WARRANT AGREEMENT
WARRANT AGREEMENT dated as of May ____, 1998, between Eat At Joe's, Ltd., a
Delaware corporation (the "Company"), and X.X. Xxxxx Securities, Inc., a Georgia
corporation (hereinafter referred to as "X.X. Xxxxx").
W I T N E S S E T H:
WHEREAS, X.X. Xxxxx has assisted the Company in connection with the
Company's offering (the "Offering") of up to $3,000,000 in principal amount of
Series A and Series B Preferred Stock (the "Preferred Stock") for an aggregate
purchase price $3,000,000; and
WHEREAS, the Warrants issued pursuant to this Agreement are being issued by
the Company to X.X. Xxxxx and/or its designees, in consideration for, and as
part of the compensation to be paid in connection with, the services of X.X.
Xxxxx in connection with the Offering;
NOW, THEREFORE, in consideration of the premises, the agreements herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant.
X.X. Xxxxx and/or its designees are hereby granted the right to purchase,
at any time from the date of issuance of the aforementioned Preferred Stock
until 5:00 P.M., Eastern Standard Time, on May ____, 2003 (the "Warrant Exercise
Term"), ______________ Shares at an exercise price (subject to adjustment as
provided in Article 7 hereof) of 100% of the Closing Bid Price (as defined in
the Company's Certificate of Designations, Preferences and Rights filed by the
Company in connection with the Offering) of the Company's Common Stock, par
value $0.001 per share on the last business day immediately prior to the date of
closing of the Offering, which is equal to $____________ per share (the "Initial
Exercise Price").
2. Warrant Certificates.
The warrant certificates (the "Warrant Certificates) delivered and to be
delivered pursuant to this Agreement shall be in the form set forth as Exhibit
A, attached hereto and made a part hereof, with such appropriate insertions,
omissions, substitutions and other variations as required or permitted by this
Agreement.
3. Exercise of Warrants.
3.1 Cash Exercise. The Exercise Price may be paid in cash or by check to
the order of ------------- the Company, or any combination of cash or check,
subject to adjustment as provided in Article 7 hereof. Upon surrender of the
Warrant Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price (as hereinafter defined) for the
Shares purchased, at the Company's executive offices currently located at 000
Xxxxx Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxx Xxxx 00000, the registered holder
of a Warrant Certificate ("Holder" or "Holders") shall be entitled to receive a
certificate or certificates for the Shares so purchased. The purchase rights
represented by each Warrant Certificate are exercisable at the option of the
Holder hereof, in whole or in part (but not as to fractional shares of the
Common Stock). In the case of the purchase of less than all the Shares
purchasable under any Warrant
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Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Shares purchasable thereunder.
3.2 Cashless Exercise. At any time during the Warrant Exercise Term, the
Holder may, at its option, exchange this Warrant, in whole or in part (a
"Warrant Exchange"), into the number of Shares determined in accordance with
this Section 3.2, by surrendering this Warrant at the principal office of the
company or at the office of its transfer agent, accompanied by a notice stating
such Holder's intent to effect such exchange, the number of Shares to be
exchanged and the date on which the Holder requests that such Warrant Exchange
occur (the "Notice of Exchange"). The Warrant Exchange shall take place on the
date specified in the Notice of Exchange or, if later, the date the Notice of
Exchange is received by the Company (the "Exchange Date"). Certificates for the
Shares issuable upon such Warrant Exchange and, if applicable, a new warrant of
like tenor evidencing the balance of the Shares remaining subject to this
Warrant, shall be issued as of the Exchange Date and delivered to the Holder
within seven (7) business days following the Exchange Date. In connection with
any Warrant Exchange, this Warrant shall represent the right to subscribe for
and acquire the number of Shares (rounded to the next highest integer) equal to
(i) the number of Shares specified by the Holder in its Notice of Exchange (the
"Total Number") less (ii) the number of Shares equal to the quotient obtained by
dividing (A) the product of the Total Number and the then existing Exercise
Price by (B) the current market value of a share of Common Stock.
4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates for the
Shares shall be made forthwith (and in any event within five business days
thereafter) without charge to the Holder thereof including, without limitation,
any tax which may be payable in respect of the issuance thereof, and such
certificates shall be issued in the name of, or in such names as may be directed
by, the Holder thereof; provided, however, that the Company shall not be
required to pay any tax which may be payable in respect of any transfer involved
in the issuance and delivery of any such certificates in a name other than that
of the Holder and the Company shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares shall
be executed on behalf of the Company by the manual or facsimile signature of the
present or any future Chairman or Vice Chairman of the Board of Directors, Chief
Executive officer or President or Vice President of the Company under its
corporate seal reproduced thereon, attested to by the manual or facsimile
signature of the present or any future Secretary or Assistant Secretary of the
Company. Warrant Certificates shall be dated the date of execution by the
Company upon initial issuance, division, exchange, substitution or transfer.
The Warrant Certificates and, upon exercise of the Warrants, in part or in
whole, certificates representing the Shares shall bear a legend substantially
similar to the following:
The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), and may not be
offered or sold except (i) pursuant to an effective registration statement
under the Act, (ii) to the extent applicable, pursuant to Rule 144 under
the Act (or any similar rule under such Act relating to the disposition of
securities), or (iii) upon the delivery by the holder to the Company of an
opinion of counsel, reasonably
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satisfactory to counsel to the issuer, stating that an exemption from
registration under such Act is available.
5. Price.
5.1 Adjusted Exercise Price. The adjusted Exercise Price shall be the price
which shall result from time to time from any and all adjustments of the Initial
Exercise Price in accordance with the provisions of Article 7 hereof.
5.2 Exercise Price. The term "Exercise Price" herein shall mean the Initial
Exercise Price or the adjusted Exercise Price, depending upon the context.
6. Registration Rights.
6.1 Registration Under the Securities Act of 1993.
The Warrants and the Shares have not been registered for purposes of public
distribution under the Securities Act of 1933, as amended ("the Act").
6.2 Registrable Securities. As used herein the term "Registrable Security"
means each of the Warrants, the Shares and any shares of Common Stock issued
upon any stock split or stock dividend in respect of such Shares; provided,
however, that with respect to any particular Registrable Security, such security
shall cease to be a Registrable Security when, as of the date of determination,
(i) it has been effectively registered under the Securities Act and disposed of
pursuant thereto, (ii) registration under the Securities Act is no longer
required for the immediate public distribution of such security or (iii) it has
ceased to be outstanding. The term "Registrable Securities" means any and/or all
of the securities falling within the foregoing definition of a "Registrable
Security." In the event of any merger, reorganization, consolidation,
recapitalization or other change in corporate structure affecting the Common
Stock, such adjustment shall be made in the definition of "Registrable Security"
as is appropriate in order to prevent any dilution or enlargement of the rights
granted pursuant to this Article 6.
6.3 Piggyback Registration. If, at any time during the five years following
the date of this Agreement, the Company proposes to prepare and file any
registration statement or post-effective amendments thereto covering equity or
debt securities of the Company, or any such securities of the Company held by
its shareholders (in any such case, other than in connection with a merger,
acquisition or pursuant to Form S-8 or successor form), (for purposes of this
Article 6, collectively, a "Registration Statement"), it will give written
notice of its intention to do so by registered mail ("Notice"), at ten (10)
business days prior to the filing of each such Registration Statement, to all
holders of the Registrable Securities. Upon the written request of such a holder
(a "Requesting Holder"), made within ten (10) business days after receipt of the
Notice, that the Company include any of the Requesting Holder's Registrable
Securities in the proposed Registration Statement, the Company shall, as to each
such Requesting Holder, use its best efforts to effect the registration under
the Securities Act of the Registrable Securities which it has been so requested
to register ("Piggyback Registration"), at the Company's sole cost and expense
and at no cost or expense to the Requesting Holders; Notwithstanding the
provisions of this Section 6.3, the Company shall have the right at any time
after it shall have given written notice pursuant to this Section 6.3
(irrespective of whether any written request for inclusion of such securities
shall have already been made) to elect not to file any such proposed
Registration Statement, or to withdraw the same after the filing but prior to
the effective date thereof.
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6.4 Demand Registration.
(a) At any time, commencing ninety (90) days from the date of this
Agreement and during the Warrant Exercise Term, any "Majority Holder" (as such
term is defined in Section 6.4(d) below) of the Registrable Securities shall
have the right (which right is in addition to the piggyback registration rights
provided for under Section 6.3 hereof), exercisable by written notice to the
Company (the "Demand Registration Request"), to have the Company prepare and
file with the Securities and Exchange Commission (the "Commission"), on one
occasion, at the sole expense of the Company, a Registration Statement and such
other documents, including a prospectus, as may be necessary (in the opinion of
both counsel for the Company and counsel for such Majority Holder), in order to
comply with the provisions of the Act, so as to permit a public offering and
sale of the Registrable Securities by the holders thereof, for nine (9)
consecutive months.
(b) The Company covenants and agrees to give written notice of any Demand
Registration Request to all holders of the Registrable Securities within ten
(10) days from the date of the Company's receipt of any such Demand Registration
Request. After receiving notice from the Company as provided in this Section
6.4(b), holders of Registrable Securities may request the Company to include
their Registrable Securities in the Registration Statement to be filed pursuant
to Section 6.4(a) hereof by notifying the Company of their decision to include
such securities within twenty (20) days of their receipt of the Company's
notice.
(c) In addition to the registration rights provided for under Section 6.3
and subsection (a) of this Section 6.4, at any time during the Warrant Exercise
Term, any Majority Holder (as defined below in Section 6.4(d)) of Registrable
Securities shall have the right, exercisable by written request to the Company,
to have the Company prepare and file with the Commission, on one occasion in
respect of all holders of Registrable Securities, a Registration Statement so as
to permit a public offering and sale of such Registrable Securities for nine (9)
consecutive months, provided, however, that all costs incident thereto shall be
at the expense of the holders of the Registrable Securities included in such
Registration Statement. If a Majority Holder shall give notice to the Company at
any time of its or their desire to exercise the registration right granted
pursuant to this Section 6.4(c), then within ten (10) days after the Company's
receipt of such notice, the Company shall give notice to the other holders of
Registrable Securities, advising them that the Company is proceeding with such
registration and offering to include therein the Registrable Securities of such
holders, provided they furnish the Company with such appropriate information in
connection therewith as the Company shall reasonably request in writing.
(d) The term "Majority Holder" as used in this Section 6.4 shall mean any
holder or any combination of holders of Registrable Securities, if included in
such holders, Registrable Securities are that aggregate number of Shares
(including Shares already issued and Shares issuable pursuant to the exercise of
outstanding Warrants) as would constitute a majority of the aggregate number of
Shares (including Shares already issued and Shares issuable pursuant to the
exercise of outstanding Warrants) included in all of the Registrable Securities.
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6.5 Covenants of the Company With Respect to Registration. The Company
covenants and agrees as follows:
(a) In connection with any registration under Section 6.4 hereof, the
Company shall file the Registration Statement as expeditiously as possible, but
in no event later than twenty (20) business days following receipt of any demand
therefor, shall use its best efforts to have any such Registration Statements
declared effective at the earliest possible time, and shall furnish each holder
of Registrable Securities such number of prospectuses as shall reasonably be
requested.
(b) The Company shall pay all costs, fees and expenses (excluding fees of
holders for their counsel, transfer taxes and underwriting discounts or
commissions) in connection with all Registration Statements filed pursuant to
Sections 6.3 and 6.4(a) hereof including, without limitation, the Company's
legal and accounting fees, printing expenses, and blue sky fees and expenses.
The holders of Registrable Securities included in any Registration Statement
filed pursuant to Section 6.4(c) hereof will pay all costs, fees and expenses in
connection with such registration.
(c) The Company will take all necessary action which may be required in
qualifying or registering the Registrable Securities included in a Registration
Statement for offering and sale under the securities or blue sky laws of such
states as are requested by the holders of such securities.
(d) The Company shall indemnify any holder of the Registrable Securities to
be sold pursuant to any Registration Statement and any underwriter or person
deemed to be an underwriter under the Act and each person, if any, who controls
such holder or underwriter or person deemed to be an underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act
of 1934, as amended ("Exchange Act"), against all loss, claim, damage, expense
or liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which any of them may
become subject under the Act, the Exchange Act or otherwise, arising from such
Registration Statement to the same extent and with the same effect as the
provisions pursuant to which the Company has agreed to indemnify the purchasers
of the Company's Preferred Stock contained in the Registration Rights Agreement
dated of even date herewith.
(e) Any holder of Registrable Securities to be sold pursuant to a
Registration Statement, and its successors and assigns, shall severally, and not
jointly, indemnify, the Company, its officers and directors and each person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against all loss, claim, damage or expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the Exchange Act or otherwise, arising from information
furnished in writing by or on behalf of such holder, or its successors or
assigns, for specific inclusion in such Registration Statement to the same
extent and with the same effect as the provisions pursuant to which purchasers
of the Company's Preferred Stock have agreed to indemnify the Company contained
in the Registration Rights Agreement dated of even date herewith.
(f) Nothing contained in this Agreement shall be construed as requiring any
Holder to exercise his Warrants prior to the initial filing of any Registration
Statement or the effectiveness thereof.
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(g) If the Company shall fail to comply with the provisions of this Article
6, the Company shall, in addition to any other equitable or other relief
available to the holders of Registrable Securities, be liable for any or all
incidental, special and consequential damages sustained by the holders of
Registrable Securities, requesting registration of their Registrable Securities.
(h) Except as otherwise provided to the contrary herein, the Company shall
not permit the inclusion of any securities other than the Registrable Securities
to be included in any Registration Statement filed pursuant to Section 6.4
hereof, or permit any other registration statement to be or remain effective
during the effectiveness of a Registration Statement filed pursuant to Section
6.4 hereof, without the prior written consent of the Majority Holders, which
consent shall not be unreasonably withheld.
(i) The Company shall deliver promptly to each holder of Registrable
Securities participating in the offering requesting the correspondence and
memoranda described in this Section 6.5(i) and to the managing underwriter, if
any, copies of all correspondence between the Commission and the Company, its
counsel or auditors and all memoranda relating to discussions with the
Commission or its staff with respect to the Registration Statement and permit
each holder of Registrable Securities and underwriters to do such investigation,
upon reasonable advance notice, with respect to information contained in or
omitted from the Registration Statement as it deems reasonably necessary to
comply with applicable securities laws or rules of the National Association of
Securities Dealers, Inc. Such investigation shall include access to books,
records and properties and opportunities to discuss the business of the Company
with its officers and independent auditors, all to such reasonable extent and at
such reasonable times and as often as any such holder of Registrable Securities
or underwriter shall reasonably request.
(j) If the Company shall enter into an underwriting agreement with the
managing underwriter selected for such underwriting, such agreement shall be
satisfactory in form and substance to the Company, each holder of Registrable
Securities and such managing underwriter, and shall contain such
representations, warranties and covenants by the Company and such other terms as
are customarily contained in agreements of that type used by the managing
underwriter. The holders of Registrable Securities shall be parties to any
underwriting agreement relating to an underwritten sale of their Registrable
Securities and may, at their option, require that any or all the
representations, warranties and covenants of the Company to or for the benefit
of such underwriter shall also be made to and for the benefit of such holders of
Registrable Securities. Such holders of Registrable Securities shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriter except as they may relate to such holders of
Registrable Securities and their intended methods of distribution.
7. Adjustments of Exercise Price and Number of Shares.
7.1 Computation of Adjusted Price. Except as hereinafter provided, in case
the Company shall at any time after the date hereof issue or sell any shares of
Common Stock (other than the issuances or sales referred to in Section 7.6
hereof), including shares held in the Company's treasury and shares of Common
Stock issued upon the exercise of any options, rights or warrants to subscribe
for shares of Common Stock (other than the issuances or sales of Common Stock
pursuant to rights to subscribe for such Common Stock distributed to all the
shareholders of the Company and Holders of Warrants pursuant to Section 7.6
hereof) and shares of Common Stock issued upon the direct or indirect conversion
or exchange of securities for shares of Common Stock, for a consideration per
share less than the lesser of either the Exercise Price in effect immediately
prior to the issuance or sale of such shares or the "Market Price" (as defined
in Section 7.1(vi) hereof) per share of Common Stock or without consideration,
then forthwith upon
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such issuance or sale, the Exercise Price shall (until another such issuance or
sale) be reduced to the price (calculated to the nearest full cent) equal to the
price determined by multiplying the Exercise Price in effect immediately prior
to such issuance or sale by a fraction, the numerator of which shall be the sum
of the number of shares of Common Stock outstanding immediately prior to such
issuance or sale and the number of shares of Common Stock which the amount of
all consideration, if any, received by the Company upon such issuance or sale
would purchase at the Market Price, and the denominator of which shall be the
number of shares of Common Stock outstanding immediately after such issuance or
sale.
For the purposes of any computation to be made in accordance with this
Section 7.1, the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common Stock for a
consideration part or all of which shall be cash, the amount of the cash
consideration therefor shall be deemed to be the amount of cash received by the
Company for such shares (or, if shares of Common Stock are offered by the
Company for subscription, the subscription price, or, if such securities shall
be sold to underwriters or dealers for public offering without a subscription
offering, the initial public offering price) before deducting therefrom any
compensation paid or discount allowed in the sale, underwriting or purchase
thereof by underwriters or dealers or others performing similar services, or any
expenses incurred in connection therewith.
(ii) In case of the issuance or sale (otherwise than as a dividend or other
distribution on any stock of the Company) of shares of Common Stock for a
consideration part or all of which shall be other than cash, the amount of the
consideration therefor other than cash shall be deemed to be the value of such
consideration as determined in good faith by the Board of Directors of the
Company.
(iii) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been issued
immediately after the opening of business on the day following the record date
for the determination of shareholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.
(iv) The reclassification of securities of the Company other than shares of
Common Stock into securities including shares of Common Stock shall be deemed to
involve the issuance of such shares of Common Stock for a consideration other
than cash immediately prior to the close of business on the date fixed for the
determination of security holders entitled to receive such shares, and the value
of the consideration allocable to such shares of Common Stock shall be
determined as provided in subsection (ii) of this Section 7.1.
(v) The number of shares of Common Stock at any one time outstanding shall
include the aggregate number of shares issued or issuable upon the exercise of
options, rights, warrants and upon the conversion or exchange of convertible or
exchangeable securities.
(vi) As used herein, the phrase "Market Price, at any date shall be deemed
to be the last reported sale price, or, in case no such reported sale takes
place on such day, the average of the last reported sale prices for the last
three (3) trading days, in either case as officially reported by the principal
securities exchange on which the Common Stock is listed or admitted to trading,
if the Common Stock is not listed or admitted to trading on any national
securities exchange, the closing bid price as furnished by the National
Association of Securities Dealers, Inc. through NASDAQ or similar
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organization if NASDAQ is no longer reporting such information, or if the Common
Stock is not quoted on NASDAQ, as determined in good faith by resolution of the
Board of Directors of the Company, based on the best information available to it
for the two (2) days immediately preceding such issuance or sale and the day of
such issuance or sale.
7.2 Options, Rights, Warrants and Convertible and Exchangeable Securities.
Except in the case of the Company issuing rights to subscribe for shares of
Common Stock distributed to all the shareholders of the Company and Holders of
Warrants pursuant to Section 7.8 hereof, if the Company shall at any time after
the date hereof issue options, rights or warrants to subscribe for shares of
Common Stock, or issue any securities convertible into or exchangeable for
shares of Common Stock, (i) for a consideration per share less than (a) the
Exercise Price in effect immediately prior to the issuance of such options,
rights or warrants, or such convertible or exchangeable securities, or (b) the
Market Price, or (ii) without consideration, the Exercise Price in effect
immediately prior to the issuance of such options, rights or warrants, or such
convertible or exchangeable securities, as the case may be, shall be reduced to
a price determined by making a computation in accordance with the provisions of
Section 7.1 hereof, provided that:
(a) The aggregate maximum number of shares of Common Stock, as the case may
be, issuable under all the outstanding options, rights or warrants shall be
deemed to be issued and outstanding at the time all the outstanding options,
rights or warrants were issued, and for a consideration equal to the minimum
purchase price per share provided for in the options, rights or warrants at the
time of issuance, plus the consideration (determined in the same manner as
consideration received on the issue or sale of shares in accordance with the
terms of the Warrants), if any, received by the Company for the options, rights
or warrants, and if no minimum price is provided in the options, rights or
warrants, then the consideration shall be equal to zero; provided, however, that
upon the expiration or other termination of the options, rights or warrants, if
any thereof shall not have been exercised, the number of shares of Common Stock
deemed to be issued and outstanding pursuant to this subsection (a) (and for the
purposes of subsection (v) of Section 7.1 hereof) shall be reduced by such
number of shares as to which options, warrants and/or rights shall have expired
or terminated unexercised, and such number of shares shall no longer be deemed
to be issued and outstanding, and the Exercise Price then in effect shall
forthwith be readjusted and thereafter be the price which it would have been had
adjustment been made on the basis of the issuance only of shares actually issued
or issuable upon the exercise of those options, rights or warrants as to which
the exercise rights shall not have expired or terminated unexercised.
(b) The aggregate maximum number of shares of Common Stock issuable upon
conversion or exchange of any convertible or exchangeable securities shall be
deemed to be issued and outstanding at the time of issuance of such securities,
and for a consideration equal to the consideration (determined in the same
manner as consideration received on the issue or sale of shares of Common Stock
in accordance with the terms of the Warrants) received by the Company for such
securities, plus the minimum consideration, if any, receivable by the Company
upon the conversion or exchange thereof; provided, however, that upon the
termination of the right to convert or exchange such convertible or exchangeable
securities (whether by reason of redemption or otherwise), the number of shares
deemed to be issued and outstanding pursuant to this subsection (b) (and for the
purpose of subsection (v) of Section 7.1 hereof) shall be reduced by such number
of shares as to which the conversion or exchange rights shall have expired or
terminated unexercised, and such number of shares shall no longer be deemed to
be issued and outstanding and the Exercise Price then in effect shall forthwith
be readjusted and thereafter be the price which it would have been had
adjustment been made on the basis of the issuance only of the shares actually
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issued or issuable upon the conversion or exchange of those convertible or
exchangeable securities as to which the conversion or exchange rights shall not
have expired or terminated unexercised.
(c) If any change shall occur in the price per share provided for in any of
the options, rights or warrants referred to in subsection (a) of this Section
7.2, or in the price per share at which the securities referred to in subsection
(b) of this Section 7.2 are convertible or exchangeable, the options, rights or
warrants or conversion or exchange rights, as the case may be, shall be deemed
to have expired or terminated on the date when such price change became
effective in respect of shares not theretofore issued pursuant to the exercise
or conversion or exchange thereof, and the Company shall be deemed to have
issued upon such date new options, rights or warrants or convertible or
exchangeable securities at the new price in respect of the number of shares
issuable upon the exercise of such options, rights or warrants or the conversion
or exchange of such convertible or exchangeable securities.
7.3 Subdivision and Combination. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
7.4 Adjustment in Number of Shares. Upon each adjustment of the Exercise
Price pursuant to the provisions of this Article 7, the number of Shares
issuable upon the exercise of each Warrant shall be adjusted to the nearest full
Share by multiplying a number equal to the Exercise Price in effect immediately
prior to such adjustment by the number of Shares issuable upon exercise of the
Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
7.5 Reclassification, Consolidation, Merger, etc. In case of any
reclassification or change of the outstanding shares of Common Stock (other than
a change in par value to no par value, or from no par value to par value, or as
a result of a subdivision or combination), or in the case of any consolidation
of the Company with, or merger of the Company into, another corporation (other
than a consolidation or merger in which the Company is the surviving corporation
and which does not result in any reclassification or change of the outstanding
shares of Common Stock, except a change as a result of a subdivision or
combination of such shares or a change in par value, as aforesaid), or in the
case of a sale or conveyance to another corporation of the property of the
Company as an entirety, the Holders shall thereafter have the right to purchase
the kind and number of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance as if the Holders were the owners of the shares of Common Stock
underlying the Warrants immediately prior to any such events at a price equal to
the product of (x) the number of shares issuable upon exercise of the Warrants
and (y) the Exercise Price in effect immediately prior to the record date for
such reclassification, change, consolidation, merger, sale or conveyance as if
such Holders had exercised the Warrants.
7.6 No Adjustment of Exercise Price in Certain Cases. No adjustment of the
Exercise Price shall be made:
(a) Upon the issuance or sale of shares of Common Stock upon the
exercise of the Warrants; or
(b) Upon (i) the issuance of options pursuant to the Company's
employee stock option plan in effect on the date hereof or the issuance or
sale by the Company of any shares of Common Stock pursuant to the exercise
of any such options, or (ii) the issuance or sale
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by the Company of any shares of Common Stock pursuant to the exercise of
any options or warrants previously issued and outstanding on the date
hereof; or
(c) Upon the issuance of shares of Common Stock pursuant to
contractual obligations existing on the date hereof; or
(d) If the amount of said adjustment shall be less than 2 cents
(2(cent)) per Share, provided, however, that in such case any adjustment
that would otherwise be required then to be made shall be carried forward
and shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward, shall
amount to at least 2 cents (2(cent)) per Share.
7.7 Dividends and Other Distributions with Respect to Outstanding
Securities. In the event that the Company shall at any time prior to the
exercise of all Warrants declare a dividend (other than a dividend consisting
solely of shares of Common Stock or a cash dividend or distribution payable out
of current or retained earnings) or otherwise distribute to its shareholders any
monies, assets, property, rights, evidences of indebtedness, securities (other
than shares of Common Stock), whether issued by the Company or by another person
or entity, or any other thing of value, the Holder or Holders of the unexercised
Warrants shall thereafter be entitled, in addition to the shares of Common Stock
or other securities receivable upon the exercise thereof, to receive, upon the
exercise of such Warrants, the same monies, property, assets, rights, evidences
of indebtedness, securities or any other thing of value that they would have
been entitled to receive at the time of such dividend or distribution. At the
time of any such dividend or distribution, the Company shall make appropriate
reserves to ensure the timely performance of the provisions of this Subsection
7.7.
7.8 Subscription Rights for Shares of Common Stock or Other Securities. In
the case the Company or an affiliate of the Company shall at any time after the
date hereof and prior to the exercise of all the Warrants issue any rights to
subscribe for shares of Common Stock or any other securities of the Company or
of such affiliate to all the shareholders of the Company, the Holders of the
unexercised Warrants shall be entitled, in addition to the shares of Common
Stock or other securities receivable upon the exercise of the Warrants, to
receive such rights at the time such rights are distributed to the other
shareholders of the Company.
8. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the
surrender hereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of like tenor and date representing
in the aggregate the right to purchase the same number of Shares in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
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9. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of shares of Common Stock and shall not be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock.
10. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants, such number of shares of Common Stock as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock issuable upon such exercise shall be duly and validly issued,
fully paid, nonassessable and not subject to the preemptive rights of any
shareholder. As long as the Warrants shall be outstanding, the Company shall use
its best efforts to cause all shares of Common Stock issuable upon the exercise
of the Warrants to be listed on or quoted on the electronic bulletin board, by
NASDAQ or listed on such national securities exchanges as requested by the
Placement Agent.
11. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring upon
the Holder or Holders the right to vote or to consent or to receive notice as a
shareholder in respect of any meetings of shareholders for the election of
directors or any other matter, or as having any rights whatsoever as a
shareholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on
the books of the Company; or
(b) the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible
into or exchangeable for shares of capital stock of the Company, or any
option, right or warrant to subscribe therefor; or
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall
be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, options or warrants, or entitled
to vote on such proposed dissolution, liquidation, winding up or sale. Such
notice shall specify such record date or the date of closing the transfer books,
as the case may be. Failure to give such notice or any defect therein shall not
affect the validity of
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any action taken in connection with the declaration or payment of any such
dividend or distribution, or the issuance of any convertible or exchangeable
securities or subscription rights, options or warrants, or any proposed
dissolution, liquidation, winding up or sale.
12. Notices.
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly made when delivered, or mailed
by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the address of such
Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 of this
Agreement or to such other address as the Company may designate by notice
to the Holders.
13. Supplements and Amendments.
The Company and the Placement Agent may from time to time supplement or
amend this Agreement without the approval of any Holders of Warrant Certificates
in order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any provisions herein, or to
make any other provisions in regard to matters or questions arising hereunder
which the Company and the Placement Agent may deem necessary or desirable and
which the Company and the Placement Agent deem not to adversely affect the
interests of the Holders of Warrant Certificates.
14. Successors.
All the covenants and provisions of this Agreement by or for the benefit of
the Company and the Holders inure to the benefit of their respective successors
and assigns hereunder.
15. Termination.
This Agreement shall terminate at the close of business on May _____, 2003.
Notwithstanding the foregoing, this Agreement will terminate on any earlier date
when all Warrants have been exercised and all the Shares issuable upon exercise
of the Warrants have been resold to the public; provided, however, that the
provisions of Article 6 shall survive such termination until the close of
business on May _____, 2003.
16. Governing Law.
This Agreement and each Warrant Certificate hereunder shall be governed by
and interpreted in accordance with the laws of the State of Delaware without
regard to the principles of conflict of laws. Any dispute or controversy between
the parties arising in connection with this Agreement or the subject matter
contemplated by this Agreement shall be resolved by arbitration before a
three-member panel of the American Arbitration Association in accordance with
the commercial arbitration rules of said forum and the Federal Arbitration Act,
9 U.S.C. 1 et seq., with the resulting award being final and conclusive. Said
arbitrators shall be empowered to award all forms of relief and damages claimed,
including, but not limited to, attorney's fees, expenses of litigation and
arbitration, exemplary damages, and prejudgment interest. The
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parties further agree that any arbitration action between them shall be heard in
Atlanta, Georgia, and expressly consent to the jurisdiction and venue of the
Superior Court of Xxxxxx County, Georgia, and the United States District Court
for the Northern District of Georgia, Atlanta Division for the adjudication of
any civil action asserted pursuant to this Paragraph.
17. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Placement Agent and any other
registered holder or holders of the Warrant Certificates, Warrants or the Shares
any legal or equitable right, remedy or claim under this Agreement; and this
Agreement shall be for the sole and exclusive benefit of the Company and the
Placement Agent and any other holder or holders of the Warrant Certificates,
Warrants or the Shares.
18. Counterparts.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and such
counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
EAT AT JOE'S LTD.
By:______________________________________
Name: Xxxxxx Xxxxx
Title: Chairman of the Board, Chief
Executive Officer, and Chief
Financial Officer
Attest: ___________________________
Name: ___________________________
Title: ___________________________
X.X. XXXXX SECURITIES, INC.
By:______________________________________
Name:
Title:
Attest: ___________________________
Name: ___________________________
Title: ___________________________
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EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE,
PURSUANT TO RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO
THE COMPANY OF AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
ISSUER, STATING THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., EASTERN STANDARD TIME, May ____, 2003
No. __ _________ Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that X.X. Xxxxx Securities, Inc. ("X.X.
Xxxxx") or registered assigns, is the registered holder of _______________
Warrants to purchase, at any time from May ____, 1998, until 5:00 P.M. Eastern
Standard Time on May ____, 2003 ("Expiration Date"), up to ____________ shares
("Shares") of fully-paid and non-assessable common stock, no par value ("Common
Stock"), of Eat At Joe's Ltd., a Delaware corporation (the "Company"), at the
Initial Exercise Price, subject to adjustment in certain events (the "Exercise
Price"), of $_______ per Share upon surrender of this Warrant Certificate and
payment of the Exercise Price at an office or agency of the Company, but subject
to the conditions set forth herein and in the warrant agreement dated as of May
____, 1998, between the Company and X.X. Xxxxx (the "Warrant Agreement").
Payment of the Exercise Price may be made in cash, or by certified or official
bank check in New York Clearing House funds payable to the order of the Company,
or any combination of cash or check.
No Warrant may be exercised after 5:00 P.M., Eastern Standard Time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to in a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events,
the Exercise Price and/or number of the Company's securities issuable thereupon
may, subject to certain conditions, be adjusted. In such event, the Company
will, at the, request of the holder, issue a new Warrant Certificate evidencing
the adjustment in the Exercise Price and the number and/or type of securities
issuable upon the exercise of the Warrants; provided, however, that the failure
of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferees) in exchange for this Warrant
Certi ficate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated: _______________, 1998 EAT AT JOE'S LTD.
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Attest:_____________________
Name: _____________________
Title: _____________________
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ____________ Shares and
herewith tenders in payment for such Shares cash or a certified or official bank
check payable in New York Clearing House Funds to the order of
_____________________ in the amount of $_______________, all in accordance with
the terms hereof. The undersigned requests that a certificate for such Shares be
registered in the name of ________________________whose address
is__________________________________________________, and that such Certificate
be delivered to ___________________________________________, whose address is
_______________________________________________________________.
Dated: Signature:_________________________________
(Signature must conform in all respects to name of holder
as specified on the face of the Warrant Certificate.)
------------------------------------
------------------------------------
(Insert Social Security or Other
Identifying Number of Holder)
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED ___________________________________________ hereby
sells, assigns and transfers unto
------------------------------------------------------------------------------
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint
___________________________________, Attorney, to transfer the within Warrant
Certificate on the books of the within-named Company, with full power of
substitution.
Dated: Signature:_________________________________
(Signature must conform in all respects to name of holder
as specified on the face of the Warrant Certificate)
-------------------------------------
-------------------------------------
(Insert Social Security or Other
Identifying Number of Assignee)
