Exhibit 10.23
THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY OTHER
SECURITIES LAWS, HAVE BEEN TAKEN FOR INVESTMENT, AND MAY NOT BE SOLD OR
TRANSFERRED OR OFFERED FOR SALE OR TRANSFER UNLESS A REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS WITH RESPECT TO
SUCH SECURITIES IS THEN IN EFFECT, OR IN THE OPINION OF COUNSEL (WHICH OPINION
IS REASONABLY SATISFACTORY TO THE ISSUER OF THESE SECURITIES), SUCH REGISTRATION
UNDER THE SECURITIES ACT AND OTHER APPLICABLE SECURITIES LAWS IS NOT REQUIRED.
Date: December 10, 2003 Warrant to Purchase
200,000 Shares
DECORIZE, INC.
(Incorporated under the laws of the State of Delaware)
WARRANT FOR THE PURCHASE OF SHARES OF
COMMON STOCK
Warrant Price: $1.20 per share, subject to adjustment as provided below.
THIS IS TO CERTIFY that, for value received, Xxxxx X. Xxxxxxx and his
assigns ("Holder"), is entitled to purchase, subject to the terms and conditions
hereinafter set forth, up to 200,000 shares of the $.001 par value common stock
("Common Stock") of Decorize, Inc., a Delaware corporation (the "Company"), and
to receive certificate(s) for the Common Stock so purchased.
1. Exercise Period and Vesting. The exercise period is the period
beginning on the date of this Warrant (the "Issuance Date") and ending at 5:00
p.m., Springfield, Missouri time, on December 31, 2006 (the "Exercise Period").
This Warrant is vested in full as of the Issuance Date and is immediately
exercisable by Holder. This Warrant will terminate automatically and immediately
upon the expiration of the Exercise Period.
2. Exercise of Warrant; Cashless Exercise. This Warrant may be exercised,
in whole or in part, at any time and from time to time during the Exercise
Period. Such exercise shall be accomplished by tender to the Company of the
purchase price set forth above as the warrant price (the "Warrant Price"),
either (a) in cash, by wire transfer or by certified check or bank cashier's
check, payable to the order of the Company, or (b) by surrendering such number
of shares of Common Stock received upon exercise of this Warrant with a current
market price equal to the Warrant Price (a "Cashless Exercise"), together with
presentation and surrender to the Company of this Warrant with an executed
subscription in substantially the form attached
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hereto as Exhibit A (the "Subscription"). Upon receipt of the foregoing, the
Company will deliver to the Holder, as promptly as possible, a certificate or
certificates representing the shares of Common Stock so purchased, registered in
the name of the Holder or its transferee (as permitted under Section 3 below).
With respect to any exercise of this Warrant, the Holder will for all purposes
be deemed to have become the holder of record of the number of shares of Common
Stock purchased hereunder on the date this Warrant, a properly executed
Subscription and payment of the Warrant Price is received by the Company (the
"Exercise Date"), irrespective of the date of delivery of the certificate
evidencing such shares, except that, if the date of such receipt is a date on
which the stock transfer books of the Company are closed, such person will be
deemed to have become the holder of such shares at the close of business on the
next succeeding date on which the stock transfer books are open. Fractional
shares of Common Stock will not be issued upon the exercise of this Warrant. In
lieu of any fractional shares that would have been issued but for the
immediately preceding sentence, the Holder will be entitled to receive cash
equal to the current market price of such fraction of a share of Common Stock on
the trading day immediately preceding the Exercise Date. In the event this
Warrant is exercised in part, the Company shall issue a new Warrant to the
Holder covering the aggregate number of shares of Common Stock as to which this
Warrant remains exercisable for.
If the Holder elects to conduct a Cashless Exercise, the Company shall
cause to be delivered to the Holder a certificate or certificates representing
the number of shares of Common Stock computed using the following formula:
X = Y (A-B)
A
Where:
X = the number of shares of Common Stock to be issued to Holder;
Y = the portion of the Warrant (in number of shares of Common
Stock) being exercised by Holder (at the date of such
calculation);
A = the fair market value of one share of Common Stock on the
Exercise Date (as calculated below); and
B = Warrant Price (as adjusted to the date of such calculation).
For purposes of the foregoing calculation, "fair market value of one share
of Common Stock on the Exercise Date" shall mean: (i) if the principal trading
market for such securities is a national or regional securities exchange, the
average closing price on such exchange for the ten (10) trading days immediately
prior to such Exercise Date; (ii) if sales prices for shares of Common Stock are
reported by the Nasdaq National Market System or Nasdaq Small Cap Market (or a
similar system then in use), the average last reported sales price for the ten
(10) trading days immediately prior to such Exercise Date; or (iii) if neither
(i) nor (ii) above are applicable, and if bid and ask prices for shares of
Common Stock are reported in the over-the-counter market by Nasdaq (or, if not
so reported, by the National Quotation Bureau), the average of the high bid and
low ask prices so reported for the ten (10) trading days immediately prior to
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such Exercise Date. Notwithstanding the foregoing, if there is no reported
closing price, last reported sales price, or bid and ask prices, as the case may
be, for the period in question, then the current market price shall be
determined as of the latest ten (10) day period prior to such day for which such
closing price, last reported sales price, or bid and ask prices, as the case may
be, are available, unless such securities have not been traded on an exchange or
in the over-the-counter market for 30 or more days immediately prior to the day
in question, in which case the current market price shall be determined in good
faith by, and reflected in a formal resolution of, the Board of Directors of the
Company. The Company acknowledges and agrees that this Warrant was issued on the
Issuance Date.
Notwithstanding anything in this Warrant to the contrary, if: (i) the last
reported sales price for the Common Stock for any consecutive fifteen (15)
trading days is greater than two (2) times the Warrant Price (as such Warrant
Price may have been adjusted pursuant to Section 4 below); and (ii) the re-sale
of the shares of Common Stock underlying this Warrant has been registered with
the Securities and Exchange Commission pursuant to a registration statement, and
such registration statement is effective at the time of the Company Notice (as
defined below), then the Company may give Holder written notice of the
satisfaction of such conditions (the "Company Notice"), in which event Holder
will have thirty (30) days after delivery of the Company Notice to exercise all
or any portion of this Warrant; it being agreed and understood that any
unexercised portion of this Warrant shall automatically and immediately
terminate at the end of such thirty (30) day period.
3. Transferability and Exchange.
(a) This Warrant, and the Common Stock issuable upon the exercise
hereof, may not be sold, transferred, pledged or hypothecated unless the Company
shall have been provided with an opinion of counsel, or other evidence
reasonably satisfactory to it, that such transfer is not in violation of the
Securities Act, and any applicable state securities laws. Subject to the
satisfaction of the aforesaid condition, this Warrant and the underlying shares
of Common Stock shall be transferable from time to time by the Holder upon
written notice to the Company. If this Warrant is transferred, in whole or in
part, the Company shall, upon surrender of this Warrant to the Company, deliver
to each transferee a Warrant evidencing the rights of such transferee to
purchase the number of shares of Common Stock that such transferee is entitled
to purchase pursuant to such transfer. The Company may place a legend similar to
the legend at the top of this Warrant on any replacement Warrant and on each
certificate representing shares issuable upon exercise of this Warrant or any
replacement Warrants. Only a registered Holder may enforce the provisions of
this Warrant against the Company. A transferee of the original registered Holder
becomes a registered Holder only upon delivery to the Company of the original
Warrant and an original Assignment, substantially in the form set forth in
Exhibit B attached hereto.
(b) This Warrant is exchangeable upon its surrender by the Holder to
the Company for new Warrants of like tenor and date representing in the
aggregate the right to purchase the number of shares purchasable hereunder, each
of such new Warrants to represent the right to purchase such number of shares as
may be designated by the Holder at the time of such surrender.
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4. Adjustments to Warrant Price and Number of Shares Subject to Warrant.
The Warrant Price and the number of shares of Common Stock purchasable upon the
exercise of this Warrant are subject to adjustment from time to time upon the
occurrence of any of the events specified in this Section 4. For the purpose of
this Section 4, "Common Stock" means shares now or hereafter authorized of any
class of common stock of the Company and any other stock of the Company, however
designated, that has the right to participate in any distribution of the assets
or earnings of the Company without limit as to per share amount (excluding, and
subject to any prior rights of, any class or series of preferred stock).
(a) In case the Company shall (i) pay a dividend or make a
distribution in shares of Common Stock or other securities, (ii) subdivide its
outstanding shares of Common Stock into a greater number of shares, (iii)
combine its outstanding shares of Common Stock into a smaller number of shares,
or (iv) issue by reclassification of its shares of Common Stock other securities
of the Company, then the Warrant Price in effect at the time of the record date
for such dividend or on the effective date of such subdivision, combination or
reclassification, and/or the number and kind of securities issuable on such
date, shall be proportionately adjusted so that the Holder of any Warrant
thereafter exercised shall be entitled to receive the aggregate number and kind
of shares of Common Stock (or such other securities other than Common Stock) of
the Company, at the same aggregate Warrant Price, that, if such Warrant had been
exercised immediately prior to such date, the Holder would have owned upon such
exercise and been entitled to receive by virtue of such dividend, distribution,
subdivision, combination or reclassification. The above adjustments shall be
determined by the Board of Directors of the Company in good faith and consistent
with the above terms, and shall be reflected in a set of written resolutions, a
copy of which shall be delivered to Holder. Such adjustment shall be made
successively whenever any event listed above shall occur.
(b) In case the Company shall fix a record date for the making of a
distribution to all holders of Common Stock (including any such distribution
made in connection with a consolidation or merger in which the Company is the
surviving corporation) of cash, evidences of indebtedness or assets, or
subscription rights or warrants, the Warrant Price to be in effect after such
record date shall be determined by multiplying the Warrant Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price per share of Common Stock on such record date,
less the amount of cash so to be distributed (or the fair market value (as
determined in good faith by, and reflected in a formal resolution of, the Board
of Directors of the Company) of the portion of the assets or evidences of
indebtedness so to be distributed, or of such subscription rights or warrants,
applicable to one share of Common Stock, and the denominator of which shall be
such current market price per share of Common Stock. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Warrant Price shall again be adjusted to
be the Warrant Price which would then be in effect if such record date had not
been fixed.
(c) For the purpose of any computation under any subsection of this
Section 4, the "current market price" per share of Common Stock on any date
shall be the per share price of the Common Stock on the trading day immediately
prior to the event requiring an adjustment hereunder and shall be: (i) if the
principal trading market for such securities is a national or regional
securities exchange, the closing price on such exchange on such day; or (ii) if
sales
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prices for shares of Common Stock are reported by the Nasdaq National Market
System or Small Cap Market System (or a similar system then in use), the last
reported sales price so reported on such day; or (iii) if neither (i) nor (ii)
above are applicable, and if bid and ask prices for shares of Common Stock are
reported in the over-the-counter market by Nasdaq (or, if not so reported, by
the National Quotation Bureau), the average of the high bid and low ask prices
so reported on such day. Notwithstanding the foregoing, if there is no reported
closing price, last reported sales price, or bid and ask prices, as the case may
be, for the day in question, then the current market price shall be determined
as of the latest date prior to such day for which such closing price, last
reported sales price, or bid and ask prices, as the case may be, are available,
unless such securities have not been traded on an exchange or in the
over-the-counter market for 30 or more days immediately prior to the day in
question, in which case the current market price shall be determined in good
faith by, and reflected in a formal resolution of, the Board of Directors of the
Company.
(d) Notwithstanding any provision herein to the contrary, no
adjustment in the Warrant Price shall be required unless such adjustment would
require an increase or decrease of at least 1% in the Warrant Price; provided,
however, that any adjustments which by reason of this subsection (d) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 4 shall be made to
the nearest cent or the nearest one-hundredth of a share, as the case may be.
(e) In the event that at any time, as a result of an adjustment made
pursuant to subsection (a) above, the Holder of any Warrant thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than shares of Common Stock, thereafter the number of such other shares so
receivable upon exercise of any Warrant shall be subject to adjustment from time
to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares of Common Stock contained in this Section
4, and the other provisions of this Warrant shall apply on like terms to any
such other shares.
(f) If the Company merges or consolidates into or with another
corporation or entity, or if another corporation or entity merges into or with
the Company (excluding such a merger in which the Company is the surviving or
continuing corporation and which does not result in any reclassification,
conversion, exchange, or cancellation of the outstanding shares of Common
Stock), or if all or substantially all of the assets or business of the Company
are sold or transferred to another corporation, entity, or person, then, as a
condition to such consolidation, merger, or sale (a "Transaction"), lawful and
adequate provision shall be made whereby the Holder shall have the right from
and after the Transaction to receive, upon exercise of this Warrant and upon the
terms and conditions specified herein and in lieu of the shares of the Common
Stock that would have been issuable if this Warrant had been exercised
immediately before the Transaction, such shares of stock, securities, or assets
as the Holder would have owned immediately after the Transaction if the Holder
had exercised this Warrant immediately before the effective date of the
Transaction.
5. Registration Rights. The Company hereby grants to Holder, with respect
to the shares of Common Stock underlying this Warrant, registration rights as
described in Schedule A to this Warrant.
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6. Reservation of Shares. The Company agrees at all times to reserve and
hold available out of its authorized but unissued shares of Common Stock the
number of shares of Common Stock issuable upon the full exercise of this
Warrant. The Company further covenants and agrees that all shares of Common
Stock that may be delivered upon the exercise of this Warrant will, upon
delivery, be fully paid and nonassessable and free from all taxes, liens and
charges with respect to the purchase thereof hereunder.
7. Notices to Holder. Upon any adjustment of the Warrant Price (or number
of shares of Common Stock purchasable upon the exercise of this Warrant)
pursuant to Section 4, the Company shall promptly thereafter cause to be given
to the Holder written notice of such adjustment. Such notice shall include the
Warrant Price (and/or the number of shares of Common Stock purchasable upon the
exercise of this Warrant) after such adjustment, and shall set forth in
reasonable detail the Company's method of calculation and the facts upon which
such calculations were based. Where appropriate, such notice shall be given in
advance and included as a part of any notice required to be given under the
other provisions of this Section 7.
In the event of (a) any fixing by the Company of a record date with respect
to the holders of any class of securities of the Company for the purpose of
determining which of such holders are entitled to dividends or other
distributions, or any rights to subscribe for, purchase or otherwise acquire any
shares of capital stock of any class or any other securities or property, or to
receive any other right, (b) any capital reorganization of the Company, or
reclassification or recapitalization of the capital stock of the Company or any
transfer of all or substantially all of the assets or business of the Company
to, or consolidation or merger of the Company with or into, any other entity or
person, or (c) any voluntary or involuntary dissolution or winding up of the
Company, then and in each such event the Company will give the Holder a written
notice specifying, as the case may be (i) the record date for the purpose of
such dividend, distribution, or right, and stating the amount and character of
such dividend, distribution, or right; or (ii) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, conveyance, dissolution, liquidation, or winding up is to take place and
the time, if any is to be fixed, as of which the holders of record of Common
Stock (or such capital stock or securities receivable upon the exercise of this
Warrant) shall be entitled to exchange their shares of Common Stock (or such
other stock securities) for securities or other property deliverable upon such
event. Any such notice shall be given at least 10 days prior to the earliest
date therein specified.
8. No Rights as a Stockholder. This Warrant does not entitle the Holder
to any voting rights or other rights as a stockholder of the Company, nor to any
other rights whatsoever except the rights herein set forth.
9. Additional Covenants of the Company. For so long as the Common Stock
is listed for trading on any regional or national securities exchange or Nasdaq
(National Market or Small Cap System), the Company shall, upon issuance of any
shares for which this Warrant is exercisable, at its expense, promptly obtain
and maintain the listing of such shares. The Company shall also comply with the
reporting requirements of Sections 13 and 15(d) of the Exchange Act for so long
as and to the extent that such requirements apply to the Company.
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The Company shall not, by amendment of its Certificate of Incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of this
Warrant. Without limiting the generality of the foregoing, the Company (a) will
at all times reserve and keep available, solely for issuance and delivery upon
exercise of this Warrant, shares of Common Stock issuable from time to time upon
exercise of this Warrant, (b) will not increase the par value of any shares of
capital stock receivable upon exercise of this Warrant above the amount payable
therefor upon such exercise, and (c) will take all such actions as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable stock.
10. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the Company, the Holder and their respective successors and
permitted assigns.
11. Notices. The Company agrees to maintain a ledger of the ownership of
this Warrant (the "Ledger"). Any notice hereunder shall be given by registered
or certified mail if to the Company, at its principal executive office and, if
to the Holder, to its address shown in the Ledger of the Company; provided,
however, that the Holder may at any time on three (3) days written notice to the
Company designate or substitute another address where notice is to be given.
Notice shall be deemed given and received after a certified or registered
letter, properly addressed with postage prepaid, is deposited in the U.S. mail.
12. Severability. Every provision of this Warrant is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the remainder of this
Warrant.
13. Governing Law. This Warrant shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to the
principles of choice of laws thereof.
14. Attorneys' Fees. In any action or proceeding brought to enforce any
provision of this Warrant, the prevailing party shall be entitled to recover
reasonable attorneys' fees in addition to its costs and expenses and any other
available remedy.
15. Entire Agreement. This Warrant (including the Schedule and Exhibits
attached hereto) constitutes the entire understanding between the Company and
the Holder with respect to the subject matter hereof, and supersedes all prior
negotiations, discussions, agreements and understandings relating to such
subject matter.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by
its duly authorized officer as of the date first set forth above.
DECORIZE, INC.,
a Delaware corporation
By: /s/ Xxxx Xxxxxxxxx
--------------------------------------
Xxxx Xxxxxxxxx
Executive Vice President and
Chief Financial Officer
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Schedule A to Warrant Certificate
REGISTRATION RIGHTS
In connection with the Warrant issued by Decorize, Inc., a Delaware
corporation (the "Company"), to which this Schedule A is attached ("Warrant"),
the Warrant holder is hereby granted registration rights as follows:
ARTICLE I
DEFINITIONS
The terms defined in this Article I shall have for all purposes of
this Schedule A the respective meanings set forth below:
"Board" shall mean the Board of Directors of the Company.
"Common Stock" shall mean the Common Stock, $0.001 par value, of the
Company, and any other class of capital stock of the Company that is duly
authorized and issued from time to time that does not have preferential rights
as to dividends or distributions of the Company's assets over any other class of
capital stock of the Company, including any shares issued in exchange for shares
of Common Stock upon any recapitalization by the Company.
"Exchange Act" shall mean the Securities and Exchange Act of 1934, as
it may be amended from time to time.
"Misstatement" shall mean an untrue statement of a material fact or an
omission to state a material fact required to be stated in a Registration
Statement or Prospectus or necessary to make the statements in a Registration
Statement or Prospectus not misleading.
"Person" shall mean a natural person, partnership, corporation,
business trust, association, joint venture or other entity or a government or
agency or political subdivision thereof.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as supplemented by any and all prospectus supplements and as amended
by any and all post-effective amendments and including all material incorporated
by reference in such prospectus.
"Registrable Security" shall mean (a) an outstanding share of Common
Stock issued by the Company to the Holder pursuant to the Warrant, and (b) any
security issued or issuable with respect to such Common Stock by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or reorganization; provided, that, any
such share or security shall be deemed to be Registrable Security only if and so
long as it is a Transfer Restricted Security.
(i)
"Registration" shall mean a Demand Registration described in Section
2(a) and a Piggyback Registration described in Section 2(b) hereof.
"Registration Expenses" shall mean the out-of-pocket expenses of a
Registration, including without limitation the following:
(1) all registration and filing fees (including fees with
respect to filings required to be made with the National Association
of Securities Dealers, Inc.) and any securities exchange on which the
Common Stock is then listed;
(2) fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of counsel for the
underwriters in connection with blue sky qualifications of the
Registrable Securities);
(3) printing, messenger, telephone and delivery expenses;
(4) reasonable fees and disbursements of counsel for the
Company; and
(5) reasonable fees and disbursements of all independent
certified public accountants of the Company incurred specifically in
connection with such Registration.
"Registration Statement" shall mean any registration statement which
covers Registrable Securities pursuant to the provisions of this Schedule A,
including the Prospectus included in such registration statement, amendments
(including post-effective amendments) and supplements to such registration
statement, and all exhibits to and all material incorporated by reference in
such registration statement.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
"Transfer Restricted Security" shall mean an issued and outstanding
security that has not been sold to or through a broker, dealer or underwriter in
a public distribution or other public securities transaction or sold in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act under Rule 144(k) promulgated thereunder (or any successor
rule other than Rule 144A). A security shall cease being a Transfer Restricted
Security if (i) all stop transfer instructions or notations and restrictive
legends with respect to such security are eligible to be removed, and (ii) the
Holder of such security has received an opinion of counsel to the Company, to
the effect that such shares in Holder's hands are freely transferable in any
public or private transaction without registration under the Securities Act (or
Holder has waived receipt of such opinion).
"Underwritten Registration" or "Underwritten Offering" shall mean a
Registration in which securities of the Company are sold to an underwriter for
distribution to the public.
(ii)
ARTICLE II
REGISTRATIONS
2.01 Demand Registration. Subject to the restrictions set forth below, if
at any time the Company shall receive from Holder a written request to register
at least fifty percent (50%) of the Registrable Securities owned by the Holder
(or its respective successors and permitted assigns) as of the date of such
request, then the Company shall effect as soon thereafter as practicable, and in
any event within fifteen (15) days of the receipt of such request, the
Registration under the Securities Act of all Registrable Securities which Holder
requests to be registered. The Company shall not be obligated to effect, or to
take any action to effect, any such registration pursuant to this Section 2.01:
(a) during the period starting with the date sixty (60) days prior to
the Company's good faith estimate of the date of filing of, and ending on a
date one hundred eighty (180) days after the effective date of, a
Company-initiated Registration; provided that the Company has delivered
notice of such Registration to the Holder prior to its receipt of the
Holder's written request for a demand Registration, and it continues to
actively employ in good faith all reasonable efforts to cause such
Registration Statement to become effective; or
(b) if the offering cannot be made on Form S-3 for any reason other
than the Company's failure to timely file its period reports under the
Exchange Act; or
(c) if in the good faith judgment of the Board of Directors of the
Company, such Registration would be seriously detrimental to the Company
and the Board of Directors of the Company concludes, as a result, that it
is essential to defer the filing of such Registration Statement at such
time, and the Company shall furnish to Holder a certificate signed by the
President of the Company stating that in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the
Company for such Registration Statement to be filed in the near future and
that it is, therefore, essential to defer the filing of such Registration
Statement. In such event, the Company shall have the right to defer such
filing (except as provided in subparagraph (a) above) for a period of not
more than one hundred eighty (180) days after receipt of the request of the
Holder; provided, that the Company shall not defer its obligation in this
manner more than twice in any 12-month period.
Furthermore, the Company shall not be required to effect more than two (2)
Registrations under this Section 2.01 on behalf of Holder; provided, that a
Registration shall not be counted for such purposes unless such Registration has
become effective and all of the Registrable Securities to be registered on
behalf of Holder have been sold, in accordance with Section 3.01(a) of this
Schedule A.
2.02 Piggyback Registration. Each time the Company decides to file a
Registration Statement under the Securities Act with respect to its Common Stock
(other than on Forms S-4 or S-8 or any successor form for the registration of
securities issued or to be issued in connection with a merger or acquisition or
employee benefit plan), including any Registration Statement filed on behalf of
stockholders of the
(iii)
Company exercising registration rights granted by the Company with respect to
such shares, the Company shall give written notice thereof to Holder. The
Company shall include in such Registration Statement such shares of Registrable
Securities for which it has received written requests to register such shares
within thirty (30) days after such written notice has been given. If in the good
faith judgment of the managing underwriter in any Underwritten Offering, the
inclusion of all of the shares of Registrable Securities and any other Common
Stock requested to be registered by third parties holding similar registration
rights would interfere with the successful marketing of a smaller number of such
shares, then the number of shares of Registrable Securities and other Common
Stock to be included in the offering (except for shares to be issued by the
Company in an offering initiated by the Company) shall be reduced as provided
herein. The Company shall advise Holder of securities requesting registration of
the underwriters' decision, and the number of shares or securities that are
entitled to be included in the Underwritten Registration shall be allocated
first to the Company for securities being sold for its own account and
thereafter as set forth in Section 2.03 below. If any person does not agree to
the terms of any such underwriting, he shall be excluded therefrom by written
notice from the Company or the underwriter. Any Registrable Securities or other
securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration. If shares are so withdrawn from the registration or if the
number of shares of Registrable Securities to be included in such registration
was previously reduced as a result of marketing factors, the Company shall then
offer to all persons who have retained the right to include securities in the
registration the right to include additional securities in the registration in
an aggregate amount equal to the number of shares so withdrawn, with such shares
to be allocated among the persons requesting additional inclusion in accordance
with Section 2.03 below.
2.03 Registration Cutback. In any circumstance in which all of the
Registrable Securities and other shares of Common Stock of the Company
(including shares of Common Stock issued or issuable upon conversion of any
currently unissued securities of the Company) with registration rights (the
"Other Shares") requested to be included in a registration on behalf of Holder
or other selling stockholders cannot be so included as a result of limitations
of the aggregate number of shares of Registrable Securities and Other Shares
that may be so included, the number of shares of Registrable Securities and
Other Shares that may be so included shall be allocated among Holder and other
selling stockholders requesting inclusion of shares pro rata on the basis of the
number of Registrable Securities and Other Shares that would be held by the
Holder and other selling stockholders, assuming conversion. If Holder or any
other selling stockholders do not request inclusion of the maximum number of
Registrable Securities and Other Shares allocated to him or it pursuant to the
above-described procedure, the remaining portion of such stockholder's
allocation shall be reallocated among those other selling stockholders whose
allocations did not satisfy their requests pro rata on the basis of the number
of Registrable Securities and Other Shares which would be held by the Holder and
other selling stockholders, assuming conversion, and this procedure shall be
repeated until all of the shares of Registrable Securities and Other Shares
which may be included in the registration on behalf of Holder and other selling
stockholders have been so allocated.
(iv)
ARTICLE III
COMPANY PROCEDURES
3.01 General Procedures. If and whenever the Company is required to
register Registrable Securities, the Company will use its best efforts to effect
such registration to permit the sale of such Registrable Securities in
accordance with the intended plan of distribution thereof, and pursuant thereto
the Company will as expeditiously as possible:
(a) prepare and file with the SEC as soon as practicable a
Registration Statement with respect to such Registrable Securities and use
its reasonable best efforts to cause such Registration Statement to become
effective and remain effective until the Registrable Securities covered by
such Registration Statement have been sold;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement, and such supplements to the
Prospectus, as may be requested by Holder or any underwriter of Registrable
Securities or as may be required by the rules, regulations or instructions
applicable to the registration form used by the Company or by the
Securities Act or rules and regulations thereunder to keep the Registration
Statement effective until all Registrable Securities covered by such
Registration Statement are sold in accordance with the intended plan of
distribution set forth in such Registration Statement or supplement to the
Prospectus;
(c) deliver to Holder and the underwriters, if any, without charge,
as many copies of each Prospectus (and each preliminary prospectus) as such
Persons may reasonably request [the Company hereby consents to the use of
each such Prospectus (or preliminary prospectus) by the Holder and the
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by such Prospectus (or preliminary
prospectus)] and a reasonable number of copies of the then-effective
Registration Statement and any post-effective amendments thereto and any
supplements to the Prospectus, including financial statements and
schedules, all documents incorporated therein by reference and all exhibits
(including those incorporated by reference);
(d) prior to any public offering of Registrable Securities, register
or qualify or cooperate with, the underwriters, if any, and their
respective counsel in connection with the registration or qualification of
such Registrable Securities for offer and sale under the securities or blue
sky laws of such jurisdictions as Holder or such underwriters may designate
in writing and do anything else necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by
the Registration Statement; provided, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action which would subject it to
general service of process in any such jurisdiction where it is not then so
subject;
(v)
(e) cause all such Registrable Securities to be listed on each
securities exchange or automated quotation system on which similar
securities issued by the Company are then listed;
(f) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such Registration
Statement;
(g) advise each seller of such Registrable Securities, promptly after
it shall receive notice or obtain knowledge thereof, of the issuance of any
stop order by the SEC suspending the effectiveness of such Registration
Statement or the initiation or threatening of any proceeding for such
purpose and promptly use its reasonable best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop order
should be issued;
(h) at least three days prior to the filing of any Registration
Statement or prospectus or any amendment or supplement to such Registration
Statement or prospectus or any document that is to be incorporated by
reference into such Registration Statement or prospectus, furnish a copy
thereof to each seller of such Registrable Securities or their counsel;
(i) notify Holder at any time when a prospectus relating to such
Registration Statement 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 a
Misstatement, and then to correct such Misstatement as set forth in Section
3.05; and
(j) permit a representative of Holder, the underwriters, if any, and
any attorney or accountant retained by Holder or underwriter to
participate, at each such Person's own expense, in the preparation of the
Registration Statement, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such
representative, underwriter, attorney or accountant in connection with the
Registration; provided, however, that such representatives, underwriters,
attorneys or accountants enter into a confidentiality agreement, in form
and substance reasonably satisfactory to the Company, prior to the release
or disclosure of any such information.
3.02 Registration Expenses. The Registration Expenses of all Registrations
shall be borne by the Company. It is acknowledged by Holder that Holder will
bear all incremental selling expenses relating to the sale of the Registrable
Securities, such as underwriters' commissions and discounts, brokerage fees,
underwriter marketing costs and all fees and expenses of any legal counsel
representing Holder.
3.03 Requirements for Participation in Underwritten Offerings. No person
may participate in any Underwritten Offering for equity securities of the
Company pursuant to a Registration initiated by the Company hereunder unless
such Person (a) agrees to sell such Person's securities on the basis provided in
any underwriting arrangements approved by the Company and (b) completes and
executes all questionnaires, powers of attorney, indemnities, lock-up
agreements, underwriting
(vi)
agreements and other documents required under the terms of such underwriting
arrangements.
3.04 Suspension of Sales. Upon receipt of written notice from the Company
that a Registration Statement or Prospectus contains a Misstatement, Holder
shall forthwith discontinue disposition of Registrable Securities until it has
received copies of a supplemented or amended Prospectus correcting the
Misstatement (it being understood that the Company hereby covenants to prepare
and file such supplement or amendment as soon as practicable after the time of
such notice), or until it is advised in writing by the Company that the use of
the Prospectus may be resumed.
3.05 Reporting Obligations. As long as Holder shall own Registrable
Securities, the Company, at all times while it shall be reporting under the
Exchange Act, covenants to file timely (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to Section 13(a) or 15(d) of the
Exchange Act and to promptly furnish Holder with true and complete copies of all
such filings. The Company further covenants that it will take such further
action as Holder may reasonably request, all to the extent required from time to
time to enable Holder to sell shares of Common Stock held by Holder without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 promulgated under the Securities Act ("Rule 144"),
including providing any legal opinions. Upon the request of Holder, the Company
shall deliver to Holder a written certification of a duly authorized officer as
to whether it has complied with such requirements.
3.06 Indemnification.
(a) The Company agrees to indemnify, to the extent permitted by law,
the Holder of Registrable Securities, its officers and directors and each
Person who controls such Holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses (including
attorneys' fees) caused by any untrue or alleged untrue statement of
material fact contained in any Registration Statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as the same are caused by or contained in any information furnished
in writing to the Company by such expressly for use therein or by such
Holder's failure to deliver a copy of the Registration Statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such Holder with a sufficient number of copies of the same. The
Company will indemnify the underwriters, their officers and directors and
each Person who controls such underwriters (within the meaning of the
Securities Act) to the same extent as provided above with respect to the
indemnification of the Holder.
(b) In connection with any Registration Statement in which a Holder
of Registrable Securities is participating, such Holder will furnish to the
Company in writing such information and affidavits as the Company
reasonably requests for use in connection with any such Registration
Statement or prospectus and, to the extent permitted by law, will indemnify
the Company, its
(vii)
directors and officers and agents and each Person who controls the Company
(within the meaning of the Securities Act) against any losses, claims,
damages, liabilities and expenses (including without limitation reasonable
attorneys' fees) resulting from any untrue statement of material fact
contained in the Registration Statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in any information or affidavit so
furnished in writing by such Holder expressly for use therein; provided,
that the obligation to indemnify will be several, not joint and several,
among such Holder of Registrable Securities, and the liability of each such
Holder of Registrable Securities will be in proportion to and limited to
the gross amount received by such Holder from the sale or Registrable
Securities pursuant to such Registration Statement. The Holder of
Registrable Securities will indemnify the underwriters, their officers,
directors and each Person who controls such underwriters (within the
meaning of the Securities Act) to the same extent as provided above with
respect to indemnification of the Company.
(c) Any person entitled to indemnification herein will (i) give
prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification and (ii) unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified
and indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is
assumed, the indemnifying party will not be subject to any liability for
any settlement made by the indemnified party without its consent (but such
consent will not be unreasonably withheld). An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not
be obligated to pay the fees and expenses of more than one counsel for all
parties indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim.
(d) The indemnification provided for under this Schedule A will
remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director or controlling
person of such indemnified party and will survive the transfer of
securities. The Company and each Holder of Registrable Securities
participating in the offering also agrees to make such provisions as are
reasonably requested by any indemnified party for contribution to such
party in the event the Company's or such Holder's indemnification is
unavailable for any reason.
(e) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with an Underwritten Offering are in conflict
with the foregoing provisions, the provisions of the underwriting agreement
shall control.
(viii)
3.07 Restrictions on Public Sales. In consideration of the agreements
contemplated herein, Holder and the Company further agree to the following
restrictions:
(a) Holder, if the Company or the managing underwriters so request in
connection with any underwritten registration of the Company' securities,
will not, without the prior written consent of the Company or such
underwriters, effect any sale of the Registrable Securities to the public
pursuant to a public offering or otherwise or other distribution of any
equity securities of the Company, including any sale pursuant to Rule 144
(each of the foregoing, a "Prohibited Sale"), during the seven (7) days
prior to, and during the one hundred eighty (180) day period commencing on,
the effective date of such underwritten registration, except in connection
with such underwritten registration; provided, that the foregoing shall not
apply to restrict the sale by any StockHolder who together with any of its
Affiliates, as such term is defined in the Securities Act, holds less than
two percent (2%) of the Common Stock on a fully diluted basis.
(b) The Company agrees not to effect any Prohibited Sale or other
distribution of its equity securities, or any securities convertible into
or exchangeable or exercisable for such equity securities, during the
period commencing on the seventh day prior to, and ending on the one
hundred eightieth (180th) day following, the effective date of any
underwritten Demand or Piggyback Registration, except in connection with
any such underwritten registration and except for any offering pursuant to
an employee benefit plan and registered on Form S-8 (or any successor
form).
ARTICLE IV
MISCELLANEOUS
4.01 Notices. All notices and other communications provided for or
permitted hereunder shall be made in accordance with the notice provisions
contained in the Warrant.
4.02 Successors and Assigns. The rights granted under this Schedule A shall
inure to the benefit of and be binding upon the successors and assigns of the
Company. No rights under this Schedule A may be assigned by Holder without the
prior written consent of the Company.
4.03 GOVERNING LAW; VENUE. NOTWITHSTANDING THE PLACE WHERE THE WARRANT MAY
BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT THIS
SCHEDULE A SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF
DELAWARE AS APPLIED TO SCHEDULE AS AMONG DELAWARE RESIDENTS ENTERED INTO AND TO
BE PERFORMED ENTIRELY WITHIN DELAWARE, WITHOUT REGARD TO THE CONFLICT OF LAW
PROVISIONS OF SUCH JURISDICTION. VENUE FOR ANY ACTION TO ENFORCE, INTERPRET, OR
RESOLVE ANY DISPUTE WITH RESPECT TO ANY PROVISION OF THIS SCHEDULE A SHALL BE
EXCLUSIVELY IN XXXXXX COUNTY, MISSOURI, AND ALL PARTIES HERETO AGREE THAT ANY
LITIGATION DIRECTLY OR INDIRECTLY RELATING TO THIS SCHEDULE A MUST BE
(ix)
BROUGHT BEFORE AND DETERMINED BY A COURT OF COMPETENT JURISDICTION WITHIN SUCH
COUNTY AND STATE. EACH OF THE PARTIES FURTHER ACKNOWLEDGE THAT SUCH VENUE IS
APPROPRIATE AND AGREE NOT TO RAISE ANY ARGUMENT THAT SUCH VENUE IS IN ANY WAY
UNDULY INCONVENIENT FOR ANY OF THEM, WITH THEIR EXECUTION HEREOF BEING EVIDENCE
OF THEIR AGREEMENT TO SUBMIT TO THE JURISDICTION OF SUCH COURTS.
4.04 Amendments and Modifications. Upon the written consent of Holder,
compliance with any of the provisions, covenants and conditions set forth in
this Schedule A may be waived, or any of such provisions, covenants or
conditions may be modified. No course of dealing between Holder or the Company
and any other party hereto or, amended or deleted any failure or delay on the
part of Holder or the Company in exercising any rights or remedies under this
Schedule A shall operate as a waiver of any rights or remedies of Holder or the
Company. No single or partial exercise of any rights or remedies under this
Schedule A by a party shall operate as a waiver or preclude the exercise of any
other rights or remedies hereunder or thereunder by such party.
(x)
Exhibit A to Warrant Certificate
SUBSCRIPTION FORM
(To be Executed by the Holder to Exercise the Rights To Purchase Common Stock
Evidenced by the Within Warrant)
The undersigned hereby irrevocably subscribes for _______ shares (the
"Stock") of the Common Stock of Decorize, Inc. (the "Company") pursuant to and
in accordance with the terms and conditions of the attached Warrant (the
"Warrant"), and hereby makes payment of $_______ therefor by [tendering cash,
wire transferring or delivering a certified check or bank cashier's check,
payable to the order of the Company] [surrendering _______ shares of Common
Stock received upon exercise of the Warrant, which shares have a current market
price equal to such payment as required in Section 2 of the Warrant]. The
undersigned requests that a certificate for the Stock be issued in the name of
the undersigned and be delivered to the undersigned at the address stated below.
If the Stock is not all of the shares purchasable pursuant to the Warrant, the
undersigned requests that a new Warrant of like tenor for the balance of the
remaining shares purchasable thereunder be delivered to the undersigned at the
address stated below.
In connection with the issuance of the Stock, I hereby represent to the
Company that I am acquiring the Stock for my own account for investment and not
with a view to, or for resale in connection with, a distribution of the shares
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
I understand that because the Stock has not been registered under the
Securities Act, I must hold such Stock indefinitely unless the Stock is
subsequently registered and qualified under the Securities Act or is exempt from
such registration and qualification. I shall make no transfer or disposition of
the Stock unless (a) such transfer or disposition can be made without
registration under the Securities Act by reason of a specific exemption from
such registration and such qualification, or (b) a registration statement has
been filed pursuant to the Securities Act and has been declared effective with
respect to such disposition. I agree that each certificate representing the
Stock delivered to me shall bear substantially the same as set forth on the
front page of the Warrant.
I agree that each certificate representing the Stock delivered to me shall
bear substantially the same legend as set forth on the front page of the
Warrant. I further agree that the Company may place stop orders on the
certificates evidencing the Stock with the transfer agent, if any, to the same
effect as the above legend. The legend and stop transfer notice referred to
above shall be removed only upon my furnishing to the Company of an opinion of
counsel (reasonably satisfactory to the Company) to the effect that such legend
may be removed.
Date:__________________________ Signed:__________________________
Address:_________________________
__________________________
A-1
Exhibit B to Warrant Certificate
ASSIGNMENT
(To be Executed by the Holder to Effect Transfer of the Attached Warrant)
For Value Received __________________________ hereby sells, assigns and
transfers to _________________________ the Warrant attached hereto and the
rights represented thereby to purchase _________ shares of Common Stock in
accordance with the terms and conditions hereof, and does hereby irrevocably
constitute and appoint _________________________ as attorney to transfer such
Warrant on the books of the Company with full power of substitution.
Dated:________________________ Signed: _____________________________
Please print or typewrite Please insert Social Security
name and address of or other Tax Identification
assignee: Number of Assignee:
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