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EXHIBIT 1.2
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XXXXXXX.XXX CORPORATION
AND
XXXXXXX AND COMPANY SECURITIES, INC.
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REPRESENTATIVE'S
WARRANT AGREEMENT
Dated as of August [__], 1999
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This REPRESENTATIVE'S WARRANT AGREEMENT has been made and
entered into as of August [__], 1999, by and between XXXXXXX.XXX CORPORATION, a
Delaware corporation (the "Company"), and XXXXXXX AND COMPANY SECURITIES, INC.,
a Delaware corporation (the "Representative").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to the Representative,
or at the direction of the Representative, to any co-managing underwriter,
warrants (the "Warrants") to purchase up to an aggregate of 120,000 shares of
common stock, $.0001 par value per share, of the Company (the "Common Stock");
WHEREAS, the Representative has agreed pursuant to the
Underwriting Agreement (the "Underwriting Agreement") dated as of August [__],
1999, by and between the Company and the Representative, to act as the
Representative of the underwriters named in Schedule I thereto (the
"Underwriters") in connection with the Company's proposed public offering (the
"Offering") of 1,200,000 shares of Common Stock at an initial public offering
price of $[_______] per share of Common Stock; and
WHEREAS, the Warrants to be issued pursuant to this Agreement
will be issued on the Closing Date (as such term is defined in the Underwriting
Agreement) by the Company to the Representative, or its designees, in
consideration for, and as part of the Representative's compensation in
connection with, the Representative acting as such pursuant to the terms of the
Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises hereof, the
payment by the Representative to the Company of an aggregate of $120, the
agreements herein set forth and other good and valuable consideration, hereby
acknowledged, the parties hereto agree as follows:
1. Grant. The Representative and, at the direction of
the Representative, any co-managing underwriter of the Offering, are hereby
granted the right to purchase, at any time from [___________], 2001, until 5:30
P.M., New York time, on [___________], 2004 (the "Expiration Date"), up to an
aggregate of 120,000 shares of Common Stock (the "Shares" or "Warrant
Securities") (subject to adjustment as provided in Section 8 hereof) at the
initial Exercise Price (as hereinafter defined) (subject to the terms and
conditions of this Agreement). Except as set forth herein, the Shares issuable
upon exercise of the Warrants will be in all respects identical to the shares of
Common Stock being purchased by the Representative for resale to the public
pursuant to the terms and provisions of the Underwriting Agreement. Any Warrant
that is not exercised on or prior to the Expiration Date shall be void and all
rights hereunder shall cease.
2. Warrant Certificates. The warrant certificates (the
"Warrant Certificates") delivered and to be delivered pursuant to this Agreement
shall be in the form set forth in Exhibit A attached hereto and made a part
hereof, with such appropriate insertions, omissions, substitutions and other
variations as required or permitted by this Agreement.
3. Exercise of Warrant.
3.1 Method of Exercise. The Warrants are exercisable at
the Exercise Price payable by certified or official bank check in New York
Clearing House funds. Upon surrender of a Warrant Certificate with a duly
executed Election to Purchase (in the form of Annex A to the Warrant
Certificate), together with payment at the Company's principal offices
(presently located at 000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxx
98109) of the aggregate Exercise Price of the Warrants being exercised, the
registered holder of a Warrant Certificate ("Holder" or "Holders") shall be
entitled to receive a certificate or certificates for the shares of Common Stock
so purchased. The purchase rights represented by each Warrant Certificate are
exercisable at the option of the Holder thereof, in whole or in part (but not as
to fractional shares of the Common Stock underlying the Warrants). In the case
of the purchase of less than all the shares of Common Stock purchasable under
any Warrant Certificate, the Company shall cancel said Warrant Certificate upon
the surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Warrants exercisable thereunder.
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3.2 Exercise by Surrender of Warrants. In addition to the
method of payment set forth in Section 3.1 and in lieu of any cash payment
required thereunder, Holders shall have the right, at any time, and from time to
time, to exercise the Warrants in full or in part by surrendering Warrant
Certificates representing a certain number of additional Warrants as payment of
the aggregate Exercise Price for the shares of Common Stock being acquired upon
exercise of the Warrants. The Warrants are exercisable pursuant to this Section
3.2 by surrender of the Warrant Certificate with a duly executed Election to
Purchase (in the form of Annex B to the Warrant Certificate) and surrender of a
certain number of Warrants in addition to those being exercised. The number of
additional Warrants to be surrendered in payment of the aggregate Exercise Price
for the Warrants being exercised shall be determined by multiplying the number
of Warrants to be exercised by the Exercise Price, and then dividing the product
thereof by an amount equal to the Market Price (as defined below). Solely for
the purposes of this Section 3.2, Market Price shall be calculated either (i) on
the date which the Election to Purchase (in the form of Annex B to the Warrant
Certificate) is deemed to have been sent to the Company pursuant to Section 13
hereof ("Notice Date") or (ii) as the average of the Market Prices for each of
the five trading days preceding the Notice Date, whichever of (i) or (ii) is
greater.
3.3 Definition of Market Price. As used herein, the
phrase "Market Price" at any date shall be deemed to be the last reported sale
price, or, in case no such reported sale takes place on such day, the average of
the last reported bid prices for the last three trading days, in either case as
officially reported by the Nasdaq SmallCap Market or the principal securities
exchange on which the Common Stock is listed or admitted to trading or by the
Nasdaq National Market (collectively, "NASDAQ"), or, if the Common Stock is not
quoted by the Nasdaq SmallCap Market listed or admitted to trading on any
national securities exchange or quoted by NASDAQ, the average closing bid price
as furnished by the NASD or similar organization, or if the Common Stock is not
quoted on the Nasdaq SmallCap Market, as determined in good faith by resolution
of the Board of Directors of the Company, based on the best information
available to it.
4. Issuance of Certificates. Upon the exercise of the
Warrants, the issuance of certificates for the total number of whole shares of
Common Stock for which such Warrants were exercised shall be made promptly (and
in any event within five business days thereafter) without charge to the Holder
thereof including, without limitation, any stock transfer or similar tax which
may be payable with respect to the issuance thereof, and such certificates shall
(subject to the provisions of Sections 5 and 7 hereof) be issued in the name of,
or in such names as may be directed by, the Holder thereof; provided, however,
that the Company shall not be required to pay any tax which may be payable with
respect to any transfer involved in the issuance and delivery of any such
certificates in a name other than that of the Holder, and the Company shall not
be required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.
The Warrant Certificates and the certificates representing the
Shares underlying the Warrants shall be executed on behalf of the Company by the
manual or facsimile signature of the then present Chairman of the Board of
Directors or President of the Company under its corporate seal reproduced
thereon and by the then present Treasurer or Secretary of the Company. Warrant
Certificates shall be dated the date of execution by the Company upon initial
issuance, division, exchange, substitution or transfer. Certificates
representing the shares of Common Stock issuable upon exercise of the Warrants
shall be dated the date on which the Company receives the Election to Purchase,
Warrant Certificate and payment of the Exercise Price.
5. Restriction on Transfer of Warrants. The Warrants may
not be sold, transferred, assigned, hypothecated or otherwise disposed of, in
whole or in part, except that the Warrants may be (i) assigned in whole or part
to any officer or partner of the Representative or any member of the
underwriting group and (ii) transferred by operation of law as a result of the
death or divorce of any transferee to whom the Warrants may have been
transferred. Any assignment shall be effected by a duly executed assignment in
the form of Annex C to the Warrant Certificate.
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6. Exercise Price.
6.1 Initial and Adjusted Exercise Price. The initial
exercise price of each Warrant shall be $[________] per share of Common Stock.
The adjusted exercise price shall be the price which shall result from time to
time from any and all adjustments of the initial exercise price in accordance
with the provisions of Section 8 hereof.
6.2 Exercise Price. The term "Exercise Price" herein
shall mean the initial exercise price or the adjusted exercise price, as the
case may be.
7. Registration Rights.
7.1 Piggyback Registration. If, at any time commencing
after [___________], 2001 and expiring five years thereafter, the Company
proposes to register any of its securities under the Securities Act of 1933, as
amended (the "Securities Act") (other than pursuant to a Form X-0, Xxxx X-0 or
any other successor form of limited purpose), it will give written notice by
registered mail at least 30 days prior to the filing of each such registration
statement, to the Representative and to all other Holders of Warrants and
Warrant Securities of its intention to do so. If the Representative or other
Holders of Warrants and Warrant Securities notify the Company within 20 business
days after receipt of any such notice of its or their desire to include any of
their respective Warrant Securities in such proposed registration statement, the
Company shall afford the Representative and such Holders of Warrants and Warrant
Securities the opportunity to have any such Warrant Securities registered under
such registration statement, provided, however, that if the managing underwriter
advises the Company in writing that the inclusion of all Warrant Securities that
Holders have proposed be included in such registration statement would interfere
with the successful marketing of the securities proposed to be registered by the
Company, then the securities to be included in such registration statement shall
be included in the following order:
(a) first, the securities proposed to be included in
such registration by the Company or, if such registration is
for securities of specified security holders of the Company,
by such holders;
(b) second, the Warrant Securities held by the
Holders requested to be included in such registration; and
(c) third, all other holders of Common Stock entitled
to be included in such registration statement (pro rata among
the holders requesting such registration based upon the number
of shares of Common Stock requested by each such holder to be
registered).
Notwithstanding the provisions of this Section 7.1, the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 7.1 (irrespective of whether a written request
for inclusion of any such Warrant Securities shall have been made) to elect not
to file any such proposed registration statement or to withdraw the same after
the filing but prior to the effective date thereof.
7.2 Demand Registration.
(a) At any time commencing on [___________], 2001 and
expiring three years thereafter (which date is the fifth anniversary of the
effective date of the Registration Statement on Form SB-2 (File No. 333-80849))
(or such earlier time as the Warrant Securities are eligible for sale under Rule
144(k), the Holders of the Warrants and/or Warrant Securities representing at
least 26% of such securities (assuming the exercise of all of the Warrants)
shall have the right (which right is in addition to the registration rights
under Section 7.1 hereof), exercisable by written notice to the Company, on one
occasion only to request to have the Company prepare and file with the
Securities and Exchange Commission (the "Commission"), a registration statement
and such other documents, including a prospectus, as may be necessary in the
opinion of counsel for the Company and, if either the Representative or a
majority of the Holders electing to participate in the registration requested
pursuant to this Section 7.2(a) have retained counsel in connection with such
registration, counsel for each of the Representative and a majority of the
Holders electing to participate in such registration, in order to comply with
the provisions of the
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Securities Act, so as to permit a public offering and sale of their respective
Warrant Securities for nine consecutive months by such Holders and any other
Holders of the Warrants and/or Warrant Securities who notify the Company of
their decision to join within 15 days after receiving notice from the Company
pursuant to Section 7.2(b).
(b) The Company covenants and agrees to give written
notice of any registration request under this Section 7.2 by any Holder or
Holders to all other registered Holders of Warrants and Warrant Securities
within ten days from the date of the receipt of any such registration request.
(c) In addition to the registration rights under Section
7.1 and Section 7.2(a), at any time commencing after [_______________], 2001 and
expiring five years thereafter (or such earlier time as the Warrant Securities
are eligible for sale under Rule 144(k)), any Holder(s) of Warrants and/or
Warrant Securities shall have the right, exercisable by written request to the
Company, to require the Company to prepare and file, with the Commission a
registration statement and such other documents, including a prospectus, as may
be necessary in the opinion of counsel for the Company and, if either the
Representative or a majority of the Holders electing to participate in the
registration requested pursuant to this Section 7.2(c) have retained counsel in
connection with such registration, counsel for each of the Representative and
the majority of the Holders electing to participate in such registration, so as
to permit a public offering and sale for nine consecutive months by any such
Holder(s) of their respective Warrant Securities, provided, however, that (i) a
minimum of 26% of the Warrant Securities issuable upon exercise of the Warrants
issued on the date hereof must be registered under such registration statement,
and (ii) the provisions of Section 7.3(b) hereof shall not apply to any such
registration request and all reasonable costs, fees and expenses in connection
therewith, including, without limitation, registration fees, legal and
accounting fees, printing fees, blue sky fees and expenses, that have been
approved in advance by a majority of the Holders participating in such
registration, shall be at the expense of the Holder or Holders making such
request.
(d) Notwithstanding the provisions of Sections 7.2(a)
and 7.2(c), if the Company shall not have filed a registration statement
relating to the Warrant Securities within the time period specified in Section
7.3(a) hereof, the Company shall have the obligation, upon the written notice of
election of at least 26% of the Holders of the Warrants and/or Warrant
Securities, to repurchase (i) any and all Warrant Securities held by such
persons at the higher of the Market Price per share of Common Stock on (x) the
date of the notice sent pursuant to Section 7.2(a) or (y) the expiration of the
period specified in Section 7.3(a) and (ii) any and all Warrants at such Market
Price less the Exercise Price of such Warrant. Such repurchase shall be in
immediately available funds and shall close within two days after the later of
(i) the expiration of the period specified in Section 7.3(a) or (ii) the
delivery of the written notice of election specified in this Section 7.2(d).
(e) Notwithstanding the provisions of Sections 7.2(a)
and (c), if at any time during which the Company is obligated to maintain the
effectiveness of a registration statement pursuant to such Sections 7.2(a) and
(c), the Company's Board of Directors, after the consultation with counsel to
the Company (which counsel shall be experienced in securities matters) has
determined in good faith that the filing of such registration statement or the
compliance by the Company with its disclosure obligations thereunder would
require the disclosure of material information which the Company has a bona fide
business purpose for preserving as confidential, then the Company may delay the
filing or the effectiveness of such registration statement (if not then filed or
effective, as appropriate) and shall not be required to maintain the
effectiveness thereof for a period expiring upon the earlier to occur of (i) the
date on which such information is disclosed to the public or ceases to be
material or the Company is so able to comply with its disclosure obligations or
(ii) 30 days after the Company's Board of Directors makes such good faith
determination. There shall not be more than one such delay period with respect
to any registration pursuant to Section 7.2(a) or (c). Notice of any such delay
period and of the termination thereof will be promptly delivered by the Company
to each Holder and shall be maintained in confidence by each such Holder.
7.3 Covenants of the Company with Respect to
Registration. In connection with any registration under Section 7.1 or 7.2
hereof, the Company covenants and agrees as follows:
(a) The Company shall use its best efforts to file a
registration statement, as soon as practicable, but in any event within 60 days
of receipt of any demand therefor, shall use its best efforts to have any
registration statement declared effective at the earliest possible time and
shall furnish each Holder desiring to sell
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Warrant Securities such number of prospectuses as shall reasonably be requested;
provided, however, that the Company shall not be obligated to effect such
registration under the Securities Act except in accordance with the following
provisions:
(i) the Company shall not be obligated to use its
best efforts to file and cause to become effective any
registration statement for a period of up to 90 days if at the
time of such request any other registration statement pursuant
to which shares of Common Stock of the Company are to be or
were sold has been filed with the Commission and not withdrawn
or has been declared effective within the prior 60 days; and
(ii) the Company may delay the filing or
effectiveness of the registration statement for a period of up
to 90 days after the date of a request for registration if at
the time of such request the Company is engaged in a firm
commitment underwritten public offering of Common Stock in
which the Holders may include their Warrant Securities
pursuant to Section 7.1 hereof.
(b) The Company shall pay all costs, fees and expenses
in connection with all registration statements filed pursuant to Sections 7.1
and 7.2(a) hereof (excluding fees and expenses of the Representative's and
Holders' counsel and accountants and any underwriting or selling commissions)
including, without limitation, the Company's legal and accounting fees, printing
expenses, blue sky fees and expenses. The Holder(s) whose Warrant Securities are
the subject of a Registration Statement filed pursuant to Section 7.2(c) will
pay all reasonable costs, fees and expenses in connection therewith, including,
without limitation, registration fees, legal and accounting fees, printing fees,
blue sky fees and expenses that have been approved in advance by a majority of
the Holders participating in such registration. If the Company shall fail to
comply with the provisions of Section 7.3(a) hereof, the Company shall, in
addition to any other equitable or other relief available to such Holders,
extend the Expiration Date by such number of days as shall equal the delay
caused by the Company's failure and be liable for any or all incidental, special
and consequential damages sustained by such Holders.
(c) The Company will take all necessary action which may
be required in qualifying or registering the Warrant Securities included in a
registration statement for offering and sale under the securities or blue sky
laws of such states as reasonably are requested by the Holder(s), provided,
that, the Company shall not be obligated to 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 or to taxation in any
jurisdiction where it is not then so subject.
(d) The Company shall furnish without charge to each
Holder of Warrant Securities, promptly after filing thereof with the Commission,
at least one copy of the registration statement filed pursuant to Section 7.1 or
7.2 (a "Registration Statement") and each amendment thereto or each amendment or
supplement to the prospectus included therein (the "Prospectus") including all
financial statements and schedules, documents incorporated by reference therein
and if the Holder so requests in writing, all exhibits thereto.
(e) The Company shall take such action as may be
reasonably necessary so that (i) the Registration Statement and any amendment
thereto and any Prospectus forming a part thereof and any supplement or
amendment thereto complies in all material respects with the Securities Act and
the rules and regulations thereunder, (ii) the Registration Statement and any
amendment thereto (in either case, other than with respect to written
information furnished to the Company by or on behalf of any Holder specifically
for inclusion therein) does not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make any statement therein not misleading and (iii) the Prospectus and any
supplement thereto (in either case, other than with respect to such information
from Holders), does not include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(f) The Company shall promptly advise the Holders of
Warrant Securities registered under the Registration Statement (which advice
pursuant to clauses (ii) - (iv) shall be accompanied by an instruction to
suspend the use of the Prospectus until the requisite changes have been made)
and, if requested by such persons, shall confirm such advice in writing:
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(i) when the Registration Statement and any amendment
thereto has been filed with the Commission and when the
Registration Statement or any post-effective amendment thereto
has become effective;
(ii) of any request by the Commission for amendments
to the Registration Statement or amendments or supplements to
the Prospectus or for additional information relating thereto;
(iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration
Statement or of the suspension by any state securities
commission of the qualification of the Warrant Securities for
offering or sale in any jurisdiction, or the initiation of any
proceeding for any of the preceding purposes; and
(iv) of the happening of any event that requires the
making of any changes in the Prospectus so that, as of such
date, the Prospectus does not contain an untrue statement of a
material fact and does not omit to state a material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
(g) If at any time the Commission shall issue any stop
order suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the Warrant
Securities under state securities or Blue Sky laws, the Company shall use its
reasonable best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(h) The Company shall, during the period the Company is
obligated to maintain the effectiveness of a Registration Statement under
Section 7.2 hereof, deliver to each Holder of Warrant Securities included under
the Registration Statement, without charge, such reasonable number of copies of
the Prospectus (including each preliminary prospectus) included in the
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request to facilitate the public sale or other disposition of the
Warrant Securities by the selling Holder.
(i) The Company shall cooperate with the Holders and the
underwriter(s), if any, to facilitate the timely preparation and delivery of
certificates representing Warrant Securities to be sold under the Registration
Statement, free of any restrictive legends and in such denominations and
registered in such names as the Holders or the underwriter(s), if any, may
reasonably request in connection with the sales of Warrant Securities pursuant
to the Registration Statement.
(j) Upon the occurrence of any event contemplated by
Section 7.3(f)(ii) - (iv) hereof or any request by the Commission for any
amendments to the Registration Statement or for additional information relating
thereto or the happening of any event that requires the making of any changes in
the Registration Statement, the Company shall file (and use its reasonable best
efforts to have declared effective as soon as possible) a post-effective
amendment to the Registration Statement or an amendment or supplement to the
Prospectus or file any other required document so that, as thereafter delivered
to the purchasers of Warrant Securities registered under the Registration
Statement, the Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements therein
in light of the circumstances under which they were made not misleading. Each
Holder of Warrant Securities registered under the Registration Statement agrees
by acquisition of such Warrant Securities that, upon receipt of any notice from
the Company of the existence of any fact of the kind described in Section
7.3(f)(ii) - (iv) hereof, such Holder will forthwith discontinue disposition of
Warrant Securities pursuant to the Registration Statement until such Holder
receives copies of the supplemented or amended Prospectus contemplated by this
Section 7.3(j), or until such Holder is advised in writing by the Company that
the use of the Prospectus may be resumed, and such Holder has received copies of
any additional or supplemental filings which are incorporated by reference in
the Prospectus. If so directed by the Company, each 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 Warrant
Securities current at the time of receipt of such notice.
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(k) Nothing contained in this Agreement shall be
construed as requiring the Holders to exercise their Warrants prior to the
initial filing of any registration statement or the effectiveness thereof.
(l) The Company shall not permit the inclusion of any
securities other than Warrant Securities to be included in any Registration
Statement filed pursuant to Section 7.2(a) or 7.2(c) hereof without the prior
written consent of the Holders representing a majority of the Holders then
requesting registration under such Section 7.2(a) or Section 7.2(c),
respectively.
(m) The Company shall furnish to each Holder
participating in the offering and to each underwriter, if any, a signed
counterpart, addressed to such Holder or underwriter, of (i) an opinion of
counsel to the Company, dated the effective date of such Registration Statement
(and, if such registration includes an underwritten public offering, an opinion
dated the date of the closing under the underwriting agreement), and (ii) if and
to the extent permitted by Statement of Auditing Standards No. 72, a "cold
comfort" letter dated the effective date of such Registration Statement (and, if
such registration includes an underwritten public offering, a letter dated the
date of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such Registration Statement, in each case covering
substantially the same matters with respect to such Registration Statement (and
the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities.
(n) The Company shall as soon as practicable after the
effective date of the Registration Statement, and in any event within 15 months
thereafter, make "generally available to its security holders" (within the
meaning of Rule 158 under the Securities Act) an earnings statement (which need
not be audited) complying with Section 11(a) of the Securities Act and covering
a period of at least 12 consecutive months beginning after the effective date of
the Registration Statement.
(o) The Company shall deliver promptly to each Holder
participating in the offering upon request, and to the managing underwriters, if
any, copies of all correspondence between the Commission and the Company, its
counsel or accountants and all memoranda relating to discussions with the
Commission or its staff with respect to the Registration Statement and shall
permit each Holder and such underwriters to do such investigation, upon
reasonable advance notice, with respect to information contained in or omitted
from the Registration Statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the NASD. Such investigation shall
include access to books, records and properties and opportunities to discuss the
business of the Company with its officers and independent accountants, all to
such reasonable extent and at such reasonable times and as often as any Holder
or underwriter shall reasonably request.
(p) With respect to the registration of Warrant
Securities pursuant to Section 7.2 to be sold to an underwriter for reoffering
to the public, the Company shall negotiate in good faith with respect to
entering into an underwriting agreement with the managing underwriters selected
for such underwriting by Holders holding a majority of the Warrant Securities
requested to be included in such underwriting, which may include the
Representative. Such agreement shall be satisfactory in form and substance to
the Company, each Holder and such managing underwriter and shall contain such
representations, warranties and covenants by the Company and such other terms as
are customarily contained in agreements of that type used by the managing
underwriter. The Holders shall be parties to any underwriting agreement relating
to an underwritten sale of their Warrant Securities and may, at their option,
require that any or all the representations, warranties and covenants of the
Company to or for the benefit of such underwriters shall also be made to and for
the benefit of such Holders. Such Holders shall not be required to make any
representations or warranties to or agreements with the Company except as they
may relate to such Holders and their intended methods of distribution and shall
not be requested by the Company to provide indemnification except as provided in
Section 7.3(s) hereof.
(q) In addition to Warrant Securities, and except as
otherwise provided in Section 7.3(l) hereof, upon the written request therefor
by any Holders, the Company shall include in the Registration Statement
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any other securities of the Company held by such Holders as of the date of
filing of such Registration Statement, including, without limitation, restricted
shares of Common Stock, options, warrants or securities convertible into shares
of Common Stock and shall not be requested by the Company to provide
indemnification except as provided in Section 7.3(s) hereof.
(r) For purposes of this Agreement, wherever a specified
percent of Holders is required to take action, such percentage shall be
calculated: (i) assuming the immediate exercise of all of the outstanding
Warrants for Common Stock and (ii) excluding the shares of Common Stock then
issued or issuable pursuant to Warrants that (x) are held by the Company, an
affiliate or officer thereof or any of their respective affiliates, members of
their family or persons acting as their nominees or in conjunction therewith or
(y) have been resold to the public pursuant to a Registration Statement filed
with the Commission under the Securities Act.
(s) Indemnification and Contribution.
(1) The Company agrees to indemnify and hold harmless
each Holder (for purposes of this Section 7.3(s), "Holder" shall include the
officers, directors, partners, employees and agents, and each person, if any,
who controls any Holder ("controlling person") within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange Act, from and against any
and all losses, claims, damages, expenses or liabilities, joint or several (and
actions, proceedings, suits and litigation in respect thereof), whatsoever, as
the same are incurred, to which such Holder or any such controlling person may
become subject, under the Securities Act, the Exchange Act or any other statute
or at common law or otherwise insofar as such losses, claims, damages, expenses
or liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, or
any preliminary Prospectus or Prospectus (as from time to time amended and
supplemented) or arise out of or are based upon the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein (with respect to any preliminary Prospectus or
Prospectus, in the light of the circumstances under which they were made), not
misleading; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, expense or liability
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration Statement, or any
preliminary Prospectus or Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Holder specifically for inclusion therein and
provided, further, that the Company shall not be liable to any such Holder under
the indemnity agreement in this subsection (1): (i) with respect to any
preliminary Prospectus or Prospectus (if such Prospectus has then been amended
or supplemented) to the extent that any such loss, liability, claim, damage or
expense of such Holder arises out of a sale of Warrant Securities by such Holder
to a person to whom (a) there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus (or of the Prospectus as
then amended or supplemented) if the Company has previously furnished copies
thereof to such Holder a reasonable time in advance or (b) prior to written
confirmation of such sale, such Holder received notice from the Company pursuant
to Section 7.3(j) to discontinue disposition pursuant to such Prospectus and, in
either case, the loss, liability, claim, damage or expense of such Holder
results from an untrue statement or alleged untrue statement or omission or
alleged omission of a material fact contained in the preliminary Prospectus (or
the Prospectus) which was corrected in the Prospectus (or the Prospectus as
amended or supplemented) or (ii) to the extent that any such loss, claim,
damage, expense or liability arises out of or is based upon any action or
failure to act by such Holder that is found in a final judicial determination
(or a settlement tantamount thereto) to constitute bad faith, willful misconduct
or gross negligence on the part of such Holder. The indemnity agreement in this
subsection (1) shall be in addition to any liability which the Company may have
at common law or otherwise, to the extent not inconsistent therewith.
The Company also agrees to indemnify or contribute to losses
of any underwriters of Warrant Securities registered under the Registration
Statement, their officers and directors and each person, if any, who controls
any such underwriter (within the meaning of the Securities Act) on substantially
the same basis as that of the indemnification of the Holders provided in this
Section 7.3(s)(1) and shall, if requested by Holders holding a majority of the
Warrant Securities sought to be registered pursuant to Section 7.2 hereof, enter
into an underwriting agreement reflecting such agreement, as provided in Section
7.3(p) hereof.
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(2) Each Holder agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers and each other person,
if any, who controls the Company within the meaning of the Securities Act, to
the same extent as the foregoing indemnity from the Company to the Holders, but
only with respect to (i) statements or omissions, if any, made in conformity
with information relating to such Holder furnished in writing by such Holder
specifically for use in the Registration Statement, or any preliminary
Prospectus or the Prospectus or any amendment thereof or supplement thereto, and
(ii) any breach of such Holder's representations, covenants or agreements set
forth herein; provided, however, that the obligation to indemnify will be
individual to each Holder and will be limited to the amount of net proceeds
received by such Holder from the sale of Warrant Securities pursuant to the
Registration Statement.
(3) Promptly after receipt by an indemnified party under
this Section 7.3(s) of notice of the commencement of any action, suit or
proceeding, such indemnified party shall, if a claim in respect thereof is to be
made against one or more indemnifying parties under this Section 7.3(s), notify
each party against whom indemnification is to be sought in writing of the
commencement thereof (but the failure to notify an indemnifying party shall not
relieve it from any liability which it may have under Sections 7.3(s)(1) or (2)
unless and to the extent that it has been prejudiced in a material respect by
such failure or from the forfeiture of substantial rights and defenses). In case
any such action, suit or proceeding is brought against any indemnified party,
and it notifies an indemnifying party or parties of the commencement thereof,
the indemnifying party or parties will be entitled to participate therein, and
to the extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party, which may be the same counsel as counsel to the indemnifying
party. Notwithstanding the foregoing, the indemnified party or parties shall
have the right to employ its or their own counsel in any such case but the fees
and expenses of such counsel shall be at the expense of such indemnified party
or parties unless (i) the employment of such counsel shall have been authorized
in writing by the indemnifying parties in connection with the defense of such
action at the expense of the indemnifying party, (ii) the indemnifying parties
shall not have employed counsel reasonably satisfactory to such indemnified
party to take charge of the defense of such action within a reasonable time
after notice of commencement of the action or (iii) such indemnified party or
parties shall have reasonably concluded, after consultation with counsel to such
indemnified party or parties, that a conflict of interest exists which makes
representation by counsel chosen by the indemnifying party not advisable (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses of one additional counsel shall be borne by
the indemnifying parties. In no event shall the indemnifying parties be liable
for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
Anything in this Section 7.3(s) to the contrary notwithstanding, an indemnifying
party shall not be liable for any settlement of any claim or action effected
without its written consent.
(4) In order to provide for just and equitable
contribution in any case in which (i) an indemnified party makes claim for
indemnification pursuant to this Section 7.3(s), but it is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding the
fact that the express provisions of this Section 7.3(s) provide for
indemnification in such case, or (ii) contribution under the Securities Act may
be required, then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid as a result of such
losses, claims, damages, expenses or liabilities (or actions, suits, proceedings
or litigation in respect thereof) in such proportion as is appropriate to
reflect the relative fault of each of the contributing parties, on the one hand,
and the party to be indemnified, on the other hand, in connection with the
statements or omissions that resulted in such losses, claims, damages, expenses
or liabilities, as well as any other relevant equitable considerations. Relative
fault 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 a Holder, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, expenses or liabilities (or actions, suits, proceedings
or litigation in respect thereof) referred to above in this subsection (4) shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating,
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preparing or defending any such action, claim, suit, proceeding or litigation.
Notwithstanding the provisions of this subsection (4), no Holder shall be
required to contribute any amount in excess of the amount by which the total
price at which the Warrant Securities sold by such indemnifying party and
distributed to the public were offered to the public exceeds the amount of any
damages that such indemnifying party 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 12(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 7.3(s), each person, if any, who controls the Company within the
meaning of the Securities Act, each executive officer of the Company and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to this subsection (4). Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit, proceeding or litigation against such party in respect to which a
claim for contribution may be made against another party or parties under this
subsection (4), notify such party or parties from whom contribution may be
sought, but the omission so to notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have hereunder or otherwise than under this subsection (4), or to
the extent that such party or parties were not adversely affected by such
omission. The contribution agreement set forth above shall be in addition to any
liabilities which any indemnifying party may have at common law or otherwise.
(t) Notwithstanding the foregoing provisions of this
Section 7.3, no registration rights shall be extended pursuant to this Section 7
with respect to any Warrant Securities (i) which have been sold pursuant to and
in accordance with an effective Registration Statement, (ii) sold in accordance
with Rule 144 under the Securities Act or (iii) eligible for sale under Rule
144(k) under the Securities Act.
8. Adjustments.
8.1 Adjustments of Number of Shares. The number of
shares of Common Stock that the holder of any Warrants shall be entitled to
receive upon each exercise thereof shall be determined by multiplying:
(a) the number of shares of Common Stock that would otherwise
(but for the provisions of this Section 8) be issuable upon such
exercise, as designated by the holder hereof pursuant to Section 4; by
(b) a fraction of which the numerator is $____ and the
denominator is the Exercise Price in effect on the date of such
exercise;
provided, however that no adjustment pursuant to this Section 8 shall occur as a
result of (i) shares of Common Stock issued pursuant to the Underwriting
Agreement, (ii) shares of Common Stock issued upon the exercise of other
Warrants or (iii) shares of Common Stock issued upon the exercise of outstanding
options and warrants granted prior to the date hereof and which are described in
the Registration Statement (collectively, the "Excluded Issuances").
8.2 Adjustment of Exercise Price.
8.2.1 Initial Exercise Price. The Exercise Price, which
will initially be 120% of the public offering price with respect to the
Offering, shall be adjusted and readjusted from time to time as provided in this
Section 8 and, as so adjusted or readjusted, shall remain in effect until a
further adjustment or readjustment thereof is required by this Section 8;
provided, however, that there shall be no adjustment of the Exercise Price due
to Excluded Issuances.
8.2.2 Issuance of Additional Shares of Common Stock. In
case the Company, at any time or from time to time after the date on which the
Registration Statement becomes effective under the Securities Act (the
"Effective Date"), shall issue or sell Additional Shares of Common Stock (as
defined below), including Additional Shares of Common Stock deemed to be issued
pursuant to Section 8.3 or Section 8.4, without consideration or for a
consideration per share less than either the Exercise Price or the Fair Market
Value (as defined below) of the shares of Common Stock outstanding immediately
prior to such issue or sale, then, and in each such case, the Exercise
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Price shall be reduced, subject to Section 8.9, concurrently with such issue or
sale, to a price (calculated to the nearest cent) determined by multiplying such
Exercise Price by a fraction of which
(a) the numerator shall be (i) the number of shares of Common
Stock outstanding immediately prior to such issue or sale plus (ii) the
number of shares of Common Stock which the aggregate consideration
received by the Company for the total number of Additional Shares of
Common Stock so issued or sold would purchase at the lesser of such
Exercise Price or Fair Market Value immediately prior to such issue or
sale, and
(b) the denominator shall be the number of shares of Common
Stock outstanding immediately after such issue or sale.
For the purposes of this Section 8.2.2, (x) immediately after any Additional
Shares of Common Stock shall be deemed to be issued pursuant to Section 8.3 or
Section 8.4, such Additional Shares of Common Stock shall be deemed to be
outstanding, and (y) treasury shares shall not be deemed to be outstanding.
"Additional Shares of Common Stock" shall mean all shares (including treasury
shares) of Common Stock issued or sold (or pursuant to Sections 8.3 or 8.4,
deemed to be issued) by the Company after the Effective Date, whether or not
subsequently reacquired or retired by the Company, other than shares of Common
Stock issued upon the exercise of the Warrants. "Fair Market Value," with
respect to shares of Common Stock outstanding at any time shall be determined as
follows:
(a) If a public market exists for the Common Stock, the Fair
Market Value of the Common Stock shall be (i) the closing price of the
Common Stock on the Business Day (as defined below) prior to such
issuance on the principal national securities exchange on which the
Common Stock is at the time traded or, if none, the Nasdaq Stock Market
("Nasdaq") or (ii) if there is not such a sale on such day or if Common
Stock is not at that time traded on the Nasdaq or on a national
securities exchange, the average of the lowest closing bid and highest
closing asked prices on such day as reported by the National
Association of Securities Dealers (or any successor organization); or
(b) If a public market for the Common Stock does not exist,
the Fair Market Value of the Common Stock shall be determined in good
faith by the Board of Directors promptly after the issuance of any
Additional Shares of Common Stock or the occurrence of any other event
or the existence of any other circumstance as a result of which the
Fair Market Value of the Common Stock would be required for any
provision of this agreement, and the Company shall promptly deliver to
each Holder a certificate of the Secretary of the Company setting forth
the amount of the Fair Market Value of the Common Stock and certifying
that the amount was determined by the Board of Directors of the
Company. If any Holder disagrees with the Fair Market Value set forth
in that certificate, such Holder may, together with any other Holders
who so disagree, engage an independent investment bank or firm of
independent public accountants to act as appraiser, the expense of
which shall be borne by such Holder or Holders, to determine the Fair
Market Value of the Common Stock, and such Holder shall deliver such
appraisal to the Company within 30 days after the date of delivery of
the certificate referenced to above. Within five days after delivery to
the Company of such appraisal, the appraiser engaged by the Holder and
a person designated by the Board (the expense of which shall be borne
by the Company) shall meet in order to resolve any questions or
differences with respect to the Fair Market Value of the Common Stock.
If such persons agree on a Fair Market Value of the Common Stock, such
Fair Market Value shall be the Fair Market Value. If no such agreement
is reached, the Fair Market Value shall be determined within ten days
after such meeting by an appraiser who shall be selected by the
appraiser engaged by the Holder and the person designated by the Board
(or, if they do not agree on an appraiser within ten days, another
independent investment bank or firm of independent public accountants
to act as appraiser selected by the American Arbitration Association),
the expense of which shall be shared equally by such Holder or Holders,
on the one hand, and the Company, on the other hand, and the
determination of that third appraiser shall be conclusive and binding
on both the Company and the Holder. In determining the Fair Market
Value of any share of Common Stock, all Warrants shall be treated as if
they had been exercised for the number of shares of Common Stock
issuable upon their exercise, and the Fair Market Value of any
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Warrants shall be equal to the Fair Market Value of the Shares of
Common Stock issuable upon the exercise of such Warrants less the
exercise price of such Warrants.
8.2.3 Dividends and Distributions. In case the Company at
any time or from time to time after the Effective Date shall declare, order, pay
or make a dividend or other distribution on Common Stock (including, without
limitation, any distribution of stock or other securities, property or options
by way of dividend, spin-off, reclassification, corporate rearrangement, or any
redemption or acquisition of stock or options or other securities), then, and in
each such case, the Exercise Price in effect immediately prior to the close of
business on the record date fixed for the determination of holders of any class
of securities entitled to receive such dividend or other distribution shall be
reduced, subject to Section 8.9, effective as of the close of business on such
record date, to a price (calculated to the nearest cent) determined by
multiplying such Exercise Price by a fraction of which
(a) the numerator shall be the Exercise Price in effect
immediately prior to the close of business on such record date minus
the value of such dividends or other distributions (as determined in
good faith by the Board of Directors of the Company) applicable to one
share of Common Stock, and
(b) the denominator shall be such Exercise Price in effect
immediately prior to the close of business on such record date;
provided, however, that no such reduction shall be made pursuant to this Section
8.2.3 for a dividend payable in Additional Shares of Common Stock or in Options
(as defined below) for Common Stock, or a dividend payable in cash or other
property and declared out of the earned surplus (i.e., retained earnings, when
and if the Company has any) of the Company (excluding any portion thereof
resulting from a revaluation of property). For purposes of the foregoing, a
dividend payable other than in cash shall be considered payable out of earned
surplus only to the extent that such earned surplus is charged an amount equal
to the fair value of such dividend at the time of declaration as determined in
good faith by the Board of Directors of the Company. "Options" shall mean
rights, options or warrants to subscribe for, purchase or otherwise acquire
either Additional Shares of Common Stock or Convertible Securities. "Convertible
Securities" shall mean any shares (other than Common Stock), evidences of
indebtedness or other securities directly or indirectly convertible into or
exchangeable for Additional Shares of Common Stock.
8.3 Treatment of Options and Convertible Securities. In
case the Company, at any time or from time to time after the Effective Date
shall issue, sell, grant or assume, or fix a record date for the determination
of holders of any class of securities entitled to receive, any Options or
Convertible Securities, then, and in each such case, the maximum number of
Additional Shares of Common Stock issuable upon the exercise of such Options or
the conversion or exchange of such Convertible Securities shall be deemed to be
issued for purposes of Section 8.2.2 as of the time of such issue, sale, grant
or assumption, or, in case such a record date shall have been fixed, as of the
close of business on such record date; provided, however, that such Additional
Shares of Common Stock shall not be deemed to be issued if the consideration per
share of such shares, as determined pursuant to Section 8.5, would be equal to
or greater than the greater of the Exercise Price or the Fair Market Value of
the shares of Common Stock on the Business Day on which such Additional Shares
of Common Stock shall be deemed to be issued; and provided further, however,
that in each such case in which Additional Shares of Common Stock would have
been deemed to be issued,
(a) no further Additional Shares of Common Stock shall be
deemed to be issued upon the subsequent issue or sale of Common Stock
or any other securities of the Company pursuant to the exercise of such
Options or the conversion or exchange of such Convertible Securities;
(b) if such Options or Convertible Securities by their terms
shall provide in any manner for any increase in the consideration
payable to the Company, or decrease in the number of Additional Shares
of Common Stock issuable, upon the exercise, conversion or exchange
thereof, the Exercise Price computed upon the original issue, sale,
grant or assumption of such Options or Convertible Securities (or upon
the fixing of the record date with respect thereto), and any subsequent
adjustments in such Exercise Price, shall, upon any such increase in
consideration or decrease in the number of Additional Shares of Common
Stock issuable becoming effective, be recomputed to reflect such
increase or decrease insofar as
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it affects such Options, or the rights of conversion or exchange under
such Convertible Securities, as are outstanding at the time such
increase or decrease becomes effective;
(c) upon the expiration of any such Options or of the rights
of conversion or exchange under any such Convertible Securities which
shall not have been exercised, or upon purchase by the Company and
cancellation or retirement of any such Options which shall not have
been exercised or of any such Convertible Securities the rights of
conversion or exchange under which shall not have been exercised, the
Exercise Price computed upon the original issue, sale, grant or
assumption of such Options or Convertible Securities (or upon the
fixing of the record date with respect thereto), and any subsequent
adjustments in such Exercise Price, shall, upon such expiration,
cancellation or retirement, be recomputed as if:
(i) in the case of Options for Common Stock or of
Convertible Securities, the only Additional Shares of Common
Stock issued or sold were the Additional Shares of Common
Stock, if any, actually issued or sold upon the exercise of
such Options or the conversion or exchange of such Convertible
Securities and the consideration received thereupon was
(A) in the case of Options, an amount equal
to (x) the consideration actually received by the
Company for the issue, sale, grant or assumption of
all such Options, plus (y) the consideration actually
received by the Company upon exercise of any such
Options, minus (z) the consideration paid by the
Company for any purchase of such Options which were
not exercised; or
(B) in the case of Convertible Securities,
an amount equal to (x) the consideration actually
received by the Company for the issue, sale, grant or
assumption of all such Convertible Securities (unless
theretofore taken into account pursuant to clause
(ii) below) which were actually converted or
exchanged, plus (y) the consideration actually
received by the Company upon such conversion or
exchange, minus (z) the consideration paid by the
Company for any purchase of such Convertible
Securities the rights of conversion or exchange under
which were not exercised; and
(ii) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually
issued or sold upon the exercise of such Options were issued
at the time of the issue, sale, grant or assumption of such
Options, and the consideration received by the Company for the
Additional Shares of Common Stock deemed to have then been
issued was an amount equal to (x) the consideration actually
received by the Company for the issue, sale or grant of all
such Options, plus (y) the consideration deemed to be received
by the Company (pursuant to Section 8.5) upon the issue or
sale of the Convertible Securities with respect to which such
Options were actually exercised, minus (z) the consideration
paid by the Company for any purchase of such Options that were
not exercised; and
(d) no readjustment pursuant to subdivision (b) or (c) above
shall have the effect of increasing the Exercise Price by an amount in
excess of the amount of the adjustment thereof originally made pursuant
to the issue, sale, grant or assumption of such Options or Convertible
Securities.
"Business Day" shall mean any day of the year which is not a Saturday,
Sunday or a day on which banks are required or authorized to close in the State
of New York.
8.4 Treatment of Stock Dividends, Stock Splits, etc. In
case the Company at any time or from time to time after the Effective Date shall
fix a record date for the determination of holders of any class of securities
entitled to receive any dividend or other distribution on any class of stock of
the Company payable in Common Stock, or shall otherwise effect any subdivision
of the outstanding shares of Common Stock into a greater number of shares of
Common Stock, then, and in each such case, Additional Shares of Common Stock
shall be deemed to be issued (a) in the case of any such dividend or other
distribution, immediately after the close of business on such record date, or
(b) in the case of any such subdivision, at the close of business on the day
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immediately prior to the day upon which such corporate action shall have become
effective.
8.5 Computation of Consideration. For the purposes of
this Section 8:
(a) The consideration for any Additional Shares of Common
Stock actually issued or sold or for the issue, sale, grant or
assumption of any Options or Convertible Securities, irrespective of
the accounting treatment of such consideration, shall
(i) insofar as it consists of cash, be computed as
the amount of cash actually received by the Company, without
deducting any expenses paid or incurred by the Company, or any
commissions or compensation paid or concessions or discounts
allowed by the Company to underwriters, dealers or others
performing similar services in connection with any such issue
or sale;
(ii) insofar as it consists of consideration
(including securities as defined in the Securities Act) other
than cash, be computed as the market value thereof at the time
of any such issue, sale, grant or assumption as determined in
good faith by the Board of Directors of the Company (which
determination shall be evidenced in a certificate delivered
promptly to each Holder and which determination shall be
subject to the procedures for disagreement as provided in item
(b) of the definition of "Fair Market Value" in Section
8.2.2); and
(iii) insofar as Additional Shares of Common Stock
are issued or sold, Options or Convertible Securities are
issued, sold, granted or assumed together with other stock or
securities or other assets of the Company for a consideration
that covers both, be the proportion of such consideration
(computed as provided in clauses (i) and (ii) above) allocable
to such Additional Shares of Common Stock or Convertible
Securities as determined in good faith by the Board of
Directors of the Company (which determination shall be
evidenced in a certificate delivered promptly to each Holder
and which determination shall be subject to the procedures for
disagreement as provided in item (b) of the definition of
"Fair Market Value" in Section 8.2.2).
(b) The following shall be deemed to be issued without
consideration: (i) all Additional Shares of Common Stock, Options or
Convertible Securities issued in payment of any dividend or other
distribution on any class of stock of the Company; and (ii) all
Additional Shares of Common Stock issued to effect a subdivision of the
outstanding shares of Common Stock into a greater number of shares of
Common Stock otherwise than by payment of a dividend in Common Stock.
Additional Shares of Common Stock, Options or Convertible Securities
issued to directors, management, employees and related parties shall be
deemed to be issued (i) without consideration if not issued for cash or
property and (ii) for less than either the Exercise Price or the Fair
Market Value to the extent that any cash or the fair value of property,
as determined in good faith by the Board of Directors, received for
such securities is less than either the Exercise Price or the Fair
Market Value of such securities.
(c) Additional Shares of Common Stock deemed to have been
issued for consideration pursuant to Section 8.3 shall be deemed to
have been issued for a consideration per share determined by dividing
(i) the total amount, if any, actually received by
the Company as consideration for the issue, sale, grant or
assumption of the Options or Convertible Securities in
question, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating
thereto, without regard to any provision contained therein for
a subsequent adjustment of such consideration) payable to the
Company upon the exercise of all such Options or the
conversion or exchange of all such Convertible Securities or,
in the case of Options for Convertible Securities, the
exercise of all such Options for Convertible Securities and
the conversion or exchange of all such Convertible Securities,
in each instance computing such consideration as provided in
the foregoing subdivision (a), by
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(ii) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment
of such number) issuable upon the exercise of such Options or
the conversion or exchange of such Convertible Securities or,
in the case of Options for Convertible Securities, the
exercise of such Options and the conversion or exchange of
such Convertible Securities.
8.6 Adjustments for Combinations, etc. In case the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Exercise Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be increased proportionately.
8.7 Merger or Consolidation. In the event of (i) any
reclassification (including, without limitation, a reclassification effected by
means of an exchange or tender offer by the Company or any Subsidiary) or change
of outstanding Common Stock (other than a change relating to par value, or as a
result of a subdivision or combination), (ii) any consolidation, merger or
combination of the Company with another corporation as a result of which holders
of Common Stock shall be entitled to receive securities or other assets
(including cash) with respect to or in exchange for Common Stock or (iii) any
sale or conveyance of the assets of the Company as, or substantially as, an
entirety to any other corporation as a result of which holders of Common Stock
shall be entitled to receive securities or other assets (including cash) with
respect to or in exchange for Common Stock, then the Company or the successor or
purchasing corporation, as the case may be, shall execute and deliver to the
Holder upon surrender of the Warrant Certificate held by such Holder a
supplemental warrant agreement providing that the holder of each Warrant then
outstanding or to be outstanding shall have the right thereafter (until the
expiration of such Warrant) to receive, upon full exercise of such Warrant, the
kind and amount of shares of stock and/or other securities and/or property
receivable upon such consolidation or merger, by a holder of the number of
shares of Common Stock for which such Warrant might have been exercised
immediately prior to such reclassification, change, consolidation, merger,
combination, sale or conveyance. Such supplemental warrant agreement shall
provide for adjustments which shall be as nearly equivalent as practicable to
the adjustments provided for in this Section 8. The above provision of this
subsection shall similarly apply to successive events of the type described in
this Section 8.7.
8.8 Dilution in Case of Other Securities. In case any
Other Securities (as defined below) shall be issued or sold, or shall become
subject to issue or sale upon the conversion or exchange of any Common Stock or
Other Securities of the Company (or any issuer of Other Securities or any other
person referred to in Section 8.7), or shall become subject to subscription,
purchase or other acquisition pursuant to any Options issued, sold, granted or
assumed by the Company (or any such other issuer or person) for a consideration
that dilutes, in accordance with the standards established in the other
provisions of this Section 8 or otherwise, the purchase rights granted by the
Warrants, then, and in each such case, the computations, adjustments and
readjustments provided for in this Section 8 with respect to the Exercise Price
shall be made and applied as nearly as possible in the manner so provided, to
determine the amount of Other Securities that the Holder of such Warrants shall
be entitled to receive upon the exercise of such Warrants, in order to protect
such Holder against such dilution of purchase rights. "Other Securities" shall
mean any stock (other than Common Stock) of the Company or of any other person
that the Holders of the Warrants at any time shall be entitled to receive, or
shall have received, upon the exercise of the Warrants, in lieu of or in
addition to Common Stock, or that at any time shall be issuable or shall have
been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to this Section 8 or otherwise.
8.9 Minimum Adjustment of Exercise Price. If the amount
of any adjustment of the Exercise Price required pursuant to this Section 8
would be less than $0.01, such amount shall be carried forward, and adjustment
with respect thereto shall be made at the time of and together with any
subsequent adjustment that, together with such amount and any other amount or
amounts so carried forward, shall aggregate at least $0.01.
8.10 Certificate of Adjustment. After each adjustment of
the Exercise Price or the amount of Warrant Securities purchasable upon exercise
of Warrants pursuant to this Section 8, the Company will promptly prepare a
certificate signed by the Chairman, President, Treasurer or Secretary of the
Company setting forth: (i) the Exercise Price, as so adjusted; (ii) the amount
of Warrant Securities purchasable upon exercise of each Warrant after
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such adjustment; and (iii) a brief statement of the facts accounting for such
adjustment. The Company will promptly file such certificate with its records and
cause a brief summary thereof to be sent by ordinary first class mail to each
Holder at such Holder's last address as it shall appear on the registry books of
the Company.
8.11 Validity of Warrant Certificate. Notwithstanding any
adjustments or changes in the Exercise Price or the amount of Warrant Securities
purchasable upon exercise of Warrants, Warrant Certificates theretofore and
thereafter issued shall continue to express the Exercise Price per share and the
amount of Warrant Securities purchasable thereunder as of the date such Warrant
Certificates were originally issued; provided, the Holders shall be entitled to
exercise Warrants represented by such Warrant Certificates after giving effect
to each such adjustment and change, and such Warrant Certificate shall be deemed
to incorporate each such adjustment and change as if new Warrant Certificates
reflecting each such adjustment and change had been issued to the Holders.
8.12 No Dilution or Impairment. The Company shall not, by
amendment of its certificate of incorporation or bylaws or through any
consolidation, merger, reorganization, transfer of assets, dissolution, issue,
sale, grant or assumption of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this
agreement or the Warrants, but will at all times, whether or not requested to do
so, 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 Holders of the Warrants against dilution or other impairment.
Without limiting the generality of the foregoing, the Company 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 upon the exercise of all
Warrants from time to time outstanding.
9. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable, without expense, upon the surrender
thereof by the Holder at the principal executive office of the Company, for a
new Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Securities in such denominations as
shall be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
such Warrant Certificates, if mutilated, the Company will make and deliver a new
Warrant Certificate of like tenor in lieu thereof.
10. Elimination of Fractional Interests. The Company
shall not be required to issue certificates representing fractions of shares of
Common Stock upon the exercise of the Warrants to purchase Common Stock, nor
shall it be required to issue scrip or pay cash in lieu of fractional interests,
it being the intent of the parties that all fractional interests shall be
eliminated by rounding any fraction up to the nearest whole number of shares of
Common Stock or other securities, properties or rights.
11. Reservation and Listing of Securities. The Company
shall at all times reserve and keep available out of its authorized capital
stock, solely for the purpose of issuance upon the exercise of the Warrants,
such number of shares of Common Stock or other securities, property or rights as
shall be issuable upon exercise thereof. The Company covenants and agrees that,
upon exercise of the Warrants and payment of the Exercise Price therefor, all
shares of Common Stock and other securities issued by the Company upon such
exercise shall be duly and validly issued, fully paid, non-assessable and not
subject to the preemptive rights of any security holder of the Company. As long
as the Warrants shall be outstanding, the Company shall use its reasonable best
efforts to cause the Common Stock issuable upon the exercise of the Warrants to
be listed (subject to official notice of issuance) on all securities exchanges
on which the Common Stock may then be listed and/or quoted by NASDAQ if the
Common Stock issued to the public is so quoted.
12. Notices to Holders. Nothing contained in this
Agreement shall be construed as conferring upon the Holders the right to receive
dividends or to vote or to consent or to receive notice as a stockholder with
respect to any meetings of stockholders for the election of directors or any
other matter or as
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having any rights whatsoever as a stockholder of the Company. If, however, at
any time prior to the expiration of the Warrants and their exercise, any of the
following events shall occur:
(a) the Company shall set a record date for the
purpose of entitling holders of shares of Common Stock to
receive a dividend or distribution payable otherwise than in
cash, or a cash dividend or distribution payable otherwise
than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the
books of the Company;
(b) the Company shall offer to all the holders of
shares of Common Stock any additional shares of capital stock
of the Company or securities convertible into or exchangeable
for shares of capital stock of the Company, or any option,
right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or
merger) or a sale of all or substantially all of its property,
assets and business as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event to each Holder at least 15 days prior to the date fixed as a
record date or the date of closing the transfer books for the determination of
the stockholders entitled to such dividend, distribution or offer, or entitled
to vote on such proposed dissolution, liquidation, winding up or sale. Such
notice shall specify such record date or the date of closing the transfer books,
as the case may be. Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection with any of the events
described in this Section 12.
13. Notices.
All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made and
sent when delivered, or mailed by registered or certified mail, return receipt
requested:
(a) If to a Holder, to the address of such Holder as
shown on the books of the Company; or
(b) If to the Company, to the address set forth in
Section 3 hereof or to such other address as the Company may
designate by notice to the Holders.
14. Supplements and Amendments. The Company and the
Underwriters may from time to time supplement or amend this Agreement without
the approval of any Holders (other than the Representative) in order to cure any
ambiguity, to correct or supplement any provision contained herein which may be
defective or inconsistent with any provisions herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
and the Representative may deem necessary or desirable and which the Company and
the Representative deem shall not adversely affect the interests of the Holders
in any material respect.
15. Successors. All the covenants and provisions of this
Agreement shall be binding upon and inure to the benefit of the Company, the
Holders and their respective successors and assigns hereunder.
16. Termination. This Agreement shall terminate at the
close of business on August [_], 2006. Notwithstanding the foregoing, the
indemnification provisions of Section 7 shall survive such termination until the
close of business on August [_], 2011.
17. GOVERNING LAW; SUBMISSION TO JURISDICTION. THIS
AGREEMENT AND EACH WARRANT CERTIFICATES ISSUED HEREUNDER SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK AND FOR ALL PURPOSES SHALL
BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE WITHOUT GIVING EFFECT TO
THE RULES OF SAID STATE GOVERNING THE CONFLICT OF LAWS.
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The Company, the Representative and the Holders hereby agree
that any action, proceeding or claim against it arising out of, or relating in
any way to, this Agreement shall be brought and enforced in the courts of the
State of New York or of the United States of America for the Southern District
of New York, and irrevocably submits to such jurisdiction, which jurisdiction
shall be exclusive. The Company, the Representative and the Holders hereby
irrevocably waive any objection to such exclusive jurisdiction or inconvenient
forum and also hereby irrevocably waive any right or claim to trial by jury in
connection with any such action, proceeding or claim. Any such process or
summons to be served upon any of the Company, the Representative and the Holders
(at the option of the party bringing such action, proceeding or claim) may be
served by transmitting a copy thereof, by registered or certified mail, return
receipt requested, postage prepaid, addressed to it at the address set forth in
Section 13 hereof. Such mailing shall be deemed personal service and shall be
legal and binding upon the party so served in any action, proceeding or claim.
The Company, the Representative and the Holders agree that the prevailing
party(ies) in any such action or proceeding shall be entitled to recover from
the other party(ies) all of its/their reasonable legal costs and expenses
relating to such action or proceeding and/or incurred in connection with the
preparation therefor.
17. Entire Agreement; Modification. This Agreement
(including the Underwriting Agreement to the extent portions thereof are
referred to herein) contains the entire understanding between the parties hereto
with respect to the subject matter hereof. Except as set forth in Section 14
hereof, this Agreement may not be modified or amended except by a writing duly
signed by the Company, Holders of Warrants or Warrant Securities representing a
majority of the shares of Common Stock issuable or issued hereunder and the
party against whom enforcement of the modification or amendment is sought.
18. Severability. If any provision of this Agreement
shall be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision of this Agreement.
19. Captions. The caption headings of the Sections of
this Agreement are for convenience of reference only, and are not intended, nor
should they be construed as, a part of this Agreement and shall be given no
substantive effect.
20. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person, corporation or entity other than the
Company, the Representative and any other Holders of Warrants and/or Warrant
Securities any legal or equitable right, remedy or claim under this Agreement;
and this Agreement shall be for the sole and exclusive benefit of the Company
and the Representative and any other Holders of Warrants and/or Warrant
Securities.
21. Counterparts. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original and such counterparts shall together constitute but one
and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
XXXXXXX.XXX CORPORATION
By:______________________________________
Name:
Title:
Attest:
_____________________________________
Name:
Title:
XXXXXXX AND COMPANY SECURITIES, INC.
By:______________________________________
Name:
Title:
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EXHIBIT A
FORM OF WARRANT CERTIFICATE
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE 5:30 P.M., NEW YORK TIME, [____________], 2004
No. W- __________ Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that _________________, or
registered assigns, is the registered holder of _______ Warrants to purchase
initially, at any time from [_______________], 2001 until 5:30 p.m. New York
time on [_______________], 2004 (the "Expiration Date"), up to __________ fully
paid and nonassessable shares of Common Stock, no par value (the "Common
Stock"), of Xxxxxxx.xxx Corporation (the "Company"), at the initial exercise
price, subject to adjustment in certain events (the "Exercise Price"), of
$[__________] per share upon surrender of this Warrant Certificate and payment
of the Exercise Price, at an office or agency of the Company, but subject to the
conditions set forth herein and in the Representative's Warrant Agreement dated
as of [______________], 1999 by and between the Company and Xxxxxxx and Company
Securities, Inc. (the "Warrant Agreement"). Payment of the Exercise Price, shall
be made by certified or official bank check in New York Clearing House funds
payable to the order of the Company and by surrender of this Warrant
Certificate.
No Warrant may be exercised after 5:30 p.m., New York time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants issued pursuant to the Warrant Agreement,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and the holders (the words "holders" or "holder" meaning the registered
holders or registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the amount the type and/or number of the
Company's securities issuable hereunder may, subject to certain conditions, be
adjusted. Subject to Section 8.6 of the Warrant Agreement, in such event, the
Company will, at the request of the holder, issue a new Warrant Certificate
evidencing the adjustment in the Exercise Price and the number and/or type of
securities issuable upon the exercise of the Warrants; provided, however, that
the failure of the Company to issue such new Warrant Certificates shall not in
any way change, alter or otherwise impair the rights of the holder as set forth
in the Warrant Agreement.
Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Warrant Agreement, without any charge except for any tax or
other governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced
by this Warrant Certificate, the Company shall forthwith issue to the holder
hereof a new Warrant Certificate representing such number of unexercised
Warrants.
22
The Company may deem and treat the registered holder(s) hereof
as the absolute owner(s) of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, and of any distribution to the holder(s) hereof, and for
all other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined
in the Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.
Dated as of _______________________, _______
XXXXXXX.XXX CORPORATION
[SEAL] By:______________________________________
Name:
Title:
Attest:
_________________________________________
Name:
Title:
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ANNEX A
TO WARRANT CERTIFICATE
FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ______________________
shares of Common Stock and herewith tenders in payment for such securities a
certified or official bank check payable in New York Clearing House Funds to the
order of ___________________________________ in the amount of $________________,
all in accordance with the terms of Section 3 of the Representative's Warrant
Agreement dated as of ____________, 1999 by and between Xxxxxxx.xxx Corporation
and Xxxxxxx and Company Securities, Inc. The undersigned requests that a
certificate for such securities be registered in the name of
_________________________________________ whose address is
____________________________________________________________________________and
that such certificate be delivered to ________________ whose address is
________________________________________.
Dated:_________________ Signature______________________________________
(Signature must conform in all respects to
name of holder as specified on the face of the
Warrant Certificate)
_______________________________________________
(Insert Social Security or Other Identifying
Number of Holder)
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ANNEX B
TO WARRANT CERTIFICATE
FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.2
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ______________ shares of
Common Stock all in accordance with the terms of Section 3.2 of the
Representative's Warrant Agreement dated as of __________, 1999 by and between
Xxxxxxx.xxx Corporation and Xxxxxxx and Company Securities, Inc. The undersigned
requests that a certificate for such securities be registered in the name of
_______________________ whose address is _____________________________ and that
such certificate be delivered to _____________________________ whose address is
____________________________________________________________________.
Dated:_________________ Signature______________________________________
(Signature must conform in all respects to
name of holder as specified on the face of the
Warrant Certificate)
_______________________________________________
(Insert Social Security or Other Identifying
Number of Holder)
25
ANNEX C
TO WARRANT CERTIFICATE
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED _______________________________ hereby
sells, assigns and transfers unto ______________________________________________
________________________________________________________________________________
(Please print name and address of transferee)
the within Warrant Certificate, together with all right, title and interest
therein, and does hereby irrevocably constitute and appoint
_____________________________ Attorney to transfer the within Warrant
Certificate on the books of the within-named Company, with full power of
substitution.
Dated:_________________ Signature______________________________________
(Signature must conform in all respects to
name of holder as specified on the face of the
Warrant Certificate)
_______________________________________________
(Insert Social Security or Other Identifying
Number of Holder)
