospectus or any prospectus supplement or
post-effective amendment has been filed, and, with respect to the
registration statement or any post-effective amendment, when the same has
become effective,
(2) of any request by the SEC for amendments or supplements to
the registration statement or the prospectus or for additional information,
(3) of the issuance by the SEC of any stop order suspending the
effectiveness of the registration statement or the initiation of any
proceedings for that purpose,
(4) if at any time the representations and warranties of the
Company contemplated by paragraph (xiv) below cease to be true and correct,
(5) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Common Stock for sale
in any jurisdiction or the initiation or threatening of any proceeding for
such purpose, and
(6) of the existence of any fact which results in the
registration statement, the prospectus or any document incorporated therein
by reference containing an untrue statement of material fact or omitting to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading;
(iv) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the registration statement at the
earliest possible moment;
(v) if reasonably requested by the managing underwriter or
underwriters or a holder of Common Stock being sold in connection with an
underwritten offering, promptly incorporate in a prospectus supplement or
post-effective amendment such necessary information as the managing
underwriters or the holders of a majority in number of the Common Stock being
sold reasonably request to have included therein relating to the plan of
distribution with respect to such Common Stock, including, without
limitation, information with respect to the amount of Common Stock being sold
to such underwriters, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the underwritten (or best
efforts underwritten) offering of the Common Stock to be sold in such
offering; and make all required filings of such prospectus supplement or
post-effective amendment as soon as notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment;
(vi) at the request of any selling holder of Common Stock,
furnish to such selling holder of Common Stock and each managing underwriter,
without charge, at least one copy of the registration statement and any
post-effective amendment thereto, including financial statements and
schedules, all documents incorporated therein by reference and all exhibits
(including those incorporated by reference);
(vii) deliver to each selling holder of Common Stock and the
underwriters, if any, without charge, as many copies of the prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such persons may reasonably request; the Company consents to the
21
use of the prospectus or any amendment or supplement thereto by each of the
selling holders of Common Stock and the underwriters, if any, in connection
with the offering and sale of the Common Stock covered by the prospectus or
any amendment or supplement thereto;
(viii) prior to any public offering of Common Stock, register or
qualify or cooperate with the selling holders of Common Stock, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification of such Common Stock for offer and sale under
the securities or blue sky laws of such jurisdictions as any seller or
underwriter reasonably requests in writing and do any and all other acts or
things reasonably necessary or advisable to enable the disposition in such
jurisdictions of the Common Stock covered by the registration statement;
PROVIDED that the Company will not be required to qualify generally to do
business in any jurisdiction where it is not then so qualified or to take any
action which would subject it to general service of process in any such
jurisdiction where it is not then so subject;
(ix) cooperate with the selling holders of Common Stock and the
managing underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Common Stock to be sold and not bearing
any restrictive legends; and enable such Common Stock to be in such
denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of Common Stock to the
underwriters;
(x) use its best efforts to cause the Common Stock covered by
the applicable registration statement to be registered with or approved by
such other governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof and the underwriters, if any, to consummate the
disposition of such Common Stock;
(xi) if any fact contemplated by paragraph (iii)(6) above shall
exist, prepare a supplement or post-effective amendment to the registration
statement or the related prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of the Common Stock, the prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading;
(xii) cause all Common Stock covered by the registration
statement to be listed on each securities exchange on which similar
securities issued by the Company are then listed, if requested by the holders
of a majority in number of such Common Stock or by the managing underwriters,
if any;
(xiii) not later than the effective date of the applicable
registration statement, provide a CUSIP number for all Common Stock and
provide the applicable trustee(s) or transfer agent(s) with printed
certificates for the Common Stock which are in a form eligible for deposit
with the Depositary;
(xiv) enter into agreements (including underwriting agreements)
and take all other appropriate actions in order to expedite or facilitate the
disposition of such Common Stock and in such connection, whether or not an
underwriting agreement is entered into and whether or not the registration is
an underwritten registration:
(1) make such representations and warranties to the holders of
such Common Stock and the underwriters, if any, in form, scope and
substance as are customarily made by issuers to underwriters in primary
underwritten offerings;
22
(2) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions shall be reasonably satisfactory in
form, scope and substance to the managing underwriters, if any) addressed
to each selling holder and the underwriters, if any, covering the matters
customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by such holders and
underwriters;
(3) obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants addressed to the selling
holders of Common Stock and the underwriters, if any, such letters to be in
customary form and covering matters of the type customarily covered in
"cold comfort" letters to underwriters in connection with primary
underwritten offerings;
(4) if an underwriting agreement is entered into, cause the same
to set forth in full the indemnification provisions and procedures of
Section 20(f) hereof (or such other substantially similar provisions and
procedures as the underwriters shall reasonably request) with respect to
all parties to be indemnified pursuant to said Section; and
(5) deliver such documents and certificates as may be reasonably
requested by the holders of a majority of the Common Stock being sold and
the managing underwriters, if any, to evidence compliance with paragraph
(xi) above and with any customary conditions contained in the underwriting
agreement or other agreement entered into by the Company.
The above shall be done at the effectiveness of such registration statement,
each closing under any underwriting or similar agreement as and to the extent
required thereunder and from time to time as may reasonably be requested by
any selling holder in connection with the disposition of Common Stock
pursuant to such registration statement, all in a manner consistent with
customary industry practice;
(xv) make available to a representative of the holders of a
majority in number of the Common Stock, any underwriter participating in any
disposition pursuant to such registration statement, and any attorney or
accountant retained by the sellers or underwriter all financial and other
records, pertinent corporate documents and properties of the Company, and
cause the Company's officers, directors and employees to supply all
information reasonably requested by any such representative, underwriter,
attorney or accountant in connection with the registration, with respect to
each at such time or times as the Company shall reasonably determine;
PROVIDED that any records, information or documents that are designated by
the Company in writing as confidential shall be kept confidential by such
persons unless disclosure of such records, information or documents is
required by court or administrative order;
(xvi) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make generally available to
its security holders earnings statements satisfying the provisions of Section
11(a) of the Securities Act, no later than 30 days after the end of any
12-month period (or 45 or 90 days if the end of such 12-month period
coincides with the end of a fiscal quarter or fiscal year, respectively, of
the Company) (1) commencing at the end of any month in which Common Stock are
sold to underwriters in an underwritten offering, or, if not sold to
underwriters in such an offering, (2) beginning with the first month
commencing after the effective date of the registration statement, which
statements shall cover said 12-month periods; and
23
(xvii) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by
any underwriter (including any "qualified independent underwriter" that is
required to be retained in accordance with the rules and regulations of the
NASD).
The Company may require each seller of Common Stock as to which any
registration is being effected to furnish to the Company such information
regarding such seller and the distribution of such securities as the Company
may from time to time reasonably request in writing.
Each holder of Warrants or Warrant Shares agrees by acquisition of
such Warrants or Warrant Shares that, upon receipt of any notice from the
Company of the happening of any event of the kind described in paragraph (xi)
above, such holder will forthwith discontinue disposition of Common Stock
until such holder's receipt of the copies of the supplemented or amended
prospectus contemplated by paragraph (xi) above, or until it is advised in
writing by the Company that the use of the prospectus may be resumed, and has
received copies of any additional or supplemental filings which are
incorporated by reference in the prospectus, and, if so directed by the
Company, such holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such holder's
possession, of the prospectus covering such Common Stock current at the time
of receipt of such notice. In the event the Company shall give any such
notice, the time period mentioned in Section 20(b)(iv) hereof shall be
extended by the number of days during the period from and including the date
of the giving of such notice to and including the date when each seller of
Common Stock covered by such registration statement either receives the
copies of the supplemented or amended prospectus contemplated by paragraph
(xi) above or is advised in writing by the Company that the use of the
prospectus may be resumed.
(e) REGISTRATION EXPENSES
(i) All expenses incident to the Company's performance of or
compliance with this Agreement will be paid by the Company, regardless
whether the registration statement becomes effective, including, without
limitation:
(1) all registration and filing fees (including, without
limitation, with respect to filings required to be made with the NASD);
(2) fees and expenses of compliance with securities or blue sky
laws (including, without limitation, fees and disbursements of one counsel
for the underwriters and selling holders in connection with blue sky
qualifications of the Common Stock and determination of their eligibility
for investment under the laws of such jurisdictions as the managing
underwriters or holders of Common Stock being sold may designate);
(3) printing (including, without limitation, expenses of
printing or engraving certificates for the Common Stock in a form eligible
for deposit with the Depositary and of printing prospectuses), messenger,
telephone and delivery expenses;
(4) fees and disbursements of counsel for the Company, for the
underwriters and for the selling holders of the Common Stock (subject to
the provisions of Section 20(e)(ii) hereof);
24
(5) fees and disbursements of all independent certified public
accountants of the Company (including, without limitation, the expenses of
any special audit and "cold comfort" letters required by or incident to
such performance);
(6) fees and disbursements of underwriters (excluding discounts,
commissions or fees of underwriters, selling brokers, dealer managers or
similar securities industry professionals relating to the distribution of
the Common Stock or legal expenses of any person other than the Company,
the underwriters and the selling holders);
(7) securities acts liability insurance if the Company so
desires or if the underwriters or selling holders of Common Stock holding a
majority in number of such Common Stock so require;
(8) fees and expenses of other persons retained by the Company;
and
(9) fees and expenses associated with any NASD filing required
to be made in connection with the registration statement, including, if
applicable, the fees and expenses of any "qualified independent
underwriter" (and its counsel) that is required to be retained in
accordance with the rules and regulations of the NASD
(all such expenses being herein called "Registration Expenses").
The Company will, in any event, pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit, the fees and expenses incurred in connection with the listing of the
securities to be registered on each securities exchange on which similar
securities issued by the Company are then listed, rating agency fees and the
fees and expenses of any person, including special experts, retained by the
Company.
(ii) In connection with each registration statement required
hereunder, the Company will reimburse the holders of Common Stock being
registered pursuant to such registration statement for the reasonable fees
and disbursements of not more than one counsel (or more than one counsel if a
legal opinion is required from more than one counsel by the terms of any
underwriting agreement relating to the registered offering or if a conflict
exists among such selling holders in the exercise of the reasonable judgment
of counsel for the selling holders and counsel for the Company, provided that
such selling holders shall use their best efforts to minimize any such
conflict) chosen by the holders of a majority of such Common Stock.
(f) INDEMNIFICATION.
(i) INDEMNIFICATION BY THE COMPANY. The Company agrees to indemnify
and hold harmless each holder of Warrant Shares, its officers, directors,
employees and agents and each person who controls such holder within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act
(each such person being sometimes hereinafter referred to as an "Indemnified
Holder"), against any losses, claims, damages or liabilities, joint or several,
to which such Indemnified Holder may become subject under the Securities Act,
the Exchange Act or otherwise, insofar as any such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon:
25
(1) Any untrue statement or alleged untrue statement of any
material fact contained in (A) the registration statement originally filed
with respect to the Warrant Shares or any amendment thereto or any
preliminary prospectus or prospectus or any amendment or supplement thereto
or (B) any application or other document, or any amendment or supplement
thereto, executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order
to qualify the Warrant Shares under the securities or "Blue Sky" laws
thereof or filed with the SEC or any securities association or securities
exchange (each an "Application"); or
(2) The omission or alleged omission to state, in such
registration statement or any amendment thereto, any preliminary prospectus
or prospectus or any amendment or supplement thereto, or any Application, a
material fact required to be stated therein or necessary to make the
statements therein not misleading,
and will reimburse, as incurred, the Indemnified Holders for any legal or
other expenses incurred by the Indemnified Holders in connection with
investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action; PROVIDED,
HOWEVER, 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 any
untrue statement or alleged untrue statement or omission or alleged omission
made in such registration statement or any amendment thereto, any preliminary
prospectus or prospectus or any amendment or supplement thereto, or any
Application in reliance upon and in conformity with written information
furnished to the Company by the Indemnified Holders specifically for use
therein; and PROVIDED, FURTHER, that the Company will not be liable to the
Indemnified Holders with respect to any such untrue statement or omission
made in any preliminary prospectus that is corrected in the prospectus (or
any amendment or supplement thereto) if the person asserting any such loss,
claim, damage or liability purchased Common Stock from the Indemnified Holder
in reliance upon the preliminary prospectus but was not sent or given a copy
of the prospectus (as amended or supplemented) at or prior to the written
confirmation of the sale of such Common Stock to such person in any case
where such delivery of the prospectus (as so amended or supplemented) is
required by the Securities Act, unless such failure to deliver the prospectus
(as amended or supplemented) was a result of the Company not delivering a
corrected prospectus to the Indemnified Holder. This indemnity agreement
will be in addition to any liability that the Company may otherwise have to
the indemnified parties. The Company shall not be liable under this Section
for any settlement of any claim or action effected without its consent, which
shall not be unreasonably withheld.
(ii) INDEMNIFICATION BY HOLDER OF WARRANT SHARES. Each holder of
Warrant Shares severally agrees to indemnify and hold harmless the Company,
its directors and officers and each person, if any, who controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent as the foregoing indemnity from the
Company to such holder, but only with respect to information relating to such
holder furnished in writing by such holder expressly for use in any
registration statement or prospectus, or any amendment or supplement thereto,
or any preliminary prospectus. In case any action or proceeding shall be
brought against the Company or its directors or officers or any such
controlling person, in respect of which indemnity may be sought against a
holder of Warrant Shares, such holder shall have the rights and duties given
the Company and the Company or its directors or officers or such controlling
person shall have the rights and duties given to each holder by the preceding
paragraph. In no event shall the liability of any selling holder of Warrant
Shares hereunder be greater in amount than the dollar amount of the proceeds
received by such holder upon the sale of the Warrant Shares giving rise to
such indemnification obligation.
26
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 so furnished in writing by such
persons specifically for inclusion in any prospectus or registration
statement or any amendment or supplement thereto, or any preliminary
prospectus.
(iii) NOTIFICATION. Promptly after receipt by an indemnified
party under this Section 20(f) of notice of the commencement of any action
for which such indemnified party is entitled to indemnification under this
Section 20(f), such indemnified party will, if a claim in respect thereof is
to be made against the indemnifying party under this Section 20(f), notify
the indemnifying party of the commencement thereof; but the omission so to
notify the indemnifying party (i) will not relieve it from any liability
under paragraph (i) or (ii) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by
the indemnifying party of substantial rights and defenses and (ii) will not,
in any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraphs (i) and (ii) above. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party; PROVIDED, HOWEVER,
that if (i) the use of counsel chosen by the indemnifying party to represent
the indemnified party would present such counsel with a conflict of interest,
(ii) the defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have been advised by
counsel that there may be one or more legal defenses available to it and/or
other indemnified parties that are different from or additional to those
available to the indemnifying party, or (iii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of the
institution of such action, then, in each such case, the indemnifying party
shall not have the right to direct the defense of such action on behalf of
such indemnified party or parties and such indemnified party or parties shall
have the right to select separate counsel to defend such action on behalf of
such indemnified party or parties. After notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof
and approval by such indemnified party of counsel appointed to defend such
action, the indemnifying party will not be liable to such indemnified party
under this Section 8 for any legal or other expenses, other than reasonable
costs of investigation, subsequently incurred by such indemnified party in
connection with the defense thereof, unless (i) the indemnified party shall
have employed separate counsel in accordance with the proviso to the
immediately preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for
the expenses of more than one separate counsel (in addition to local counsel)
in any one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
designated by the majority of the Indemnified Holders in the case of
paragraph (i) of this Section 20(f) or the Company in the case of paragraph
(ii) of this Section 20(f), representing the indemnified parties under such
paragraph (i) or paragraph (ii), as the case may be, who are parties to such
action or actions) or (ii) the indemnifying party has authorized in writing
the employment of counsel for the indemnified party at the expense of the
indemnifying party. After such notice from the indemnifying party to such
indemnified party, the indemnifying party will not be liable for the costs
and expenses of any settlement of such action effected by such indemnified
party without the consent of the indemnifying party, unless such indemnified
party waived in writing its rights under this Section 20(f), in which case
the indemnified party may effect such a settlement without such consent.
27
(iv) CONTRIBUTION. If the indemnification provided for in this
Section 20(f) is unavailable to an indemnified party under Section 20(f)(i)
or Section 20(f)(ii) hereof (other than by reason of exceptions provided in
those Sections) in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the Company, on the one hand, and of the
Indemnified Holder, on the other hand, in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The
relative fault of the Company, on the one hand, and of the Indemnified
Holder, on the other hand, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Indemnified Holder and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The amount paid or payable by
a party as a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include, subject to the limitations set
forth in the second paragraph of Section 20(f)(i) hereof, any legal or other
fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim.
The Company and each holder of Warrant Shares agree that it would
not be just and equitable if contribution pursuant to this Section were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this
Section, an Indemnified Holder shall not be required to contribute any amount
in excess of the amount by which the total price at which the Securities sold
by such Indemnified Holder or its affiliated Indemnified Holders and
distributed to the public were offered to the public exceeds the amount of
any damages which such Indemnified Holder, or its affiliated Indemnified
Holders, has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(g) SUCCESSORS. The provisions of this Section 20 shall inure to
the benefit of the successors of the holders of Warrants or Warrant Shares if
such successor purchased such Warrants or Warrant Shares in a transaction
exempt from registration under the Securities Act other than pursuant to Rule
144.
SECTION 21. CHANGE OF WARRANT AGENT. If the Warrant Agent shall
become incapable of acting as Warrant Agent or shall resign as provided
below, the Company shall appoint a successor to such Warrant Agent. If the
Company shall fail to make such appointment within a period of 30 days after
it has been notified in writing of such incapacity by the Warrant Agent or by
the registered holders of a majority of Warrants, then the registered holder
of any Warrant Certificate may apply to any court of competent jurisdiction
for the appointment of a successor to the Warrant Agent. Pending appointment
of a successor to such Warrant Agent, either by the Company or by such a
court, the duties of the Warrant Agent after the effective date of its
resignation or after the date it becomes incapable of acting as Warrant Agent
shall be carried out by the Company. After appointment, the successor to the
Warrant Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Warrant Agent without
further act or deed; but the former Warrant Agent shall, conditioned upon
receiving a receipt therefore and a release from the Company of its
obligations hereunder, deliver and transfer to the successor to the Warrant
Agent any property at the time held by it hereunder and execute and deliver
28
any further assurance, conveyance, act or deed necessary for the purpose.
Failure to give any notice provided for in this Section 21, however, or any
defect therein, shall not affect the legality or validity of the appointment
of a successor to the Warrant Agent.
The Warrant Agent may resign at any time and be discharged from the
obligations hereby created by so notifying the Company in writing at least 30
days in advance of the proposed effective date of its resignation. If no
successor Warrant Agent accepts the engagement hereunder by such time, the
Company shall act as Warrant Agent and, at such time, the former Warrant
Agent shall, conditioned upon receiving a receipt therefore and a release
from the Company of its obligations hereunder, deliver and transfer to the
Company any property at the time held by it hereunder and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose.
SECTION 22. NOTICES TO THE COMPANY AND WARRANT AGENT. Any notice or
demand authorized by this Agreement to be given or made by the Warrant Agent
or by the registered holder of any Warrant Certificate to or on the Company
shall be sufficiently given or made when and if deposited in the mail,
registered, postage prepaid, addressed (until another address is filed in
writing by the Company with the Warrant Agent), as follows:
Color Spot Nurseries, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Chief Executive Officer
with a copy to:
Xxxxxxxxxx Hyatt Xxxxxx & Xxxxxxxxxx, P.C.
000 Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Any notice pursuant to this Agreement to be given by the Company or
by the registered holder(s) of any Warrant Certificate to the Warrant Agent
shall be sufficiently given when and if deposited in the mail, registered,
postage prepaid, addressed (until another address is filed in writing by the
Warrant Agent with the Company) to the Warrant Agent at the Warrant Agent
Office as follows:
American Stock Transfer and Trust Company
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (___) ___-____
Attention: Xxxxxxx Xxxxxxxxx
Notice may also be given by facsimile transmission (effective when
receipt is acknowledged) or by overnight delivery service (effective the next
business day).
SECTION 23. SUPPLEMENTS AND AMENDMENTS. The Company and the Warrant
Agent may from time to time supplement or amend this Agreement without the
consent of any holders of Warrant
29
Certificates in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with any
other provision herein, or to make any other provisions in regard to matters
or questions arising hereunder which the Company and the Warrant Agent may
deem necessary or desirable and which, in either case, shall not in any way
materially adversely affect the interests of the holders of Warrant
Certificates. Any amendment or supplement to this Agreement that has a
material adverse effect on the interests of holders of the Warrants or, in
the case of Section 20, Warrant Shares shall require the written consent of
registered holders of a majority of the then outstanding Warrants or, in the
case of Section 20, Warrant Shares (excluding Warrants and Warrant Shares
held by the Company or any of its Affiliates). The consent of each holder of
a Warrant affected shall be required for any amendment pursuant to which the
Exercise Price would be increased or the number of Warrant Shares purchasable
upon exercise of Warrants would be decreased (other than in accordance with
Section 14, 15 or 16 hereof).
SECTION 24. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent shall
bind and inure to the benefit of their respective successors and assigns
hereunder, including, without limitation, any Successor under Section 14(i)
of this Agreement.
SECTION 25. TERMINATION. This Agreement shall terminate on the
later of (i) 5:00 p.m., New York, New York time on ______________, 2002 and
(ii) the date on which none of the Warrant Shares are entitled to the
benefits of Section 20.
SECTION 26. GOVERNING LAW; 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
governed by and construed in accordance with the internal laws of said State.
The parties hereto irrevocably consent to the jurisdiction of the courts of
the State of New York and any federal court located in such state in
connection with any action, suit or proceeding arising out of or relating to
this Agreement.
SECTION 27. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any person or corporation other than the
Company, the Warrant Agent and the registered holders of the Warrant
Certificates any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of
the Company, the Warrant Agent and the registered holders of the Warrant
Certificates.
SECTION 28. 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 all such counterparts shall together
constitute but one and the same instrument.
SECTION 29. FURTHER ASSURANCES. From time to time on and after the
date hereof, the Company shall deliver or cause to be delivered to the
Warrant Agent such further documents and instruments and shall do and cause
to be done such further acts as the Warrant Agent shall reasonably request
(it being understood that the Warrant Agent shall have no obligation to make
such request) to carry out more effectively the provisions and purposes of
this Agreement, to evidence compliance herewith or to assure itself that it
is protected hereunder.
30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
COLOR SPOT NURSERIES, INC.
By:
------------------------------
Xxxxxxx X. Xxxxxxxx
Chief Executive Officer
AMERICAN STOCK TRANSFER AND TRUST COMPANY
By:
------------------------------
Authorized Signatory
Form of Initial Warrant Certificate EXHIBIT A
[Face]
THE COMMON STOCK, PAR VALUE $0.001, OF THE COMPANY (THE "COMMON STOCK") FOR
WHICH THIS WARRANT IS EXERCISABLE MAY NOT BE OFFERED OR SOLD IN THE UNITED
STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") AND ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION FROM REGISTRATION REQUIREMENTS. ACCORDINGLY, NO WARRANT HOLDER SHALL
BE ENTITLED TO EXERCISE SUCH HOLDER'S WARRANTS AT ANY TIME UNLESS, AT THE TIME
OF EXERCISE, (I) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT RELATING TO
THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS WARRANT (THE
"WARRANT SHARES") HAS BEEN FILED WITH, AND DECLARED EFFECTIVE BY, THE SECURITIES
AND EXCHANGE COMMISSION (THE "SEC"), AND NO STOP ORDER SUSPENDING THE
EFFECTIVENESS OF SUCH REGISTRATION STATEMENT HAS BEEN ISSUED BY THE SEC OR (II)
THE ISSUANCE OF THE WARRANT SHARES IS PERMITTED PURSUANT TO AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
No. ___________ Warrant Certificate _________ Warrants
COLOR SPOT NURSERIES, INC.
This Warrant Certificate certifies that _________, or its registered
assigns, is the registered holder of Warrants expiring ___________ __, 2002 (the
"WARRANTS"), to purchase shares of the common stock, par value $.001 (the
"COMMON STOCK"), of Color Spot Nurseries, Inc., a Delaware corporation (the
"COMPANY"). Each Warrant entitles the registered holder upon exercise at any
time until 5:00 p.m. New York, New York time on _____________ __, 2002, to
receive from the Company one fully paid and nonassessable share of Common Stock
(the "WARRANT SHARES") at the initial exercise price (the "EXERCISE PRICE") of
$.01 per share (A) by tendering Warrants having a fair market value equal to the
Exercise Price, (B) in the form of cash or by certified or official bank check
payable to the order of the Company in the amount of the Exercise Price or (C)
by any combination of Warrants and cash, equal to the exercise price, and upon
surrender of this Warrant Certificate and such payment of the Exercise Price at
the office or agency of the Warrant Agent (as hereinafter defined), but only
subject to the conditions set forth herein and in the Warrant Agreement referred
to below. The Exercise Price and number of Warrant Shares issuable upon
exercise of the Warrants are subject to adjustment upon the occurrence of
certain events set forth in the warrant agreement (the "WARRANT AGREEMENT"),
dated as of _______________ __, 1997, between the Company and American Stock
Transfer and Trust Company, as warrant agent (the "WARRANT AGENT"). All
capitalized terms not defined herein shall have the meanings assigned to such
terms in the Warrant Agreement.
No Warrant may be exercised after 5:00 p.m., New York, New York Time
on _____________ __, 2002 and to the extent not exercised by such time such
Warrants shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the following pages hereof and such further provisions
shall for all purposes have the same effect as though fully set forth at this
place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent.
A-1
This Warrant Certificate shall be governed and construed in accordance
with the internal laws of the State of New York.
A-2
IN WITNESS WHEREOF, Color Spot Nurseries, Inc. has caused this Warrant
Certificate to be signed by its [Chief Executive Officer, President, Chief
Financial Officer or Secretary].
Dated: ___________ __, 1997
COLOR SPOT NURSERIES, INC.
By:
----------------------------------------
[name]
[title]
Countersigned:
AMERICAN STOCK TRANSFER AND TRUST COMPANY,
as Warrant Agent
By:
-------------------------------
Authorized Signatory
A-3
Form of Warrant Certificate
[Reverse]
[Unless and until it is exchanged in whole or in part for Warrants in
definitive form, this Warrant may not be transferred except as a whole by the
depositary to a nominee of the depositary or by a nominee of the depositary to
the depositary or another nominee of the depositary or by the depositary or any
such nominee to a successor depositary or a nominee of such successor
depositary. The Depository Trust Company ("DTC") (55 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx) shall act as the depositary until a successor shall be appointed by
the Company and the Warrant Agent. Unless this certificate is presented by an
authorized representative of DTC to the issuer or its agent for registration of
transfer, exchange or payment, and any certificate issued is registered in the
name of Cede & Co. or such other name as requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or such other
entity as is requested by an authorized representative of DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.](1)
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants expiring ____________ __, 2002 entitling the holder
upon exercise to receive shares of Common Stock of the Company, and are issued
or to be issued pursuant to the Warrant Agreement duly executed and delivered by
the Company to the Warrant Agent, 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 Warrant Agent, the Company and the holders (the
words "HOLDERS" or "HOLDER" meaning the registered holders or registered holder)
of the Warrants.
Warrants may be exercised at any time until 5:00 p.m., New York, New
York time on ___________ __, 2002. The holder of Warrants evidenced by this
Warrant Certificate may exercise them by surrendering this Warrant Certificate,
with the form of election to purchase set forth hereon properly completed and
executed, together with payment of the Exercise Price (A) by tendering Warrants
having a fair market value equal to the Exercise Price, (B) in the form of cash
or by certified or official bank check payable to the order of the Company in
the amount of the Exercise Price or (C) by any combination of Warrants and cash,
equal to the Exercise Price, at the office of the Warrant Agent. In the event
that upon any exercise of Warrants evidenced hereby the number of Warrants
exercised shall be less than the total number of Warrants evidenced hereby,
there shall be issued to the holder hereof or his assignee a new Warrant
Certificate evidencing the number of Warrants not exercised. No adjustment
shall be made for any dividends on any Common Stock issuable upon exercise of
this Warrant.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price set forth on the face hereof may, subject to certain
conditions, be adjusted. If the Exercise Price is adjusted, the Warrant
Agreement provides that the number of shares of Common Stock issuable upon the
exercise of each Warrant shall be adjusted. No fractions of a share of Common
Stock will be issued upon the exercise of any Warrant, but the Company will pay
the cash value thereof determined as provided in the Warrant Agreement.
----------------------
(1). This paragraph is to be included only if the Warrant is in global form.
A-4
The Warrant Agreement provides that the Company shall be bound by
certain registration obligations with respect to the Common Stock issuable upon
exercise of the Warrants, as set forth in the Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Warrant
Agent by the registered holder thereof in person or by legal representative or
attorney duly authorized in writing, may be exchanged, in the manner and subject
to the limitations provided in the Warrant Agreement, but without payment of any
service charge, for another Warrant Certificate or Warrant Certificates of like
tenor evidencing in the aggregate a like number of Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent, 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 in the Warrant Agreement,
without charge except for any tax or other governmental charge imposed in
connection therewith.
The Company and the Warrant Agent may deem and treat the registered
holder(s) thereof 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, of any distribution to the
holder(s) hereof, and for all other purposes, and neither the Company nor the
Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights
of a stockholder of the Company.
A-5
Form of Election to Purchase
(To Be Executed Upon Exercise Of Warrant)
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to receive __________ shares of Common
Stock and herewith (check item) tenders payment for such shares to the order of
Color Spot Nurseries, Inc. in the amount of $_______ (the "PURCHASE PRICE") in
accordance with the terms hereof.
/ / Warrants having a fair market value (as defined in the Warrant
Agreement) equal to the Purchase Price.
/ / Cash or certified or official bank check payable to the order of the
Company in an amount equal to the Purchase Price.
/ / (A) Warrants having a fair market value (as defined in the Warrant
Agreement) and (B) cash, in an aggregate amount equal to the Purchase
Price.
The undersigned requests that a certificate for such shares be
registered in the name of _______________________________, whose address is
______________________________________ and that such shares be delivered to
___________________________ whose address is ________________________________.
If said number of shares is less than all of the shares of Common
Stock purchasable hereunder, the undersigned requests that a new Warrant
Certificate representing the remaining balance of such shares be registered in
the name of _____________________, whose address is __________________, and
that such Warrant Certificate be delivered to ________________, whose address is
_____________________.
Date: ____________________
Your Signature:________________________________
(Sign exactly as your name appears on the face of
this Warrant)
Signature Guarantee:
A-6
SCHEDULE OF EXCHANGES OF GLOBAL WARRANTS (2)
The following exchanges of a part of this Global Warrant for definitive Warrants
have been made:
Amount of decrease Number of Warrants
in Number of Amount of increase in in this Global Warrant Signature of
Warrants in this Number of Warrants following such authorized officer of
Date of Exchange Global Warrant in this Global Warrant decrease or increase Warrant Agent
-----------------------------------------------------------------------------------------------------------------
----------------------
(2). This is to be included only if the Warrant is in global form.
A-7
WARRANT AGREEMENT
TABLE OF CONTENTS
Page
SECTION 1. Appointment of Warrant Agent . . . . . . . . . . . . . . . . . . 1
SECTION 2. Issuance of Warrants . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 3. Warrant Certificates . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 4. Execution of Warrant Certificates. . . . . . . . . . . . . . . . 2
SECTION 5. Legending of Warrants. . . . . . . . . . . . . . . . . . . . . . 2
SECTION 6. Registration and Countersignature. . . . . . . . . . . . . . . . 3
SECTION 7. Registration of Transfers and Exchanges. . . . . . . . . . . . . 3
(a) Transfer and Exchange of Definitive Warrants. . . . . . . . . . . . 3
(b) Exchange or Transfer of a Definitive Warrant for a Beneficial
Interest in a Global Warrant. . . . . . . . . . . . . . . . . . . . 3
(c) Transfer and Exchange of Global Warrants. . . . . . . . . . . . . . 4
(d) Exchange of a Beneficial Interest in a Global Warrant for a
Definitive Warrant. . . . . . . . . . . . . . . . . . . . . . . . . 4
(e) Restrictions on Transfer and Exchange of Global Warrants. . . . . . 4
(f) Countersigning of Definitive Warrants in Absence of Depositary. . . 4
(g) Cancellation of Global Warrant. . . . . . . . . . . . . . . . . . . 4
(h) Obligations with Respect to Transfers and Exchanges of Warrants . . 4
SECTION 8. Terms of Warrants; Exercise of Warrants. . . . . . . . . . . . . 5
SECTION 9. Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 10. Payment of Taxes. . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 11. Mutilated or Missing Warrant Certificates . . . . . . . . . . . 7
SECTION 12. Reservation of Warrant Shares . . . . . . . . . . . . . . . . . 7
SECTION 13. Obtaining Stock Exchange Listings . . . . . . . . . . . . . . . 8
SECTION 14. Adjustment of Exercise Price and Number of Warrant Shares
Issuable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(a) Adjustment for Change in Capital Stock. . . . . . . . . . . . . . . 8
i
(b) Adjustment for Rights Issue . . . . . . . . . . . . . . . . . . . . 9
(c) Adjustment for Other Distributions. . . . . . . . . . . . . . . . . 10
(d) Current Market Price. . . . . . . . . . . . . . . . . . . . . . . . 10
(e) When De Minimis Adjustment May Be Deferred. . . . . . . . . . . . . 11
(f) When No Adjustment Required . . . . . . . . . . . . . . . . . . . . 11
(g) Notice of Adjustment. . . . . . . . . . . . . . . . . . . . . . . . 11
(h) Notice of Certain Transactions. . . . . . . . . . . . . . . . . . . 11
(i) Reorganization of the Company . . . . . . . . . . . . . . . . . . . 12
(j) Warrant Agent's Disclaimer. . . . . . . . . . . . . . . . . . . . . 12
(k) When Issuance or Payment May Be Deferred. . . . . . . . . . . . . . 12
(l) Adjustment in Number of Shares. . . . . . . . . . . . . . . . . . . 13
(m) Form of Warrants. . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 15. No Dilution or Impairment . . . . . . . . . . . . . . . . . . . 13
SECTION 16. Fractional Interests. . . . . . . . . . . . . . . . . . . . . . 14
SECTION 17. Notices to Warrant Holders. . . . . . . . . . . . . . . . . . . 14
SECTION 18. Merger, Consolidation or Change of Name of Warrant Agent. . . . 15
SECTION 19. Warrant Agent . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 20. Registration Rights . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 21. Change of Warrant Agent . . . . . . . . . . . . . . . . . . . . 28
SECTION 22. Notices to the Company and Warrant Agent. . . . . . . . . . . . 28
SECTION 23. Supplements and Amendments. . . . . . . . . . . . . . . . . . . 29
SECTION 24. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 25. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 26. Governing Law; Jurisdiction . . . . . . . . . . . . . . . . . . 30
SECTION 27. Benefits of this Agreement. . . . . . . . . . . . . . . . . . . 30
SECTION 28. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 29. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . 30
EXHIBIT A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
ii
