EXHIBIT 4.1
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement") is made as of the 7th day of July,
2000 by and between ALPNET, Inc., a Utah corporation (the "Company"), and the
Investors set forth on the signature page affixed hereto (each an "Investor" and
collectively the "Investors").
RECITALS
A. The Company and the Investors are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the U.S.
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended;
B. The Investors wish to purchase, and the Company wishes to sell and issue
to the Investors, upon the terms and conditions stated in this Agreement, that
number of shares of the common stock of the Company, no par value (the "Common
Stock"), and that number of warrants to purchase Common Stock in the forms
attached hereto as EXHIBITS A AND B (collectively, the "Warrants"), as are set
forth on the signature page attached hereto and executed by each such Investor
for an aggregate purchase price between $6 million and $8 million; and
C. Contemporaneous with the execution and delivery of this Agreement, the
parties hereto are executing and delivering a Registration Rights Agreement, in
the form attached hereto as EXHIBIT C (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
under the Securities Act of 1933, as amended and the rules and regulations
promulgated thereunder, and applicable state securities laws;
In consideration of the mutual promises made herein and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS. In addition to those terms defined above and elsewhere in
this Agreement, for the purposes of this Agreement, the following terms shall
have the meanings here set forth:
1.1 "AFFILIATE" means, with respect to any Person, any other Person
which directly or indirectly controls, is controlled by, or is under common
control with, such Person.
1.2 "AGREEMENTS" means this Agreement, the Registration Rights
Agreement, and the Warrants.
1.3 "A WARRANTS" means the Warrants expiring 6 years after the date of
issuance and exercisable one year after the date of issuance, in the form of
EXHIBIT A attached hereto.
1.4 "B WARRANTS" means the Warrants, in the form of EXHIBIT B attached
hereto, expiring up to 30 months after the date of issuance, subject to
redemption by the Company under certain circumstances as provided therein, and
exercisable at the earlier of the first anniversary of the date of issuance or
the Redemption Notice Date (as defined therein).
1.5 The "COMPANY" shall refer to the Company (as defined in the first
paragraph hereof) together with its subsidiaries wherever applicable (including
without limitation with respect to all representations of the Company unless the
context otherwise requires).
1.6 "CLOSING" means the consummation of the transactions contemplated
by this Agreement, and "Closing Date" means the date of such Closing.
1.7 "CONTROL" means the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
1.8 "MARKET PRICE" means the average of the twenty (20) lowest closing
bid prices of the Common Stock over a period of forty (40) consecutive trading
days as reported by the NASDAQ Small Cap or National Market (the "Nasdaq Stock
Market").
1.9 "MATERIAL ADVERSE EFFECT" means a material adverse effect on the
(i) condition (financial or otherwise), business, assets, prospects or results
of operations of the Company; (ii) ability of the Company to perform any of its
material obligations under the terms of this Agreement; or (iii) rights and
remedies of an Investor under the terms of this Agreement.
1.10 "PERSON" means an individual, corporation, partnership, trust,
business trust, association, joint stock company, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed herein.
1.11 "SEC FILINGS" has the meaning set forth in Section 4.6.
1.12 "SECURITIES" means the Shares (defined below), the Warrants, the
Warrant Shares (defined below), and the shares of Common Stock issuable pursuant
to Section 7 below.
1.13 "SECTION 7 SHARES" means shares issued or issuable pursuant to
Section 7 hereof.
1.14 "SHARES" means the shares of Common Stock being purchased by the
Investors hereunder.
1.15 "WARRANT SHARES" means the shares of Common Stock issuable upon
exercise of or otherwise pursuant to the Warrants.
1.16 "1933 ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
1.17 "1934 ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
2. PURCHASE AND SALE OF THE SHARES AND WARRANTS. Subject to the terms and
conditions of this Agreement, each of the Investors hereby severally, and not
jointly, agrees to purchase, and the Company hereby agrees to sell and issue to
each of the Investors, the number of Shares and Warrants to purchase the number
of shares of Common Stock set forth on such Investor's signature page attached
hereto. The number of Shares to be purchased by each Investor shall be
determined by dividing such Investor's aggregate purchase price (as such
aggregate purchase price is set forth on such Investor's signature page attached
hereto), by a per share purchase price equal to 90% of the Market Price
immediately prior to the date of this Agreement (the "Purchase Price"). The
number of shares of Common Stock purchasable by the Investors upon exercise of
the Warrants shall be as set forth on such Investor's signature page
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attached hereto and the exercise price of the Warrants shall be 125% of the
Market Price; provided, in no event shall the exercise price of the Warrants be
less than the closing bid price of the Common Stock on the trading day
immediately preceding the date of this Agreement.
3. CLOSING. The Company shall promptly deliver to Investors' counsel, in
trust, certificates, registered in such name or names as the Investors may
designate, representing all of the Shares and all of the Warrants, with
instructions that such certificates are to be held for release to the Investors
only upon payment of the Purchase Price to the Company. Upon receipt by counsel
to the Investors of the certificates, each Investor shall promptly cause a wire
transfer in same day funds to be sent to the account of the Company as
instructed in writing by the Company, in an amount representing such Investor's
Purchase Price; provided that the Company shall direct the Investors to pay
directly to Ladenburg Xxxxxxx, from the payment of the Purchase Price due to the
Company hereunder, the amounts due to Ladenburg Xxxxxxx (or its affiliate) for
fees payable in connection with the transactions contemplated hereby. On the
date the Company receives such funds, the certificates evidencing the Shares and
the Warrants shall be released to the Investors (and such date shall be deemed
the "Closing Date").
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to the Investors that:
4.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has all requisite corporate
power and authority to carry on its business as now conducted and own its
properties. The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property makes such qualification or
licensing necessary unless the failure to so qualify would not have a Material
Adverse Effect. All of the Company's subsidiaries are listed by name and
jurisdiction on SCHEDULE 4.1 attached hereto.
4.2 AUTHORIZATION. The Company has full power and authority and has
taken all requisite action on the part of the Company, its officers, directors
and stockholders necessary for (i) the authorization, execution and delivery of
the Agreements, (ii) authorization of the performance of all obligations of the
Company hereunder or thereunder, and (iii) the authorization, issuance (or
reservation for issuance) and delivery of the Securities. The Agreements
constitute the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability, relating to or affecting creditors' rights generally.
4.3 CAPITALIZATION. Set forth on Schedule 4.3 hereto is (a) the
authorized capital stock of the Company on the date hereof; (b) the number of
shares of capital stock issued and outstanding; (c) the number of shares of
capital stock issuable pursuant to the Company's stock plans; and (d) the number
of shares of capital stock issuable and reserved for issuance pursuant to
securities (other than the Shares and the Warrants) exercisable for, or
convertible into or exchangeable for any shares of capital stock. All of the
issued and outstanding shares of the Company's capital stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights. Except as set forth on Schedule 4.3, no Person is entitled to
preemptive or similar statutory or contractual rights with respect to any
securities of the Company. Except as set forth on Schedule 4.3, there are no
outstanding warrants, options, convertible securities or other rights,
agreements or arrangements of any character under which the Company is or may be
obligated to issue any equity securities of any kind and except as contemplated
by this Agreement or set forth on Schedule 4.3, the Company is not currently in
negotiations for the issuance of any equity securities of any kind. Except as
set forth on Schedule 4.3, the Company has no knowledge of any voting
agreements, buy-sell agreements, option or right of first purchase agreements or
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other agreements of any kind among any of the securityholders of the Company
relating to the securities of the Company held by them. Except as set forth on
Schedule 4.3, the Company has not granted any Person the right to require the
Company to register any securities of the Company under the 1933 Act, whether on
a demand basis or in connection with the registration of securities of the
Company for its own account or for the account of any other Person.
4.4 VALID ISSUANCE. The Company has reserved a sufficient number of
shares of Common Stock for the issuance of the Shares pursuant to this Agreement
and upon exercise of the Warrants. The Company will take such steps as may be
necessary to reserve sufficient shares for issuance pursuant to Section 7 below
when such issuance is determinable. The Shares and Warrants are duly authorized,
and such Securities, along with the Warrant Shares and shares issuable pursuant
to Section 7 below, when issued in accordance herewith and with the terms of the
Warrants, will be duly authorized, validly issued, fully paid, non-assessable
and free and clear of all encumbrances and restrictions, except for restrictions
on transfer imposed by applicable securities laws.
4.5 CONSENTS. The execution, delivery and performance by the Company
of the Agreements and the offer, issuance and sale of the Securities require no
consent of, action by or in respect of, or filing with, any Person, governmental
body, agency, or official other than filings that have been made pursuant to
applicable state securities laws and post-sale filings pursuant to applicable
state and federal securities laws and the requirements of the Nasdaq Stock
Market, which the Company undertakes to file within the applicable time periods.
4.6 DELIVERY OF SEC FILINGS; BUSINESS. The Company has provided the
Investors with copies of the Company's most recent Annual Report on Form 10-K405
for the fiscal year ended December 31, 1999, and all other reports filed by the
Company pursuant to the 1934 Act since the filing of the Annual Report on Form
10-K405 and prior to the date hereof (collectively, the "SEC Filings"); which
the Company hereby represents and warrants are all filings required of the
Company pursuant to the 1934 Act for such period. The Company is engaged only in
the business described in the SEC Filings and the SEC Filings contain a complete
and accurate description of the business of the Company. The Company has not
provided to any Investor (i) any information required to be filed under the 1934
Act that has not been so filed or (ii) any material non-public information.
4.7 USE OF PROCEEDS. The proceeds of the sale of the Common Stock and
the Warrants hereunder shall be used by the Company for working capital and
general corporate purposes.
4.8 NO MATERIAL ADVERSE CHANGE. Since the filing of the Company's most
recent Annual Report on Form 10-K405 or as otherwise identified and described in
subsequent reports filed by the Company pursuant to the 1934 Act, there has not
been:
(i) any change in the consolidated assets, liabilities,
financial condition or operating results of the Company from that reflected in
the financial statements included in the Company's most recent Quarterly Report
on Form 10-Q, except changes in the ordinary course of business which have not
had, in the aggregate, a Material Adverse Effect;
(ii) any declaration or payment of any dividend, or any
authorization or payment of any distribution, on any of the capital stock of the
Company, or any redemption or repurchase of any securities of the Company;
(iii) any material damage, destruction or loss, whether or not
covered by insurance, to any assets or properties of the Company;
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(iv) any waiver by the Company of a valuable right or of a
material debt owed to it;
(v) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and which is not material to the assets, properties,
financial condition, operating results or business of the Company taken as a
whole (as such business is presently conducted and as it is proposed to be
conducted);
(vi) any material change or amendment to a material contract or
arrangement by which the Company or any of its assets or properties is bound or
subject;
(vii) any material labor difficulties or labor union organizing
activities with respect to employees of the Company;
(vii) any transaction entered into by the Company other than in
the ordinary course of business; or
(ix) any other event or condition of any character that might
have a Material Adverse Effect.
4.9 SEC FILINGS; MATERIAL CONTRACTS.
(a) The SEC Filings complied as to form in all material respects
with the requirements of the 1934 Act and did not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading.
(b) During the preceding two years, each registration statement
and any amendment thereto filed by the Company pursuant to the 1933 Act and the
rules and regulations thereunder, as of the date such statement or amendment
became effective, complied as to form in all material respects with the 1933 Act
and did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading; and each prospectus filed pursuant to Rule 424(b) under
the 1933 Act, as of its issue date and as of the closing of any sale of
securities pursuant thereto did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
(c) Except as set forth on Schedule 4.3 hereto, there are no
agreements or instruments currently in force and effect that constitute a
warrant, option, convertible security or other right, agreement or arrangement
of any character under which the Company is or may be obligated to issue any
material amounts of any equity security of any kind, or to transfer any material
amounts of any equity security of any kind.
4.10 FORM S-3 ELIGIBILITY. The Company is currently eligible to
register the resale of its Common Stock on a registration statement on Form S-3
under the 1933 Act.
4.11 NO CONFLICT, BREACH, VIOLATION OR DEFAULT. (a) The execution,
delivery and performance of the Agreements by the Company and the issuance and
sale of the Securities will not conflict with or result in a breach or violation
of any of the terms and provisions of, or constitute a default under (i) the
Company's Articles of Incorporation or the Company's Bylaws, both as in effect
on the date
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hereof (copies of which have been provided to the Investors before the date
hereof), or (ii) except where it would not have a Material Adverse Effect, (a)
any statute, rule, regulation or order of any governmental agency or body or any
court, domestic or foreign, having jurisdiction over the Company or any of its
properties, or (b) any agreement or instrument to which the Company is a party
or by which the Company is bound or to which any of the properties of the
Company is subject.
(b) Except where it would not have a Material Adverse Effect, the
Company (i) is not in violation of any statute, rule or regulation applicable to
the Company or its assets, (ii) is not in violation of any judgment, order or
decree applicable to the Company or its assets, and (iii) is not in breach or
violation of any agreement, note or instrument to which it or its assets are a
party or are bound or subject. The Company has not received notice from any
Person of any claim or investigation that, if adversely determined, would render
the preceding sentence untrue or incomplete.
4.12 TAX MATTERS. The Company has timely prepared and filed all tax
returns required to have been filed by the Company with all appropriate
governmental agencies and timely paid all taxes owed by it. The charges,
accruals and reserves on the books of the Company in respect of taxes for all
fiscal periods are adequate in all material respects, and there are no material
unpaid assessments against the Company nor, to the knowledge of the Company, any
basis for the assessment of any additional taxes, penalties or interest for any
fiscal period or audits by any federal, state or local taxing authority except
such as which are not material. All material taxes and other assessments and
levies that the Company is required to withhold or to collect for payment have
been duly withheld and collected and paid to the proper governmental entity or
third party when due. There are no tax liens or claims pending or threatened
against the Company or any of its respective assets or property. There are no
outstanding tax sharing agreements or other such arrangements between the
Company and any other corporation or entity.
4.13 TITLE TO PROPERTIES. Except as disclosed in the SEC Filings, the
Company has good and marketable title to all real properties and all other
properties and assets owned by it, in each case free from liens, encumbrances
and defects that would materially affect the value thereof or materially
interfere with the use made or currently planned to be made thereof by them; and
except as disclosed in the SEC Filings, the Company holds any leased real or
personal property under valid and enforceable leases with no exceptions that
would materially interfere with the use made or currently planned to be made
thereof by them.
4.14 CERTIFICATES, AUTHORITIES AND PERMITS. The Company possesses
adequate certificates, authorities or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now operated by it and has
not received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit that, if determined
adversely to the Company, would individually or in the aggregate have a Material
Adverse Effect.
4.15 NO LABOR DISPUTES. No material labor dispute with the employees
of the Company exists or, to the knowledge of the Company, is imminent.
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4.16 INTELLECTUAL PROPERTY. The Company owns or possesses adequate
rights or licenses to the inventions, know-how, patents, copyrights, trademarks,
trade names, confidential information and other intellectual property
(collectively, "Intellectual Property Rights"), free and clear of all liens,
security interests, charges, encumbrances, equities and other adverse claims,
necessary to conduct the business now operated by it, or presently employed by
it, and presently contemplated to be operated by it, and the Company has not
received any notice of infringement of or conflict with asserted rights of
others with respect to any Intellectual Property Rights. To the knowledge of the
Company, the Company's patents and other Intellectual Property Rights and the
present activities of the Company do not infringe any patent, copyright,
trademark, trade name or other proprietary rights of any third party.
4.17 ENVIRONMENTAL MATTERS. The Company is not in violation of any
statute, rule, regulation, decision or order of any governmental agency or body
or any court, domestic or foreign, relating to the use, disposal or release of
hazardous or toxic substances or relating to the protection or restoration of
the environment or human exposure to hazardous or toxic substances
(collectively, "Environmental Laws"), does not own or operate any real property
contaminated with any substance that is subject to any Environmental Laws, is
not liable for any off-site disposal or contamination pursuant to any
Environmental Laws, and is not subject to any claim relating to any
Environmental Laws, which violation, contamination, liability or claim would
individually or in the aggregate have a Material Adverse Effect; and the Company
is not aware of any pending investigation that might lead to such a claim.
4.18 LITIGATION. Except as disclosed in the SEC Filings, there are no
pending actions, suits or proceedings against or affecting the Company or any of
its properties that, if determined adversely to the Company, would individually
or in the aggregate have a Material Adverse Effect or would materially and
adversely affect the ability of the Company to perform its obligations under
this Agreement, or which are otherwise material in the context of the sale of
the Securities; and to the Company's knowledge, no such actions, suits or
proceedings are threatened or contemplated.
4.19 FINANCIAL STATEMENTS. The financial statements included in each
SEC Filing present fairly and accurately in all material respects the
consolidated financial position of the Company as of the dates shown and its
consolidated results of operations and cash flows for the periods shown, and
such financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis. Except as set
forth in the financial statements of the Company included in the SEC Filings
filed prior to the date hereof, the Company has no liabilities, contingent or
otherwise, except those which individually or in the aggregate are not material
to the financial condition or operating results of the Company.
4.20 INSURANCE COVERAGE. The Company maintains in full force and
effect insurance coverage that is customary for comparably situated companies
for the business being conducted and properties owned or leased by the Company,
and the Company reasonably believes such insurance coverage to be adequate
against all liabilities, claims and risks against which it is customary for
comparably situated companies to insure.
4.21 COMPLIANCE WITH NASDAQ CONTINUED LISTING REQUIREMENTS. The
Company is in compliance with all applicable Nasdaq SmallCap Market continued
listing requirements and is in good standing on such exchange. There are no
proceedings pending or to the Company's knowledge threatened against the Company
relating to the continued listing of the Company's Common Stock on the Nasdaq
SmallCap Market and the Company has not received any notice of, nor to the
knowledge of the Company is there any basis for, the delisting of the Common
Stock from the Nasdaq SmallCap Market.
4.22 ACKNOWLEDGEMENT OF DILUTION. The number of shares of Common Stock
issuable pursuant to this Agreement may increase substantially. The Company's
executive officers and directors
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have studied and fully understand the nature of the transactions being
contemplated hereunder and recognize that they have a potential dilutive effect.
4.23 BROKERS AND FINDERS. The Investors shall have no liability or
responsibility for the payment of any commission or finder's fee to any third
party in connection with or resulting from this agreement or the transactions
contemplated by this Agreement by reason of any agreement of or action taken by
the Company.
4.24 NO DIRECTED SELLING EFFORTS OR GENERAL SOLICITATION. Neither the
Company nor any Person acting on its behalf has conducted any general
solicitation or general advertising (as those terms are used in Regulation D) in
connection with the offer or sale of any of the Securities.
4.25 NO INTEGRATED OFFERING. Neither the Company nor any of its
Affiliates, nor any Person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would adversely affect reliance by
the Company on Section 4(2) for the exemption from registration for the
transactions contemplated hereby or would require registration of the Securities
under the 1933 Act; or would require the integration of this offering with any
other offering of securities for purposes of determining the need to obtain
shareholder approval of the transactions contemplated hereby under the rules of
the Nasdaq Stock Market.
4.26 DISCLOSURES. No representation or warranty made under any Section
hereof and no information furnished by the Company pursuant hereto, or in any
other document, certificate or statement furnished by the Company to the
Investor or any authorized representative of the Investor, pursuant to the
Agreements or in connection therewith, contains any untrue statement of a
material fact or omits to state a material fact necessary to make the respective
statements contained herein or therein, in light of the circumstances under
which the statements were made, not misleading.
5. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. Each of the Investors
hereby severally, and not jointly, represents and warrants to the Company as to
itself only that:
5.1 ORGANIZATION AND EXISTENCE. The Investor is a validly existing
corporation, partnership or limited liability company and has all requisite
corporate, partnership or limited liability company power and authority to
invest in the Securities pursuant to this Agreement.
5.2 AUTHORIZATION. The execution, delivery and performance by the
Investor of this Agreement and the Registration Rights Agreement have been duly
authorized and this Agreement and the Registration Rights Agreement will each
constitute the valid and legally binding obligation of the Investor, enforceable
against the Investor in accordance with their terms.
5.3 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Securities to be received
by the Investor hereunder will be acquired for the Investor's own account, not
as nominee or agent, and not with a view to the resale or distribution of any
part thereof in violation of securities laws, and the Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same in violation of securities laws. The Investor is not a registered
broker dealer or an entity engaged in the business of being a broker dealer.
5.4 INVESTMENT EXPERIENCE. The Investor acknowledges that it can bear
the economic risk and complete loss of its investment in the Securities and has
such knowledge and experience in financial or business matters that it is
capable of evaluating the merits and risks of the investment contemplated
hereby.
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5.5 DISCLOSURE OF INFORMATION. The Investor has had an opportunity to
receive documents related to the Company and to ask questions of and receive
answers from the Company regarding the Company, its business and the terms and
conditions of the offering of the Securities. Neither such inquiries nor any
other due diligence investigation conducted by the Investor shall modify, amend
or affect the Investor's right to rely on the Company's representations and
warranties contained in this Agreement or made pursuant to this Agreement.
5.6 RESTRICTED SECURITIES. The Investor understands that the
Securities are characterized as "restricted securities" under the U.S. federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the 1933 Act only in certain limited circumstances.
5.7 LEGENDS. It is understood that, until registration for resale
pursuant to the Registration Rights Agreement or until sales under Rule 144 are
permitted, certificates evidencing the Securities may bear one or all of the
following legends or legends substantially similar thereto:
(a) "This security has not been registered under the Securities
Act of 1933, as amended (the "Act"), or under any state securities laws, in
reliance upon exemptions from registration for non-public offerings. This
security may not be sold or transferred unless it is registered under the Act
and under applicable state securities laws or unless ALPNET receives an opinion
of counsel reasonably satisfactory to it that an exemption from registration is
available (unless waived)."
(b) If required by the authorities of any state in connection
with the issuance of sale of the Securities, the legend required by such state
authority.
Upon registration for resale pursuant to the Registration Rights
Agreement or upon Rule 144(k) becoming available, the Company shall promptly
cause certificates evidencing the Shares previously issued hereunder to be
replaced with certificates which do not bear such restrictive legends, and all
Warrant Shares subsequently issued shall not bear such restrictive legends.
(Similarly, upon registration for resale pursuant to the Registration Rights
Agreement or upon Rule 144(k) becoming available, the Company shall promptly
cause certificates evidencing the shares of Common Stock issued pursuant to
Section 7 below to be replaced with certificates which do not bear restrictive
legends). If the Company does not promptly cause all such unlegended
certificates to be issued to the Investors hereunder (no later than 10 business
days in any event), the Company shall pay liquidated damages to the Investors
equal to 2% per month (or part thereof) based on the original market value of
such Securities.
5.8 ACCREDITED INVESTOR. The Investor is an accredited investor as
defined in Rule 501(a) of Regulation D, as amended, under the 0000 Xxx.
5.9 NO GENERAL SOLICITATION. The Investor did not learn of the
investment in the Securities as a result of any public advertising or general
solicitation.
5.10 BROKERS. The Investor has taken no action which would give rise
to any claim by any person for brokerage commissions, finder's fees or similar
payments by the Company or the Investor relating to this Agreement or the
transactions contemplated hereby except for the broker's fee of Ladenburg
Xxxxxxx which shall be paid by the Company out of the Closing proceeds.
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6. REGISTRATION RIGHTS AGREEMENT. The parties acknowledge and agree that
part of the inducement for the Investors to enter into this Agreement is the
Company's execution and delivery of the Registration Rights Agreement. The
parties acknowledge and agree that simultaneously with the execution hereof, the
Registration Rights Agreement is being duly executed and delivered by the
parties thereto.
7. COVENANTS AND AGREEMENTS OF THE COMPANY.
7.1 PURCHASE PRICE ADJUSTMENTS.
(a) REQUIRED ADJUSTMENTS. Subject to the exclusions contained in
Section 7.1(f) below, if during the MFN Period (defined below) the Company
issues or sells any shares of its Common Stock at a Per Share Selling Price (as
defined below) lower than the Purchase Price per share set forth in Section 2
hereof, the Purchase Price per share of the Shares sold to the Investors
hereunder shall be adjusted downward to equal such lower Per Share Selling Price
and Investors shall be entitled to receive the additional shares as provided by
Section 7.1(c), subject to Section 7.1(d) below. The Company shall give to the
Investors written notice of, and issue a press release announcing, any such sale
within 24 hours of the closing of any such issuance or sale. The term "Shares"
as used in this Agreement shall include shares issued to the Investors pursuant
to this Section 7.1. Notwithstanding anything contained herein, an Investor
shall not be entitled to receive the additional shares as provided in this
paragraph with respect to any issuance or sale by the Company of shares of its
Common Stock that takes place more than six (6) months following the date on
which such Investor has disposed of all its Shares.
(b) DEFINITIONS.
(i) For the purposes of this Section 7.1, the term "Per
Share Selling Price" as used in this Section 7.1 shall include the amount
actually paid by third parties for each share of Common Stock. In the event a
fee is paid by the Company in connection with such transaction, any such fee
shall be deducted from the selling price pro rata to all shares sold in the
transaction to arrive at the Per Share Selling Price. A sale of shares of Common
Stock shall include the sale or issuance of rights, options, warrants or
convertible securities under which the Company is or may become obligated to
issue shares of Common Stock, and in such circumstances the Per Share Selling
Price of the Common Stock covered thereby shall also include the exercise or
conversion price thereof (in addition to the consideration received by the
Company upon such sale or issuance less the fee amount as provided above). In
case of any such security issued within the MFN Period in a "Variable Rate
Transaction" or an "MFN Transaction" (each as defined below), the Per Share
Selling Price shall be deemed to be the lowest conversion or exercise price at
which such securities are converted or exercised or might have been converted or
exercised in the case of a Variable Rate Transaction, or the lowest adjustment
price in the case of an MFN Transaction, over the life of such securities. If
shares are issued for a consideration other than cash, the Per Share Selling
Price shall be the fair value of such consideration as determined in good faith
by independent certified public accountants mutually acceptable to the Company
and the Investors.
(ii) The term "Variable Rate Transaction" shall mean a
transaction in which the Company issues or sells (a) any debt or equity
securities that are convertible into, exchangeable or exercisable for, or
include the right to receive additional shares of Common Stock either (x) at a
conversion, exercise or exchange rate or other price that is based upon and/or
varies with the trading prices of or quotations for the Common Stock at any time
after the initial issuance of such debt or equity securities, or (y) with a
fixed conversion, exercise or exchange price that is subject to being reset at
some future date after the initial issuance of such debt or equity security or
upon the occurrence of specified or contingent events directly or indirectly
related to the business of the Company or the market for the Common Stock (but
excluding standard stock split anti-dilution provisions), or (b) any securities
of the
10
Company pursuant to an "equity line" structure which provides for the sale, from
time to time, of securities of the Company which are registered for resale
pursuant to the 1933 Act.
(iii) The term "MFN Transaction" shall mean a transaction in
which the Company issues or sells any securities in a capital raising
transaction or series of related transactions (the "New Offering") which grants
to the investor (the "New Investor") the right to receive additional securities
based upon future capital raising transactions of the Company on terms more
favorable than those granted to the New Investor in the New Offering.
(iv) The term "MFN Period" shall mean the period ending on
the later of thirty (30) months following the Closing Date or twenty-seven (27)
months following the effective date of the Registration Statement contemplated
by the Registration Rights Agreement.
(c) ADJUSTMENT MECHANISM. Subject to Section 7.1(d) below, if an
adjustment of the Purchase Price is required pursuant to Section 7.1(a), the
Company shall deliver to the Investors within eight (8) business days of the
closing of the transaction giving rise to the adjustment (as may be adjusted
pursuant to Section 7.1(d) below, "Delivery Date") each Investor's pro-rata
share of such number of additional shares of Common Stock equal to (i) the
aggregate Purchase Price paid by the Investor divided by the adjusted per share
purchase price as required under Section 7.1(a), minus (ii) the total number of
shares of Common Stock previously delivered to that Investor hereunder; provided
however, that the Company shall effect such adjustment in cash, in whole or in
part, to the extent required by Section 7.1(d). In the event the Company fails
to deliver the additional shares (or cash, as the case may be) by the Delivery
Date, the Company shall be liable to the Investors for a penalty equal to 2% of
the aggregate Purchase Price adjustment per month (in each instance to such
Investor pro rata in accordance with its participation in this offering),
payable in Common Stock or cash, at each Investor's election.
(d) LIMITATION ON NUMBER OF SHARES.
(i) Notwithstanding anything to the contrary contained
herein, the number of shares of Common Stock that may be acquired by any
Investor pursuant to this Section 7.1 shall not exceed a number that, when added
to the total number of shares of Common Stock deemed beneficially owned by such
Investor (other than by virtue of the ownership of securities or rights to
acquire securities (including this Section 7.1) that have limitations on the
Investor's right to convert, exercise or purchase similar to the limitation set
forth herein), together with all shares of Common Stock deemed beneficially
owned (other than by virtue of the ownership of securities or rights to acquire
securities that have limitations on the right to convert, exercise or purchase
similar to the limitation set forth herein) by the holder's "AFFILIATES" (as
defined in Rule 144 of the Act) ("AGGREGATION PARTIES") that would be aggregated
for purposes of determining whether a group under Section 13(d) of the
Securities Exchange Act of 1934 as amended, exists, would exceed 9.9% of the
total issued and outstanding shares of the Common Stock (the "RESTRICTED
OWNERSHIP PERCENTAGE"). Each holder shall have the right (w) at any time and
from time to time to reduce its Restricted Ownership Percentage immediately upon
notice to the Corporation and (x) (subject to waiver) at any time and from time
to time, to increase its Restricted Ownership Percentage immediately in the
event of the announcement as pending or planned, of a change of control
transaction (including without limitation a transaction that would result in a
transfer of more than 50% of the Company's voting power or equity, or a
transaction that would result in a person or "group" being deemed the beneficial
owner of 50% or more of the Company's voting power or equity).
11
(ii) Each Investor covenants at all times on each day
(each such day being referred to as a "Covenant Day") as follows: During the
balance of such Covenant Day and the succeeding sixty-one (61) days (the balance
of such Covenant Day and the succeeding 61 days being referred to as the
"Covenant Period") such Investor will not acquire shares of Common Stock
pursuant to any right (including pursuant to this Section 7.1) existing at the
commencement of the Covenant Period to the extent the number of shares so
acquired by such Investor and its Aggregation Parties (ignoring all
dispositions) would exceed:
(x) the Restricted Ownership Percentage of the total number of
shares of Common Stock outstanding at the commencement of
the Covenant Period, MINUS
(y) the number of shares of Common Stock actually owned by such
Investor and its Aggregation Parties at the commencement of
the Covenant Period.
A new and independent covenant will be deemed to be given by the Investor as of
each moment of each Covenan t Day. No covenant will terminate, diminish or
modify any other covenant. The Investor agrees to comply with each such
covenant. This Section 7.1(d)(ii) controls in the case of any conflict with any
other provision of this Agreement or any agreement entered into in connection
herewith.
(iii) The Corporation's obligation to issue Common Stock
which would exceed such limits referred to in this Section 7.1(d) shall be
suspended to the extent necessary until such time, if any, as shares of Common
Stock may be issued in compliance with such restrictions.
(iv) If by way of any adjustment required by this
Section 7.1, the Investor would receive a number of shares of Common Stock such
that the total number of such shares held by the Investor as of the date of such
adjustment would equal or exceed the Restricted Ownership Percentage, then the
Company shall not effect the adjustment required by this Section only to the
extent necessary to avoid causing the aforesaid limitation to be exceeded. With
respect to such shares of Common Stock which may not be issued to an Investor on
the Delivery Date due to the limitation contained in this paragraph ("Excess
Shares"), the Delivery Date for such Excess Shares, or any portion thereof from
time to time as specified by the Investor, shall be extended to such date which
is eight (8) calendar days following delivery of written notice to the Company
from the Investor stating that the Excess Shares (or such portion thereof), are
no longer subject to the limitation contained in this paragraph since such
Excess Shares (or portion thereof) may be issued without violating the
Restricted Ownership Percentage.
(v) In the event that the Company would be obligated to
issue an amount of shares of Common Stock which, when aggregated with all shares
of Common Stock issued to an Investor, would constitute a breach of the
Company's obligations under the rules or regulations of Nasdaq as they apply to
the Company, or any other principal securities exchange or market upon which the
Common Stock is or becomes traded (the "Cap Regulations"), the Company shall not
be obligated to issue any such shares of Common Stock. Instead, the Company
shall immediately seek shareholder approval of this transaction (with voting in
accordance with the Cap Regulations and other applicable law) if such approval
would, under the Cap Regulations, permit the Company to issue the shares of
Common Stock without violation of the Cap Regulations. If such shareholder
approval will not afford a cure of the breach of the Cap Regulations, or if such
shareholder approval is not obtained within eighty (80) days, then the Company
shall promptly redeem the Investor at a redemption price equal to 110% of the
cash value of the adjustment. Only shares of Common Stock acquired pursuant to
this Agreement
12
(including Warrant Shares) will be included in determining whether the
limitations would be exceeded for purposes of this Section 7.1(d)(v).
(e) CAPITAL ADJUSTMENTS. In case of any stock split or reverse
stock split, stock dividend, reclassification of the common stock,
recapitalization, merger or consolidation, or like capital adjustment affecting
the Common Stock of the Company, the provisions of Section 7.1 shall be applied
in a fair, equitable and reasonable manner so as to give effect, as nearly as
may be, to the purposes hereof.
(f) EXCLUSIONS. Section 7.1(a) shall not apply to:
(i) sales of shares of Common Stock by the Company pursuant
to the provisions of any existing shareholder-approved option or similar plan
heretofore adopted by the Company; or
(ii) sales of shares of Common Stock by the Company upon
conversion or exercise of any convertible securities, options or warrants
outstanding prior to the date hereof.
(g) RULE 144. The Company agrees to take the position that,
for purposes of determining the holding period under Rule 144 for shares of
Common Stock issued pursuant to Section 7.1(a), the holding period of such
shares shall be tacked to the holding period of the Shares.
7.2 LIMITATION ON TRANSACTIONS.
(a) Until the date of effectiveness of the Registration
Statement covering the Shares as contemplated by the Registration Rights
Agreement, without the prior written consent of the Investors (which consent may
be withheld in the Investors' discretion), the Company shall not issue or sell
or agree to issue or sell for cash any securities in a capital raising
transaction prior to such date.
(b) Until the expiration of the MFN Period, without the prior
written consent of the Investors (which consent may be withheld in the
Investors' discretion), the Company shall not (i) issue or sell or agree to
issue or sell for cash any securities in a MFN Transaction; or (ii) issue or
sell, or agree to issue or sell, for cash any securities in a Variable Rate
Transaction. However, notwithstanding the foregoing, the Company may issue, sell
and agree to issue and sell such securities at any time after the date which is
six (6) months following the date on which the Investor no longer holds any
Shares.
(c) Subject to any consent or approval rights of the Investors
hereunder, in the event the Company contemplates an offering of its equity or
debt securities within six months of the date hereof, the Company agrees that,
upon the request of the Investors, the Company shall first disclose the terms
and conditions and other relevant facts of such proposed transaction to Nasdaq
and obtain from Nasdaq its assurance that such transaction will not be
integrated with the offering which is the subject of this Agreement for purposes
of the Nasdaq rules requiring shareholder approval of the issuance of 20% or
more of an issuer's outstanding common stock. In the event the Company fails to
seek or obtain such assurances, then, at the election of an Investor, the
Company shall redeem within five (5) days the Common Stock purchased by such
Investor at 120% of the original per share Purchase Price paid by the Investor
for all Common Stock then held by such Investor.
(d) Subject to Sections 7.2(a) and 7.2(b) above and 7.3 below
and pursuant to the terms of this paragraph, the Company may issue and sell
securities to Ladenburg Xxxxxxx and Company ("Ladenburg Xxxxxxx"), acting as an
underwriter, who then may make a placement of registered shares of Common Stock
to certain investors in individually negotiated transactions, on an
13
occasional basis, as agreed by the parties. The transactions described in this
paragraph shall only be for Common Stock without any future adjustments
whatsoever nor any agreements to do so. Notwithstanding anything contained
herein, the Company shall not issue or sell to Ladenburg Xxxxxxx (or any
affiliate) under such transaction or similar transaction (i) any securities
after December 31, 2002, (ii) greater than $1 million worth of securities during
any thirty (30) calendar day period, or (iii) greater than $8 million of
securities from commencement of such transaction(s) through December 31, 2002,
in each case without the prior written consent of the Investor.
7.3 RIGHT OF THE INVESTORS TO PARTICIPATE IN FUTURE TRANSACTIONS.
Until the expiration of the MFN Period, the Investors will have a right to
participate in future capital raising transactions on the terms and conditions
set forth in this Section 7.3 (except for equity financings pursuant to firm
commitment underwritten offerings and subject to Section 7.2(d) above). During
such period, the Company shall give ten (10) business days (or five (5) business
days in case of the transaction described in Section 7.2(d) above) advance
written notice to the Investor prior to any non-public offer or sale of any of
the Company's equity securities or any securities convertible into or
exchangeable or exercisable for such securities (except for equity financings
pursuant to firm commitment underwritten offerings and subject to Section 7.2(d)
above) by providing to the Investors a comprehensive term sheet containing all
significant business terms of such a proposed transaction. The Investors shall
have the right (pro rata in accordance with the Investors' participation in this
offering, or together with other investors selected by the Investors and
reasonably acceptable to the Company) to purchase all or part of such securities
which are the subject of such a proposed transaction for the same consideration
and on the same terms and conditions as contemplated for such third-party sale.
The Investor(s)' rights hereunder must be exercised in writing by the
Investor(s) within five (5) business days (or two (2) business days in case of
the transaction described in Section 7.2(d) above) following receipt of the
notice from the Company. If, subsequent to the Company giving notice to an
Investor hereunder but prior to the Investor exercising its right to participate
(or the expiration of the five-day period without response from the Investor),
the terms and conditions of the proposed third-party sale are changed from that
disclosed in the comprehensive term sheet provided to such Investor, the Company
shall be required to provide a new notice to the Investor hereunder and the
Investors shall have the right, which must be exercised within five (5) business
days of such new notice, to exercise their rights to purchase the securities on
such changed terms and conditions as provided hereunder. In the event the
Investors do not exercise their rights hereunder, or affirmatively decline to
engage in the proposed transaction with the Company, then the Company may
proceed with such proposed transaction on the same terms and conditions as
noticed to the Investors (assuming the Investors have consented to the
transaction, if required, pursuant to Section 7.2 of this Agreement). The rights
and obligations of this Section 7.3 shall in no way diminish the other rights of
the Investor pursuant to this Section 7.
7.4 OPINION OF COUNSEL. On or prior to the Closing Date, the Company
will deliver to the Investors the opinion of legal counsel to the Company, in
form and substance reasonably acceptable to the Investors, addressing those
legal matters set forth in Schedule 7.4 hereto.
7.5 RESERVATION OF COMMON STOCK PURSUANT TO SECTION 7.1 AND EXERCISE
OF WARRANTS. The Company hereby agrees at all times to reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of providing for the exercise of the Warrants, such number of shares
of Common Stock as shall from time to time equal the number of shares sufficient
to permit the exercise of the Warrants in accordance with the terms of the
Warrants. In addition, as soon as such number is determinable, the Company
agrees to reserve such shares as may be necessary to permit the issuances to the
Investors required by Section 7.1.
14
7.6 REPORTS. For so long as the Investors beneficially own any of the
Securities, the Company will furnish to the Investors the following reports,
each of which shall be provided to the Investors by air mail or reputable
courier (within one week of filing with the SEC, in the case of SEC filings):
(a) QUARTERLY REPORTS. The Company's quarterly report on Form
10-Q or, in the absence of such report, consolidated balance sheets of the
Company as at the end of such period and the related consolidated statements of
operations, stockholders' equity and cash flows for such period and for the
portion of the Company's fiscal year ended on the last day of such quarter, all
in reasonable detail and certified by a principal financial officer of the
Company to have been prepared in accordance with generally accepted accounting
principles, subject to year-end and audit adjustments.
(b) ANNUAL REPORTS. The Company's Form 10-K or, in the absence
of a Form 10-K, consolidated balance sheets of the Company as at the end of such
year and the related consolidated statements of earnings, stockholders' equity
and cash flows for such year, all in reasonable detail and accompanied by the
report on such consolidated financial statements of an independent certified
public accountant selected by the Company and reasonably satisfactory to the
Investor.
(c) SECURITIES FILINGS. Copies of (i) all notices, proxy
statements, financial statements, reports and documents as the Company shall
send or make available generally to its stockholders or to financial analysts,
promptly after providing same to the stockholders and (ii) all periodic and
special reports, documents and registration statements (other than on Form S-8)
which the Company furnishes or files, or any officer or director of the Company
(in such person's capacity as such) furnishes or files with the SEC.
(d) OTHER INFORMATION. Such other information relating to the
Company as from time to time may reasonably be requested by any Investor
provided the Company produces such information in its ordinary course of
business, and further provided that the Company, solely in its own discretion,
determines that such information is not confidential in nature and disclosure to
the Investor would not be harmful to the Company.
(e) RULE 144. The Company agrees to make publicly available on a
timely basis the information necessary to enable Rule 144 to be available for
resale.
7.7 PRESS RELEASES. Any press release or other publicity concerning
this Agreement or the transactions contemplated by this Agreement shall be
submitted to the Investors for comment at least two (2) business days prior to
issuance, unless the release is required to be issued within a shorter period of
time by law or pursuant to the rules of a national securities exchange. The
Company shall issue a press release concerning the fact and material terms of
this Agreement within one business day of the Closing.
7.8 NO CONFLICTING AGREEMENTS. The Company will not take any action,
enter into any agreement or make any commitment that would conflict or interfere
in any material respect with the obligations to the Investors under the
Agreements.
7.9 INSURANCE. For so long as any Investor beneficially owns any of
the Securities, the Company shall, and shall cause each subsidiary to, have in
full force and effect (a) insurance reasonably believed to be adequate on all
assets and activities of a type customarily insured, covering property damage
and loss of income by fire or other casualty, and (b) insurance reasonably
believed to be adequate protection against all liabilities, claims and risks
against which it is customary for companies similarly situated as the Company
and the subsidiaries to insure.
15
7.10 COMPLIANCE WITH LAWS. So long as the Investors beneficially own
any Securities, the Company will use reasonable efforts to comply with all
applicable laws, rules, regulations, orders and decrees of all governmental
authorities, except to the extent non-compliance (in one instance or in the
aggregate) would not have a Material Adverse Effect.
7.11 LISTING OF UNDERLYING SHARES AND RELATED MATTERS. The Company
hereby agrees, promptly following the Closing of the transactions contemplated
by this Agreement, to take such action to cause the Shares and the Warrant
Shares to be listed on the Nasdaq SmallCap Market as promptly as possible but no
later than the effective date of the registration contemplated by the
Registration Rights Agreement. The Company further agrees that if the Company
applies to have its Common Stock or other securities traded on any other
principal stock exchange or market, it will include in such application the
Shares and Warrant Shares and will take such other action as is necessary to
cause such Common Stock to be so listed. For so long as the Investors
beneficially own any of the Securities, the Company will take all action
necessary to continue the listing and trading of its Common Stock on the Nasdaq
SmallCap Market and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of such exchange, as
applicable, to ensure the continued eligibility for trading of the Shares and
the Warrant Shares thereon. Neither the Company nor any of its Affiliates, nor
any Person acting on its or their behalf, shall directly or indirectly make any
offers or sales of any security or solicit any offers to buy any security which
may cause the integration of the offering hereunder with any other offering of
securities for purposes of determining the need to obtain shareholder approval
of the transactions contemplated hereby under the rules of the Nasdaq Stock
Market. The Company shall notify the Investors in advance if it intends to make
any private placement of securities within the six month period following the
date hereof, and at the Investors' request the Company shall request a ruling
from the NASD in advance that such private placement will not be integrated with
the transactions contemplated hereunder as described in the preceding sentence.
7.12 CORPORATE EXISTENCE. So long as the Investors beneficially own
any of the Shares or Warrants, the Company shall maintain its corporate
existence, except in the event of a merger, consolidation or sale of all or
substantially all of the Company's assets, as long as the surviving or successor
entity in such transaction (a) assumes the Company's obligations hereunder and
under the agreements and instruments entered into in connection herewith,
regardless of whether or not the Company would have had a sufficient number of
shares of Common Stock authorized and available for issuance in order to fulfill
its obligations hereunder and effect the exercise in full of all Warrants
outstanding as of the date of such transaction; (b) has no legal, contractual or
other restrictions on its ability to perform the obligations of the Company
hereunder and under the agreements and instruments entered into in connection
herewith; and (c)(i) is a publicly traded corporation whose common stock and the
shares of capital stock issuable upon exercise of the Warrants are (or would be
upon issuance thereof) listed for trading on the Nasdaq National Market, the
Nasdaq SmallCap Market, the New York Stock Exchange or the American Stock
Exchange, or (ii) if not such a publicly traded corporation, then the buyer
agrees that it will, at the election of the Investors, purchase such Investors'
Securities at a price equal to 120% of the Purchase Price of such Securities.
8. SURVIVAL. All representations, warranties, covenants and agreements
contained in this Agreement shall be deemed to be representations, warranties,
covenants and agreements as of the date hereof and shall survive the execution
and delivery of this Agreement.
9. MISCELLANEOUS.
9.1 SUCCESSORS AND ASSIGNS. This Agreement may not be assigned by a
party hereto without the prior written consent of the other party hereto which
consent may not be unreasonably withheld or delayed, except that without the
prior written consent of the Company, but after notice duly
16
given, an Investor may assign its rights and delegate its duties hereunder in
whole or in part to an Affiliate or to a third party acquiring some portion or
all of its Shares in a private transaction. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
9.2 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.3 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
9.4 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given only upon delivery to each party to be notified by (i)
personal delivery, (ii) telex or telecopier, upon receipt of confirmation of
complete transmittal, or (iii) an internationally recognized overnight air
courier, addressed to the party to be notified at the address as follows, or at
such other address as such party may designate by ten days' advance written
notice to the other party:
17
If to the Company:
ALPNET, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxxx
Vice President Legal, Chief Legal Officer
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxxxxx Xxxxxxx & XxXxxxxxxx
Gateway Tower East, Suite 900
00 Xxxx Xxxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Xxxxxx X. Xxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to the Investors, to the addresses set forth on the signature
pages hereto.
9.5 EXPENSES. The parties hereto shall pay their own costs and
expenses in connection herewith, except that the Company shall pay to Tail Wind,
Inc. a sum equal to 1% of the Purchase Price paid by each Investor as and for
reimbursement for legal and due diligence expenses incurred in connection
herewith and such amount shall be paid at Closing from gross proceeds of the
offering. The Company shall pay all fees and expenses of Ladenburg Xxxxxxx in
connection with the transactions contemplated by this Agreement pursuant to a
separate agreement between such parties.
9.6 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the Investors. Any amendment or
waiver effected in accordance with this paragraph shall be binding upon each
holder of any Securities purchased under this Agreement at the time outstanding,
each future holder of all such securities, and the Company.
9.7 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
9.8 ENTIRE AGREEMENT. This Agreement, including the Exhibits and
Schedules hereto, and the Registration Rights Agreement constitute the entire
agreement among the parties hereof with respect to the subject matter hereof and
thereof and supersede all prior agreements and understandings, both oral and
written, between the parties with respect to the subject matter hereof and
thereof.
9.9 FURTHER ASSURANCES. The parties shall execute and deliver all
such further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.
18
9.10 APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to principles of conflicts of laws.
9.11 REMEDIES.
(i) The Investors shall be entitled to specific performance of
the Company's obligations under the Agreements.
(ii) The Company on the one hand, and each Investor severally and
not jointly on the other hand, shall indemnify the other and hold it harmless
from any loss, cost, expense or fees (including attorneys' fees and expenses)
arising out of any breach of any representation, warranty, covenant or agreement
in any of the Agreements, or arising out of the enforcement of this Section
9.11.
9.12 JURISDICTION. The parties hereby agree that all actions or
proceedings arising directly or indirectly from or in connection with this
Agreement or the other Agreements shall be litigated only in the Supreme Court
of the State of New York or the United States District Court for the Southern
District of New York located in New York County, New York. The parties consent
to the jurisdiction and venue of the foregoing courts and consent that any
process or notice of motion or other application to either of said courts or a
judge thereof may be served inside or outside the State of New York or the
Southern District of New York by registered mail, return receipt requested,
directed to the party being served at its address set forth in this Agreement
(and service so made shall be deemed complete three (3) days after the same has
been posted as aforesaid) or by personal service or in such other manner as may
be permissible under the rules of said courts. The Company hereby waives any
right to a jury trial in connection with any litigation pursuant to this
Agreement or the other Agreements.
[SIGNATURE PAGE FOLLOWS]
19
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
THE COMPANY: ALPNET, INC.
By:
-----------------------------
Name:
Title:
20
THE INVESTORS THE TAIL WIND FUND, LTD.
By:
-----------------------------
Name:
Title:
Aggregate Purchase Price: 5,000,000
---------
Number of A Warrants: 300,000
---------
Number of B Warrants: 300,000
---------
Address for Notices:
The Tail Wind Fund Ltd.
MeesPierson (Bahamas) Ltd.
Attn: Xxxxxx Xxxxx
Windemere House, 000 Xxxx Xxx Xxxxxx
P.O. Box SS 5539, Nassau, Bahamas
Tel: 242/000-0000 Fax: 242/000-0000
with a copy to:
Xxxxx Xxxxx, Esq.
x/x XXXX
0xx Xxxxx, No. 0 Xxxxxx Xxxxxx
Xxxxxx, XX0X 0XX XX
Telephone: 00-000-000-0000
Facsimile: 00-000-000-0000
and with a copy to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx, 00xx Xxx.
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
21
THE INVESTORS RESONANCE LIMITED
By:
-----------------------------
Name:
Title:
Aggregate Purchase Price: 1,500,000
---------
Number of A Warrants: 25,000
---------
Number of B Warrants: 25,000
---------
Address for Notices:
Resonance Limited
0000 Xxxx 0xx Xxxxxx
Xxxxxxxx, XX 00000
with a copy to:
Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx, 00xx Xxx.
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
21
SCHEDULE 4.1
ALPNET, INC
SUBSIDIARY LIST
SUBSIDIARY LEGAL NAME SUBSIDIARY JURISDICTION
--------------------------------------------------------------------------------
SUBSIDIARIES OF ALPNET, INC.
ALPNET Belgium N.V. Belgium
ALPNET do Brasil S/C Ltda Brazil
a.l.p. Systems, Ltd Canada
ALPNET Canada Inc. Canada
Bengbu Alpnet Technology Co Ltd China
ALPNET, GmbH Germany
ALPNET Technology GmbH Germany
ALPNET Deutschland GmbH Germany
Interlingua, S.L Spain
a.l.p. Services, S.A.R.L.. France
Interdoc S.A.R.L. (ALPNET France) France
Automated Language Processing Services Ltd United Kingdom
Computype Ltd United Kingdom
Interlingua Group Ltd United Kingdom
ALPNET UK Ltd United Kingdom
ALPNET Hong Kong Hong Kong
ALPNET Ireland Ltd Ireland
ALPNET Netherlands BV Netherlands
TPS BV Netherlands
ALPNET Sweden AB Sweden
ALPNET Singapore Pte Ltd. Singapore
a.l.p. Services, Inc United States of America
Interverbum Ltd United Kingdom
Linguasoft Ltd United Kingdom
Interlingua Language Services Ltd. United Kingdom
Interlingua Ltd United Kingdom
Translations Service Bureau Ltd United Kingdom
Technical Translation International Ltd United Kingdom
BRANCH OFFICES OF ALPNET, INC
ALPNET Thailand Thailand
ALPNET Japan Japan
ALPNET Korea Korea
SCHEDULE 4.3
ALPNET, INC
CAPITALIZATION TABLE
AS OF JUNE 26, 2000
COMMON SHARES COMMON
ISSUED AND PREFERRED CONVERTIBLE SHARES
DESCRIPTION OUTSTANDING STOCK DEBT ISSUABLE TOTAL SHARES
-------------------------------------------------------------------------------------------------------------------------
COMMON STOCK AUTHORIZED 100,000,000
PREFERRED STOCK AUTHORIZED 4,000,000
COMMON SHARES ISSUED AND ISSUABLE
Common Stock 27,964,040 27,964,040
Preferred Stock 87,339 786,051 786,051(1)
Executive Option Plan 847,666 847,666
Nonstatutory Option Plan 2,620,780 2,620,780
Stock Options to Non-employees 25,000 25,000
Convertible EP Notes $ 133,000 87,319 87,319
Convertible Notes (1st Issue) $2,090,000 910,329 910,329
Convertible Notes (2nd Issue) $1,706,000 768,476 768,476
Warrants on Convertible Notes (2nd Issue) 384,238 384,238
Total Common Shares Issued and issuable 34,393,899
Other Shares
Contingent Shares for Acquisition 1,800,000 1,800,000(2)
200,000 to 200,000 to
Estimated Warrants for Ladenburg Xxxxxxx 250,000 250,000(3)
(1) Preferred shares are convertible into 9 common shares at the option of the
holder and have voting rights as if already converted.
(2) Shares issuable to Stork in 12,000 share increments for each one cent
shortfall if the stock price is below $2.50 on July 30, 2000
(3) Warrant Shares issuable as a fee to Ladenburg Xxxxxxx based on 6% warrant
coverage and $8M funding
EXHIBIT A
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES LAWS, IN RELIANCE UPON
EXEMPTIONS FROM REGISTRATION FOR NON-PUBLIC OFFERINGS. THIS SECURITY MAY NOT BE
SOLD OR TRANSFERRED UNLESS IT IS REGISTERED UNDER THE ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR UNLESS ALPNET RECEIVES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO IT THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE (UNLESS
WAIVED).
VOID AFTER 5:00 P.M. EASTERN TIME ON JULY _____, 2006 ("EXPIRATION DATE").
ALPNET, INC.
A WARRANT
WARRANT ("WARRANT") TO PURCHASE SHARES OF
COMMON STOCK, NO PAR VALUE PER SHARE
This is to certify that, for VALUE RECEIVED, [_______________]
("Warrantholder"), is entitled to purchase, subject to the provisions of this
Warrant, from ALPNET, Inc., a corporation organized under the laws of Utah
("Company"), at any time after the first anniversary of the issuance hereof but
not later than 5:00 P.M., Eastern time, on the Expiration Date, ________ shares
("Warrant Shares") of Common Stock, no par value ("Common Stock"), of the
Company, at an exercise price per share equal to $______ [125% OF THE MARKET
PRICE AS OF THE DATE OF THE PURCHASE AGREEMENT, BUT IN NO EVENT LESS THAN THE
STOCK'S CLOSING BID PRICE ON THE TRADING DAY IMMEDIATELY PRECEDING THE DATE OF
THE PURCHASE AGREEMENT] (the exercise price in effect from time to time
hereafter being herein called the "Warrant Price"). The number of Warrant Shares
purchasable upon exercise of this Warrant and the Warrant Price shall be subject
to adjustment from time to time as described herein.
This Warrant has been issued pursuant to the terms of the Purchase
Agreement ("Purchase Agreement") dated on or about the date hereof between the
Company and the Warrantholder. Capitalized terms used herein and not defined
shall have the meaning specified in the Purchase Agreement.
Section 1. REGISTRATION. The Company shall maintain books for the transfer
and registration of the Warrant. Upon the initial issuance of the Warrant, the
Company shall issue and register the Warrant in the name of the Warrantholder.
Section 2. TRANSFERS. As provided herein, this Warrant may be transferred
only pursuant to a registration statement filed under the Securities Act of
1933, as amended ("Securities Act") or an exemption from registration
thereunder. Subject to such restrictions, the Company shall transfer this
Warrant from time to time, upon the books to be maintained by the Company for
that purpose, upon surrender thereof for transfer properly endorsed or
accompanied by appropriate instructions for transfer upon any such transfer, and
a new Warrant shall be issued to the transferee and the surrendered Warrant
shall be canceled by the Company.
Section 3.
(a) EXERCISE OF WARRANT. Subject to the provisions hereof, the
Warrantholder may exercise this Warrant in whole or in part at any time and from
time to time after the first anniversary of the issuance hereof upon surrender
of the Warrant, together with delivery of the duly executed Warrant exercise
form attached hereto (the "Exercise Agreement"), to the Company during normal
business hours on any business day at the Company's principal executive offices
(or such other office or agency of the Company as it may designate by notice to
the holder hereof), and upon (i) payment to the Company in cash, by certified or
official bank check or by wire transfer for the account of the Company of the
Warrant Price for the Warrant Shares specified in the Exercise Agreement or (ii)
delivery to the Company of a written notice of an election to effect a "Cashless
Exercise" (as defined below) for the Warrant Shares specified in the Exercise
Agreement. The Warrant Shares so purchased shall be deemed to be issued to the
holder hereof or such holder's designee, as the record owner of such shares, as
of the close of business on the date on which this Warrant (or evidence of loss,
theft or destruction thereof) shall have been surrendered, the completed
Exercise Agreement shall have been delivered. Certificates for the Warrant
Shares so purchased, representing the aggregate number of shares specified in
the Exercise Agreement, shall be delivered to the holder hereof within a
reasonable time, not exceeding three (3) business days, after this Warrant shall
have been so exercised. The certificates so delivered shall be in such
denominations as may be requested by the holder hereof and shall be registered
in the name of such holder or such other name as shall be designated by such
holder. If this Warrant shall have been exercised only in part, then, unless
this Warrant has expired, the Company shall, at its expense, at the time of
delivery of such certificates, deliver to the holder a new Warrant representing
the number of shares with respect to which this Warrant shall not then have been
exercised.
To effect a "Cashless Exercise", the Warrantholder shall submit to the
Company with the Exercise Agreement, written notice of the holder's intention to
do so, including a calculation of the number of shares of Common Stock to be
issued upon such exercise in accordance with the terms hereof. In the event of a
Cashless Exercise, in lieu of paying the Warrant Price in cash, the holder shall
surrender this Warrant for that number of shares of Common Stock determined by
multiplying the number of Warrant Shares to which it would otherwise be entitled
by a fraction, the numerator of which shall be the difference between the then
current Fair Market Value per share of the Common Stock and the Warrant Price,
and the denominator of which shall be the then current Fair Market Value per
share of the Common Stock. For this purpose, the "Fair Market Value" of the
Common Stock shall be the closing price of the Common Stock as reported by the
Nasdaq Stock Market for the thirty (30) trading days immediately preceding the
date of the Exercise Agreement.
2
(b) NO REDEMPTION OF WARRANT. The Company may not redeem this Warrant
in whole or in part.
Section 4. COMPLIANCE WITH THE SECURITIES ACT OF 1933. Neither this Warrant
nor the Common Stock issued upon exercise hereof nor any other security issued
or issuable upon exercise of this Warrant may be offered or sold except as
provided in this agreement and in conformity with the Securities Act of 1933, as
amended, and then only against receipt of an agreement of such person to whom
such offer of sale is made to comply with the provisions of this Section 4 with
respect to any resale or other disposition of such security. The Company may
cause the legend set forth on the first page of this Warrant to be set forth on
each Warrant or similar legend on any security issued or issuable upon exercise
of this Warrant until the Warrant Shares have been registered for resale under
the Registration Rights Agreement or until Rule 144 is available, unless counsel
for the Company is of the opinion as to any such security that such legend is
unnecessary.
Section 5. PAYMENT OF TAXES. The Company will pay any documentary stamp
taxes attributable to the initial issuance of Warrant Shares issuable upon the
exercise of the Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Warrant Shares in a
name other than that of the registered holder of this Warrant in respect of
which such shares are issued, and in such case, the Company shall not be
required to issue or deliver any certificate for Warrant Shares or any Warrant
until the person requesting the same has paid to the Company the amount of such
tax or has established to the Company's satisfaction that such tax has been
paid. The holder shall be responsible for income taxes due under federal or
state law, if any such tax is due.
Section 6. MUTILATED OR MISSING WARRANTS. In case this Warrant shall be
mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and
substitution of and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and for the purchase of a like number of Warrant Shares, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Company.
Section 7. RESERVATION OF COMMON STOCK. The Company hereby represents and
warrants that there have been reserved, and the Company shall at all applicable
times keep reserved, out of the authorized and unissued Common Stock, a number
of shares sufficient to provide for the exercise of the rights of purchase
represented by the Warrant, and the transfer agent for the Common Stock
("Transfer Agent"), and every subsequent transfer agent for the Common Stock or
other shares of the Company's capital stock issuable upon the exercise of any of
the right of purchase aforesaid, shall be irrevocably authorized and directed at
all times to reserve such number of authorized and unissued shares of Common
Stock as shall be requisite for such purpose. The Company agrees that all
Warrant Shares issued upon exercise of the Warrant shall be, at the time of
delivery of the certificates for such Warrant Shares, duly authorized, validly
issued, fully paid and non-assessable shares of Common Stock of the Company. The
Company will keep a conformed copy of this Warrant on file with the Transfer
Agent and with every subsequent transfer agent for the Common Stock or other
shares of the Company's capital stock issuable upon the exercise of the rights
of purchase represented by the Warrant. The Company will
3
supply from time to time the Transfer Agent with duly executed stock
certificates required to honor the outstanding Warrant.
Section 8. WARRANT PRICE. The Warrant Price, subject to adjustment as
provided in Section 9, shall, if payment is made in cash or by certified check,
be payable in lawful money of the United States of America.
Section 9. ADJUSTMENTS. Subject and pursuant to the provisions of this
Section 9, the Warrant Price and number of Warrant Shares subject to this
Warrant shall be subject to adjustment from time to time as set forth
hereinafter.
(a) If the Company shall at any time or from time to time while the
Warrant is outstanding, pay a dividend or make a distribution on its Common
Stock in shares of Common Stock, subdivide its outstanding shares of Common
Stock into a greater number of shares or combine its outstanding shares into a
smaller number of shares or issue by reclassification of its outstanding shares
of Common Stock any shares of its capital stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), then the number of Warrant Shares
purchasable upon exercise of the Warrant and the Warrant Price in effect
immediately prior to the date upon which such change shall become effective,
shall be adjusted by the Company so that the Warrantholder thereafter exercising
the Warrant shall be entitled to receive the number of shares of Common Stock or
other capital stock which the Warrantholder would have received if the Warrant
had been exercised immediately prior to such event. Such adjustment shall be
made successively whenever any event listed above shall occur.
(b) If any capital reorganization, reclassification of the capital
stock of the Company, consolidation or merger of the Company with another
corporation, or sale, transfer or other disposition of all or substantially all
of the Company's assets to another corporation shall be effected, then, as a
condition of such reorganization, reclassification, consolidation, merger, sale,
transfer or other disposition, lawful and adequate provision shall be made
whereby each Warrantholder shall thereafter have the right to purchase and
receive upon the basis and upon the terms and conditions herein specified and in
lieu of the Warrant Shares immediately theretofore issuable upon exercise of the
Warrant, such shares of stock, securities or assets as would have been issuable
or payable with respect to or in exchange for a number of Warrant Shares equal
to the number of Warrant Shares immediately theretofore issuable upon exercise
of the Warrant, had such reorganization, reclassification, consolidation,
merger, sale, transfer or other disposition not taken place, and in any such
case appropriate provision shall be made with respect to the rights and
interests of each Warrantholder to the end that the provisions hereof
(including, without limitations, provision for adjustment of the Warrant Price)
shall thereafter be applicable, as nearly equivalent as may be practicable in
relation to any shares of stock, securities or properties thereafter deliverable
upon the exercise hereof. The Company shall not effect any such consolidation,
merger, sale, transfer or other disposition unless prior to or simultaneously
with the consummation thereof the successor corporation (if other than the
Company) resulting from such consolidation or merger, or the corporation
purchasing or otherwise acquiring such assets or other appropriate corporation
or entity shall assume, by written instrument executed and delivered to the
Company, the obligation to deliver to the holder of the Warrant such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to purchase and the other
4
obligations under this Warrant. The provisions of this paragraph (b) shall
similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales, transfers or other dispositions.
(c) 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
continuing corporation) of evidences of indebtedness or assets (other than cash
dividends or cash distributions payable out of consolidated earnings or earned
surplus or dividends or distributions referred to in Section 9(a)), 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 total number of shares of Common Stock outstanding multiplied by
the Fair Market Value per share of Common Stock (as determined pursuant to
Section 3), less the fair market value (as determined by the Company's Board of
Directors in good faith) of said assets or evidences of indebtedness so
distributed, or of such subscription rights or warrants, and the denominator of
which shall be the total number of shares of Common Stock outstanding multiplied
by such current Fair Market Value per share of Common Stock. Such adjustment
shall be made successively whenever such a record date is fixed.
(d) For the duration of the term of this Warrant, if the Company
shall at any time or from time to time issue or sell securities for a Per Share
Selling Price (as such term is defined in the Purchase Agreement, with all
referenced terms also defined in the Purchase Agreement) less than the Warrant
Price, then the Warrant Price shall be automatically reset (if it would result
in a reduction of such price) to a price equal to 139% of such Per Share Selling
Price. The number of Warrant Shares shall be proportionally increased in the
event of any adjustments pursuant to this paragraph. Such adjustments shall be
made successively whenever such sales are made. If an adjustment (the
"Adjustment") of the Warrant Price is required pursuant hereto, the Company
shall deliver to the Warrantholder, within eight business days of the closing of
the transaction giving rise to the Adjustment ("Delivery Date"), a notice
("Adjustment Notice") stating that such Warrant Price has been automatically
adjusted as of the Delivery Date, and such notice shall constitute an amendment
to this Warrant. In the event the Company fails to deliver the Adjustment Notice
by the applicable Delivery Date, the Company shall be liable to the
Warrantholder for a delay payment, as liquidated damages, equal to 2% of (x) the
number of Warrant Shares issuable hereunder times (y) the Fair Market Value per
share, per month payable in Common Stock or cash, at the Warrantholder's
election (provided, that such failure to notify shall not affect automatic
adjustment of the Warrant Price). The Company shall give to the Warrantholder
written notice of any such sale of Common Stock within 24 hours of the closing
of any such sale and shall within such 24 hour period issue a press release
announcing such sale.
(e) An adjustment shall become effective immediately after the record
date in the case of each dividend or distribution and immediately after the
effective date of each other event which requires an adjustment.
(f) In the event that, as a result of an adjustment made pursuant to
Section 9, the holder of this Warrant shall become entitled to receive any
shares of capital stock of the Company other than shares of Common Stock, the
number of such other shares so receivable upon exercise of this Warrant shall be
subject thereafter to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Warrant
Shares contained in this Warrant.
5
Section 10. FRACTIONAL INTEREST. The Company shall not be required to issue
fractions of Warrant Shares upon the exercise of the Warrant. If any fraction of
a Warrant Share would, except for the provisions of this Section, be issuable
upon the exercise of the Warrant (or specified portions thereof), the Company
shall round such calculation to the nearest whole number and disregard the
fraction.
Section 11. BENEFITS. Nothing in this Warrant shall be construed to give
any person, firm or corporation (other than the Company and the Warrantholder)
any legal or equitable right, remedy or claim, it being agreed that this Warrant
shall be for the sole and exclusive benefit of the Company and the
Warrantholder.
Section 12. NOTICES TO WARRANTHOLDER. Upon the happening of any event
requiring an adjustment of the Warrant Price, the Company shall forthwith give
written notice thereof to the Warrantholder at the address appearing in the
records of the Company, stating the adjusted Warrant Price and the adjusted
number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. In the event of a dispute with respect to any such
calculation, the certificate of the Company's independent certified public
accountants shall be conclusive evidence of the correctness of any computation
made, absent manifest error. Failure to give such notice to the Warrantholder or
any defect therein shall not affect the legality or validity of the subject
adjustment. At the Warrantholder's request, the Company shall deliver to the
Warrantholder as of a requested date a notice specifying the Warrant Price and
the number of Warrant Shares into which this Warrant is exercisable as of such
date.
6
Section 13. IDENTITY OF TRANSFER AGENT. The Transfer Agent for the Common
Stock is:
American Stock Transfer & Trust Company
0000 00xx Xxxxxx, Xx. 0X
Xxxxxxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
Attention: Xxxxxxxxx Xxxxx
Forthwith upon the appointment of any subsequent transfer agent for the
Common Stock or other shares of the Company's capital stock issuable upon the
exercise of the rights of purchase represented by the Warrant, the Company will
fax to the Warrantholder a statement setting forth the name and address of such
transfer agent.
Section 14. NOTICES. Any notice pursuant hereto to be given or made by the
Warrantholder to or on the Company shall be sufficiently given or made
personally or if sent by an internationally recognized courier by next day or
two day delivery service, addressed as follows:
ALPNET, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
Chief Legal Officer
or such other address as the Company may specify in writing by notice to the
Warrantholder complying as to delivery with the terms of this Section 14.
Any notice pursuant hereto to be given or made by the Company to or on the
Warrantholder shall be sufficiently given or made if personally delivered or if
sent by an internationally recognized courier service by overnight or two-day
service, to the address set forth on the books of the Company or, as to each of
the Company and the Warrantholder, at such other address as shall be designated
by such party by written notice to the other party complying as to delivery with
the terms of this Section 14.
All such notices, requests, demands, directions and other communications
shall, when sent by courier, be effective two (2) days after delivery to such
courier as provided and addressed as aforesaid.
Section 15. REGISTRATION RIGHTS. The initial holder of this Warrant is
entitled to the benefit of certain registration rights in respect of the Warrant
Shares as provided in the Registration Rights Agreement.
Section 16. SUCCESSORS. All the covenants and provisions hereof by or for
the benefit of the Warrantholder shall bind and inure to the benefit of its
respective successors and assigns hereunder.
7
Section 17. GOVERNING LAW. This Warrant shall be deemed to be a contract
made under the laws of the State of New York, without giving effect to its
conflict of law principles, and for all purposes shall be construed in
accordance with the laws of said State.
Section 18. 9.9% AND 19.9% LIMITATIONS.
(a) Notwithstanding anything to the contrary contained herein, the
number of shares of Common Stock that may be acquired by the holder upon
exercise pursuant to the terms hereof shall not exceed a number that, when added
to the total number of shares of Common Stock deemed beneficially owned by such
holder (other than by virtue of the ownership of securities or rights to acquire
securities (including the Warrant Shares) that have limitations on the holder's
right to convert, exercise or purchase similar to the limitation set forth
herein), together with all shares of Common Stock deemed beneficially owned
(other than by virtue of the ownership of securities or rights to acquire
securities that have limitations on the right to convert, exercise or purchase
similar to the limitation set forth herein) by the holder's "affiliates" (as
defined in Rule 144 of the Act) ("Aggregation Parties") that would be aggregated
for purposes of determining whether a group under Section 13(d) of the
Securities Exchange Act of 1934 as amended, exists, would exceed 9.9% of the
total issued and outstanding shares of the Common Stock (the "Restricted
Ownership Percentage"). Each holder shall have the right (w) at any time and
from time to time to reduce its Restricted Ownership Percentage immediately upon
notice to the Corporation and (x) (subject to waiver) at any time and from time
to time, to increase its Restricted Ownership Percentage immediately in the
event of the announcement as pending or planned, of a change of control
transaction (including without limitation a transaction that would result in a
transfer of more than 50% of the Company's voting power or equity, or a
transaction that would result in a person or "group" being deemed the beneficial
owner of 50% or more of the Company's voting power or equity).
(b) The holder covenants at all times on each day (each such day
being referred to as a "Covenant Day") as follows: During the balance of such
Covenant Day and the succeeding sixty-one (61) days (the balance of such
Covenant Day and the succeeding 61 days being referred to as the "Covenant
Period") such holder will not acquire shares of Common Stock pursuant to any
right (including exercise of Warrants) existing at the commencement of the
Covenant Period to the extent the number of shares so acquired by such holder
and its Aggregation Parties (ignoring all dispositions) would exceed:
(x) the Restricted Ownership Percentage of the total number of shares
of Common Stock outstanding at the commencement of the Covenant
Period, MINUS
(y) the number of shares of Common Stock actually owned by such
holder and its Aggregation Parties at the commencement of the
Covenant Period.
A new and independent covenant will be deemed to be given by the
holder as of each moment of each Covenant Day. No covenant will terminate,
diminish or modify any other covenant. The holder agrees to comply with each
such covenant. This Section 18 controls in the case of any conflict with any
other provision of the Purchase Agreement or any agreement entered into in
connection therewith.
8
The Corporation's obligation to issue Common Stock which would exceed
such limits referred to in this Section 18 shall be suspended to the extent
necessary until such time, if any, as shares of Common Stock may be issued in
compliance with such restrictions.
(c) Notwithstanding anything contained herein, in no event shall the
Company issue shares of Common Stock hereunder to the extent that the total
number of shares issued or deemed issued to the Investors under the Purchase
Agreement would exceed 19.9% of the Company's issued and outstanding shares of
Common Stock on the date of issuance hereof. Instead, the Company shall redeem
this Warrant to the extent necessary at such consideration required to place the
Investors in the same economic position they would have been if not for such
limitation. Only shares acquired pursuant to the Purchase Agreement will be
included in determining whether the limitation would be exceeded for purposes of
this paragraph.
Section 19. The Company agrees that within ten (10) business days after any
request from time to time of the Warrantholder, it shall deliver to such holder
a new Warrant in substitution of this Warrant which is identical in all respects
except that the then Warrant Price shall be appropriately specified in the
Warrant, and the Warrant shall specify the fixed number of Warrant Shares into
which the Warrants are then exercisable. Such changes are intended not as
amendments to the Warrant but only as clarification of the foregoing numbers for
convenience purposes, and such changes shall not affect any provisions
concerning adjustments to the Warrant Price or number of Warrant Shares
contained herein.
[SIGNATURE PAGE FOLLOWS]
9
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
as of July __, 2000.
ALPNET, INC.
By:
-----------------------
Name:
Title:
Attest:
Sign:
------------------------
Print Name:
10
ALPNET, INC.
WARRANT EXERCISE FORM
Alpnet, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
Chief Legal Officer
This undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant ("Warrant") for, and to purchase
thereunder by (CHECK AS APPLICABLE):
payment by cash, wire transfer or certified check,
Cashless Exercise of the within Warrant pursuant to Section 3(b) of the
Warrant, _______________ shares of Common Stock* ("Warrant Shares") provided for
therein, and requests that certificates for the Warrant Shares be issued as
follows:
-------------------------------
Name
--------------------------------
Address
--------------------------------
--------------------------------
and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares.
In lieu of delivering physical certificates representing the Warrant Shares
purchasable upon exercise of this Warrant, provided the Company's transfer agent
is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer ("FAST") program, upon request of the Holder, the Company
shall use its best efforts to cause its transfer agent to electronically
transmit the Warrant Shares issuable upon conversion or exercise to the
undersigned, by crediting the account of the undersigned's prime broker with DTC
through its Deposit Withdrawal Agent Commission ("DWAC") system.
Dated: Signature:
---------------------------- ----------------------------
----------------------------
Name (please print)
----------------------------
Address
-------------------
* NOTE: If conversion of the Warrant is made by surrender of the Warrant and
the number of shares indicated exceeds the maximum number of shares to
which a holder is entitled, the Company will issue such maximum number of
shares purchasable upon exercise of the Warrant registered in the name of
the undersigned Warrantholder or the undersigned's Assignee as below
indicated and deliver same to the address stated below.
EXHIBIT B
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES LAWS, IN RELIANCE UPON
EXEMPTIONS FROM REGISTRATION FOR NON-PUBLIC OFFERINGS. THIS SECURITY MAY NOT BE
SOLD OR TRANSFERRED UNLESS IT IS REGISTERED UNDER THE ACT AND UNDER APPLICABLE
STATE SECURITIES LAWS OR UNLESS ALPNET RECEIVES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO IT THAT AN EXEMPTION FROM REGISTRATION IS AVAILABLE (UNLESS
WAIVED).
VOID AFTER 5:00 P.M. EASTERN TIME ON JANUARY __, 2003 ("EXPIRATION DATE").
ALPNET, INC.
B WARRANT
WARRANT ("WARRANT") TO PURCHASE SHARES OF
COMMON STOCK, NO PAR VALUE PER SHARE
This is to certify that, for VALUE RECEIVED, [_______________]
("Warrantholder"), is entitled to purchase, subject to the provisions of this
Warrant, from ALPNET, Inc., a corporation organized under the laws of Utah
("Company"), at any time after earlier of the first anniversary of the issuance
hereof or the Redemption Notice Date (as defined below), but not later than 5:00
P.M., Eastern time, on the Expiration Date, ________ shares ("Warrant Shares")
of Common Stock, no par value ("Common Stock"), of the Company, at an exercise
price per share equal to $______ [125% OF THE MARKET PRICE AS OF THE DATE OF THE
PURCHASE AGREEMENT, BUT IN NO EVENT LESS THAN THE STOCK'S CLOSING BID PRICE ON
THE TRADING DAY IMMEDIATELY PRECEDING THE DATE OF THE PURCHASE AGREEMENT] (the
exercise price in effect from time to time hereafter being herein called the
"Warrant Price"). The number of Warrant Shares purchasable upon exercise of this
Warrant and the Warrant Price shall be subject to adjustment from time to time
as described herein.
This Warrant has been issued pursuant to the terms of the Purchase
Agreement ("Purchase Agreement") dated on or about the date hereof between the
Company and the Warrantholder. Capitalized terms used herein and not defined
shall have the meaning specified in the Purchase Agreement.
Section 1. REGISTRATION. The Company shall maintain books for the transfer
and registration of the Warrant. Upon the initial issuance of the Warrant, the
Company shall issue and register the Warrant in the name of the Warrantholder.
Section 2. TRANSFERS. As provided herein, this Warrant may be transferred
only pursuant to a registration statement filed under the Securities Act of
1933, as amended ("Securities Act") or an exemption from registration
thereunder. Subject to such restrictions, the Company shall transfer this
Warrant from time to time, upon the books to be maintained by the Company for
that purpose, upon surrender thereof for transfer properly endorsed or
accompanied by appropriate instructions for transfer upon any such transfer, and
a new Warrant shall be issued to the transferee and the surrendered Warrant
shall be canceled by the Company.
Section 3.
(a) EXERCISE OF WARRANT. Subject to the provisions hereof, the
Warrantholder may exercise this Warrant in whole or in part, at any time and
from time to time after earlier of the first anniversary of the issuance hereof,
the Redemption Notice Date (as defined below) or the twentieth (20th)
consecutive trading on which the closing bid price of the Company's Common Stock
(as reported by the Nasdaq Stock Market) is greater than 175% of the Warrant
Price, upon surrender of the Warrant, together with delivery of the duly
executed Warrant exercise form attached hereto (the "Exercise Agreement"), to
the Company during normal business hours on any business day at the Company's
principal executive offices (or such other office or agency of the Company as it
may designate by notice to the holder hereof), and upon payment to the Company
in cash, by certified or official bank check or by wire transfer for the account
of the Company of the Warrant Price for the Warrant Shares specified in the
Exercise Agreement. The Warrant Shares so purchased shall be deemed to be issued
to the holder hereof or such holder's designee, as the record owner of such
shares, as of the close of business on the date on which this Warrant (or
evidence of loss, theft or destruction thereof) shall have been surrendered, the
completed Exercise Agreement shall have been delivered. Certificates for the
Warrant Shares so purchased, representing the aggregate number of shares
specified in the Exercise Agreement, shall be delivered to the holder hereof
within a reasonable time, not exceeding three (3) business days, after this
Warrant shall have been so exercised. The certificates so delivered shall be in
such denominations as may be requested by the holder hereof and shall be
registered in the name of such holder or such other name as shall be designated
by such holder. If this Warrant shall have been exercised only in part, then,
unless this Warrant has expired, the Company shall, at its expense, at the time
of delivery of such certificates, deliver to the holder a new Warrant
representing the number of shares with respect to which this Warrant shall not
then have been exercised.
(b) REDEMPTION OF WARRANT. Subject to the Purchase Agreement, in the
event that the closing bid price of the Company's Common Stock (as reported by
the Nasdaq Stock Market) is greater than 175% of the Warrant Price for twenty
(20) consecutive trading days ("Pre-Call Period"), the Company shall have the
right, upon at least ten (10) trading days' prior written notice to the
Warrantholder ("Redemption Notice"), to redeem all or any portion of this
Warrant which has not previously been exercised, at a redemption price equal to
$.01 per Warrant Share issuable hereunder for the portion hereof being redeemed.
Such redemption shall occur on the date specified in the Redemption Notice
("Redemption Date"), provided that such Redemption Date may not occur until at
least ten (10)
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trading days following the date on which the Warrantholder received the
Redemption Notice (the "Redemption Notice Date"). The Company may not deliver
the Redemption Notice unless and until the closing bid price of the Company's
Common Stock (as reported by the Nasdaq Stock Market) is greater than 175% of
the Warrant Price for ten (10) consecutive trading days. The period from the
Redemption Notice Date to the Redemption Date shall be referred to herein as the
"Post-Call Period". The Warrantholder may exercise this Warrant, including any
portion subject to a Redemption Notice, at any time and from time to time during
the period from the Redemption Notice Date through the date on which the
redemption price for such Warrants is paid by the Company (and thereafter is
such redemption price is not paid), and the Company shall honor all tendered
Exercise Agreements during such period. Any Redemption Notice under this Section
shall be irrevocable. If the Company intends to redeem less than all of the then
outstanding Warrants issued to Investors under the Purchase Agreement, it shall
do so on a pro rata basis among such holders in accordance with this Section.
Failure by the Company to redeem this Warrant on a timely basis after delivering
a Redemption Notice shall result in the Company being prohibited from exercising
such right pursuant to this Section again.
Notwithstanding anything to the contrary herein, the Company shall be
prohibited from exercising its right to redeem this Warrant pursuant to this
Section unless at all times during the Pre-Call Period and Post-Call Period (i)
all the Warrant Shares with respect to this Warrant are covered by an effective
registration statement under the Securities Act and a deliverable prospectus,
(ii) the Warrant Shares with respect to this Warrant are listed and traded on
the Nasdaq Stock Market, (iii) the Company is not in breach of any provisions of
this Warrant or the other Agreements, and (iv) the closing bid price of the
Company's Common Stock (as reported by the Nasdaq Stock Market) is greater than
175% of the Warrant Price.
Section 4. COMPLIANCE WITH THE SECURITIES ACT OF 1933. Neither this Warrant
nor the Common Stock issued upon exercise hereof nor any other security issued
or issuable upon exercise of this Warrant may be offered or sold except as
provided in this agreement and in conformity with the Securities Act of 1933, as
amended, and then only against receipt of an agreement of such person to whom
such offer of sale is made to comply with the provisions of this Section 4 with
respect to any resale or other disposition of such security. The Company may
cause the legend set forth on the first page of this Warrant to be set forth on
each Warrant or similar legend on any security issued or issuable upon exercise
of this Warrant until the Warrant Shares have been registered for resale under
the Registration Rights Agreement or until Rule 144 is available, unless counsel
for the Company is of the opinion as to any such security that such legend is
unnecessary.
3
Section 5. PAYMENT OF TAXES. The Company will pay any documentary stamp
taxes attributable to the initial issuance of Warrant Shares issuable upon the
exercise of the Warrant; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Warrant Shares in a
name other than that of the registered holder of this Warrant in respect of
which such shares are issued, and in such case, the Company shall not be
required to issue or deliver any certificate for Warrant Shares or any Warrant
until the person requesting the same has paid to the Company the amount of such
tax or has established to the Company's satisfaction that such tax has been
paid. The holder shall be responsible for income taxes due under federal or
state law, if any such tax is due.
Section 6. MUTILATED OR MISSING WARRANTS. In case this Warrant shall be
mutilated, lost, stolen, or destroyed, the Company shall issue in exchange and
substitution of and upon cancellation of the mutilated Warrant, or in lieu of
and substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and for the purchase of a like number of Warrant Shares, but only
upon receipt of evidence reasonably satisfactory to the Company of such loss,
theft or destruction of the Warrant, and with respect to a lost, stolen or
destroyed Warrant, reasonable indemnity or bond with respect thereto, if
requested by the Company.
Section 7. RESERVATION OF COMMON STOCK. The Company hereby represents and
warrants that there have been reserved, and the Company shall at all applicable
times keep reserved, out of the authorized and unissued Common Stock, a number
of shares sufficient to provide for the exercise of the rights of purchase
represented by the Warrant, and the transfer agent for the Common Stock
("Transfer Agent"), and every subsequent transfer agent for the Common Stock or
other shares of the Company's capital stock issuable upon the exercise of any of
the right of purchase aforesaid, shall be irrevocably authorized and directed at
all times to reserve such number of authorized and unissued shares of Common
Stock as shall be requisite for such purpose. The Company agrees that all
Warrant Shares issued upon exercise of the Warrant shall be, at the time of
delivery of the certificates for such Warrant Shares, duly authorized, validly
issued, fully paid and non-assessable shares of Common Stock of the Company. The
Company will keep a conformed copy of this Warrant on file with the Transfer
Agent and with every subsequent transfer agent for the Common Stock or other
shares of the Company's capital stock issuable upon the exercise of the rights
of purchase represented by the Warrant. The Company will supply from time to
time the Transfer Agent with duly executed stock certificates required to honor
the outstanding Warrant.
Section 8. WARRANT PRICE. The Warrant Price, subject to adjustment as
provided in Section 9, shall, if payment is made in cash or by certified check,
be payable in lawful money of the United States of America.
Section 9. ADJUSTMENTS. Subject and pursuant to the provisions of this
Section 9, the Warrant Price and number of Warrant Shares subject to this
Warrant shall be subject to adjustment from time to time as set forth
hereinafter.
(a) If the Company shall at any time or from time to time while the
Warrant is outstanding, pay a dividend or make a distribution on its Common
Stock in shares of Common Stock, subdivide its outstanding shares of Common
Stock into a greater number of shares or combine its
4
outstanding shares into a smaller number of shares or issue by reclassification
of its outstanding shares of Common Stock any shares of its capital stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), then the number of
Warrant Shares purchasable upon exercise of the Warrant and the Warrant Price in
effect immediately prior to the date upon which such change shall become
effective, shall be adjusted by the Company so that the Warrantholder thereafter
exercising the Warrant shall be entitled to receive the number of shares of
Common Stock or other capital stock which the Warrantholder would have received
if the Warrant had been exercised immediately prior to such event. Such
adjustment shall be made successively whenever any event listed above shall
occur.
(b) If any capital reorganization, reclassification of the capital
stock of the Company, consolidation or merger of the Company with another
corporation, or sale, transfer or other disposition of all or substantially all
of the Company's assets to another corporation shall be effected, then, as a
condition of such reorganization, reclassification, consolidation, merger, sale,
transfer or other disposition, lawful and adequate provision shall be made
whereby each Warrantholder shall thereafter have the right to purchase and
receive upon the basis and upon the terms and conditions herein specified and in
lieu of the Warrant Shares immediately theretofore issuable upon exercise of the
Warrant, such shares of stock, securities or assets as would have been issuable
or payable with respect to or in exchange for a number of Warrant Shares equal
to the number of Warrant Shares immediately theretofore issuable upon exercise
of the Warrant, had such reorganization, reclassification, consolidation,
merger, sale, transfer or other disposition not taken place, and in any such
case appropriate provision shall be made with respect to the rights and
interests of each Warrantholder to the end that the provisions hereof
(including, without limitations, provision for adjustment of the Warrant Price)
shall thereafter be applicable, as nearly equivalent as may be practicable in
relation to any shares of stock, securities or properties thereafter deliverable
upon the exercise hereof. The Company shall not effect any such consolidation,
merger, sale, transfer or other disposition unless prior to or simultaneously
with the consummation thereof the successor corporation (if other than the
Company) resulting from such consolidation or merger, or the corporation
purchasing or otherwise acquiring such assets or other appropriate corporation
or entity shall assume, by written instrument executed and delivered to the
Company, the obligation to deliver to the holder of the Warrant such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to purchase and the other obligations under this
Warrant. The provisions of this paragraph (b) shall similarly apply to
successive reorganizations, reclassifications, consolidations, mergers, sales,
transfers or other dispositions.
(c) 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
continuing corporation) of evidences of indebtedness or assets (other than cash
dividends or cash distributions payable out of consolidated earnings or earned
surplus or dividends or distributions referred to in Section 9(a)), 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 total number of shares of Common Stock outstanding multiplied by
the Fair Market Value per share of Common Stock (as defined below), less the
fair market value (as determined by the Company's Board of Directors in good
faith) of said assets or evidences of indebtedness so distributed, or of such
subscription rights or warrants, and the denominator of which shall be the total
number of shares of Common Stock outstanding
5
multiplied by such current Fair Market Value per share of Common Stock. Such
adjustment shall be made successively whenever such a record date is fixed. For
this purpose, the "Fair Market Value" of the Common Stock shall be the closing
price of the Common Stock as reported by the Nasdaq Stock Market for the thirty
(30) trading days immediately preceding the date of the Exercise Agreement.
(d) For the duration of the term of this Warrant, if the Company shall
at any time or from time to time issue or sell securities for a Per Share
Selling Price (as such term is defined in the Purchase Agreement, with all
referenced terms also defined in the Purchase Agreement) less than the Warrant
Price, then the Warrant Price shall be automatically reset (if it would result
in a reduction of such price) to a price equal to 139% of such Per Share Selling
Price. The number of Warrant Shares shall be proportionally increased in the
event of any adjustments pursuant to this paragraph. Such adjustments shall be
made successively whenever such sales are made. If an adjustment (the
"Adjustment") of the Warrant Price is required pursuant hereto, the Company
shall deliver to the Warrantholder, within eight business days of the closing of
the transaction giving rise to the Adjustment ("Delivery Date"), a notice
("Adjustment Notice") stating that such Warrant Price has been automatically
adjusted as of the Delivery Date, and such notice shall constitute an amendment
to this Warrant. In the event the Company fails to deliver the Adjustment Notice
by the applicable Delivery Date, the Company shall be liable to the
Warrantholder for a delay payment, as liquidated damages, equal to 2% of (x) the
number of Warrant Shares issuable hereunder times (y) the Fair Market Value per
share, per month payable in Common Stock or cash, at the Warrantholder's
election (provided, that such failure to notify shall not affect automatic
adjustment of the Warrant Price). The Company shall give to the Warrantholder
written notice of any such sale of Common Stock within 24 hours of the closing
of any such sale and shall within such 24 hour period issue a press release
announcing such sale.
(e) An adjustment shall become effective immediately after the record
date in the case of each dividend or distribution and immediately after the
effective date of each other event which requires an adjustment.
(f) In the event that, as a result of an adjustment made pursuant to
Section 9, the holder of this Warrant shall become entitled to receive any
shares of capital stock of the Company other than shares of Common Stock, the
number of such other shares so receivable upon exercise of this Warrant shall be
subject thereafter to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the Warrant
Shares contained in this Warrant.
Section 10. FRACTIONAL INTEREST. The Company shall not be required to issue
fractions of Warrant Shares upon the exercise of the Warrant. If any fraction of
a Warrant Share would, except for the provisions of this Section, be issuable
upon the exercise of the Warrant (or specified portions thereof), the Company
shall round such calculation to the nearest whole number and disregard the
fraction.
Section 11. BENEFITS. Nothing in this Warrant shall be construed to give
any person, firm or corporation (other than the Company and the Warrantholder)
any legal or equitable right, remedy or claim, it being agreed that this Warrant
shall be for the sole and exclusive benefit of the Company and the
Warrantholder.
6
Section 12. NOTICES TO WARRANTHOLDER. Upon the happening of any event
requiring an adjustment of the Warrant Price, the Company shall forthwith give
written notice thereof to the Warrantholder at the address appearing in the
records of the Company, stating the adjusted Warrant Price and the adjusted
number of Warrant Shares resulting from such event and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based. In the event of a dispute with respect to any such
calculation, the certificate of the Company's independent certified public
accountants shall be conclusive evidence of the correctness of any computation
made, absent manifest error. Failure to give such notice to the Warrantholder or
any defect therein shall not affect the legality or validity of the subject
adjustment. At the Warrantholder's request, the Company shall deliver to the
Warrantholder as of a requested date a notice specifying the Warrant Price and
the number of Warrant Shares into which this Warrant is exercisable as of such
date.
Section 13. IDENTITY OF TRANSFER AGENT. The Transfer Agent for the Common
Stock is:
American Stock Transfer & Trust Company
0000 00xx Xxxxxx, Xx. 0X
Xxxxxxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
Attention: Xxxxxxxxx Xxxxx
Forthwith upon the appointment of any subsequent transfer agent for the
Common Stock or other shares of the Company's capital stock issuable upon the
exercise of the rights of purchase represented by the Warrant, the Company will
fax to the Warrantholder a statement setting forth the name and address of such
transfer agent.
Section 14. NOTICES. Any notice pursuant hereto to be given or made by the
Warrantholder to or on the Company shall be sufficiently given or made
personally or if sent by an internationally recognized courier by next day or
two day delivery service, addressed as follows:
ALPNET, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Telephone: (000) 000-0000
Telefax:(000) 000-0000
Attention: Xxxxx X. Xxxxxx
Chief Legal Officer
or such other address as the Company may specify in writing by notice to the
Warrantholder complying as to delivery with the terms of this Section 14.
Any notice pursuant hereto to be given or made by the Company to or on the
Warrantholder shall be sufficiently given or made if personally delivered or if
sent by an internationally recognized courier service by overnight or two-day
service, to the address set forth on the books of the Company or, as to each of
the Company and the Warrantholder, at such other address as shall be
7
designated by such party by written notice to the other party complying as to
delivery with the terms of this Section 14.
All such notices, requests, demands, directions and other communications
shall, when sent by courier, be effective two (2) days after delivery to such
courier as provided and addressed as aforesaid.
Section 15. REGISTRATION RIGHTS. The initial holder of this Warrant is
entitled to the benefit of certain registration rights in respect of the Warrant
Shares as provided in the Registration Rights Agreement.
Section 16. SUCCESSORS. All the covenants and provisions hereof by or for
the benefit of the Warrantholder shall bind and inure to the benefit of its
respective successors and assigns hereunder.
Section 17. GOVERNING LAW. This Warrant shall be deemed to be a contract
made under the laws of the State of New York, without giving effect to its
conflict of law principles, and for all purposes shall be construed in
accordance with the laws of said State.
Section 18. 9.9% AND 19.9% LIMITATIONS.
(a) Notwithstanding anything to the contrary contained herein, the
number of shares of Common Stock that may be acquired by the holder upon
exercise pursuant to the terms hereof shall not exceed a number that, when added
to the total number of shares of Common Stock deemed beneficially owned by such
holder (other than by virtue of the ownership of securities or rights to acquire
securities (including the Warrant Shares) that have limitations on the holder's
right to convert, exercise or purchase similar to the limitation set forth
herein), together with all shares of Common Stock deemed beneficially owned
(other than by virtue of the ownership of securities or rights to acquire
securities that have limitations on the right to convert, exercise or purchase
similar to the limitation set forth herein) by the holder's "affiliates" (as
defined in Rule 144 of the Act) ("Aggregation Parties") that would be aggregated
for purposes of determining whether a group under Section 13(d) of the
Securities Exchange Act of 1934 as amended, exists, would exceed 9.9% of the
total issued and outstanding shares of the Common Stock (the "Restricted
Ownership Percentage"). Each holder shall have the right (w) at any time and
from time to time to reduce its Restricted Ownership Percentage immediately upon
notice to the Corporation and (x) (subject to waiver) at any time and from time
to time, to increase its Restricted Ownership Percentage immediately in the
event of the announcement as pending or planned, of a change of control
transaction (including without limitation a transaction that would result in a
transfer of more than 50% of the Company's voting power or equity, or a
transaction that would result in a person or "group" being deemed the beneficial
owner of 50% or more of the Company's voting power or equity).
(b) The holder covenants at all times on each day (each such day being
referred to as a "Covenant Day") as follows: During the balance of such Covenant
Day and the succeeding sixty-one (61) days (the balance of such Covenant Day and
the succeeding 61 days being referred to as the "Covenant Period") such holder
will not acquire shares of Common Stock pursuant to any right (including
exercise of Warrants) existing at the commencement of the Covenant Period to the
extent the number of shares so acquired by such holder and its Aggregation
Parties (ignoring all dispositions) would exceed:
8
(x) the Restricted Ownership Percentage of the total number of shares
of Common Stock outstanding at the commencement of the Covenant
Period, MINUS
(y) the number of shares of Common Stock actually owned by such
holder and its Aggregation Parties at the commencement of the
Covenant Period.
A new and independent covenant will be deemed to be given by the
holder as of each moment of each Covenant Day. No covenant will terminate,
diminish or modify any other covenant. The holder agrees to comply with each
such covenant. This Section 18 controls in the case of any conflict with any
other provision of the Purchase Agreement or any agreement entered into in
connection therewith.
The Corporation's obligation to issue Common Stock which would exceed
such limits referred to in this Section 18 shall be suspended to the extent
necessary until such time, if any, as shares of Common Stock may be issued in
compliance with such restrictions.
(c) Notwithstanding anything contained herein, in no event shall the
Company issue shares of Common Stock hereunder to the extent that the total
number of shares issued or deemed issued to the Investors under the Purchase
Agreement would exceed 19.9% of the Company's issued and outstanding shares of
Common Stock on the date of issuance hereof. Instead, the Company shall redeem
this Warrant to the extent necessary at such consideration required to place the
Investors in the same economic position they would have been if not for such
limitation. Only shares acquired pursuant to the Purchase Agreement will be
included in determining whether the limitation would be exceeded for purposes of
this paragraph.
Section 19. The Company agrees that within ten (10) business days after any
request from time to time of the Warrantholder, it shall deliver to such holder
a new Warrant in substitution of this Warrant which is identical in all respects
except that the then Warrant Price shall be appropriately specified in the
Warrant, and the Warrant shall specify the fixed number of Warrant Shares into
which the Warrants are then exercisable. Such changes are intended not as
amendments to the Warrant but only as clarification of the foregoing numbers for
convenience purposes, and such changes shall not affect any provisions
concerning adjustments to the Warrant Price or number of Warrant Shares
contained herein.
[SIGNATURE PAGE FOLLOWS]
9
IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
as of July __, 2000.
ALPNET, INC.
By:
---------------------------
Name:
Title:
Attest:
Sign:
------------------------
Print Name:
10
ALPNET, INC.
WARRANT EXERCISE FORM
Alpnet, Inc.
0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000
Telephone: (000) 000-0000
Telefax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx
Chief Legal Officer
This undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant ("Warrant") for, and to purchase
thereunder payment by cash, wire transfer or certified check, _______________
shares of Common Stock* ("Warrant Shares") provided for therein, and requests
that certificates for the Warrant Shares be issued as follows:
Name
------------------------------
Address
------------------------------
------------------------------
and, if the number of Warrant Shares shall not be all the Warrant Shares
purchasable upon exercise of the Warrant, that a new Warrant for the balance of
the Warrant Shares.
In lieu of delivering physical certificates representing the Warrant Shares
purchasable upon exercise of this Warrant, provided the Company's transfer agent
is participating in the Depository Trust Company ("DTC") Fast Automated
Securities Transfer ("FAST") program, upon request of the Holder, the Company
shall use its best efforts to cause its transfer agent to electronically
transmit the Warrant Shares issuable upon conversion or exercise to the
undersigned, by crediting the account of the undersigned's prime broker with DTC
through its Deposit Withdrawal Agent Commission ("DWAC") system.
Dated: Signature:
----------------------- -------------------------------
-------------------------------
Name (please print)
-------------------------------
Address
-------------------
* NOTE: If conversion of the Warrant is made by surrender of the Warrant and
the number of shares indicated exceeds the maximum number of shares to
which a holder is entitled, the Company will issue such maximum number of
shares purchasable upon exercise of the Warrant registered in the name of
the undersigned Warrantholder or the undersigned's Assignee as below
indicated and deliver same to the address stated below.
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of this 7th day of July, 2000 by and between ALPNET, Inc., a Utah
corporation (the "Company"), and the persons identified as Investors pursuant to
that certain Purchase Agreement of even date herewith by and between the Company
and such Investors (the "Purchase Agreement").
The parties hereby agree as follows:
1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
"ADDITIONAL REGISTRABLE SECURITIES" shall mean the shares of Common
Stock, if any, issued to the Investors pursuant to Section 7.1 of the Purchase
Agreement.
"COMMON STOCK" shall mean the Company's Common Stock, no par value per
share.
"INVESTORS" shall mean the purchasers identified in the Purchase
Agreement and any subsequent holder of any Warrants, Registrable Securities or
Additional Registrable Securities.
"PROSPECTUS" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable Securities or
Additional Registrable Securities covered by such Registration Statement and by
all other amendments and supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such prospectus.
"REGISTER," "REGISTERED" and "REGISTRATION" refer to a registration
made by preparing and filing a registration statement or similar document in
compliance with the 1933 Act (as defined below), and the declaration or ordering
of effectiveness of such registration statement or document.
"REGISTRABLE SECURITIES" shall mean the shares of Common Stock issued
and issuable to the Investors pursuant to the Purchase Agreement (other than
additional shares of Common Stock issuable pursuant to Section 7.1 of the
Purchase Agreement) and issuable upon the exercise of the Warrants, and any
other securities issued or issuable with respect to or in exchange for
Registrable Securities.
"REGISTRATION STATEMENT" shall mean any registration statement of the
Company filed under the 1933 Act that covers the resale of any of the
Registrable Securities or Additional Registrable Securities pursuant to the
provisions of this Agreement, amendments and supplements to such Registration
Statement, including post-effective amendments, all exhibits and all material
incorporated by reference in such Registration Statement.
"SEC" means the U.S. Securities and Exchange Commission.
"1933 ACT" means the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder.
"1934 ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"WARRANTS" mean the A Warrants and B Warrants to purchase shares of
Common Stock issued to the Investors pursuant to the Purchase Agreement, the
forms of which are attached to the Purchase Agreement as Exhibits A and B.
Capitalized terms used herein but not otherwise defined shall have the
meaning ascribed thereto in the Purchase Agreement.
2. REGISTRATION.
(a) REGISTRATION STATEMENTS.
(i) REGISTRABLE SECURITIES. Promptly following the closing of
the purchase and sale of Common Stock and Warrants contemplated by the Purchase
Agreement (the "Closing Date") (but no later than thirty (30) days after the
Closing Date), the Company shall prepare and file with the SEC one Registration
Statement on Form S-3 (or, if Form S-3 is not then available to the Company, on
such form of registration statement as is then available to effect a
registration for resale of the Registrable Securities, subject to the Investors'
consent), covering the resale of the Registrable Securities in an amount equal
to the number of shares of Common Stock issued to the Investors on the Closing
Date plus the number of shares of Common Stock necessary to permit the exercise
in full of the Warrants. Such Registration Statement also shall cover, to the
extent allowable under the 1933 Act and the Rules promulgated thereunder
(including Rule 416), such indeterminate number of additional shares of Common
Stock resulting from stock splits, stock dividends or similar transactions with
respect to the Registrable Securities. No securities shall be included in the
Registration Statement without the consent of each Investor. The Registration
Statement (and each amendment or supplement thereto, and each request for
acceleration of effectiveness thereof) shall be provided in accordance with
Section 3(c) to the Investors and their counsel prior to its filing or other
submission.
(ii) ADDITIONAL REGISTRABLE SECURITIES. At any time and from time
to time upon the written demand of any Investor following the issuance of any
additional shares of Common Stock to such Investor pursuant to Section 7.1 of
the Purchase Agreement, the Company shall prepare and file with the SEC one
Registration Statement on Form S-3 (or, if Form S-3 is not then available to the
Company, on such form of registration statement as is then available to effect a
registration for resale of the Additional Registrable Securities, subject to the
Investor's consent) covering the resale of the Additional Registrable Securities
in an amount equal to the number of shares of Common Stock issued to such
Investor; PROVIDED, HOWEVER, that if such number of shares is less than 10,000
shares, then the Company may at its option, in lieu of registering such shares
hereunder, promptly redeem such shares at a redemption price equal to 110% of
the fair market value of such shares (based on the last sale price on Nasdaq on
the trading day immediately preceding the redemption date). Such Registration
Statement also shall cover, to the extent allowable under the 1933 Act and the
Rules promulgated thereunder (including
2
Rule 416), such indeterminate number of additional shares of Common Stock
resulting from stock splits, stock dividends or similar transactions with
respect to the Additional Registrable Securities. No securities shall be
included in the Registration Statement without the consent of the Investor. The
Registration Statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be provided in
accordance with Section 3(c) to the Investor and its counsel prior to its filing
or other submission.
(b) EXPENSES. The Company will pay all expenses associated with each
registration, including the Investors' reasonable expenses (including reasonable
attorneys fees) in connection with the registration but excluding discounts,
commissions, fees of underwriters, selling brokers, dealer managers or similar
securities industry professionals.
(c) EFFECTIVENESS.
(i) The Company shall use its best efforts to have each
Registration Statement declared effective as soon as practicable. If (A) the
Registration Statement covering Registrable Securities is not declared effective
by the SEC within three (3) months following the Closing Date, or the
Registration Statement covering Additional Registrable Securities is not
declared effective by the SEC within three (3) months following the demand of an
Investor relating to the Additional Registrable Securities covered thereby, or
with respect to either a Registration Statement which is subject to full review
by the SEC staff (which shall not include a "plain English" review), within four
(4) months following the Closing Date or demand, as the case may be (each, a
"Registration Date"), (B) after a Registration Statement has been declared
effective by the SEC, sales cannot be made pursuant to such Registration
Statement for any reason (including without limitation by reason of a stop
order, or the Company's failure to update the Registration Statement) but except
as excused pursuant to subparagraph (ii) below, or (C) the Common Stock
generally or the Registrable Securities (or Additional Registrable Securities
after issuance and registration) specifically are not listed or included for
quotation on the Nasdaq National Market System, the Nasdaq Small Cap Market, the
New York Stock Exchange or the American Stock Exchange, then the Company will
make pro-rata payments to each Investor as liquidated damages and not as a
penalty, in an amount equal to 2% of the aggregate amount paid by such Investor
on the Closing Date to the Company for shares of Common Stock still held by such
Investor for any month or pro rata for any portion thereof following the
Registration Date during which any of the events described in (A) or (B) or (C)
above occurs and is continuing (the "Blackout Period"), provided, however, that
in the case of the events described in (A) or (B) above with respect only to the
Additional Registrable Securities, such penalty shall equal 2% of the aggregate
market value of such Additional Registrable Securities for the duration of the
Blackout Period. Each such payment shall be due and payable within five (5) days
of the end of each month (or ending portion thereof) of the Blackout Period.
Such payments shall be in partial compensation to the Investors, and shall not
constitute the Investors' exclusive remedy for such events. The Blackout Period
shall terminate upon (x) the effectiveness of the applicable Registration
Statement in the case of (A) and (B) above; (y) listing or inclusion of the
Common Stock on the Nasdaq National Market System, the Nasdaq Small Cap Market,
the New York Stock Exchange or the American Stock Exchange in the case of (C)
above; and (z) in the case of the events described in (A) or (B) above, the
earlier termination of the Registration Period (as defined in Section 3(a)
below). The
3
amounts payable as liquidated damages pursuant to this paragraph shall be
payable, at the option of the Investors, in lawful money of the United States or
in shares of Common Stock at the Market Price (as defined in the Purchase
Agreement), and amounts payable as liquidated damages shall be paid monthly
within two (2) business days of the last day of each month following the
commencement of the Blackout Period until the termination of the Blackout
Period. Amounts payable as liquidated damages hereunder shall cease when an
Investor no longer holds Warrants or Registrable Securities, or Additional
Registrable Securities (or the right to potentially obtain Additional
Registrable Securities), as applicable.
(ii) For not more than ten (10) consecutive trading days or for
a total of not more than twenty (20) trading days in any twelve (12) month
period, the Company may delay the disclosure of material non-public information
concerning the Company, by terminating or suspending effectiveness of any
registration contemplated by this Section containing such information, the
disclosure of which at the time is not, in the good faith opinion of the
Company, in the best interests of the Company (an "Allowed Delay"); provided,
that the Company shall promptly (a) notify the Investors in writing of the
existence of (but in no event, without the prior written consent of an Investor,
shall the Company disclose to such Investor any of the facts or circumstances
regarding) material non-public information giving rise to an Allowed Delay, and
(b) advise the Investors in writing to cease all sales under the Registration
Statement until the end of the Allowed Delay. The duration of the MFN Period
provided for in the Purchase Agreement will be extended by the number of days of
any and all Blackout Periods, including any Allowed Delays.
(d) UNDERWRITTEN OFFERING. If any offering pursuant to a Registration
Statement pursuant to Section 2(a) hereof involves an underwritten offering, the
Company shall have the right to select an investment banker and manager to
administer the offering, which investment banker or manager shall be reasonably
satisfactory to the Investors.
3. COMPANY OBLIGATIONS. The Company will use its best efforts to effect
the registration of the Registrable Securities and Additional Registrable
Securities in accordance with the terms hereof, and pursuant thereto the Company
will, as expeditiously as possible:
(a) use its best efforts to cause such Registration Statement to
become effective and to remain continuously effective for a period that will
terminate upon the earlier of (i) the date on which all Registrable Securities
or Additional Registrable Securities, as the case may be, covered by such
Registration Statement, as amended from time to time, have been sold, and (ii)
the date on which all Registrable Securities or Additional Registrable
Securities, as the case may be, may be sold pursuant to Rule 144(k) (the
"Registration Period"), but in no event less than the later of the date on which
no Warrants remain outstanding and the third anniversary of the Closing Date.
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement and the Prospectus as may be necessary
to keep the Registration Statement effective for the period specified in Section
3(a) and to comply with the provisions of the 1933 Act and the 1934 Act with
respect to the distribution of all Registrable Securities and Additional
Registrable Securities; provided that, at least five (5) business days prior to
the filing of a Registration Statement or Prospectus, or any amendments or
supplements thereto, the Company will furnish to the Investors copies
4
of all documents proposed to be filed, which documents will be subject to the
comments of the Investors, which must be received within such five (5) business
day period;
(c) permit counsel designated by the Investors to review each
Registration Statement and all amendments and supplements thereto no fewer than
five (5) business days prior to their filing with the SEC and not file any
document to which such counsel reasonably objects;
(d) furnish to the Investors and their legal counsel (i) promptly
after the same is prepared and publicly distributed, filed with the SEC, or
received by the Company, one copy of any Registration Statement and any
amendment thereto, each preliminary prospectus and Prospectus and each amendment
or supplement thereto, and each letter written by or on behalf of the Company to
the SEC or the staff of the SEC, and each item of correspondence from the SEC or
the staff of the SEC, in each case relating to such Registration Statement
(other than any portion of any thereof which contains information for which the
Company has sought confidential treatment), and (ii) such number of copies of a
Prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as each Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities and
Additional Registrable Securities owned by such Investor;
(e) in the event the Company selects an underwriter for the offering,
the Company shall enter into and perform its reasonable obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
underwriter of such offering;
(f) if required by the underwriter, or if any Investor is described
in the Registration Statement as an underwriter, the Company shall furnish, on
the effective date of the Registration Statement, on the date that Registrable
Securities or Additional Registrable Securities, as applicable, are delivered to
an underwriter, if any, for sale in connection with the Registration Statement
and at periodic intervals thereafter from time to time on request, (i) an
opinion, dated as of such date, from independent legal counsel representing the
Company for purposes of such Registration Statement, in form, scope and
substance as is customarily given in an underwritten public offering, addressed
to the underwriter and the Investors and (ii) a letter, dated such date, from
the Company's independent certified public accountants in form and substance as
is customarily given by independent certified public accountants to underwriters
in an underwritten public offering, addressed to the underwriter and the
Investors;
(g) make effort to prevent the issuance of any stop order or other
suspension of effectiveness and, if such order is issued, obtain the withdrawal
of any such order at the earliest possible moment;
(h) furnish to each Investor at least five copies of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules by air mail or reputable courier within five business
days of the effective date thereof;
(i) prior to any public offering of Registrable Securities or
Additional Registrable Securities, use its reasonable best efforts to register
or qualify or cooperate with the Investors and their counsel in connection with
the registration or qualification of such Registrable Securities or Additional
5
Registrable Securities, as applicable, for offer and sale under the securities
or blue sky laws of such jurisdictions requested by the Investor and do any and
all other reasonable acts or things necessary or advisable to enable the
distribution in such jurisdictions of the Registrable Securities or Additional
Registrable Securities covered by the Registration Statement;
(j) cause all Registrable Securities or Additional Registrable
Securities covered by a Registration Statement to be listed on each securities
exchange, interdealer quotation system or other market on which similar
securities issued by the Company are then listed;
(k) immediately notify the Investors, at any time when a Prospectus
relating to the Registrable Securities or Additional Registrable Securities is
required to be delivered under the 1933 Act, upon discovery that, or upon 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 not misleading in the light of the
circumstances then existing, and at the request of any such holder, promptly
prepare and furnish to such holder 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 purchasers of such Registrable Securities or Additional
Registrable Securities, as applicable, 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 not misleading in
the light of the circumstances then existing; and
(l) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC under the 1933 Act and the 1934 Act, take such
other actions as may be reasonably necessary to facilitate the registration of
the Registrable Securities and Additional Registrable Securities, if applicable,
hereunder; and make available to its security holders, as soon as reasonably
practicable, but not later than the Availability Date (as defined below), an
earnings statement covering a period of at least twelve months, beginning after
the effective date of each Registration Statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the 1933 Act (for the purpose
of this subsection 3(l), "Availability Date" means the 45th day following the
end of the fourth fiscal quarter that includes the effective date of such
Registration Statement, except that, if such fourth fiscal quarter is the last
quarter of the Company's fiscal year, "Availability Date" means the 90th day
after the end of such fourth fiscal quarter).
4. DUE DILIGENCE REVIEW; INFORMATION. The Company shall make available,
during normal business hours, for inspection and review by the Investors,
advisors to and representatives of the Investors (who may or may not be
affiliated with the Investors and who are reasonably acceptable to the Company),
any underwriter participating in any disposition of Common Stock on behalf of
the Investors pursuant to the Registration Statement or amendments or
supplements thereto or any blue sky, NASD or other filing, all financial and
other records, all SEC Documents and other filings with the SEC, and all other
corporate documents and properties of the Company as may be reasonably necessary
for the purpose of such review, and cause the Company's officers, directors and
employees, within a reasonable time period, to supply all such information
reasonably requested by the Investors or any such representative, advisor or
underwriter in connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries reasonably made or
submitted by any of them), prior to and from time to time after the filing and
effectiveness of the Registration Statement for the sole purpose of enabling the
6
Investors and such representatives, advisors and underwriters and their
respective accountants and attorneys to conduct initial and ongoing due
diligence with respect to the Company and the accuracy of the Registration
Statement.
The Company shall not disclose material nonpublic information to the
Investors, or to advisors to or representatives of the Investors, unless prior
to disclosure of such information the Company identifies such information as
being material nonpublic information and provides the Investors, such advisors
and representatives with the opportunity to accept or refuse to accept such
material nonpublic information for review. The Company may, as a condition to
disclosing any material nonpublic information hereunder, require the Investors'
advisors and representatives to enter into a confidentiality agreement
(including an agreement with such advisors and representatives prohibiting them
from trading in Common Stock during such period of time as they are in
possession of material nonpublic information) in form reasonably satisfactory to
the Company and the Investors. Nothing herein shall require the Company to
disclose material nonpublic information to the Investors or their advisors or
representatives.
5. OBLIGATIONS OF THE INVESTORS.
(a) Each Investor shall furnish in writing to the Company such
information regarding itself, the Registrable Securities or Additional
Registrable Securities, as applicable, held by it and the intended method of
disposition of the Registrable Securities or Additional Registrable Securities,
as applicable, held by it, as shall be reasonably required to effect the
registration of such Registrable Securities or Additional Registrable
Securities, as applicable, and shall execute such documents in connection with
such registration as the Company may reasonably request. At least fifteen (15)
business days prior to the first anticipated filing date of any Registration
Statement, the Company shall notify each Investor of the information the Company
requires from such Investor if such Investor elects to have any of the
Registrable Securities or Additional Registrable Securities included in the
Registration Statement.
(b) Each Investor, by its acceptance of the Registrable Securities
and Additional Registrable Securities, if any, agrees to cooperate with the
Company as reasonably requested by the Company in connection with the
preparation and filing of a Registration Statement hereunder, unless such
Investor has notified the Company in writing of its election to exclude all of
its Registrable Securities or Additional Registrable Securities, as applicable,
from the Registration Statement.
(c) In the event the Company at an Investor's request, determines to
engage the services of an underwriter, such Investor agrees to enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and take such other
actions as are reasonably required in order to expedite or facilitate the
dispositions of the Registrable Securities or Additional Registrable Securities,
as applicable.
(d) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event rendering a Registration Statement no
longer effective, such Investor will immediately discontinue disposition of
Registrable Securities or Additional Registrable Securities pursuant to the
Registration Statement covering such Registrable Securities or Additional
Registrable
7
Securities, until the Investor's receipt of the copies of the supplemented or
amended prospectus filed with the SEC and declared effective and, if so
directed by the Company, the Investor shall deliver to the Company (at the
expense of the Company) or destroy all copies in the Investor's possession of
the prospectus covering the Registrable Securities or Additional Registrable
Securities, as applicable, current at the time of receipt of such notice.
(e) No Investor may participate in any third party underwritten
registration hereunder unless it (i) agrees to sell the Registrable Securities
or Additional Registrable Securities, as applicable, on the basis provided in
any underwriting arrangements in usual and customary form entered into by the
Company, (ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements, and (iii) agrees to pay its
pro rata share of all underwriting discounts and commissions and any expenses in
excess of those payable by the Company pursuant to the terms of this Agreement.
6. INDEMNIFICATION.
(a) INDEMNIFICATION BY COMPANY. The Company agrees to indemnify and
hold harmless, to the fullest extent permitted by law the Investors, each of
their officers, directors, partners and employees and each person who controls
the Investors (within the meaning of the 0000 Xxx) against all losses, claims,
damages, liabilities, costs (including, without limitation, reasonable
attorney's fees) and expenses imposed on such person caused by (i) any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus or any preliminary prospectus or any amendment or
supplement thereto or 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, except insofar as the same are based upon any
information furnished in writing to the Company by such Investors, expressly for
use therein, or (ii) any violation by the Company of any federal, state or
common law, rule or regulation applicable to the Company in connection with any
Registration Statement, Prospectus or any preliminary prospectus, or any
amendment or supplement thereto, and shall reimburse in accordance with
subparagraph (c) below, each of the foregoing persons for any legal and any
other expenses reasonably incurred in connection with investigating or defending
any such claims. The foregoing is subject to the condition that, insofar as the
foregoing indemnities relate to any untrue statement, alleged untrue statement,
omission or alleged omission made in any preliminary prospectus or Prospectus
that is eliminated or remedied in any Prospectus or amendment or supplement
thereto, the above indemnity obligations of the Company shall not inure to the
benefit of any indemnified party if a copy of such corrected Prospectus or
amendment or supplement thereto had been provided to such indemnified party and
was not sent or given by such indemnified party at or prior to the time such
action was required of such indemnified party by the 1933 Act and if delivery of
such Prospectus or amendment or supplement thereto would have eliminated (or
been a sufficient defense to) any liability of such indemnified party with
respect to such statement or omission. Indemnity under this Section 5(a) shall
remain in full force and effect regardless of any investigation made by or on
behalf of any indemnified party and shall survive the permitted transfer of the
Registrable Securities and Additional Registrable Securities.
8
(b) INDEMNIFICATION BY HOLDER. In connection with any registration
pursuant to the terms of this Agreement, each Investor will furnish to the
Company in writing such information as the Company reasonably requests
concerning the holders of Registrable Securities and Additional Registrable
Securities or the proposed manner of distribution for use in connection with any
Registration Statement or Prospectus and agrees, severally but not jointly, to
indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its directors, officers, employees, stockholders and each person who
controls the Company (within the meaning of the 0000 Xxx) against any losses,
claims, damages, liabilities and expense (including reasonable attorney's fees)
resulting from any untrue statement of a material fact or any omission of a
material fact required to be stated in the Registration Statement or Prospectus
or preliminary prospectus or amendment or supplement thereto or necessary to
make the statements therein not misleading, to the extent, but only to the
extent that such untrue statement or omission is contained in any information
furnished in writing by such Investor to the Company specifically for inclusion
in such Registration Statement or Prospectus or amendment or supplement thereto
and that such information was substantially relied upon by the Company in
preparation of the Registration Statement or Prospectus or any amendment or
supplement thereto. In no event shall the liability of an Investor be greater in
amount than the dollar amount of the proceeds (net of all expense paid by such
Investor and the amount of any damages such holder has otherwise been required
to pay by reason of such untrue statement or omission) received by such Investor
upon the sale of the Registrable Securities or Additional Registrable Securities
included in the Registration Statement giving rise to such indemnification
obligation.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any person entitled to
indemnification hereunder shall (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such person unless (a) the indemnifying party
has agreed to pay such fees or expenses, or (b) the indemnifying party shall
have failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such person or (c) in the reasonable judgment of any such
person, based upon written advice of its counsel, a conflict of interest exists
between such person and the indemnifying party with respect to such claims (in
which case, if the person notifies the indemnifying party in writing that such
person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such person); and provided, further, that the failure of
any indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations hereunder, except to the extent that such
failure to give notice shall materially adversely affect the indemnifying party
in the defense of any such claim or litigation. It is understood that the
indemnifying party shall not, in connection with any proceeding in the same
jurisdiction, be liable for fees or expenses of more than one separate firm of
attorneys at any time for all such indemnified parties. No indemnifying party
will, except with the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation.
9
(d) CONTRIBUTION. If for any reason the indemnification provided for
in the preceding paragraphs (a) and (b) is unavailable to an indemnified party
or insufficient to hold it harmless, other than as expressly specified therein,
then the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations. No person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the 1933 Act shall be entitled to
contribution from any person not guilty of such fraudulent misrepresentation. In
no event shall the contribution obligation of a holder of Registrable Securities
or Additional Registrable Securities be greater in amount than the dollar amount
of the proceeds (net of all expenses paid by such holder and the amount of any
damages such holder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission) received by it upon
the sale of the Registrable Securities or Additional Registrable Securities
giving rise to such contribution obligation.
7. MISCELLANEOUS.
(a) AMENDMENTS AND WAIVERS. This Agreement may be amended only by a
writing signed by the parties hereto. The Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it,
only if the Company shall have obtained the written consent to such amendment,
action or omission to act, of each Investor.
(b) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made as set forth in Section 9.4 of the Purchase
Agreement.
(c) ASSIGNMENTS AND TRANSFERS BY INVESTORS. This Agreement and all
the rights and obligations of the Investors hereunder may be assigned or
transferred to any transferee or assignee of any Warrants, Registrable
Securities or Additional Registrable Securities.
(d) ASSIGNMENTS AND TRANSFERS BY THE COMPANY. This Agreement may not
be assigned by the Company without the prior written consent of each Investor,
except that without the prior written consent of the Investors, but after notice
duly given, the Company shall assign its rights and delegate its duties
hereunder to any successor-in-interest corporation, and such
successor-in-interest shall assume such rights and duties, in the event of a
merger or consolidation of the Company with or into another corporation or the
sale of all or substantially all of the Company's assets.
(e) BENEFITS OF THE AGREEMENT. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
(f) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10
(g) TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(h) SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms to the fullest extent permitted by law.
(i) FURTHER ASSURANCES. The parties shall execute and deliver all
such further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.
(j) ENTIRE AGREEMENT. This Agreement, together with the Purchase
Agreement and Warrants, is intended by the parties as a final expression of
their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. This Agreement, together with the Purchase Agreement
and Warrants, supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
(k) APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York without regard
to principles of conflicts of law.
[SIGNATURE PAGE FOLLOWS]
11
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
THE COMPANY:
ALPNET, INC.
By:
---------------------------
Name:
Title:
THE INVESTORS:
THE TAIL WIND FUND, LTD.
By:
---------------------------
Name:
Title:
12
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
THE COMPANY:
ALPNET, INC.
By:
---------------------------
Name:
Title:
THE INVESTORS:
RESONANCE LIMITED
By:
---------------------------
Name:
Title:
12
