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COMMON STOCK AND WARRANT PURCHASE AGREEMENT
BETWEEN
JUST FOR FEET, INC.
AND
SNEAKER GUARANTEE LLC
JULY 2, 1998
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TABLE OF CONTENTS
Page
ARTICLE I GENERAL DEFINITIONS . . . . . . . . . . . . . . . . . 1
Section 1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Other Definitional Provisions . . . . . . . . . . . . 6
ARTICLE II SALE AND PURCHASE OF UNITS; PAYMENT
AND DELIVERIES; CLOSING . . . . . . . . . . . . . . . 6
Section 2.1 Sale and Purchase of Units . . . . . . . . . . . . . . 6
Section 2.2 Payment and Deliveries . . . . . . . . . . . . . . . . 6
Section 2.3 Closing . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
THE COMPANY . . . . . . . . . . . . . . . . . . . . . 7
Section 3.1 Corporate Organization . . . . . . . . . . . . . . . . 7
Section 3.2 Authorization; Validity . . . . . . . . . . . . . . . 8
Section 3.3 No Violation . . . . . . . . . . . . . . . . . . . . . 8
Section 3.4 Consents . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.5 SEC Documents . . . . . . . . . . . . . . . . . . . . 9
Section 3.6 Liabilities . . . . . . . . . . . . . . . . . . . . . 10
Section 3.7 No Material Adverse Change . . . . . . . . . . . . . . 10
Section 3.8 Capitalization . . . . . . . . . . . . . . . . . . . . 10
Section 3.9 Registration Rights . . . . . . . . . . . . . . . . . 11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
THE INVESTORS . . . . . . . . . . . . . . . . . . . . 11
Section 4.1 Organization . . . . . . . . . . . . . . . . . . . . . 11
Section 4.2 Authorization; Validity . . . . . . . . . . . . . . . 11
Section 4.3 No Violation . . . . . . . . . . . . . . . . . . . . . 11
Section 4.4 Consents . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.5 Investment Representations, Etc. . . . . . . . . . . . 12
ARTICLE V BOARD REPRESENTATION AND OTHER COVENANTS . . . . . . . 14
Section 5.1 Board Designee . . . . . . . . . . . . . . . . . . . . 14
Section 5.2 Observer and Monitoring Rights . . . . . . . . . . . . 15
Section 5.3 Lock-Up . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . 17
Section 6.1 Amendments; Assignment . . . . . . . . . . . . . . . . 17
Section 6.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.3 Waiver . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.4 Severability . . . . . . . . . . . . . . . . . . . . . 18
Section 6.5 Parties . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.6 Entire Agreement . . . . . . . . . . . . . . . . . . . 18
Section 6.7 Equitable Relief . . . . . . . . . . . . . . . . . . . 18
Section 6.8 Governing Law . . . . . . . . . . . . . . . . . . . . 19
Section 6.9 Notices . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.10 Section Titles . . . . . . . . . . . . . . . . . . . . 20
Section 6.11 Number and Person . . . . . . . . . . . . . . . . . . 20
Section 6.12 Non-Compete . . . . . . . . . . . . . . . . . . . . . 20
Section 6.13 Counterparts . . . . . . . . . . . . . . . . . . . . . 21
Exhibits
Exhibit A - Form of Registration Rights Agreement
Exhibit B - Form of Warrant
COMMON STOCK AND WARRANT PURCHASE AGREEMENT
THIS COMMON STOCK AND WARRANT PURCHASE AGREEMENT (this
"Agreement") is made as of the 2nd day of July, 1998, between Just For
Feet, Inc., a Delaware corporation (the "Company"), and Sneaker Guarantee
LLC, a Delaware limited liability company (the "Investor"), and for
purposes of Section 5.2 and Article VI only, Xxxxxx X. Xxx Company ("THL"),
and, for purposes of Sections 5.1, 5.4, 6.1 through 6.11 and 6.13 only,
Xxxxxx Xxxxxxxxxx.
The Company desires to sell to the Investor, and the Investor
desires to purchase from the Company, securities of the Company consisting
of 926,355 units (the "Units"), each comprised of one share of Common Stock
and one Warrant to purchase .99701626 of a share of Common Stock, upon the
terms and subject to the conditions set forth herein.
In consideration of the foregoing and the respective
representations, warranties, covenants and agreements hereinafter set
forth, and for other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
GENERAL DEFINITIONS
Section 1.1 Defined Terms. Capitalized terms, when used herein,
shall have the following meanings (unless defined elsewhere in this
Agreement):
"Affiliate" means, with respect to any Person, any other Person
that directly or indirectly through one or more intermediaries controls,
or is under common control with, or is controlled by, such Person. As
used in this definition and in Section 5.1, "control" means the power,
directly or indirectly, to direct or cause the direction of management
or policies of a Person (through ownership of voting securities or other
equity interests, by contract or otherwise).
"Agreement" means this Common Stock and Warrant Purchase Agreement,
as the same may be from time to time amended, modified or supplemented.
"Board" means the Company's Board of Directors.
"Business Day" means any day other than a Saturday or Sunday on
which banks are not authorized or required to close in New York, New
York.
"Certificate of Formation" means the Certificate of Formation of
the Investor filed by the Investor with the Secretary of State of the
State of Delaware, as it may be amended from time to time.
"Closing" means the consummation of the transaction contemplated in
this Agreement.
"Closing Date" means the date of this Agreement.
"Common Shares" means, collectively, the Purchased Shares and the
Warrant Shares.
"Common Stock" means the Common Stock, par value $.0001 per
share, of the Company.
"Company" means Just For Feet, Inc., a Delaware corporation, and
its successors.
"Consents" has the meaning specified in Section 3.4 of this
Agreement.
"Contingent Payment Agreement" means the Contingent Payment
Agreement to be dated as of the Closing Date, in substantially the form
attached as Schedule I to the Sneaker Merger Agreement.
"Employee Options" means those stock options that have been or may
be issued, as determined by the Company's Board of Directors, to
employees of the Company pursuant to the Company's stock option plans
adopted by the Company's Board of Directors.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles set forth in
the Opinions of the Accounting Principles Board of the American
Institute of Certified Public Accountants and in statements by the
Financial Accounting Standards Board that are applicable to the
circumstances as of the date of determination; and the requisite that
such principles be applied on a consistent basis shall mean that the
accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period.
"HSR" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Investor" has the meaning specified in the first paragraph of this
Agreement.
"Investor LLC Agreement" means the Limited Liability Company
Agreement of the Investor dated the date hereof, as it may be amended
from time to time.
"JFF Merger Corp." means JFF Merger Corp., a Delaware corporation
and, immediately prior to consummation of the merger provided for in the
Sneaker Merger Agreement, a wholly owned subsidiary of the Company.
"Lien" means any interest in any property or asset in favor of a
Person other than the owner of the property or asset and securing an
obligation owed to such Person, whether such interest is based on the
common law, statute or contract, including, but not limited to, the
security interest lien arising from a mortgage, encumbrance, pledge,
conditional sale, security agreement or trust receipt, or a lease,
consignment or bailment for security purposes.
"Majority Holders" has the meaning specified in Section 5.3 of this
Agreement.
"Material Adverse Effect" means a material adverse effect on the
business, properties, assets, results of operations or financial
condition of the Company and its Subsidiaries taken as a whole.
"Member" means any Person who is a member of the Investor,
including any Person who is admitted as such a member after the date
hereof in accordance with the Investor LLC Agreement.
"Merger" means the merger of Merger Sub with and into Sneaker
pursuant to the Sneaker Merger Agreement.
"Merger Sub" means JFF Merger Corp., a Delaware corporation and a
wholly owned subsidiary of the Company.
"Other Agreements" means the Warrants, the Registration Rights
Agreement and all certificates and other instruments executed by or on
behalf of the Company prior to or at the Closing and delivered to the
Investors pursuant to this Agreement.
"Permitted Holder" has the meaning specified in Section 5.3 of this
Agreement.
"Permitted Transaction" has the meaning specified in Section 5.3 of
this Agreement.
"Permitted Transaction Purchasers" has the meaning specified in
Section 5.3 of this Agreement.
"Permitted Transaction Seller" has the meaning specified in Section
5.3 of this Agreement.
"Permitted Transferees" has the meaning specified in Section 5.1 of
this Agreement.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization or
any other entity or organization, including a government or any agency
or political subdivision thereof.
"Preferred Stock" means the Preferred Stock, par value $.0001 per
share, of the Company.
"Purchase Price" has the meaning specified in Section 2.1 of this
Agreement.
"Purchased Shares" means the 926,355 shares of Common Stock
included in the Units to be purchased by the Investors hereunder.
"Registration Rights Agreement" means the Registration Rights
Agreement by and among the Company and the Investor, substantially in
the form of Exhibit A hereto, to be entered into at the Closing.
"Xxxxxxxxxx" means Xxxxxx Xxxxxxxxxx.
"SEC" means the Securities and Exchange Commission.
"SEC Documents" has the meaning specified in Section 3.5 of this
Agreement.
"Securities" means, collectively, the Warrants and the Common
Shares, and any securities into which or for which such securities shall
be changed, converted or exchanged.
"Securities Act" means the Securities Act of 1933, as amended.
"Sneaker" means Sneaker Stadium, Inc., a Delaware corporation.
"Sneaker Merger Agreement" means the Agreement and Plan of Merger
dated as of July 2, 1998 among the Company, Merger Sub and Sneaker.
"Subsidiary" has the meaning specified in Rule 12b-2 under the
Exchange Act.
"THL" has the meaning specified in the first paragraph of this
Agreement.
"Units" has the meaning specified in the preambles of this
Agreement.
"Warrants" means the warrants included in the Units to be purchased
by the Investor hereunder, to purchase an aggregate of 923,591 shares of
Common Stock, substantially in the form of Exhibit B hereto, and any
warrant or warrants issued in exchange or substitution therefor.
"Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
Section 1.2 Other Definitional Provisions. All definitions
contained in this Agreement are equally applicable to the singular and
plural form of the term defined. The words "hereof," "herein," and
"hereunder" and words of like or similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. Unless otherwise specified, all Article and
Section references pertain to this Agreement and all Exhibit references
pertain to Exhibits to this Agreement, which are hereby incorporated herein
for all purposes. All accounting terms not specifically defined herein
shall be construed in accordance with GAAP.
ARTICLE II
SALE AND PURCHASE OF UNITS;
PAYMENT AND DELIVERIES; CLOSING
Section 2.1 Sale and Purchase of Units. Upon the terms set forth
in this Agreement, and in reliance upon the representations and warranties
contained herein, at the Closing, the Company will issue and sell to the
Investor, and the Investor will purchase and accept from the Company, the
Units for an aggregate consideration of twenty million dollars
($20,000,000) (the "Purchase Price"). The parties agree that (i) no
services were rendered by the Investor (or by any Member or any Affiliate
of the Investor or of any Member) to the Company, Sneaker or any of their
Subsidiaries in connection with the purchase of the Units,(ii) the Purchase
Price shall be allocated $15 million to the Purchased Shares and $5 million
to the Warrants and (iii) they shall prepare and file all tax returns on a
basis consistent with the foregoing and shall take no position inconsistent
with the foregoing in any proceeding before any taxing authority or for any
other tax purpose.
Section 2.2 Payment and Deliveries. At the Closing (a) the
Company is delivering to the Investor (i) a duly executed stock
certificate, registered in the name of the Investor, representing the
Purchased Shares, (ii) a duly executed Warrant, registered in the name of
the Investor, representing the right to purchase 923,591 Warrant Shares,
and (iii) the Other Agreements duly executed by the Company, and an opinion
or opinions of counsel for the Company, and other documents, in the
respective forms previously agreed between the Company and the Investor,
against (b) the delivery by the Investor, to the Company of (i) the
Purchase Price, by wire transfer(s) of immediately available funds in
accordance with the Company's instructions, which instructions shall have
been given in writing to the Investor no later than three (3) Business Days
prior to the Closing and (ii) an opinion of counsel for the Investor, and a
certificate executed by the Investor, in the respective forms previously
agreed between the Company and the Investor.
Section 2.3 Closing. The Closing is taking place on the date
hereof concurrently with the execution and delivery of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Investor as
follows:
Section 3.1 Corporate Organization. (a) The Company and each of
its Subsidiaries is a duly incorporated and validly existing corporation
(or other Person) in good standing under the laws of the jurisdiction of
its organization; (b) the Company and each of its Subsidiaries has all
necessary corporate power (or comparable power, in the case of a Subsidiary
that is not a corporation) to own the property and assets it uses in its
business and otherwise to carry on its business; and (c) the Company and
each of its Subsidiaries is duly licensed or qualified and in good standing
in each jurisdiction in which the nature of the business transacted by it
or the nature of the property owned or leased by it makes such licensing or
qualification necessary, except where the failure to be so licensed or
qualified would not reasonably be expected to have a Material Adverse
Effect. The Company is not in violation of any term of its Certificate of
Incorporation or of its Bylaws, each as currently in effect. The Company
has previously delivered to the Investors true and correct copies of its
Certificate of Incorporation and Bylaws as currently in effect and true and
correct copies of forms of such documents as will be in effect at and as of
the Closing (after consummation of the Reincorporation Merger).
Section 3.2 Authorization; Validity.
(a) The Company has the corporate power and authority to
execute, deliver and perform its obligations under, and to consummate the
transactions contemplated by, this Agreement and the Other Agreements, and
has taken all necessary corporate action to authorize the execution,
delivery and performance by the Company of, and consummation by the Company
of the transactions contemplated by, this Agreement and the Other
Agreements. This Agreement has been, and upon the execution and delivery
by the Company of the Other Agreements such Other Agreements will be, duly
and validly executed and delivered by the Company and constitutes or, in
the case of the Other Agreements, will constitute, valid and binding
obligations of the Company, enforceable against the Company in accordance
with their respective terms.
(b) The issuance, sale and delivery of the Securities in
accordance with this Agreement or the Warrants, as applicable, have been
duly authorized by all requisite corporate action on the part of the
Company, and, when issued, sold and delivered in accordance with this
Agreement or the Warrants, as applicable, will be duly and validly issued
and, in the case of the Common Shares, fully paid and nonassessable, and
such issuance, sale and delivery will not give rise to any preemptive
rights on the part of any Person. When so issued, sold and delivered, the
Securities will be free and clear of any and all Liens, claims or
encumbrances imposed by action of the Company, except as provided in this
Agreement.
Section 3.3 No Violation. Neither the execution, delivery nor
performance by the Company of this Agreement and the Other Agreements, nor
compliance by the Company with the terms and provisions hereof and thereof,
nor the consummation by it of the transactions contemplated herein or
therein, will (a) contravene any applicable provision of any law, statute,
rule or regulation, or any applicable order, writ, injunction or decree of
any court or governmental instrumentality, (b) conflict with or result in
any breach of any term, covenant, condition or other provision of, or
constitute a default under (except where such conflict, breach or default
would not reasonably be expected to have a Material Adverse Effect), or
result in the creation or imposition of (or the obligation to create or
impose) any Lien other than pursuant to this Agreement upon any of the
property or assets of the Company under the terms of any contractual
obligation to which the Company is a party or by which it or any of its
properties or assets are bound or to which it may be subject, or (c)
violate or conflict with any provision of the Certificate of Incorporation
or the Bylaws of the Company.
Section 3.4 Consents. All consents, approvals, orders or
authorizations of, or registrations, declarations or filings with, all
governmental agencies, authorities or instrumentalities or any other Person
("Consents") required to be obtained or made by the Company in connection
with the execution, delivery and performance by the Company of this
Agreement and the Other Agreements, and the consummation by the Company of
the transactions contemplated hereby and thereby, have been obtained or
made and are in full force and effect, except for (i) governmental Consents
contemplated by the Registration Rights Agreement in connection with any
registration pursuant thereto of Securities under the Securities Act and
(ii) such Consents the failure of which to be obtained or made would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
Section 3.5 SEC Documents. The Company has timely filed each
report, schedule, registration statement and definitive proxy statement
required to be filed by the Company with the SEC since January 1, 1996
(such documents are referred to herein as the "SEC Documents"). As of
their respective dates, the SEC Documents complied in all material respects
with the requirements of the Securities Act or the Exchange Act, as the
case may be, and the applicable rules and regulations of the SEC
thereunder, and none of the SEC Documents, as of their respective dates,
contained any untrue statement of a material fact or omitted 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. The financial statements of the Company included in
the SEC Documents complied, as of their respective dates, in all material
respects with all applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with GAAP consistently applied (except as may be indicated in
the notes thereto or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC) and fairly present in all material respects the
consolidated financial position of the Company as at the dates thereof and
the consolidated results of its operations, cash flows and changes in
financial position for the periods indicated therein.
Section 3.6 Liabilities. All liabilities or obligations of the
Company of any nature (whether accrued, absolute, contingent or otherwise)
which were incurred after January 31, 1998 were incurred in the ordinary
course of business, and individually or in the aggregate, have not had, and
would not reasonably be expected to have, a Material Adverse Effect.
Section 3.7 No Material Adverse Change. Except as disclosed in
the SEC Documents filed prior to the date of this Agreement and furnished
to the Investors, since January 31, 1998 the Company has not suffered or,
to the Company's knowledge, been threatened with, any change having, or
that would reasonably be expected to have, a Material Adverse Effect.
Section 3.8 Capitalization. The authorized capital stock of the
Company consists of 70,000,000 shares of Common Stock and 5,000,000 shares
of Preferred Stock. As of June 29, 1998, there were outstanding (a)
30,171,921 shares of Common Stock, (b) Employee Options to purchase an
aggregate of 3,790,711 shares of Common Stock, (c) non-employee director
options to purchase 252,500 shares of Common Stock and (d) no shares of
Preferred Stock. There are currently 6,181,250 shares of Common Stock
reserved for issuance pursuant to the Company's Stock Option Plans. Except
as described above in this Section 3.8 or as contemplated by this Agreement
or the Other Agreements, and except for changes occurring after June 29,
1998 resulting from (x) the exercise of Employee Options outstanding on
such date or (y) the grant of Employee Options in the ordinary course of
business and the exercise of such Employee Options, as of the date hereof
there are no outstanding (i) shares of capital stock or other securities of
the Company, (ii) securities of the Company convertible into or
exchangeable for shares of capital stock or other securities of the Company
or (iii) options, rights, subscriptions, warrants, calls, unsatisfied
preemptive rights, or other agreements to acquire or otherwise receive from
the Company, and no obligation, commitment or arrangement of the Company to
issue, transfer or sell, any capital stock or other securities of, or
securities convertible into or exchangeable for capital stock or other
securities of the Company.
Section 3.9 Registration Rights. Except for the Registration
Rights Agreement, neither the Company nor any of its Subsidiaries is under
any contractual obligation to register any of its presently outstanding
securities or any of its securities that may hereafter be issued.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
The Investor represents and warrants to the Company as follows:
Section 4.1 Organization. The Investor has been duly organized as
a limited liability company, and is validly existing and in good standing,
under the laws of the State of Delaware.
Section 4.2 Authorization; Validity.
(a) The Investor has the requisite limited liability company
power and authority to execute, deliver and perform its obligations under,
and to consummate the transactions contemplated by, this Agreement and the
Other Agreements to which the Investor is a party. The execution, delivery
and performance by the Investor of this Agreement and the Other Agreements
to which the Investor is a party, and the consummation by the Investor of
the transactions contemplated hereby and thereby have been duly authorized
by the Investor. This Agreement and the Other Agreements to which the
Investor is a party have been duly and validly executed and delivered by
the Investor and constitute valid and binding obligations of the Investor,
enforceable against it in accordance with their respective terms.
Section 4.3 No Violation. Neither the execution, delivery nor
performance by the Investor of this Agreement and the Other Agreements to
which the Investor is a party, nor compliance by the Investor with the
terms and provisions hereof and thereof, nor the consummation by the
Investor of the transactions contemplated herein or therein, will (a)
contravene any applicable provision of any law, statute, rule or
regulation, or any applicable order, writ, injunction or decree of any
court or governmental instrumentality, (b) conflict with or result in any
breach of any term, covenant, condition or other provision of, or
constitute a default under (except where such conflict, breach or default
would not reasonably be expected to materially impair the Investor's
ability to consummate the transactions contemplated by this Agreement), the
terms of any contractual obligation to which the Investor is a party or by
which the Investor or any of the Investor's properties or assets are bound
or to which the Investor may be subject, or (c) violate or conflict with
any provision of the Certificate of Formation or the Investor LLC
Agreement.
Section 4.4 Consents. All Consents required to be obtained or
made by the Investor in connection with the execution, delivery and
performance by the Investor of, and the consummation by the Investor of the
transactions contemplated by, this Agreement or the Other Agreements to
which the Investor is a party have been obtained or made and are in full
force and effect, except for (i) governmental Consents contemplated by the
Registration Rights Agreement in connection with any registration pursuant
thereto of Securities under the Securities Act and (ii) such Consents the
failure of which to be obtained or made, would not, individually or in the
aggregate, reasonably be expected to materially impair the Investor's
ability to consummate the transactions contemplated by this Agreement.
Section 4.5 Investment Representations, Etc.
(a) Purchase for Investment. The Securities to be purchased
by the Investor pursuant to this Agreement or upon exercise of the Warrants
will be acquired for investment only and not with a view to any public
distribution thereof in violation of any of the requirements of the
Securities Act or the rules and regulations thereunder.
(b) Securities Not Registered. The Investor understands that
the Securities have not been registered under the Securities Act in
reliance upon exemptions contained in the Securities Act and applicable
regulations promulgated thereunder or interpretations thereof, and cannot
be offered for sale, sold or otherwise transferred unless such sale or
transfer is so registered or qualifies for exemption from registration
under the Securities Act.
(c) Sophistication. The Investor has such knowledge and
experience in financial and business matters that the Investor is capable
of evaluating the merits and risks of its investment in the Securities; and
the Investor understands and is able to bear any economic risks associated
with such investment (including the necessity of holding the Securities for
an indefinite period of time, inasmuch as the Securities have not been, and
may not in the foreseeable future be, registered under the Securities Act,
and including the risk of the loss of the Investor's entire investment in
the Securities).
(d) Accredited Investor. The Investor is an "accredited
investor" within the meaning of such term as defined in Rule 501(a)(8) of
Regulation D of the SEC, 17 CFR section 230.501(a)(8).
(e) Legends. The Investor understands and agrees that
certificates representing the Securities will bear conspicuous legends in
substantially the respective forms set forth below (in addition to any
other legend required by law):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER EITHER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR
APPLICABLE STATE SECURITIES LAWS (THE "STATE ACTS"), AND SHALL NOT BE
SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE TRANSFERRED (WHETHER
OR NOT FOR CONSIDERATION) BY THE HOLDER EXCEPT BY REGISTRATION OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION UPON THE ISSUANCE TO THE
COMPANY OF A FAVORABLE OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER SHALL
NOT BE VIOLATION OF THE 1933 ACT AND THE STATE ACTS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER CONTAINED IN A COMMON STOCK AND WARRANT
PURCHASE AGREEMENT DATED AS OF JULY 2, 1998 (THE "PURCHASE AGREEMENT"),
AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN COMPLIANCE WITH
THE PURCHASE AGREEMENT, A COPY OF WHICH IS AVAILABLE FOR INSPECTION AT
THE PRINCIPAL EXECUTIVE OFFICES OF JUST FOR FEET, INC.
Notwithstanding the foregoing, the certificate(s) representing any
Securities need not continue to bear the first of the foregoing legends
(and the Company agrees to cause such legend to be removed from such
certificate(s) at the request of the holder thereof) if (i) the sale or
other transfer of such Securities referred to in such legend is in
accordance with the provisions of Rule 144 promulgated under the Securities
Act (or any other rule permitting public sale without registration under
the Securities Act) or (ii) the opinion of counsel referred to above is to
the effect that such Investor and any subsequent transferee (other than an
Affiliate of the Company) would be entitled to transfer such Securities in
a public sale without registration under the Securities Act.
Notwithstanding the foregoing, from and after February 1, 2000 the
certificate(s) representing any Securities need not continue to bear the
second of the foregoing legends (and the Company agrees, from and after
such date, to cause such legend to be removed from such certificate(s) at
the request of the holder thereof) if Section 5.3 hereof, by its terms, is
no longer applicable to such Securities.
ARTICLE V
BOARD REPRESENTATION AND OTHER COVENANTS
Section 5.1 Board Designee. By action of the Board, the Company
shall elect to the Board, effective as of the Closing, a person designated
by the Investor (an "Investor Designee"). The Investor Designee to be
elected as of the Closing shall be Xxxxxx X. Xxxxx, Xx. Until such time as
(x) the Investor has disposed (directly, including through a disposition of
the Warrants) of, in the aggregate, seventy-five percent (75%) or more of
the Common Shares to Persons other than its Members or Affiliates, or any
Person who or which was a stockholder or subordinated creditor of Sneaker
immediately prior to the effectiveness of the Merger ("Permitted
Transferees") or (y) THL, together with its Affiliates, ceases to own a
majority of the member interests in the Investor and to control, directly
or indirectly, the Investor, (a) the Company shall nominate and recommend
to the Company's stockholders for election, and Xxxxxxxxxx shall vote or
cause to be voted (or execute or cause to be executed written consents with
respect to) all shares of capital stock of the Company held at the time by
Xxxxxxxxxx or over which Xxxxxxxxxx possesses voting discretion in favor of
the election, to the Board of an Investor Designee and (b) the Investor may
require that an Investor Designee be removed and/or replaced by another
Investor Designee, in which event (i) if stockholder action is necessary to
effect such removal and/or replacement, the Company and Xxxxxxxxxx,
respectively, shall take the actions referred to in clause (a) above in
favor of such removal or replacement, as applicable, and (ii) in the case
of such a replacement Investor Designee in connection with the death,
resignation or removal of an existing Investor Designee, the Company, by
action of its Board of Directors, shall cause such replacement Investor
Designee to be elected to the Board to fill the vacancy caused by such
death, resignation or removal. The Company's obligations set forth in the
last sentence of this Section 5.1 with respect to the nomination,
recommendation or election of a particular Investor Designee shall be
subject to any fiduciary duty principles which may be applicable to the
members of the Board in connection therewith.
Section 5.2 Observer and Monitoring Rights. From and after the
Closing and so long as the Investor or any Permitted Transferee holds any
Securities or so long as any Member is a creditor of the Company or Sneaker
or potentially entitled to payments pursuant to the Contingent Payment
Agreement, if the Investor no longer has the right to designate a member of
the Board pursuant to Section 5.1 hereof, the Company will (a) permit a
representative designated by the Investor to attend all meetings of the
Board to observe such meetings, (b) provide such representative with copies
of all materials provided to members of the Board, at the same time as such
notices or materials are provided to such members and (c) if requested by
the Investor, cause knowledgeable officers of the Company to meet, not more
frequently than quarterly, upon reasonable advance notice, with
representatives of the Investor or THL to discuss the business, affairs,
finances, accounts and prospects of the Company. The Company may require
that any such representative designated pursuant to this Section 5.2
execute a confidentiality agreement in customary form and reasonably
acceptable to such representative with respect to confidential information
of the Company made available to such representative pursuant to this
Section 5.2, which agreement shall include an acknowledgment of such
representative that in such capacity such representative may obtain
material non-public information concerning the Company, and, accordingly,
will be subject to any applicable restrictions pursuant to Rule 10b-5 under
the Exchange Act in connection with such representative's possession of
such information. The Investor and THL each acknowledges that the
provisions of this Section 5.2 shall not be construed to provide the
Investor, any Member or any Affiliate thereof or THL with any right to
participate in meetings of the Board or to exercise any control over the
affairs of the Company or its Subsidiaries.
Section 5.3 Lock-Up. Without the prior written consent of the
Company, the Investor may not transfer or otherwise dispose of any
Securities prior to January 31, 2000. After such date, the Investor may
only transfer or otherwise dispose of Securities (including pursuant to the
Registration Rights Agreement) in a transaction in which Securities are
being transferred by Persons (which may include the Investor) holding a
majority in interest of the then outstanding Securities (with respect to
the Warrants, based on the number of Warrant Shares for which the Warrants
are then exercisable) (the "Majority Holders"). Any such transaction is
referred to herein as a "Permitted Transaction". Subject to any applicable
restrictions set forth in the Registration Rights Agreement, upon notice
from the Majority Holders of a proposed Permitted Transaction, each other
Person which then holds Securities (a "Permitted Holder") shall be entitled
to, and upon request by the Majority Holders will (and the Company may, by
notice to the Majority Holders, require that the Majority Holders so
request), transfer in such Permitted Transaction, on the same terms as
those on which the Majority Holders are transferring Securities, the same
portion of such Permitted Holder's Securities as the portion of the
Securities then held by the Majority Holders being transferred in such
Permitted Transaction ; provided, that if the purchaser(s) in such
Permitted Transaction (the "Permitted Transaction Purchasers") desire to
purchase less than all of the Securities to be sold in such Permitted
Transaction in accordance with this Section 5.3, the number of Securities
to be so sold shall be reduced to the number of such Securities to be
purchased by the Permitted Transaction Purchasers, on a pro rata basis with
respect to each Person selling Securities in such Permitted Transaction
(each such Person, a "Permitted Transaction Seller"), based on the number
of Securities then held by such Permitted Transaction Seller (with respect
to any Warrants held by a Permitted Transaction Seller, based on the number
of Warrant Shares for such Warrants are then exercisable) relative to the
number of Securities then held by all Permitted Transaction Sellers.
Notwithstanding the foregoing, the restrictions on transfer set forth in
this Section 5.3 shall not apply to any (i) transfer or other disposition
of Securities by the Investor to any Permitted Transferee (provided any
such Permitted Transferee agrees in writing to be bound by the first
sentence of this Section 5.3 to the extent applicable to the Investor and
to the provisions of this Section 5.3 applicable to a Permitted Holder),
(ii) any bona-fide pledge of, or grant of a security interest in, any
Securities to any senior creditor of Sneaker as of immediately prior to the
Closing, or any foreclosure upon, or sale or other disposition of, such
Securities by such creditor or any assignee or transferee of the claim or
interest of such creditor pursuant to any debt restructuring agreement, or
any agent acting for any of the foregoing, or (iii) any sale of Securities
after January 31, 2000 pursuant to a public offering or otherwise on a
public trading market.
ARTICLE VI
MISCELLANEOUS
Section 6.1 Amendments; Assignment.
(a) This Agreement may not be amended except by an instrument
in writing signed by (i) the Company and the Investor, (ii) Xxxxxxxxxx, if
such amendment affects Xxxxxxxxxx'x obligations hereunder, and (iii) THL,
if such amendment affects THL's obligations hereunder. The Company may not
assign or transfer this Agreement or any rights hereunder. The Investor
may, subject to the provisions of Section 5.3 hereof, assign, transfer or
otherwise dispose of, at any time or times, any or all of the Securities
and in connection therewith, transfer or assign, in whole or in part, the
Investor's rights, title, interests, remedies, powers, and/or duties
thereunder and under this Agreement and the Registration Rights Agreement.
This Agreement shall be binding upon and inure to the benefit of the
successors and permitted assigns of the Investor.
Section 6.2 Expenses. Each party will bear its own legal and
other expenses with respect to this Agreement and the transaction
contemplated hereby.
Section 6.3 Waiver. The failure of a party, at any time or times
hereafter, to require strict performance of any provision of this Agreement
shall not waive, affect or diminish any right of such party thereafter to
demand strict compliance and performance therewith. None of the
undertakings, agreements, warranties, covenants and representations
contained in this Agreement shall be deemed to have been waived, unless
such waiver is set forth in an instrument in writing duly executed by the
waiving party.
Section 6.4 Severability. Wherever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
Section 6.5 Parties. Subject to the provisions of Section 6.1
hereof, this Agreement shall be binding upon and inure to the benefit of
the successors and permitted assigns of the Company, the Investor,
Xxxxxxxxxx and THL.
Section 6.6 Entire Agreement. This Agreement and the Other
Agreements constitute the entire agreement of the parties with respect to
the subject matter hereof and thereof and may not be modified or
supplemented by any prior or contemporaneous oral understanding.
Section 6.7 Equitable Relief. Each of the parties (including
Xxxxxxxxxx and THL) recognizes that, in the event a party fails to perform,
observe or discharge any of its obligations under this Agreement, any
remedy of law may prove to be inadequate relief to the other party or
parties, and, therefore, each of the parties agrees that such other party
or parties shall be entitled to temporary and permanent injunctive relief
in any such case without the necessity of proving actual damages.
Section 6.8 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to the conflicts of law principles thereof.
Section 6.9 Notices. Any notice required to be given hereunder
shall be sufficient if in writing, and sent by facsimile transmission (with
a confirmatory copy sent by overnight courier), by courier service (with
proof of service), hand delivery or certified or registered mail (return
receipt requested and first-class postage prepaid), addressed as follows:
If to the Investor, at: Sneaker Guarantee LLC
c/o Xxxxxx X. Xxx Company
00 Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Xx.
Telecopy: (000) 000-0000
with a copy to: Skadden, Arps, Slate
Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Xxxx X. Xxxx, Esq.
Telecopy: (000) 000-0000
If to the Company, at: Just For Feet, Inc.
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxx
Telecopy: (000) 000-0000
with a copy to: Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
and
Xxxxx, Xxxxxxxx & Xxxxxxx
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxx Xxxxxxxx
Telecopy: (000) 000-0000
if to Xxxxxxxxxx, at: Just For Feet, Inc.
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxxx
Telecopy: (000) 000-0000
with a copy to: Xxxxx, Xxxxxxxx & Xxxxxxx
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxx Xxxxxxxx
Telecopy: (000) 000-0000
or to such other address as any party shall specify by written notice so
given, and any such notice hereunder shall be deemed to have been delivered
as of the date received.
Section 6.10 Section Titles. The section titles contained in this
Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties
hereto.
Section 6.11 Number and Person. Wherever the word, or words, the
Company, Subsidiary, Investor, it, itself, or any other such descriptive
words referring to the parties hereto are used, they shall be construed to
apply to the singular or plural, as the case may be.
Section 6.12 Non-Compete. THL agrees that from and after the
Closing Date until the later of the time the Board no longer includes an
Investor Designee or the expiration of the Investor's right to designate a
representative pursuant to Section 5.2 hereof, THL will not, and will not
allow any of its controlled Affiliates to, invest in any Person the
principal business of which is branded athletic footwear retailing, except
for investments resulting in ownership by THL and such Affiliates of less
than 5% of the equity of any such Person and which involve no designee or
representative of THL or any such Affiliate being an officer or director,
or otherwise involved in the management, of such Person.
Section 6.13 Counterparts. This Agreement may be executed in a
number of identical counterparts, each of which, for all purposes, is to be
deemed an original, and all of which collectively constitute one agreement.
A facsimile or photocopy of an executed counterpart of this Agreement shall
be sufficient to bind the party or parties whose signature(s) appear
thereon.
Signature Page Follows
IN WITNESS WHEREOF, this Common Stock and Warrant Purchase
Agreement has been duly executed and delivered as of the day and year first
written above.
JUST FOR FEET, INC.
By: /s/ Xxxx X. Xxxx
----------------------------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
SNEAKER GUARANTEE LLC
By: XXXXXX X. XXX COMPANY as Manager
By: /s/ Xxxxxx X. Xxxxx, Xx.
----------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Managing Director
For purposes of Section 5.2 and
Article VI only:
XXXXXX X. XXX COMPANY
By: /s/ Xxxxxx X. Xxxxx, Xx.
---------------------------------
Name: Xxxxxx X. Xxxxx, Xx.
Title: Managing Director
For purposes of Sections 5.1, 5.4, 6.1
through 6.11 and 6.13 only:
/s/ Xxxxxx Xxxxxxxxxx
------------------------------------
Xxxxxx Xxxxxxxxxx
EXHIBIT A
FORM OF REGISTRATION
RIGHTS AGREEMENT
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of July 2, 1998 (this
"Agreement") by and among Just for Feet, Inc., a Delaware corporation (the
"Company"), Xxxxxx Xxxxxxxxxx, solely for purposes of Section 4.6(b)
hereof, Sneaker Guarantee LLC, a Delaware limited liability company ("SGL"
and together with direct and indirect transferees of SGL in accordance with
Section 1.3 hereof, the "Investors"), and Xxxxxx X. Xxx Company, solely in
its capacity as Investors' Agent (as defined in Section 7.2 hereof).
The Company and SGL have entered into a Common Stock and Warrant
Purchase Agreement dated as of July 2, 1998 (the "Purchase Agreement")
providing for the sale by the Company and the purchase by SGL of 926,355
units (the "Units"), each consisting of one share of Common Stock, par
value $.0001 per share, of the Company (the "Common Stock") and one warrant
for the purchase of .99701626 of a share of Common Stock (the "Warrants"),
upon the terms and subject to the conditions contained therein.
Capitalized terms used and not defined herein have the meanings ascribed to
such terms in the Purchase Agreement.
The Company and SGL desire to provide for certain registration
rights with respect to the Common Stock and Warrants being acquired by SGL
pursuant to the Purchase Agreement and with respect to the shares of Common
Stock purchasable upon exercise of the Warrants (together with any other
securities issued in respect of or in exchange for such Common Stock or
Warrants by way of distribution or in connection with a split or
combination of Common Stock or Warrants, or a merger, consolidation or
other reorganization or recapitalization, the "Registrable Securities").
SGL is entering into this Agreement and makes the covenants of
the Investors herein for and on behalf of itself and any other Investors.
In consideration of the foregoing and the respective covenants
and agreements set forth herein and in the Purchase Agreement, the parties
hereby agree as follows.
Section 1. Exercisability of Registration Rights.
1.1 Effectiveness of Registration Rights. The registration
rights set forth in Sections 2 and 3 hereof shall be effective on the date
hereof, except as expressly set forth below.
1.2 Duration of Registration Rights. The registration rights
set forth in Sections 2 and 3 hereof shall not be exercisable by the
Investors if and to the extent that the Investors are restricted from
transferring or disposing of the Registrable Securities under Section 5.3
of the Purchase Agreement. Registrable Securities shall cease to be such
when: (a) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act of 1933, as
amended (the "Securities Act"), and such securities shall have been
disposed of in accordance with such registration statement; (b) such
securities shall have been distributed pursuant to Rule 144 (or any
successor provision to such Rule) under the Securities Act; or (c) such
securities shall have ceased to be outstanding.
1.3 Permitted Transferees; Exercise of Rights. Any Investor
(including without limitation (x) Banque Nationale de Paris, for itself
and as agent for itself and for Xxxxxxx Xxxxx Senior Floating Rate Fund,
Inc., Xxxxxxx Xxxxx Prime Rate Portfolio and Xxxxxxx Xxxxx Debt Strategies
Portfolio, together with its successors and assigns (the "Sneaker
Lenders"), (y) direct and indirect transferees of the Sneaker Lenders and
(z) other permitted direct or indirect transferees of SGL under the
Purchase Agreement) may transfer the registration rights granted hereunder
by transferring all or a portion of the Registrable Securities (subject to
and in accordance with the terms and conditions of the Purchase Agreement)
and sending a written notice thereof to the Company. The written notice
shall comply with Section 7.6 hereof, be signed by both the transferor
Investor and the transferee and include an executed counterpart of this
Agreement pursuant to which the transferee: (a) shall become a party to
this Agreement, (b) shall be deemed to be an Investor for all purposes
hereunder and (c) shall be bound by all the provisions hereof applicable to
the Investors. Except as set forth herein, the Investors may jointly
exercise the registration rights granted hereunder in such manner and in
such proportion as they shall agree among themselves.
Section 2. Registration on Request.
2.1 Notice. Subject to the terms and conditions set forth
herein, upon written notice by the Investors, executed and delivered for
them and on their behalf only by the Investors' Agent, requesting that the
Company effect the registration under the Securities Act of some or all of
the Registrable Securities held by them, which notice shall specify the
intended method or methods of disposition of such Registrable Securities,
the Company will use its reasonable best efforts to effect (at the earliest
possible date) the registration, under the Securities Act, of such
Registrable Securities for disposition in accordance with the intended
method or methods of disposition stated in such request, provided that:
(a) if the Company shall have previously effected a
registration with respect to Registrable Securities pursuant to Section 3
hereof, the Company shall not be required to effect a registration pursuant
to this Section 2 until a period of 120 days shall have elapsed from the
effective date of the most recent such previous registration;
(b) if, upon receipt of a registration request pursuant to
this Section 2, the Company is advised in writing (with a copy to the
Investors) by the underwriter or proposed underwriter for a contemplated
Company Offering (as defined below) that, in such firm's opinion, a
registration at the time and on the terms requested would adversely affect
any public offering of securities (other than in connection with employee
benefit and similar plans) by the Company (a "Company Offering") that had
been contemplated by the Company prior to the date of the aforesaid written
notice from the Investors requesting registration, subject to Section
4.3(d) hereof, the Company shall not be required to effect a registration
pursuant to this Section 2 until the earliest of (i) the later of (A) 120
days after the completion of such Company Offering or (B) the termination
of any "black-out" or "lock-up" period required by the underwriters, if
any, to be applicable to the Investors in connection with such Company
Offering, (ii) 30 days after abandonment of such Company Offering or (iii)
four months after the date of the aforesaid written notice from the
Investors requesting registration;
(c) if the Investors are advised in writing by the managing
underwriter of the offering that the number of Registrable Securities
(treating the Warrants, for these purposes, on an as-exercised basis)
offered by the Investors in a registration under this Section 2 is greater
than the number of securities which can be offered without adversely
affecting the offering, the Investors agree to reduce pro rata the number
of Registrable Securities offered for the account of the Investors to a
number deemed satisfactory by the managing underwriter;
(d) if, within 15 days after the date of the aforesaid
written notice from the Investors requesting registration under this
Section 2.1, the Company determines in good faith, and delivers written
notice to the Investors (and the Investors acknowledge that any notice
given by the Company to the Investors pursuant to this Section 2.1(d) shall
constitute material, nonpublic information), that the filing of a
registration statement would require the disclosure of material
information, which disclosure would have a significant adverse impact on
the (i) Company's business, (ii) a contemplated financing, strategic or
other material transaction involving the Company or (iii) any bona fide
negotiation as to such a contemplated transaction which was in process
prior to, and is ongoing at, the date of the written notice to the
Investors pursuant to this Section 2.1(d), subject to Section 4.3(d)
hereof, the Company shall not be required to effect a registration pursuant
to this Section 2 until the earlier of (x) the date upon which such
material information is disclosed to the public or ceases to be material or
would no longer have the impact described above or (y) 90 days after the
Company makes such good faith determination;
(e) the Company shall not be required to effect a
registration pursuant to this Section 2 if the U.S. Securities and Exchange
Commission ("SEC"), applicable law or regulation or the managing
underwriter of the offering requires the Company to include in the
registration statement financial statements audited as of any date other
than the end of its fiscal year;
(f) the Company shall not be required to register any
Registrable Securities under this Section 2 unless (i) the proposed
approximate aggregate offering price of the Registrable Securities to be
registered shall be at least $10,000,000 or (ii) if any of the Registrable
Securities are being offered for the account of the Sneaker Lenders, the
Registrable Securities proposed to be offered constitute at least 1% of the
Common Stock outstanding at the time registration is requested under this
Section 2.1;
(g) prior to the effectiveness of any registration
statement effected pursuant to this Section 2, if the managing underwriter
of the offering advises the Investors that it is inadvisable to proceed
with the offering, the Investors shall have the right to cause the Company
to withdraw any such registration and, if the Investors pay all
Registration Expenses in connection with any such withdrawn registration,
obtain one additional registration right for purposes of paragraph (i) of
this Section 2.1;
(h) the Investors shall be permitted to select the
underwriters of any offering of Registrable Securities for which a
registration is effected under this Section 2; subject to the consent of
the Company, which shall not be unreasonably withheld; and
(i) the Investors shall have the right to exercise
registration rights pursuant to this Section 2: (i) once as to the Common
Stock included in the Units and the Common Stock underlying the Warrants
included in the Units; (ii) once (at any time after July 2, 1999) with
respect to the Warrants included in the Units, the Common Stock underlying
those Warrants or both; and (iii) once with respect to each withdrawn
registration in accordance with paragraph (g) of this Section 2.1 and each
Blackout Termination Right provided for by Section 4.3(b) hereof.
2.2 Registration Expenses.
(a) As used in this Agreement, "Registration Expenses"
shall include all expenses incident to the Company's performance of or
compliance with the registration requirements set forth in this Agreement
including, without limitation, the following: (i) the fees, disbursements
and expenses of the Company's counsel (United States and foreign) and
accountants in connection with the registration of Registrable Securities
to be disposed of under the Securities Act; (ii) all expenses in connection
with the preparation, printing and filing of the registration statement,
any preliminary prospectus or final prospectus, any other offering document
and amendments and supplements thereto and the mailing and delivering of
copies thereof to the underwriters and dealers; (iii) the cost of printing
or producing any agreement(s) among underwriters, underwriting agreement(s)
and blue sky or legal investment memoranda, any selling agreements and any
other documents in connection with the offering, sale or delivery of
Registrable Securities to be disposed of; (iv) all expenses in connection
with the qualification of Registrable Securities to be disposed of for
offering and sale under state securities laws, including the fees and
disbursements of counsel for the underwriters in connection with such
qualification and in connection with any blue sky and legal investment
surveys; and (v) the filing fees incident to securing any required review
by the National Association of Securities Dealers ("NASD") of the terms of
the sale of Registrable Securities to be disposed of.
(b) Other than as provided for in Section 2.1(g) hereof,
the Company (as between the Company and the Investors) will pay all
Registration Expenses in connection with any registration pursuant to this
Section 2, except that (i) the Company shall not bear underwriting
discounts or commissions attributable to Registrable Securities or transfer
taxes applicable to Registrable Securities and (ii) the Company shall be
required to pay the fees and disbursements of one, but only one, firm of
legal counsel retained by the Investors in connection with any such
registration.
2.3 Third Person Shares. The Company shall have the right to
register equity securities (as defined in the Securities Exchange Act of
1934, as amended (the "Exchange Act")) for sale for the account of any
person in any registration of Registrable Securities requested pursuant to
this Section 2; provided that the Company shall not have the right to
register such securities to the extent that the Investors are advised in
writing (with a copy to the Company) by the underwriter for the offering of
Registrable Securities for which a registration is effected under this
Section 2 that, in such firm's opinion, registration of such securities
would adversely affect in a significant manner the offering and sale of
Registrable Securities then contemplated by the Investors.
Section 3. Incidental Registration.
3.1 Notice and Registration. If the Company proposes to
register for public sale under the Securities Act (whether proposed to be
offered for sale by the Company or any other person) any of its equity
securities (the "Other Securities") on a form and in a manner which would
permit registration of Registrable Securities for sale to the public under
the Securities Act, the Company will give prompt written notice to the
Investors of its intention to do so, and upon the written request of the
Investors, delivered to the Company for and on behalf of the Investors only
by the Investors' Agent, within 20 Business Days (as defined below) after
the giving of any such notice (which request shall specify Registrable
Securities intended to be disposed of by the Investors and the intended
method of disposition thereof), the Company will use its reasonable best
efforts to effect, in connection with the registration of the Other
Securities, the registration under the Securities Act of all Registrable
Securities which the Company has been so requested to register by the
Investors, to the extent required to permit the disposition (in accordance
with the intended method or methods thereof as aforesaid) of Registrable
Securities so to be registered; provided that:
(a) if, at any time after giving such written notice of its
intention to register any Other Securities and prior to the effective date
of the registration statement filed in connection with such registration,
the Company shall determine for any reason not to register the Other
Securities, the Company may, at its election, give written notice of such
determination to the Investors, and thereupon the Company shall be relieved
of its obligation to register such Registrable Securities in connection
with the registration of such Other Securities (but not from its obligation
to pay Registration Expenses to the extent incurred in connection therewith
as provided in Section 3.2 hereof), without prejudice, however, to the
rights (if any) of the Investors immediately to request that such
registration be effected as a registration under Section 2 hereof;
(b) the Company will not be required to effect any
registration of Registrable Securities pursuant to this Section 3 if no
securities of any other selling stockholder are to be included in such
registration and the Company shall have been advised in writing (with a
copy to the Investors) by a recognized independent investment banking firm
selected by the Company and reasonably acceptable to the Investors that, in
such firm's opinion, a registration at that time of any of the Registrable
Securities proposed to be offered would adversely affect in a significant
manner the proposed Company Offering;
(c) if the Company shall have been advised in writing (with
a copy to the Investors) by the managing underwriter of the offering of the
Other Securities that the number of securities (treating the Warrants and
other options, warrants or rights, as well as convertible and exchangeable
securities, for these purposes, on an as-exercised, as-converted or as-
exchanged basis) offered by the Investors and other selling stockholders,
if any, in a registration under this Section 3 is greater than the number
of securities which can be offered without adversely affecting the
offering, (i) the Company may reduce pro rata the number of securities
(including without limitation Registrable Securities) offered for the
account of selling stockholders to a number deemed satisfactory by the
managing underwriter and (ii) in the event that the Company so reduces the
number of securities offered for the account of selling stockholders, the
Investors agree to reduce pro rata the number of Registrable Securities
offered for their account accordingly;
(d) the Company may, in its sole discretion, delay any
offering of Other Securities for which a registration is effected under
this Section 3 by giving written notice of the delay to the Investors;
provided, however, that if (i) the registration statement with respect to
the offering is not yet effective and the delay extends for more than 30
days from the date of the written notice of delay under this Section 3.1(d)
or (ii) the registration statement with respect to the offering has been
declared effective by the SEC and the closing of the offering is delayed
for at least 12 hours, the Investors may withdraw their Registrable
Securities from the offering, and thereupon the Company shall be relieved
of its obligation to register such Registrable Securities (but not from its
obligation to pay Registration Expenses to the extent incurred in
connection therewith as provided in Section 3.2 hereof), without prejudice,
however, to the rights (if any) of the Investors immediately to request
that such registration be effected as a registration under Section 2
hereof;
(e) the Company shall not be required to register any
Registrable Securities under this Section 3 unless the approximate proposed
aggregate offering price of the Registrable Securities to be registered
shall be at least (i) $1,500,000 in the event that the Investors are the
only selling stockholders for whom or which securities are being registered
or (ii) $100,000 in the event that the Investors are not the only selling
stockholders for whom or which securities are being registered; and
(f) the Company shall not be required to effect any
registration of Registrable Securities under this Section 3 incidental to
the registration of any of its securities in connection with mergers,
acquisitions, exchange offers, subscription offers, dividend reinvestment
plans or stock option or other employee benefit plans.
No registration of Registrable Securities effected under this Section 3
shall relieve the Company of its obligation to effect a registration of
Registrable Securities pursuant to Section 2. For purposes of this
Agreement, "Business Day" means any day other than a Saturday, Sunday or a
day on which the SEC is not open to receive filings.
3.2 Registration Expenses. The Company (as between the Company
and the Investors) will pay all Registration Expenses in connection with
any registration pursuant to this Section 3, except that (a) the Company
shall not bear underwriting discounts or commissions attributable to
Registrable Securities or transfer taxes applicable to Registrable
Securities and (b) the Company shall be required to pay the fees and
disbursements of one, but only one, firm of legal counsel retained by the
Investors in connection with any such registration.
Section 4. Registration Procedures.
4.1 Registration and Qualification. If and whenever the
Company is required to use its reasonable best efforts to effect the
registration of any Registrable Securities under the Securities Act as
provided in Sections 2 and 3 hereof, the Company will promptly as is
practicable:
(a) prepare, file with the SEC and use its reasonable best
efforts to cause to become effective a registration statement under the
Securities Act with respect to the Registrable Securities to be offered;
(b) furnish to the Investors copies of any such
registration statement, any prospectus included therein and any amendment
or supplement thereto (including all documents incorporated by reference
therein prior to the effectiveness of such registration statement), which
documents (other than documents incorporated by reference) will be subject
to the review of the Investors for a period of at least five business days,
and (i) with respect to a registration under Section 2 hereof, the Company
shall not file with the SEC any such registration statement, prospectus,
amendment or supplement to which any Investor with securities covered by
the registration statement shall reasonably object within five business
days of receipt thereof and (ii) with respect to a registration under
Section 3 hereof, prior to filing with the SEC any such registration
statement, prospectus, amendment or supplement, the Company will consider
the reasonable objections of any Investor which are conveyed to the
Company;
(c) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities until such
time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the Investors set
forth in such registration statement or, in the case of registration
statements not governed by Rule 415 under the Securities Act, the
expiration of three months after such registration statement becomes
effective, if earlier;
(d) if any person becomes an Investor subsequent to the
time that a registration statement governed by Rule 415 becomes effective,
upon request by the new Investor or the Investors' Agent, add such Investor
to the registration statement through a supplement to the prospectus
included in the registration statement or, if required by applicable law,
rule or regulation, a post-effective amendment to include such Investor as
a selling securityholder in a distribution under such registration
statement;
(e) furnish to the Investors and to any underwriter of such
Registrable Securities such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus included
in such registration statement (including each preliminary prospectus and
any summary prospectus) in conformity with the requirements of the
Securities Act, such documents incorporated by reference in such
registration statement or prospectus and such other documents as the
Investors or such underwriter may reasonably request;
(f) use its reasonable best efforts to register or qualify
all Registrable Securities covered by such registration statement under
such other securities or blue sky laws of such United States jurisdictions
as the Investors, acting solely through the Investors' Agent, or any
underwriter of such Registrable Securities shall reasonably request and do
any and all other acts and things which may be reasonably necessary or
advisable to enable the Investors or any underwriter to consummate the
disposition in such jurisdictions of the Registrable Securities covered by
such registration statement; provided that the Company shall not for any
such purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction where it is not so qualified or to subject
itself to taxation in any such jurisdiction or to consent to general
service of process in any such jurisdiction;
(g) (i) furnish to the Investors, addressed to them, an
opinion of counsel for the Company, dated the date of the closing under the
underwriting agreement, covering substantially the same matters with
respect to such registration statement (and the prospectus included
therein) as are customarily covered in opinions of issuer's counsel
delivered to underwriters in underwritten public offerings of securities
and such other matters as the Investors may reasonably request, and (ii) if
permitted by applicable accounting standards, use its reasonable efforts to
furnish to the Investors, addressed to them, a "cold comfort" letter signed
by the independent public accountants who have certified the Company's
financial statements included in such registration statement, covering
substantially the same matters with respect to such registration statement
(and the prospectus included therein), and with respect to events
subsequent to the date of such financial statements, as are customarily
covered in accountants' letters delivered to underwriters in underwritten
public offerings of securities and such other matters as the Investors may
reasonable request; and
(h) (i) immediately notify the Investors at any time when a
prospectus relating to a registration pursuant to Section 2 or 3 hereof is
required to be delivered under the Securities Act of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state any 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 and (ii) at the request of the
Investors, acting solely through the Investors' Agent, prepare and furnish
to the Investors a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchaser of such Registrable Securities, such prospectus
shall not include an untrue statement of a material fact or 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 are
made, not misleading. The Investors agree not to sell Registrable
Securities registered under Section 2 or Section 3 hereof if they have been
notified of the happening of an event under clause (i) of this Section
4.1(g) until the Investors have received such copies of the supplement or
amendment as aforesaid and are further notified by the Company that the
prospectus included in the registration statement, as then in effect, no
longer includes an untrue statement of a material fact or omits to state
any 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, and the three-month time period set forth in
paragraph (b) of this Section 4.1, if applicable, shall be extended for a
number of days equal to the number of days the Investors are prohibited
from selling such Registrable Securities under this Section 4(g).
The Company may require the Investors to furnish to the Company such
information regarding the Investors and the distribution of such securities
as the Company may from time to time reasonably request in writing and as
shall be required by law or by the SEC or the NASD in connection with any
registration.
4.2 Underwriting.
(a) If requested by the underwriters for any underwritten
offering of Registrable Securities pursuant to a registration requested
hereunder, the Company will enter into an underwriting agreement with such
underwriters for such offering, such agreement to contain such
representations, warranties, covenants and indemnities by the Company and
such other terms and provisions as are customarily contained in
underwriting agreements with respect to secondary distributions, including
without limitation indemnities and contribution substantially to the effect
and to the extent provided in Section 6 hereof and the provision of an
opinion of counsel and, if applicable, a "cold comfort" letter, in each
case to the effect and to the extent provided in Section 4.1(f) hereof.
The Investors on whose behalf Registrable Securities are to be distributed
by such underwriters shall be parties to any such underwriting agreement,
and the representations and warranties by, and the other agreements on the
part of, the Company to and for the benefit of such underwriters shall also
be made to and for the benefit of such Investors.
(b) In the event that any registration pursuant to Section
3 hereof shall involve, in whole or in part, an underwritten offering, the
Company may require Registrable Securities requested to be registered
pursuant to Section 3 to be included in such underwriting on the same terms
and conditions as shall be applicable to the Other Securities being sold
through underwriters under such registration. In such case, the Investors
on whose behalf Registrable Securities are to be distributed by such
underwriters shall be parties to any such underwriting agreement. Such
agreement shall contain such representations, warranties, covenants and
indemnities by such Investors and such other terms and provisions as are
customarily contained in underwriting agreements with respect to secondary
distributions, including without limitation indemnities and contribution
substantially to the effect and to the extent provided in Section 6 hereof,
provided that the amount of any indemnification provided by such Investors
shall be limited to the net proceeds to such Investors from the offering
under such registration. The representations and warranties in such
underwriting agreement by, and the other agreements on the part of, the
Company to and for the benefit of such underwriters shall also be made to
and for the benefit of such Investors.
(c) In the event that any registration shall involve an
underwritten offering of Registrable Securities with an aggregate current
market value (calculated based on the per share closing price of the Common
Stock on the trading day immediately prior to the day on which notice of
registration is given by the Investors under Section 2.1 or Section 3.1)
equal to or in excess of $30,000,000, the Company will (i) market the
Registrable Securities to be offered with the same diligence the Company
would devote to the marketing of a primary registration of its securities
and (ii) cause its management to participate in any efforts by the
underwriters to market the Registrable Securities to be offered, if and as
required by the underwriters.
4.3 Blackout Periods. (a) Except as restricted below, at any
time when a registration statement effected pursuant to Section 2 hereunder
relating to Registrable Securities is effective, upon written notice from
the Company to the Investors that either:
(i) the Company has determined to engage in
a Company Offering and has been advised in writing (with a copy
to the Investors) by the underwriter or proposed underwriter of
the Company Offering that, in such firm's opinion, the Investors'
sale of Registrable Securities pursuant to the registration
statement would adversely affect the Company's own immediately
planned Company Offering (a "Transaction Blackout") or
(ii) the Company has determined in good
faith, and delivers written notice to the Investors, that the
Investors' sale of Registrable Securities pursuant to the
registration statement would require disclosure of material
information, which disclosure would have a significant adverse
impact on (A) the Company's business, (B) a contemplated
financing, strategic or other material transaction involving the
Company or (C) any bona fide negotiation as to such a
contemplated transaction which was in process prior to, and is
ongoing at, the date of written notice to the Investors pursuant
to this Section 4.3(a)(ii) (an "Information Blackout"),
the Investors shall suspend sales of Registrable Securities pursuant to
such registration statement until the earlier of:
(A) (1) in the case of a Transaction Blackout,
the earliest of (a) the later of (i) 120 days after the
completion of such Company Offering, or (ii) the
termination of any "black-out" or "lock-up" period
required by the underwriters to be applicable to the
Investors, if any, in connection with such Company
Offering, (b) 30 days after abandonment of such Company
Offering and (c) four months after the date of the
Company's written notice of the Transaction Blackout or
(2) in the case of an Information Blackout, the earlier
of (a) the date upon which such material information is
disclosed to the public or ceases to be material or
would no longer have the impact described in Section
4.3(a)(ii) hereof and (b) 90 days after the Company
makes such determination; and
(B) such time as the Company notifies the
Investors that sales pursuant to such registration
statement may be resumed;
provided, that the Company may not impose a Transaction Blackout during any
underwritten public offering and that the Company shall only be permitted
to deliver one notice of a Transaction Blackout or Information Blackout
within any 180-day period. For purposes of this Agreement, the number of
days from a suspension of sales of the Investors under this Section 4.3(a)
until the day when such sales may be resumed hereunder is called a "Sales
Blackout Period."
(b) Any delivery by the Company of notice of a Transaction
Blackout or Information Blackout during the 90 days immediately following
effectiveness of any registration statement effected pursuant to Section 2
hereof shall give the Investors the right, by notice to the Company within
20 Business Days after the end of the applicable Sales Blackout Period, to
cancel such registration and obtain one additional registration right (a
"Blackout Termination Right") for purposes of Section 2.1(i).
(c) If there is a Transaction Blackout or an Information
Blackout and the Investors do not exercise their cancellation right, if
any, pursuant to paragraph (b) of this Section 4.3, or if such cancellation
right is not available, the three-month time period set forth in Section
4.1(b), if applicable, shall be extended for a number of days equal to the
number of days in the Sales Blackout Period.
(d) The Company only shall be permitted to delay
registration of Registrable Securities pursuant to Section 2(b) or Section
2(d) hereof or impose a Sales Blackout Period pursuant to paragraph (a) of
this Section 4.3 if, in the aggregate, the Company's exercise of such
rights under Sections 2(b), 2(d) and 4.3 results in four months or less of
delayed registrations or sales within any 365-day period.
4.4 Public Trading. In connection with the registration of any
offering of Registrable Securities under this Agreement, the Company agrees
to use its reasonable best efforts to (a) effect the quotation or listing
of such Registrable Securities through or on the Nasdaq National Market,
any other market of The Nasdaq Stock Market or any securities exchange
through or on which shares of the Common Stock are then quoted or listed or
(b) otherwise facilitate the public trading of such Registrable Securities.
4.5 Warrant Agreement. The Company covenants and agrees that on
or prior to the closing of the first registered public offering of the
Warrants, if reasonably necessary to facilitate such public offering, the
Company will (a) enter into a Warrant Agreement with a warrant agent (the
"Warrant Agreement") containing customary terms and conditions consistent
with the terms of the Warrants with respect to the execution, registration,
transfer, split-up and exchange of certificates representing the Warrants
and, as appropriate, including other terms and conditions currently set
forth in the Warrant and (b) exchange then outstanding certificates
representing the Warrants for new certificates representing the Warrants
issued in accordance with the Warrant Agreement.
4.6 Lock-up. (a) If any registration of Registrable Securities
under the Securities Act pursuant to Section 2 or Section 3 involves an
underwritten offering, the Company agrees, if so required by the managing
underwriter: (i) not to effect any sale or distribution of any of its
equity securities or securities convertible into or exchangeable or
exercisable for any of such equity securities during a period commencing on
the effective date of such registration and ending not more than 90 days
thereafter, except (A) as part of and pursuant to such underwritten
offering or (B) in connection with (1) a stock option plan, stock purchase
plan, savings plan or similar plan or (2) an acquisition, merger or
exchange offer; and (ii) to use its reasonable best efforts to cause its
officers and directors other than Xxxxxx Xxxxxxxxxx to agree not to effect
any sale or distribution (other than a private sale to a transferee who or
which agrees to the same restrictions to which the transferor is subject)
of any (x) equity securities of the Company owned or controlled by any of
them or their respective family members or (y) securities convertible into
or exchangeable or exercisable for any of such equity securities owned or
controlled by any of them or their respective family members, in each such
case during a period commencing on the effective date of such registration
and ending not more than 90 days thereafter, except as part of and pursuant
to such underwritten offering.
(b) If any registration of Registrable Securities under the
Securities Act pursuant to Section 2 or Section 3 involves an underwritten
offering, Xxxxxx Xxxxxxxxxx agrees, if so required by the managing
underwriter, not to effect any sale or distribution (other than a private
sale to a transferee who or which agrees to the same restrictions to which
the transferor is subject) of any equity securities of the Company owned or
controlled by him or his respective family members or securities
convertible into or exchangeable or exercisable for any of such equity
securities owned or controlled by him or his respective family members
during a period commencing on the effective date of such registration and
ending not more than 90 days thereafter, except as part of and pursuant to
such underwritten offering.
(c) If (i) any registration of Registrable Securities under
the Securities Act pursuant to Section 2 or Section 3 involves an
underwritten offering, (ii) Xxxxxx Xxxxxxxxxx has executed and delivered an
agreement with the Company relating to such registration as provided for in
Section 4.6(b) hereof and (iii) each officer or director who owns or
controls at least 50,000 shares of Common Stock (subject to adjustment for
stock splits, stock combinations and the like) has executed and delivered
an agreement with the Company relating to such registration as provided for
in Section 4.6(a)(ii) hereof, the Investors agree, if so required by the
managing underwriter, not to effect any sale or distribution (other than a
private sale to a transferee who or which agrees to the same restrictions
to which the transferor is subject) of any of their equity securities of
the Company or securities convertible into or exchangeable or exercisable
for any of such equity securities during a period commencing on the
effective date of such registration and ending not more than 90 days
thereafter, except as part of and pursuant to such underwritten offering.
Section 5. Preparation; Reasonable Investigation.
5.1 Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement registering
Registrable Securities under the Securities Act, the Company will give the
Investors and the underwriters, if any, and their respective counsel and
accountants, such reasonable and customary access after reasonable notice
to its books and records and such opportunities to discuss the business of
the Company with its officers and the independent public accountants who
have certified its financial statements and perform such other diligence as
shall be necessary, in the opinion of the Investors and such underwriters
or their respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act.
Section 6. Indemnification.
6.1 Indemnification and Contribution.
(a) In the event of any registration of any Registrable
Securities hereunder, the Company agrees to indemnify and hold harmless the
Investors, their respective directors, officers or partners (as
applicable), each person who participates as an underwriter in the offering
or sale of such securities, each officer and director of each underwriter
and each person, if any, who controls any such Investor or any such
underwriter within the meaning of the Securities Act or the Exchange Act
against any losses, claims, damages, liabilities and expenses, joint or
several, to which such person may be subject under the Securities Act or
otherwise insofar as such losses, claims, damages, liabilities or expenses
(or actions or proceedings in respect thereof) arise out of are based upon
(i) any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus included therein, any amendment or supplement thereto or any
document incorporated by reference therein or (ii) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and the Company
will reimburse each such person for any legal or any other expenses
reasonably incurred by such person in connection with investigating or
defending any such loss, claim, liability, action or proceeding; provided
that the Company shall not be liable in any such case to the extent that
any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus or final 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 the
Investors expressly for inclusion in such registration statement,
prospectus, amendment or supplement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of
any such Investor, director, officer, partner or person and shall survive
the transfer of such securities by any such Investor. The Company also
agrees to provide for contribution substantially in accordance with the
terms and provisions of Section 6.2 hereof.
(b) In the event of any registration of any Registrable
Securities hereunder, the Investors agree to indemnify and hold harmless
(in the same manner and to the same extent as set forth in clause (a) of
this Section 6.1) the Company, each director of the Company, each officer
of the Company who shall sign such registration statement, each person who
participates as an underwriter in the offering or sale of such securities,
each officer and director of each underwriter, and each person, if any, who
controls the Company or any such underwriter within the meaning of the
Securities Act or the Exchange Act, with respect to any statement in or
omission from such registration statement, any preliminary prospectus or
final prospectus included therein, or any amendment or supplement thereto,
if such statement or omission was made in reliance upon and in conformity
with written information furnished by or on behalf of the Investors to the
Company expressly for inclusion in such registration statement, prospectus,
amendment or supplement. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Company
or any such director, officer or controlling person and shall survive the
transfer of the Registrable Securities by any such Investors. The
Investors will reimburse each such person for any legal or any other
expenses reasonably incurred by such person in connection with
investigating or defending any loss, claim, liability, action or proceeding
for which indemnification is provided under this Section 6.1(b). The
Investors also agree to provide for contribution substantially in
accordance with the terms and provisions of Section 6.2 hereof.
(c) Notwithstanding the provisions of paragraphs (a) and
(b) of this Section 6.1, no Investor shall be required to provide
indemnification in any amount in excess of the net proceeds received by
such Investor in the offering. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to indemnification from any person who was not guilty of such
fraudulent misrepresentation. The Investors' obligations to indemnify
pursuant to Section 6.1(b) are several and not joint, and each Investor's
obligation to indemnify is limited to its respective net proceeds from the
offering. The term "person," as used in this Section 6.1 and elsewhere in
this Agreement shall mean a natural person, corporation, partnership or
other entity.
6.2 Contribution. If the indemnification provided for in
Section 6.1 hereof is required by its terms but is for any reason held to
be unavailable to or otherwise insufficient to hold harmless an indemnified
party under Section 6.1 hereof in respect to any losses, claims, damages,
liabilities or expenses referred to therein, then each applicable
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of any losses, claims, damages, liabilities
or expenses referred to therein (a) in such proportion as is appropriate to
reflect the relative benefits received by the Company, the Investors and
the underwriters from the offering or (b) if the allocation provided by
clause (a) above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in
clause (a) above but also the relative fault of the Company, the Investors
and the underwriters in connection with the statements or omissions or
inaccuracies in the representations and warranties herein which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The respective relative benefits
received by the Company, the Investors and the underwriters shall be deemed
to be in the same proportion, in the case of the Company and the Investors,
as the total price paid to the Company and to the Investors, respectively,
for the securities sold by them to the underwriters (net of underwriting
commissions and discounts but before deducting expenses), and in the case
of the underwriters, as the underwriting commissions or discounts received
by them bears to the total of such amounts paid to the Company and to the
Investors and received by the underwriters as underwriting commissions or
discounts. The relative fault of the Company, the Investors and the
underwriters 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, the Investors or the underwriters and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company
and the Investors agree that it would not be just and equitable if
contribution pursuant to this Section 6.2 were determined solely by pro
rata allocation (even if the underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this Section 6.2,
no Investor shall be required to contribute any amount in excess of the net
proceeds received by such Investor in the offering. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. The Investors' obligations to
contribute pursuant to this Section 6.2 are several and not joint, and each
Investor's obligation to contribute is limited to its respective net
proceeds from the offering.
Section 7. Miscellaneous.
7.1 Legends; Stop Transfer Restriction. The Investors hereby
acknowledge that each of the certificates representing Registrable
Securities shall be subject to stop transfer instructions against the
transfer of certificates legended in accordance with Section 4.3(b) of the
Purchase Agreement. Such stop transfer instructions and legend shall be
applicable to any disposition of Registrable Securities while transfer of
such Registrable Securities is restricted by the Securities Act. The
Company agrees that, upon receipt of a written request from the Investors,
executed and delivered for them and on their behalf only by the Investors'
Agent, addressed to the Company and its transfer agent and accompanied by
an opinion of counsel reasonably acceptable to the Company to the effect
that some or all of the Registrable Securities may lawfully be publicly
offered and sold in the United States without registration under the
Securities Act, the Company will, or will cause its transfer agent or
warrant agent (if any) to, remove such legend from certificates
representing such Registrable Securities, and will make inapplicable to
such Registrable Securities such stop transfer instructions.
7.2 Investors' Agent. Each of the Investors (including
transferees which become Investors hereunder in accordance with Section 1.3
hereof) by its execution and delivery of this Agreement or the counterpart
referenced in Section 1.3, designates and appoints Xxxxxx X. Xxx Company as
such Investor's agent, attorney-in-fact and representative, with full power
of substitution (in such capacity, the "Investors' Agent"), and in such
capacity, Xxxxxx X. Xxx Company is hereby authorized and directed to take
all such actions and exercise all such rights, power or authority
(including, without limitation, the power and authority, on behalf of the
Investors, to execute and deliver any certificate, notice or instructions
hereunder), and make any decision or determination as are required,
authorized or permitted by this Agreement to be performed, exercised or
made by such Investor or by the Investors' Agent. Any such action taken or
exercise of rights, power or authority, and any decision or determination
made by the Investors' Agent consistent therewith, shall be absolutely and
irrevocably binding on each Investor as if such Investor personally had
taken such action, exercised such rights, power or authority or made such
decision or determination in such Investor's individual capacity.
(a) Each of the Investors agrees that each party hereto may
conclusively rely without further investigation on the instructions and
decisions of the Investors' Agent acting in such capacity on behalf of any
Investor and that, as between each Investor and each other party hereto,
all actions of the Investors' Agent acting in such capacity shall be
conclusive and binding on each Investor. Each Investor acknowledges that
the foregoing appointment and designation shall be deemed to be coupled
with an interest, shall be irrevocable and, in the case of any Investor who
is an individual, shall survive the death or incapacity of such Investor.
The Investors' Agent shall not be liable to any Investor for the
performance of any act or the failure to act under or in connection with
this Agreement, and the Investors shall indemnify and hold harmless the
Investors' Agent from any liability in connection with its acting as such,
so long as it acted or failed to act in good faith in what it reasonably
believed to be the scope of its authority and for a purpose which it
reasonably believed to be in the best interests of the Investors.
(b) A successor to the Investors' Agent may be chosen by
those persons holding at least a majority in interest of the Registrable
Securities then outstanding, provided that notice thereof is given by the
new Investors' Agent to the Company. Any such successor shall, for
purposes of this Agreement, be deemed to be, from the time of the
appointment thereof in accordance with the terms hereof, the Investors'
Agent and from and after such time, the term "Investors' Agent" as used
herein shall be deemed to refer to such successor. No appointment of a
successor shall be effective unless such successor agrees in writing to be
bound by the terms of this Agreement.
(c) The Investors' Agent shall be permitted to retain
counsel, consultants and other advisors and shall be entitled to
reimbursement from the Investors of its reasonable out-of-pocket expenses
including without limitation the reasonable, documented fees and expenses
incurred by the Investors' Agent for payment to, or in connection with, the
retention of such counsel, consultants or other advisors.
(d) The provisions of this Section 7.2 shall in no way
impose any obligations on the Company. In particular, notwithstanding any
notice received by the Company to the contrary (except any notice of the
appointment of a successor Investors' Agent in accordance with Section
7.2(c) above, the Company (i) shall be fully protected in relying upon and
shall be entitled to rely upon, actions, decisions and determinations of
the Investors' Agent and (ii) shall be entitled to assume that all actions,
decisions and determinations of the Investors' Agent are fully authorized
by the Investors.
7.3 No Inconsistent Agreements. The Company has not entered
into, and shall not on or after the date of this Agreement enter into, any
agreement with respect to its securities that compromises, negates or
violates the rights expressly granted to the Investors under this
Agreement.
7.4 Governing Law. This agreement shall be construed, performed
and enforced in accordance with, and governed by, the laws of the State of
New York, without giving effect to the principles of conflicts of law
thereof which may require application of the laws of a different
jurisdiction.
7.5 Severability. In the event that any part of this Agreement
is declared by any court or other judicial or administrative body to be
null, void or unenforceable, said provision shall survive to the extent it
is not so declared, and all of the other provisions of this Agreement shall
remain in full force and effect.
7.6 Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission (with a
confirmatory copy sent by overnight courier), by courier service (with
proof of service), hand delivery or certified or registered mail (return
receipt requested and first-class postage prepaid), addressed as follows:
If to the Investors, at: Xxxxxx X. Xxx Company
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx, Xx.
Telecopy: (000) 000-0000
with a copy to: Skadden, Arps, Slate
Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Xxxx X. Xxxx, Esq.
Telecopy: (000) 000-0000
If to the Company, at: Just For Feet, Inc.
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxx
Telecopy: (000) 000-0000
with a copy to: Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
and
Xxxxx, Xxxxxxxx & Xxxxxxx
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxx Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
if to Xxxxxx Xxxxxxxxxx, at: Just For Feet, Inc.
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxxxxx
Telecopy: (000) 000-0000
with a copy to: Xxxxx, Xxxxxxxx & Xxxxxxx
0000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxx Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
or to such other address as any party shall specify by written notice so
given, and any such notice hereunder shall be deemed to have been delivered
as of the date received.
7.7 Amendments; Waivers. This Agreement may be amended or
modified, and any of the terms, covenants or conditions hereof may be
waived, only by a written instrument executed by or on behalf of the
parties hereto (with the Investors' Agent acting on behalf of the
Investors), or in the case of a waiver, by the party waiving compliance.
Any waiver by any party of any condition, or of the breach of any
provision, term or covenant contained in this Agreement, in any one or more
instances, shall not be deemed to be, nor construed as, a further or
continuing waiver of any such condition, or of the breach of any other
provision, term or covenant of this Agreement.
7.8 Remedies. Any person having rights under any provision of
this Agreement will be entitled to enforce such rights specifically or to
recover damages or to exercise any other remedy available to it at law or
equity. These rights and remedies shall be cumulative, and the exercise of
any right or remedy provided herein shall not preclude any party from
exercising any other right or remedy provided herein. Each party hereto
agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it or any of the provisions of this
Agreement and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
7.9 Headings and Interpretation. The headings in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement. Terms such as "herein," "hereof,"
"hereunder" and "hereinafter" refer to this Agreement as a whole and not to
the particular sentence or paragraph where they appear, unless the context
otherwise requires. References in this Agreement to Sections or Schedules
shall be to Sections of or Schedules to this Agreement, unless otherwise
indicated. Unless the context otherwise requires, (i) terms used in the
plural include the singular, and vice versa, (ii) words in the masculine
gender include the feminine and neuter, and vice versa, and (iii) the use
of "or" is intended to be inclusive.
7.10 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
shall constitute the same instrument.
The parties hereto have caused this Agreement to be executed by
their respective officers or partners thereunto duly authorized as of the
date first above written.
JUST FOR FEET, INC.
By__________________________________________
Name:
Title:
____________________________________________
Xxxxxx Xxxxxxxxxx
(solely for purposes of Section 4.6(b) hereof)
SNEAKER GUARANTEE LLC
By: XXXXXX X. XXX COMPANY as Manager
By_________________________________________
Name:
Title:
INVESTORS' AGENT:
----------------
XXXXXX X. XXX COMPANY
By________________________________________
Name:
Title:
EXHIBIT B
FORM OF WARRANT
THIS WARRANT, AND THE SECURITIES FOR WHICH THIS WARRANT IS EXERCISABLE,
HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "1933 ACT") , OR APPLICABLE STATE SECURITIES LAWS (THE "STATE
ACTS"), AND SHALL NOT BE SOLD, PLEDGED, HYPOTHECATED, DONATED OR OTHERWISE
TRANSFERRED (WHETHER OR NOT FOR CONSIDERATION) BY THE HOLDER EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION UPON THE ISSUANCE TO JUST FOR
FEET, INC. OF A FAVORABLE OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY
SATISFACTORY TO JUST FOR FEET, INC. TO THE EFFECT THAT ANY SUCH TRANSFER
SHALL NOT BE A VIOLATION OF THE 1933 ACT AND THE STATE ACTS.
THIS WARRANT, AND THE SECURITIES FOR WHICH THIS WARRANT IS EXERCISABLE, ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER CONTAINED IN A COMMON STOCK AND
WARRANT PURCHASE AGREEMENT DATED AS OF JULY 2, 1998 (THE "PURCHASE
AGREEMENT"), AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE PURCHASE AGREEMENT, A COPY OF WHICH IS AVAILABLE FOR
INSPECTION AT THE PRINCIPAL EXECUTIVE OFFICES OF JUST FOR FEET, INC.
WARRANT
to Purchase
923,591
Shares
of
Common Stock (par value $.0001 per share)
of
JUST FOR FEET, INC.
Initial Price: $21.59 per share
This certifies that, for value received, SNEAKER GUARANTEE LLC
("Investor"), or its registered assigns (Investor or any such registered
assigns, a "Holder"), is entitled to purchase, subject to the provisions of
this Warrant, from JUST FOR FEET, INC., a Delaware corporation (the
"Company"), at any time on or after the July 2, 1998 and before July 2,
2003 (the "Expiration Date"), an aggregate of 923,591 shares, as adjusted
from time to time as hereinafter set forth (the "Warrant Number"), of fully
paid and nonassessable shares of common stock, par value $.0001 per share
("Common Stock"), of the Company at a purchase price of $21.59 per share
(as adjusted from time to time as hereinafter set forth, the "Warrant
Price"). This Warrant is one of the Warrants referred to in the Common
Stock and Warrant Purchase Agreement, dated as of July 2, 1998 (the
"Execution Date"), by and among the Company, Investor and the other
investors set forth on Exhibit A thereto (the "Purchase Agreement"). This
Warrant and such other Warrants, and any warrant or warrants issued in
exchange or substitution therefor, are sometimes referred to herein
collectively as the "Warrants."
Section 1. Definitions. Capitalized terms used and not
otherwise defined herein shall have the respective meanings ascribed to
such terms in the Purchase Agreement.
Section 2. Exercise of Warrant. (a) Subject to the
provisions hereof, this Warrant may be exercised, in whole or in part (with
respect to all or that portion of the shares of Common Stock subject to
this Warrant as to which this Warrant has not previously been exercised),
at any time on or after the Closing Date and before the Expiration Date, by
presentation and surrender of this Warrant to the Company at the office or
agency of the Company maintained for that purpose pursuant to Section 10
hereof (the "Warrant office or agency"), together with the Form of
Subscription annexed hereto completed and duly executed and accompanied by
payment to the Company, for the account of the Company, of the Warrant
Price for the number of shares of Common Stock specified in such Form of
Subscription. Except as provided below in Section 2(b), the Warrant Price
for the number of shares of Common Stock specified in the Form of
Subscription shall be payable in United States dollars by certified check
or wire transfer of immediately available funds to an account designated by
the Company for this purpose.
(b) Upon any exercise of this Warrant, the Holder may, at
its option, instruct the Company, by appropriate designation in the Form of
Subscription accompanying the surrender of this Warrant at the time of such
exercise, to apply to the payment of the aggregate Warrant Price required
by Section 2(a) to be paid upon such exercise such number of the shares of
Common Stock otherwise issuable to such Holder upon such exercise as shall
be specified in such Form of Subscription, in which case an amount equal to
the excess of the aggregate Average Market Price of such specified number
of shares of Common Stock on the date of such exercise over the portion of
the aggregate Warrant Price required by Section 2(a) to be paid upon such
exercise which is attributable to such specified number of shares of Common
Stock shall be deemed to have been paid to the Company and the number of
shares of Common Stock issuable upon such exercise shall be reduced by such
specified number.
(c) Upon proper exercise of this Warrant as provided above,
Holder shall be deemed to be the holder of record of the shares of Common
Stock issuable upon such exercise, notwithstanding that the stock transfer
books of the Company shall then be closed or that certificates representing
such shares of Common Stock shall not then be actually delivered to Holder.
Upon any exercise of this Warrant for less than all of the shares of Common
Stock then issuable as provided in this Warrant, the Company will issue a
new Warrant of like tenor and date for the balance of such shares so
issuable. The Company shall pay all expenses, and any and all stamp or
similar taxes that may be payable in connection with the preparation,
issuance and delivery of stock certificates or any new Warrant(s) as
provided herein, except that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issue
and delivery of shares of the Common Stock in a name other than that of
Holder who shall have surrendered the same in exercise of the subscription
right evidenced thereby, and no such issuance or delivery shall be made
unless and until the person requesting such issuance has paid to the
Company such tax or has established to the satisfaction of the Company that
such tax has been paid.
(d) All shares of Common Stock issued upon exercise of this
Warrant shall be duly authorized, validly issued, fully paid and
nonassessable, and the issuance and delivery of such shares upon such
exercise will not give rise to any preemptive rights on the part of any
person or entity.
Section 3. Reservation of Shares; Preservation of Rights of
Holder. The Company hereby agrees that there shall be reserved for
issuance and/or delivery upon exercise of this Warrant, free from
preemptive rights, such number of shares of duly authorized but unissued or
treasury shares of Common Stock, or other stock or securities deliverable
pursuant to Section 7(g) hereof, as shall be required for issuance or
delivery upon exercise of this Warrant. The Company further agrees that it
will not, by amendment of its Certificate of Incorporation or through
reorganization, consolidation, merger, dissolution or sale of assets, or by
any other voluntary act, avoid or seek to avoid the observance or
performance of any of the covenants, stipulations or conditions to be
observed or performed hereunder by the Company. Without limiting the
generality of the foregoing, the Company agrees that before taking any
action that would cause an adjustment reducing the Warrant Price below the
then par value of Common Stock issuable upon exercise hereof, the Company
will from time to time take all such action necessary in order that the
Company may validly and legally issue fully paid and nonassessable shares
of such Common Stock at the Warrant Price as so adjusted.
Section 4. Fractional Shares. The Company shall not be
required to issue fractional shares of Common Stock upon exercise of this
Warrant but shall pay for any such fraction of a share in cash or by
certified or official bank check at the Warrant Price.
Section 5. Loss of Warrant. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction)
of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Warrant, if mutilated, the Company will execute and
deliver a new Warrant of like tenor and date. Any such new Warrant
executed and delivered shall constitute an additional contractual
obligation on the part of the Company, whether or not this Warrant so lost,
stolen, destroyed or mutilated shall be at any time enforceable by anyone.
Section 6. Rights of Holder. Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder of the Company.
Section 7. Antidilution Provisions. The Warrant Price and
the Warrant Number shall be subject to adjustment from time to time as
provided in this Section 7.
(a) In case the Company shall pay or make a dividend or
other distribution on any class of capital stock of the Company in Common
Stock, the Warrant Price in effect at the close of business on the date
fixed for the determination of stockholders entitled to receive such
dividend or other distribution shall be reduced to a price determined by
multiplying such Warrant Price by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding at the close of
business on the date fixed for such determination and the denominator shall
be the sum of such number of shares and the total number of shares
constituting such dividend or other distribution, such reduction to become
effective at the opening of business on the day following the date fixed
for such determination. In the event that such dividend or distribution is
not so paid or made, the Warrant Price shall again be adjusted to be the
Warrant Price which would then be in effect if such date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution had not been fixed, but such subsequent adjustment shall not
affect the number of shares of Common Stock issued upon any exercise of
this Warrant prior to the date such subsequent adjustment is made. For the
purposes of this Section 7(a), the number of shares of Common Stock at any
time outstanding shall not include shares held in the treasury of the
Company but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock.
(b) In case the Company shall issue rights or warrants to
all holders of its Common Stock entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than the Average Market
Price of Common Stock (as defined below) on the date fixed for the
determination of stockholders entitled to receive such rights or warrants,
the Warrant Price in effect at the close of business on the date fixed for
such determination shall be reduced to a price determined by multiplying
such Warrant Price by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business on the date
fixed for such determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription or purchase would purchase at such
Average Market Price, and the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the date fixed for
such determination plus the number of shares of Common Stock so offered for
subscription or purchase, such reduction to become effective at the opening
of business on the day following the date fixed for such determination. To
the extent that shares of Common Stock are not delivered after the
expiration of such rights or warrants, the Warrant Price shall be
readjusted to the Warrant Price which would then be in effect had the
adjustments made upon the issuance of such rights or warrants been made on
the basis of delivery of only the number of shares of Common Stock actually
delivered. In the event that such rights or warrants are not so issued,
the Warrant Price shall again be adjusted to be the Warrant Price which
would then be in effect if the date fixed for the determination of
stockholders entitled to receive such rights or warrants had not been
fixed, but such subsequent adjustment shall not affect the number of shares
of Common Stock issued upon any exercise of the Warrant prior to the date
such subsequent adjustment is made. For the purposes of this Section 7(b),
the number of shares of Common Stock at any time outstanding shall not
include shares held in the treasury of the Company but shall include shares
issuable in respect of scrip certificates issued in lieu of fractions of
shares of Common Stock. As used herein the term "Average Market Price" of
the Common Stock shall mean the average of the daily reported closing sales
prices, regular way, per share of the Common Stock on The NASDAQ Stock
Market ("NASDAQ") or, if the Common Stock is not principally traded on
NASDAQ, such other market on which the Common Stock is listed or
principally traded, for the 10 consecutive trading days prior to the date
of determination. In the event that the Common Stock is not traded on any
market or exchange the "Average Market Price" of the Common Stock shall
mean the fair market value of the Common Stock as determined in good faith
by the Company's Board of Directors (the "Board of Directors").
(c) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Warrant
Price in effect at the close of business on the date upon which such
subdivision becomes effective shall be proportionately reduced, and
conversely, in case outstanding shares of Common Stock shall each be
combined into a smaller number of shares of Common Stock, the Warrant Price
in effect at the close of business on the date upon which such combination
becomes effective shall be proportionately increased, such reduction or
increase, as the case may be, to become effective at the opening of
business on the day following the date upon which such subdivision or
combination becomes effective.
(d) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its indebtedness or
assets (including securities, but excluding (i) any rights or warrants referred
to in Section 7(b) hereof, and (ii) any dividend or distribution referred to
in Section 7(a) hereof), then either (at the option of the Company) (A) the
Company shall elect to include Holder in such distribution (as of the
record date for such distribution) as if Holder had exercised this Warrant
for Common Stock immediately prior to such record date (such exercise
assumed to be made at the Warrant Price in effect without regard to the
adjustment provided in the following clause (B)), or (B) the Warrant Price
shall be reduced to a price determined by multiplying the Warrant Price in
effect at the close of business on the date fixed for the determination of
stockholders entitled to receive such distribution by a fraction of which
the numerator shall be the Average Market Price per share of Common Stock
on the date fixed for such determination less the fair market value (as
reasonably determined in good faith by the Board of Directors) on such date
of the portion of the assets or evidences of indebtedness so to be
distributed applicable to one share of Common Stock and the denominator
shall be the Average Market Price of Common Stock on the date fixed for
such determination, such adjustment to become effective at the opening of
business on the day following the date fixed for the determination of
stockholders entitled to receive such distribution. In the event that such
dividend or distribution is not so paid or made, the Warrant Price shall
again be adjusted to be the Warrant Price which would then be in effect if
such date fixed for the determination of stockholders entitled to receive
such dividend or other distribution had not been fixed, but such subsequent
adjustment shall not affect the number of shares of Common Stock issued
upon any exercise of this Warrant prior to the date such subsequent
adjustment is made. If the Company makes an election under clause (A) of
this Section 7(d) with respect to any such distribution payable on this
Warrant (an "Elected Company Dividend"), the Company may in lieu of such
distribution elect to pay to the Holder the fair market value (determined
as provided above) of such Elected Company Dividend in cash (the "Cash
Equivalent").
(e) The reclassification (including any reclassification
upon a consolidation or merger in which the Company is the continuing
corporation, but not including any transactions for which an adjustment is
provided in Section 7(g) hereof) of Common Stock into securities other than
Common Stock shall be deemed to involve (i) a distribution of such
securities other than Common Stock to all holders of Common Stock (and the
effective date of such reclassification shall be deemed to be "the date
fixed for the determination of stockholders entitled to receive such
distribution" within the meaning of Section 7(d) hereof), and (ii) a
subdivision or combination, as the case may be, of the number of shares of
Common Stock outstanding immediately prior to such reclassification into
the number of shares of Common Stock outstanding immediately thereafter
(and the effective date of such reclassification shall be deemed to be "the
date upon which such becomes subdivision effective" or "the date upon which
such combination becomes effective," as the case may be, within the meaning
of Section 7(c) hereof).
(f) The Company may make such reductions in the Warrant
Price, in addition to those required by Sections 7 (a), (b), (c), (d) and
(e) hereof, as it considers to be advisable in order that any event treated
for Federal income tax purposes as a dividend of stock or stock rights
shall not be taxable to the recipients.
(g) In case of any consolidation of the Company with, or
merger of the Company into, any other Person, any merger of another Person
into the Company (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock) or any sale or transfer of all or substantially all
of the assets of the Company, the Holder shall have the right thereafter,
during the period this Warrant shall be outstanding, to exercise this
Warrant only for the kind and amount (if any) of securities, cash or other
property receivable upon such consolidation, merger, sale or transfer by a
holder of the number of shares of Common Stock which would have been
purchasable if this Warrant had been exercised immediately prior to such
consolidation, merger or transfer (and the Person formed by such
consolidation or resulting from such merger or which acquires such assets,
as the case may be, shall execute and deliver to the Holder a new Warrant
satisfactory in form and substance to Holder, providing for the foregoing).
If the holders of the Common Stock may elect from choices the kind or
amount of securities, cash or other property receivable upon such
consolidation, merger, sale or transfer, then for the purpose of this
Section 7(g) the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer shall be
deemed to be the choice specified by Holder, which specification shall be
made by Holder by the later of (i) 20 business days after Holder is
provided with a final version of all information required by law or
regulation to be furnished to holders of Common Stock concerning such
choice, or if no such information is required, 20 business days after the
Company notifies Holder of all material facts concerning such specification
and (ii) the last time at which holders of Common Stock are permitted to
make their specification known to the Company. If Holder fails to make any
specification, Holder's choice shall be deemed to be whatever choice is
made by a plurality of holders of Common Stock not affiliated with the
Company or the other Person party to the merger or consolidation or, if no
such holders exist, as specified by the Board of Directors in good faith.
The new Warrant referred to above shall provide for adjustments which, for
events subsequent to the effective date of such new Warrant, shall be as
nearly equivalent as may be practicable to the adjustments provided for in
this Section 7. The above provisions of this Section 7 (g) shall similarly
apply to successive consolidations, mergers, sales or transfers.
(h) Whenever there shall be any change in the Warrant Price
hereunder, then there shall be an adjustment (to the nearest hundredth of a
share) in the number of shares of Common Stock purchasable upon exercise of
the Warrant, which adjustment shall become effective at the time such
change in the Warrant Price becomes effective and shall be made by
multiplying the number of shares of Common Stock purchasable upon exercise
of this Warrant immediately before such change in the Warrant Price by a
fraction of which the numerator is the Warrant Price immediately before
such change and the denominator is the Warrant Price immediately after such
change.
(i) No adjustment in the Warrant Price shall be required
unless such adjustment would require an increase or decrease of at least 1%
in such price; provided, however, that any adjustments which by reason of
this Section 7 (i) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. Notwithstanding the
foregoing, any adjustment required by this Section 7 (i) shall be made
prior to the Expiration Date.
(j) In any case in which this Section 7 shall require that
an adjustment shall become effective on the day following a record date for
an event, the Company may defer until the occurrence of such event (i)
issuing to Holder, if the Warrant is exercised after such record date and
before the occurrence of such event, the additional Common Stock (and
associated Elected Company Dividend or Cash Equivalent, if any) issuable
upon exercise by reason of the adjustment required by such event over and
above Common Stock (and associated Elected Company Dividend or Cash
Equivalent, if any) issuable upon such exercise before giving effect to
such adjustment and (ii) paying to Holder any amount in cash in lieu of a
fractional share of Common Stock pursuant Section 4 above; provided, that,
upon request of Holder, the Company shall deliver to Holder a due xxxx or
other appropriate instrument evidencing Holder's right to receive such
additional Common Stock and such cash, upon the occurrence of the event
requiring such adjustment.
Section 8. Notice of Adjustment of Warrant Price. Whenever
the Warrant Price is adjusted as herein provided, the Company shall compute
the adjusted Warrant Price in accordance with Section 7 and shall prepare a
certificate signed by the Treasurer of the Company (or other responsible
financial officer) setting forth the adjusted Warrant Price and showing in
reasonable detail the facts upon which such adjustment is based, and such
certificate shall forthwith be filed at the Warrant office or agency of the
Company and a copy delivered as soon as practicable to Holder at its last
address as it shall appear upon the register provided for in Section 2 or
as otherwise provided in Section 11.
Section 9. Notice Regarding Dividend, Subscription Rights,
Reclassifications, Dissolutions. In case:
(a) the Company shall declare a dividend (or any other
distribution) on Common Stock; or
(b) the company shall authorize the granting to the holders
of Common Stock of rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any other rights; or
(c) of any reclassification of Common Stock (other than a
subdivision or combination of its outstanding shares of Common Stock), or
of any consolidation or merger to which the Company is a party and for
which approval of any stockholders of the Company is required, or of the
sale or transfer of all or substantially all of the assets of the Company;
or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall cause to be filed at its Warrant office or agency,
and shall cause to be delivered to Holder at its last address as it shall
appear upon the register provided for in Section 2, at least 30 days (or 15
days in any case specified in clause (a) or (b) above) prior to the
applicable record or effective date hereinafter specified, a notice stating
(x) the date on which a record is to be taken for the purpose of such
dividend, distribution or issuance of rights or warrants, or, if a record
is not be taken, the date as of which the holders of Common Stock of record
to be entitled to such dividend, distribution or rights or warrants are to
be determined, or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding
up is expected to become effective, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities, cash or other property deliverable
upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up.
Section 10. Transfers; Maintenance of Office or Agency. (a)
Except as otherwise provided in the Purchase Agreement, this Warrant and
all rights hereunder are transferable, as to all or any of the number of
shares of Common Stock purchasable upon its exercise, by the Holder hereof
in person or by duly authorized attorney, upon surrender of this Warrant at
the Warrant office or agency, together with the Form of Assignment attached
hereto duly executed. The Company shall deem and treat the registered
Holder of this Warrant at any time as the absolute owner hereof for all
purposes and shall not be affected by any notice to the contrary. If this
Warrant is transferred with respect to less than all of the shares of
Common Stock for which this Warrant is then exercisable, the Company shall
at the time of surrender of this Warrant for such transfer, issue to the
transferee a Warrant covering the number of shares of Common Stock as to
which this Warrant was transferred and to the transferor a Warrant covering
the remaining shares of Common Stock for which this Warrant is exercisable.
(b) The Company will maintain a Warrant office or agency in
the Borough of Manhattan, The City of New York, where this Warrant may be
presented or surrendered for split-up, combination, registration of
transfer, or exchange, and where notices or demands to or upon the Company
in respect of the Warrant may be served.
Section 11. Notices. Notices under this Warrant by the
Company to Investor and by Investor to the Company shall be provided in the
manner, and to the respective addresses of the Company and Investor, set
forth in the Purchase Agreement.
Section 12. Registration Rights. The Warrants and the shares
of Common Stock issuable upon exercise of the Warrants are the subject of a
Registration Rights Agreement, dated as of the date hereof, by and among
the Company, Investor and the other signatories thereto granting certain
rights to require the registration under the Securities Act of 1933, as
amended, of the Warrants and the shares of Common Stock issuable upon
exercise of the Warrants.
Section 13. Purchase Agreement. The Warrants and the shares
of Common Stock issuable upon the exercise of the Warrants are subject to
the terms and provisions of the Purchase Agreement including without
limitation certain restrictions on transfer set forth in Section 5.3
thereof.
Section 14. Governing Law. This Warrant shall be governed by,
and interpreted in accordance with, the laws of the State of Delaware,
without regard to the principles of conflicts of law thereof.
Dated: July 2, 1998 JUST FOR FEET, INC.
(Seal)
By_____________________________________
Name:
Title:
ATTEST:
________________________________
Secretary
FORM OF SUBSCRIPTION
[To be executed only upon exercise of Warrant]
To: JUST FOR FEET, INC.
The undersigned registered holder of the within Warrant hereby irrevocably
exercises such Warrant for, and purchases thereunder, _____(1)____ shares of
Common Stock of JUST FOR FEET, INC., and herewith makes payment of the
aggregate Warrant Price of $__________ therefor, and requests that the
certificates for such shares be issued in the name of, and delivered to
______________, whose address is __________________.
[Pursuant to Section 2(b) of the within Warrant, the undersigned registered
holder of the within Warrant hereby instructs JUST FOR FEET, INC. to apply,
in accordance with such Section 2(b), to the payment of the aggregate
Warrant Price set forth above ___(2)___ shares of Common Stock for which
this Warrant is being exercised, and acknowledges that the number of shares
of Common Stock which will be issued to the undersigned pursuant to this
exercise shall be reduced by such ____(2)____ shares.] (3)
Dated: ___________________ ____________________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of Warrant)
____________________________________________
(Street Address)
____________________________________________
(City) (State) (Zip Code)
__________________________
(1) Insert here the number of shares for which the Warrant is being
exercised, without making any adjustment for any other stock or other
securities or property or cash which, pursuant to the adjustment
provisions of this Warrant, may be delivered upon exercise. In the
case of partial exercise, a new Warrant or Warrants will be issued and
delivered, representing the unexercised portion of the Warrant, to the
Holder surrendering the Warrant.
(2) Insert number of shares of Common Stock to be applied to payment of the
aggregate Warrant Price pursuant to Section 2(b).
(3) To be included and completed in order to effect a "cashless" exercise
pursuant to Section 2(b) of the Warrant.
FORM OF ASSIGNMENT
[To be executed only upon transfer of Warrant]
For value received, the undersigned registered holder of the within Warrant
hereby sells, assigns and transfers unto ________________ the right
represented by such Warrant to purchase __________ shares of Common Stock
of JUST FOR FEET, INC. to which such Warrant relates, and appoints
__________________ Attorney to make such transfer on the books of JUST FOR
FEET, INC. maintained for such purpose, with full power of substitution in
the premises.
Dated: __________________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of Warrant)
__________________________________________
(Street Address)
__________________________________________
(City) (State) (Zip Code)
Signed in the presence of:
_____________________________
