XXXXXXXXXXX.XXX, INC.
AND
XXXXX & COMPANY, INC.
REPRESENTATIVE'S
WARRANT AGREEMENT
DATED AS OF ____, 2001
REPRESENTATIVE'S WARRANT AGREEMENT dated as of _________, 2001 between
XXXXXXXXXXX.XXX, INC., a Nevada corporation (the "Company"), and XXXXX &
COMPANY, INC. ("Xxxxx") (Xxxxx is hereinafter referred to as "Representative").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to the Representative or its
designee(s) warrants ("Representative Warrants") to purchase up to an aggregate
of three hundred thousand (300,000) shares of Common Stock of the Company and
four hundred thousand (400,000) Common Stock purchase warrants, each to purchase
one additional share of Common Stock; and
WHEREAS, the Representative has agreed pursuant to the underwriting
agreement (the "Underwriting Agreement") dated as of the date hereof between the
Company and the several Underwriters listed therein to act as the Representative
in connection with the Company's proposed public offering of 1,000,000 Units at
a public offering price of $[____] per Unit, each Unit consisting of three (3)
shares of the Company's Common Stock at $[____] per Share and four (4) Warrants
at $[ ] per Warrant (the "Public Offering"); and
WHEREAS, the Representative's Warrants to be issued pursuant to this
Agreement will be issued on the Closing Date (as such term is defined in the
Underwriting Agreement) by the Company to the Representative in consideration
for, and as part of the Representative's compensation in connection with, the
Representative acting as the Representative pursuant to the Underwriting
Agreement;
NOW, THEREFORE, in consideration of the premises, the payment by the
Representative to the Company of an aggregate fifty dollars ($50.00), the
agreements herein set forth and other good and valuable consideration, hereby
acknowledged, the parties hereto agree as follows:
1. GRANT. The Representative (or its designees) is hereby granted the
right to purchase, at any time from _____________, 2002 [twelve months after
date of this Agreement], until 5:30 P.M., New York time, on ___________, 2006
[five years after date of this Agreement], up to an aggregate of 300,000 shares
of Common Stock and up to an aggregate of 400,000 Warrants at an initial
exercise price (subject to adjustment in Section 8 hereof) of $[____] per share
of Common Stock and $[ ] per Warrant, subject to the terms and conditions of
this Agreement. Each Warrant is exercisable to purchase one additional share of
Common Stock at an initial exercise price of $[____], commencing on the date of
issuance (the "Initial Exercise Date") and ending, at 5:00 p.m. New York time on
________ (the "Expiration Date"), at which time the Warrants shall expire.
Except as set forth herein, the Units are in all respects identical to the Units
being offered by the Underwriters for resale to the public pursuant to the terms
and provisions of the Underwriting Agreement.
2. WARRANT CERTIFICATES. The warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in Exhibit A, attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
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3. EXERCISE OF WARRANT.
3.1 METHOD OF EXERCISE. The Representative Warrants are initially
exercisable at an exercise price (subject to adjustment as provided in SECTION 8
hereof) of $________ per share of Common Stock and $[ ] per Warrant as set forth
in SECTION 6 hereof payable by certified or official bank check in New York
Clearing House funds, subject to adjustment as provided in SECTION 8 hereof.
Upon surrender of a 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 of Common Stock and/or Warrants so purchased
at the Company's principal executive offices (presently located at 0000 Xxx.
00X., Xxxxx 000, Xxxx Xxxxxx, Xxxxxxx 00000) the registered holder of a Warrant
Certificate ("Holder" or "Holders") shall be entitled to receive a certificate
or certificates for the shares of Common Stock so purchased and a certificate or
certificates for the Warrants so purchased. The purchase rights represented by
each Representative Warrant Certificate are exercisable at the option of the
Holder thereof, in whole or in part (but not as to fractional shares of the
Common Stock and Warrants underlying the Representative Warrants). The
Representative Warrants may be exercised to purchase all or part of the shares
of Common Stock and/or Warrants represented thereby. In the case of the purchase
of less than all the shares of Common Stock and/or Warrants purchasable under
any Representative Warrant Certificate, the Company shall cancel said
Representative Warrant Certificate upon the surrender thereof and shall execute
and deliver a new Representative Warrant Certificate of like tenor for the
balance of the shares of Common Stock and/or Warrants purchasable thereunder.
3.2 EXERCISE BY SURRENDER OF REPRESENTATIVE WARRANT. In addition
to the method of payment set forth in SECTION 3.1 and in lieu of any cash
payment required thereunder, the Holder(s) of the Representative Warrants shall
have the right at any time and from time to time to exercise the Representative
Warrants in full or in part by surrendering the Warrant Certificate in the
manner specified in SECTION 3.1 hereof. The number of shares of Common Stock to
be issued pursuant to this SECTION 3.2 shall be equal to the difference between
(a) the number of shares of Common Stock in respect of which the Representative
Warrants are exercised and (b) a fraction, the numerator of which shall be the
number of shares of Common Stock in respect of which the Representative Warrants
are exercised multiplied by the Exercise Price and the denominator of which
shall be the Market Price (as defined in SECTION 3.3 hereof) of the Common
Stock. The number of Warrants to be issued pursuant to this SECTION 3.2 shall be
equal to the difference between (a) the number of Warrants in respect of which
the Representative Warrants are exercised and (b) a fraction, the numerator of
which shall be the number of Warrants in respect of which the Representative
Warrants are exercised multiplied by the Exercise Price and the denominator of
which shall be the Market Price (as defined in SECITON 3.3 hereof) of the
Warrants. Solely for the purposes of this Section 3.2, Market Price shall be
calculated either (i) on the date on which the form of election attached hereto
is deemed to have been sent to the Company pursuant to Section 14 hereof
("Notice Date") or (ii) as the average of the Market Price for each of the five
trading days immediately preceding the Notice Date, whichever of (i) or (ii)
results in a greater Market Price.
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3.3 DEFINITION OF MARKET PRICE.
(a) As used herein, the phrase "Market Price of the
Common Stock" or "Market Price of the Warrants", respectively, 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 or the Warrants, as the
case may be, are listed or admitted to trading or by the American Stock Exchange
("AMEX"), Nasdaq National Market ("Nasdaq/NM") or the Nasdaq Small Cap Market,
or, if the Common Stock or the Warrants, as the case may be, are not listed or
admitted to trading on any national securities exchange or quoted by the
National Association of Securities Dealers Automated Quotation System
("Nasdaq"), the average closing bid price as furnished by the National
Association of Securities Dealers, Inc. ("NASD") through Nasdaq or similar
organization if Nasdaq is no longer reporting such information.
(b) If the Market Price of the Common Stock cannot
be determined pursuant to Section 3.3(a) above, the Market Price of the Common
Stock shall be determined in good faith (using customary valuation methods) by
resolution of the members of the Board of Directors of the Company, based on the
best information available to it.
(c) If the Market Price of the Warrants cannot be
determined pursuant to Section 3.3(a) above, the Market Price of a Warrant shall
equal the difference between the Market Price of the Common Stock and the
Exercise Price of the Warrant.
4. ISSUANCE OF CERTIFICATES. Upon the exercise of the Representative
Warrants, the issuance of certificates for shares of Common Stock and Warrants
or other securities, properties or rights underlying such Representative
Warrants, and upon the exercise of the Warrants, the issuance of certificates
for shares of Common Stock or other securities, properties or rights underlying
such Warrants shall be made forthwith (and in any event such issuance shall be
made within five (5) 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 (subject to the provisions
of Sections 5 and 7 hereof) be issued in the name of, or in such names as may be
directed by, the Holder thereof.
The Warrant Certificates and the certificates representing the shares
of Common Stock and the Warrants underlying the Representative Warrants and the
shares of Common Stock underlying each Warrant or other securities, property or
rights shall be executed on behalf of the Company by the manual or facsimile
signature of the then present Chairman or Vice Chairman of the Board of
Directors or President or Vice President of the Company under its corporate seal
reproduced thereon, attested to by the manual or facsimile signature of the then
present Secretary or Assistant Secretary or Treasurer or Assistant Treasurer of
the Company. Warrant Certificates shall be dated the date of execution by the
Company upon initial issuance, division, exchange, substitution or transfer.
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5. RESTRICTION ON TRANSFER OF REPRESENTATIVE WARRANTS. The Holder of a
Warrant Certificate, by its acceptance thereof, covenants and agrees that the
Representative Warrants are being acquired as an investment and not with a view
to the distribution thereof; that the Warrants may not be sold, transferred,
assigned, hypothecated or otherwise disposed of, in whole or in part, for a
period of one (1) year from the date hereof, except to officers or partners of
the Representative.
6. EXERCISE PRICE.
6.1 INITIAL AND ADJUSTED EXERCISE PRICE. Except as otherwise
provided in Section 8 hereof, the initial exercise price of each Representative
Warrant shall be $[____] per share of Common Stock and $[ ] per Warrant. The
adjusted exercise price shall be the price which shall result from time to time
from any and all adjustments of the initial exercise price in accordance with
the provisions of Section 8 hereof.
6.2 EXERCISE PRICE. The term "Exercise Price" herein shall
mean the initial exercise price or the adjusted exercise price, depending upon
the context.
7. REGISTRATION RIGHTS.
7.1 REGISTRATION UNDER THE SECURITIES ACT OF 1933. The
Representative Warrants, the shares of Common Stock and the Warrants underlying
the Representative Warrants and the shares of Common Stock issuable upon
exercise of the Warrants underlying the Representative Warrants and any other
securities issuable upon exercise of the Representative Warrants (collectively,
the "Warrant Securities") have been registered under the Securities Act of 1933,
as amended (the "Act") pursuant to the Company's Registration Statement on Form
SB-2 (Registration No. 333- ) (the "Registration Statement"). All the
representations and warranties of the Company contained in the Underwriting
Agreement relating to the Registration Statement, the Preliminary Prospectus and
Prospectus (as such terms are defined in the Underwriting Agreement) and made as
of the dates provided therein, are hereby incorporated by reference. The Company
agrees and covenants promptly to file post effective amendments to such
Registration Statement as may be necessary to maintain the effectiveness of the
Registration Statement as long as any Representative Warrants are outstanding.
In the event that, for any reason, whatsoever, the Company shall fail to
maintain the effectiveness of the Registration Statement, upon exercise, in part
or in whole, of the Representative Warrants, certificates representing the
shares of Common Stock and the Warrants underlying the Representative Warrants,
and upon exercise, in whole or in part of the Warrants, certificates
representing the shares of Common Stock underlying the Warrants and any other
securities issuable upon exercise of the Representative Warrants shall bear the
following legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act"),
and may not be offered, sold, pledged, hypothecated, assigned or
transferred except pursuant to (i) an effective registration
statement under the Act, (ii) to the extent applicable, Rule 144
under the Act (or any similar rule under such Act relating to the
disposition of securities), or (iii) an opinion of counsel, if
such opinion shall be reasonably satisfactory to counsel to the
issuer, that an exemption from registration under such Act is
available.
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7.2 PIGGYBACK REGISTRATION. If, at any time commencing after
the effective date of the public offering hereof and expiring five (5) years
thereafter, the Company proposes to register any of its securities under the Act
(other than pursuant to Form X-0, X-0 or a comparable registration statement)
the Company will give written notice by registered mail, at least thirty (30)
days prior to the filing of each such registration statement, to the
Representative and to all other Holders of the Representative Warrants and/or
the Warrant Securities of its intention to do so. If the Representative or other
Holders of the Representative Warrants and/or Warrant Securities notifies the
Company within twenty (20) days after receipt of any such notice of its or their
desire to include any such securities in such proposed registration statement,
the Company shall afford the Representative and such Holders of the
Representative Warrants and/or Warrant Securities the opportunity to have any
such Warrant Securities registered under such registration statement.
Notwithstanding the provisions of this Section 7.2, the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 7.2 (irrespective of whether a written request
for inclusion of any such securities shall have been made) to elect not to file
any such proposed registration statement, or to withdraw the same after the
filing but prior to the effective date thereof.
7.3 DEMAND REGISTRATION.
(a) At any time commencing after the effective date
of the public offering hereof and expiring five (5) years thereafter, the
Holders of the Representative Warrants and/or Warrant Securities representing a
"Majority" (as hereinafter defined) of such securities (assuming the exercise of
all of the Representative Warrants and the Warrants underlying the
Representative Warrants) shall have the right (which right is in addition to the
registration rights under Section 7.2 hereof), exercisable by written notice to
the Company, to have the Company prepare and file with the Securities and
Exchange Commission (the "Commission"), on one occasion, 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 the
Representative and Holders, in order to comply with the provisions of the Act,
so as to permit a public offering and sale of their respective Warrant
Securities for nine (9) consecutive months by such Holders and any other Holders
of the Representative Warrants and/or Warrant Securities who notify the Company
within ten (10) days after receiving notice from the Company of such request.
(b) The Company covenants and agrees to give
written notice of any registration request under this Section 7.3 by any Holder
or Holders to all other registered Holders of the Representative Warrants and
the Warrant Securities within ten (10) days from the date of the receipt of any
such registration request.
(c) Notwithstanding anything to the contrary
contained herein, if the Company shall not have filed a registration statement
for the Warrant Securities within the time period specified in Section 7.4(a)
hereof pursuant to the written notice specified in Section 7.3(a) of a Majority
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of the Holders of the Representative Warrants and/or Warrant Securities, the
Company shall have the option, upon the written notice of election of a Majority
of the Holders of the Representative Warrants and/or Warrant Securities to
repurchase (i) any and all Warrant Securities at the higher of the Market Price
per share of Common Stock on (x) the date of the notice sent pursuant to Section
7.3(a) or (y) the expiration of the period specified in Section 7.4(a) and (ii)
any and all Warrants at such Market Price less the Exercise Price of such
Warrant. Such repurchase shall be in immediately available funds and shall close
within two (2) days after the later of (i) the expiration of the period
specified in Section 7.4(a) or (ii) the delivery of the written notice of
election specified in this Section 7.3(c)
(d) In addition to the registration rights under Section 7.2
and subsection (a) of this Section 7.3, at any time commencing after the date
hereof and expiring five (5) years thereafter, any Holder of Representative
Warrants and/or Warrant Securities shall have the right, exercisable by written
request to the Company, to have the Company prepare and file, on one occasion,
with the Commission a registration statement so as to permit a public offering
and sale for nine (9) consecutive months by any such Holder of its Warrant
Securities provided, however, that the provisions of Section 7.4(b) hereof shall
not apply to any such registration request and registration and all costs
incident thereto shall be at the expense of the Holder or Holders making such
request.
7.4 COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. In
connection with any registration under Section 7.2 or 7.3 hereof, the Company
covenants and agrees as follows:
(a) The Company shall use its best efforts to file a registration
statement within thirty (30) days of receipt of any demand therefor, shall use
its best efforts to have any registration statement declared effective at the
earliest possible time, and shall furnish each Holder desiring to sell Warrant
Securities such number of prospectuses as shall reasonably be requested.
(b) The Company shall pay all costs (excluding fees and expenses
of Holder(s)' counsel and any underwriting or selling commissions), fees and
expenses in connection with all registration statements filed pursuant to
Sections 7.2 and 7.3(a) hereof including, without limitation, the Company's
legal and accounting fees, printing expenses, blue sky fees and expenses. The
Holder(s) will pay all costs, fees and expenses in connection with any
registration statement filed pursuant to Section 7.3(d). If the Company shall
fail to comply with the provisions of Section 7.4(a), the Company shall, in
addition to any other equitable or other relief available to the Holder(s), be
liable for any or all incidental or special damages sustained by the Holder(s)
requesting registration of their Warrant Securities, excluding consequential
damages.
(c) The Company will take all necessary action which may be
required in qualifying or registering the Warrant Securities included in a
registration statement for offering and sale under the securities or blue sky
laws of such states as reasonably are requested by the Holder(s), provided that
the Company shall not be obligated to execute or file any general consent to
service of process or to qualify as a foreign corporation to do business under
the laws of any such jurisdiction.
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(d) The Company shall indemnify the Holder(s) of the Warrant
Securities to be sold pursuant to any registration statement and each person, if
any, who controls such Holders 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 but only to
the same extent and with the same effect as the provisions pursuant to which the
Company has agreed to indemnify the Underwriters contained in Section 7 of the
Underwriting Agreement. The Company further agree(s) that upon demand by an
indemnified person, at any time or from time to time, it will promptly reimburse
such indemnified person for any loss, claim, damage, liability, cost or expense
actually and reasonably paid by the indemnified person as to which the Company
has indemnified such person pursuant hereto. Notwithstanding the foregoing
provisions of this Section 7.4(d) any such payment or reimbursement by the
Company of fees, expenses or disbursements incurred by an indemnified person in
any proceeding in which a final judgment by a court of competent jurisdiction
(after all appeals or the expiration of time to appeal) is entered against the
Company or such indemnified person as a direct result of the Holder(s) or such
person's gross negligence or willful misfeasance will be promptly repaid to the
Company.
(e) The Holder(s) of the Warrant Securities to be sold pursuant
to a registration statement, and their 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 by or on behalf of such Holders, or their successors
or assigns, for specific inclusion in such registration statement to the same
extent and with the same effect as the provisions contained in Section 7 of the
Underwriting Agreement pursuant to which the Underwriters have agreed to
indemnify the Company. The Holder(s) further agree(s) that upon demand by an
indemnified person, at any time or from time to time, they will promptly
reimburse such indemnified person for any loss, claim, damage, liability, cost
or expense actually and reasonably paid by the indemnified person as to which
the Holder(s) have indemnified such person pursuant hereto. Notwithstanding the
foregoing provisions of this Section 7.4(e) any such payment or reimbursement by
the Holder(s) of fees, expenses or disbursements incurred by an indemnified
person in any proceeding in which a final judgment by a court of competent
jurisdiction (after all appeals or the expiration of time to appeal) is entered
against the Company or such indemnified person as a direct result of the Company
or such person's gross negligence or willful misfeasance will be promptly repaid
to the Holder(s).
(f) Nothing contained in this Agreement shall be construed as
requiring the Holder(s) to exercise their Warrants prior to the initial filing
of any registration statement or the effectiveness thereof.
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(g) The Company shall not permit the inclusion of any securities
other than the Warrant Securities to be included in any registration statement
filed pursuant to Section 7.3 hereof, or permit any other registration statement
to be or remain effective during the effectiveness of a registration statement
filed pursuant to Section 7.3 hereof, without the prior written consent of the
Holders of the Representative Warrants and Warrant Securities representing a
Majority of such securities (assuming the exercise of all of the Representative
Warrants and the Warrants underlying the Representative Warrants).
(h) The Company shall furnish to each Holder participating in the
offering and to each underwriter, if any, a signed counterpart, addressed to
such Holder or underwriter, of (i) an opinion of counsel to the Company, dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), and (ii) a "cold comfort" letter
dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, a letter dated the date
of the closing under the underwriting agreement) signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such registration statement, in each case covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities.
(i) The Company shall as soon as practicable after the effective
date of the registration statement, and in any event within 15 months
thereafter, make "generally available to its security holders" (within the
meaning of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the Act and covering a period of at
least 12 consecutive months beginning after the effective date of the
registration statement.
(j) The Company shall deliver promptly to each Holder
participating in the offering requesting the correspondence and memoranda
described below 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 and underwriter to
do such investigation, upon reasonable advance notice, with respect to
information contained in or omitted from the registration statement as it deems
reasonably necessary to comply with applicable securities laws or rules of the
NASD. Such investigation shall include access to books, records and properties
and opportunities to discuss the business of the Company with its officers and
independent auditors, all to such reasonable extent and at such reasonable times
and as often as any such Holder or underwriter shall reasonably request.
(k) The Company shall enter into an underwriting agreement with
the managing underwriter selected for such underwriting by Holders holding a
Majority of the Warrant Securities requested to be included in such
underwriting, which may be the Representative. Such agreement shall be
satisfactory in form and substance to the Company, each Holder and such managing
underwriter, and shall contain such representations, warranties and covenants by
the Company and such other terms as are customarily contained in agreements of
that type used by the managing underwriter. The Holders shall be parties to any
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underwriting agreement relating to an underwritten sale of their Warrant
Securities and may, at their option, require that any or all of the
representations, warranties and covenants of the Company to or for the benefit
of such underwriters shall also be made to and for the benefit of such Holders.
Such Holders shall not be required to make any representations or warranties to
or agreements with the Company or the underwriters except as they may relate to
such Holders and their intended methods of distribution.
(l) In addition to the Warrant Securities, upon the written
request therefor by any Holder(s), the Company shall include in the registration
statement any other securities of the Company held by such Holder(s) as of the
date of filing of such registration statement, including without limitation,
restricted shares of Common Stock, options, warrants or any other securities
convertible into shares of Common Stock.
(m) For purposes of this Agreement, the term "Majority" in
reference to the Holders of Representative Warrants or Warrant Securities shall
mean in excess of fifty percent (50%) of the then outstanding Warrants or
Warrant Securities that (i) are not held by the Company, an affiliate, officer,
creditor, employee or agent thereof or any of their respective affiliates,
members of their family, persons acting as nominees or in conjunction therewith
and (ii) have not been resold to the public pursuant to a registration statement
filed with the Commission under the Act.
8. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES.
8.1 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.
8.2 STOCK DIVIDENDS AND DISTRIBUTIONS. In case the Company shall
pay dividends in, or make a distribution of, shares of Common Stock or of the
Company's capital stock convertible into Common Stock, the Exercise Price shall
forthwith be proportionately decreased. An adjustment made pursuant to this
Section 8.2 shall be made as of the record date for the subject stock dividend
or distribution.
8.3 ADJUSTMENT IN NUMBER OF SECURITIES. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Section 8, the number of
Warrant Securities issuable upon the exercise at the adjusted Exercise Price of
each Representative Warrant shall be adjusted to the nearest whole number by
multiplying a number equal to the Exercise Price in effect immediately prior to
such adjustment by the number of Warrant Securities issuable upon exercise of
the Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
8.4 DEFINITION OF COMMON STOCK. For the purpose of this
Agreement, the term "Common Stock" shall mean (i) the class of stock designated
as Common Stock in the Certificate of Incorporation of the Company as may be
amended or restated as of the date hereof, or (ii) any other class of stock
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resulting from successive changes or reclassifications of such Common Stock
consisting solely of changes in par value, or from par value to no par value, or
from no par value to par value.
8.5 MERGER OR CONSOLIDATION OR SALE.
(a) In case of any consolidation of the Company with, or merger
of the Company with, or merger of the Company into, another corporation (other
than a consolidation or merger which does not result in any reclassification or
change of the outstanding Common Stock), the corporation formed by such
consolidation or merger shall execute and deliver to the Holder a supplemental
warrant agreement providing that the holder of each Representative Warrant then
outstanding or to be outstanding shall have the right thereafter (until the
expiration of such Representative Warrant) to receive, upon exercise of such
Representative Warrant, the kind and amount of shares of stock and other
securities and property receivable upon such consolidation, merger, sale or
transfer by a holder of the number of shares of Common Stock of the Company for
which such Representative Warrant might have been exercised immediately prior to
such consolidation, merger, sale or transfer. Such supplemental warrant
agreement shall provide for adjustments which shall be identical to the
adjustments provided in this Section 8. The above provision of this subsection
shall similarly apply to successive consolidations or mergers.
(b) In the event of (i) the sale by the Company of all or
substantially all of its assets, or (ii) the engagement by the Company or any of
its affiliates in a "Rule 13e-3 transaction" as defined in paragraph (a)(3) of
Rule 13e-3 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended, or (iii) a distribution to the Company's stockholders
of any cash, assets, property, rights, evidences of indebtedness, securities or
any other thing of value, or any combination thereof, the Holders of the
unexercised Representative Warrants shall receive notice of such sale,
transaction or distribution twenty (20) days prior to the date of such sale or
the record date for such transaction or distribution, as applicable, and, if
they exercise such Representative Warrants prior to such date, they shall be
entitled, in addition to the shares of Common Stock issuable upon the exercise
thereof, to receive such property, cash, assets, rights, evidence of
indebtedness, securities or any other thing of value, or any combination
thereof, on the payment date of such sale, transaction or distribution.
8.6 NO ADJUSTMENT OF EXERCISE PRICE IN CERTAIN CASES. No
adjustment of the Exercise Price shall be made if the amount of said adjustment
shall be less than ten cents (10(cent)) per Warrant Security, 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 ten cents (10(cent)) per Warrant Security.
8.7 ADJUSTMENT OF WARRANTS' EXERCISE PRICE. With respect to any
of the Warrants whether or not the Warrants have been exercised (or are
exercisable) and whether or not the Warrants are issued and outstanding, the
Warrant exercise price and the number of shares of Common Stock underlying such
Warrants shall be automatically adjusted in accordance with Section 8 of the
Warrant Agreement between the Company and ______________________ dated
____________, 2001 (the "Warrant Agreement"), upon the occurrence of any of the
11
events described therein. Thereafter, the underlying Warrants shall be
exercisable at such adjusted Warrant exercise price for such adjusted number of
underlying shares of Common Stock or other securities, properties or rights.
9. EXCHANGE AND REPLACEMENT OF REPRESENTATIVE WARRANT CERTIFICATES.
Each Representative Warrant Certificate is exchangeable without expense, upon
the surrender thereof by the registered Holder at the principal executive office
of the Company, for a new Representative Warrant Certificate of like tenor and
date representing in the aggregate the right to purchase the same number of
shares of Common Stock and Warrants 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 Representative 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 Representative Warrants, if mutilated, the Company will make and deliver a
new Representative Warrant Certificate of like tenor, in lieu thereof.
10. ELIMINATION OF FRACTIONAL INTERESTS. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
or Warrants upon the exercise of the Representative Warrants, or fractions of
shares of Common Stock upon the exercise of the Warrants underlying the
Representative Warrants, it being the intent of the parties that all fractional
interests shall be eliminated by rounding any fraction up to the nearest whole
number of shares of Common Stock or Warrants, as the case may be, or other
securities, properties or rights.
11. RESERVATION AND LISTING OF SECURITIES. The Company shall at all
times reserve and keep available out of its authorized shares of Common Stock,
solely for the purpose of issuance upon the exercise of the Representative
Warrants and the Warrants, such number of shares of Common Stock or other
securities, properties or rights as shall be issuable upon the exercise thereof.
The Company covenants and agrees that, upon exercise of the Representative
Warrants and payment of the Exercise Price therefor, all shares of Common Stock
and other securities issuable upon such exercise shall be duly and validly
issued, fully paid, non-assessable and not subject to the preemptive rights of
any stockholder. The Company further covenants and agrees that upon exercise of
the Warrants underlying the Representative Warrants and payment of the
respective Warrant exercise price therefor, all shares of Common Stock and other
securities issuable upon such exercises shall be duly and validly issued, fully
paid, non-assessable and not subject to the preemptive rights of any
stockholder. As long as the Representative Warrants shall be outstanding, the
Company shall use its best efforts to cause all shares of Common Stock issuable
upon the exercise of the Representative Warrants and all Warrants underlying the
Representative Warrants to be listed (subject to official notice of issuance) on
all securities exchanges on which the Common Stock or the Warrants issued to the
public in connection herewith may then be listed and/or quoted on any exchange,
the Nasdaq National Market or the Nasdaq Small Cap Market.
12
12. NOTICES TO WARRANT HOLDERS. Nothing contained in this Agreement
shall be construed as conferring upon the Holders the right to vote or to
consent or to receive notice as a stockholder in respect of any meetings of
stockholders for the election of directors or any other matter, or as having any
rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Representative 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 twenty (20) days prior to the date fixed
as a record date or the date of closing the transfer books for the determination
of the stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
13. WARRANTS. The form of the certificate representing Warrants (and
the form of election to purchase shares of Common Stock upon the exercise of
Warrants and the form of assignment printed on the reverse thereof) shall be
substantially as set forth in Exhibit "A" to the Warrant Agreement. Each Warrant
issuable upon exercise of the Representative Warrants shall evidence the right
to initially purchase one fully paid and non-assessable share of Common Stock at
an initial purchase price of $[____] per share commencing on the Initial
Exercise Date and ending at 5:00 p.m. New York time on the Warrant Expiration
Date at which time the Warrants shall expire. The exercise price of the Warrants
and the number of shares of Common Stock issuable upon the exercise of the
Warrants are subject to adjustment, whether or not the Representative Warrants
have been exercised and the Warrants have been issued, in the manner and upon
the occurrence of the events set forth in Section 8 of the Warrant Agreement,
which is hereby incorporated herein by reference and made a part hereof as if
set forth in its entirety herein. Subject to the provisions of this Agreement
and upon issuance of the Warrants underlying the Representative Warrants, each
registered holder of such Warrants shall have the right to purchase from the
Company (and the Company shall issue to such registered holders) up to the
13
number of fully paid and non-assessable shares of Common Stock (subject to
adjustment as provided herein and in the Warrant Agreement), free and clear of
all preemptive rights of stockholders, provided that such registered holder
complies with the terms governing exercise of the Warrants set forth in the
Warrant Agreement, and pays the applicable exercise price, determined in
accordance with the terms of the Warrant Agreement. Upon exercise of the
Warrants, the Company shall forthwith issue to the registered holder of any such
Warrant in his name or in such name as may be directed by him, certificates for
the number of shares of Common Stock so purchased. Except as otherwise provided
herein, the Warrants underlying the Representative Warrants shall be governed in
all respects by the terms of the Warrant Agreement. The Warrants shall be
transferable in the manner provided in the Warrant Agreement, and upon any such
transfer, a new Warrant Certificate shall be issued promptly to the transferee.
The Company covenants to, and agrees with, the Holder(s) that without the prior
written consent of the Holder(s), the Warrant Agreement will not be modified,
amended, cancelled, altered or superseded, and that the Company will send to
each Holder, irrespective of whether or not the Representative Warrants have
been exercised, any and all notices required by the Warrant Agreement to be sent
to holders of Warrants.
14. 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 the registered Holder of the Representative 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
hereof or to such other address as the Company may designate by notice to the
Holders.
15. SUPPLEMENTS AND AMENDMENTS. The Company and the
Representative may from time to time supplement or amend this Agreement without
the approval of any Holders of Warrant Certificates (other than the
Representative) in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any
provisions herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Representative may deem
necessary or desirable and which the Company and the Representative deem shall
not adversely affect the interests of the Holders of Warrant Certificates.
16. SUCCESSORS. All the covenants and provisions of this
Agreement shall be binding upon and inure to the benefit of the Company, the
Holders and their respective successors and assigns hereunder.
17. TERMINATION. This Agreement shall terminate at the close of
business on ___________ [5 years from date of this Agreement]. Notwithstanding
the foregoing, the indemnification provisions of Section 7 shall survive such
termination until the close of business on ____________ [10 years from the date
of this Agreement].
14
18. GOVERNING LAW, SUBMISSION TO JURISDICTION. This Agreement and
each Warrant Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of New York and for all purposes shall be construed
in accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws.
The Company, the Representative and the Holders hereby agree that
any action, proceeding or claim against it arising out of, or relating in any
way to, this Agreement shall be brought and enforced in the courts of the State
of New York or of the United States of America for the Southern District of New
York, and irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. The Company, the Representative and the Holders hereby irrevocably
waive any objection to such exclusive jurisdiction or inconvenient forum. Any
such process or summons to be served upon any of the Company, the Representative
and the Holders (at the option of the party bringing such action, proceeding or
claim) may be served by transmitting a copy thereof, by registered or certified
mail, return receipt requested, postage prepaid, addressed to it at the address
as set forth in Section 14 hereof. Such mailing shall be deemed personal service
and shall be legal and binding upon the party so served in any action,
proceeding or claim. The Company, the Representative and the Holders agree that
the prevailing party(ies) in any such action or proceeding shall be entitled to
recover from the other party(ies) all of its/their reasonable legal costs and
expenses relating to such action or proceeding and/or incurred in connection
with the preparation therefor.
19. ENTIRE AGREEMENT; MODIFICATION. This Agreement (including the
Underwriting Agreement to the extent portions thereof are referred to herein)
and the Warrant Agreement contain the entire understanding between the parties
hereto with respect to the subject matter hereof and may not be modified or
amended except by a writing duly signed by the party against whom enforcement of
the modification or amendment is sought.
20. SEVERABILITY. If any provision of this Agreement shall be
held to be invalid or unenforceable, such invalidity or unenforceability shall
not affect any other provision of this Agreement.
21. CAPTIONS. The caption headings of the Sections of this
Agreement are for convenience of reference only and are not intended, nor should
they be construed as, a part of this Agreement and shall be given no substantive
effect.
22. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company and the
Representative and any other registered Holder(s) of the Warrant Certificates or
Warrant Securities any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole and exclusive benefit of the
Company and the Representative and any other Holder(s) of the Warrant
Certificates or Warrant Securities.
23. 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 to either constitute but one and the
same instrument.
15
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
XXXXXXXXXXX.XXX, INC.
By:________________________
Name:
Title:
Attest:
--------------------
Secretary
XXXXX & COMPANY, INC.
By:________________________
Name:
Title:
16
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
(ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE
UNDER SUCH ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION
OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE
ISSUER, 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 REPRESENTATIVE'S WARRANT AGREEMENT REFERRED TO
HEREIN.
EXERCISABLE ON OR BEFORE 5:00 P.M., NEW YORK TIME, ________, 2006
No. W- _ Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that __________, or registered
assigns, is the registered holder of ______ Representative Warrants to purchase
from xXxxxxxxxxx.xxx, Inc., a Nevada corporation (the "Company"), at any time
from _________, 2002 [one year from the effective date of the Registration
Statement] until 5:00 p.m. New York time on ____________, 2006 [five years from
the effective date of the Registration Statement] ("Expiration Date"), up to
300,000 fully-paid and non-assessable shares of common stock ("Common Stock")
and 400,000 warrants ("Warrants") (each Warrant entitling the holder to purchase
one fully-paid and non-assessable share of Common Stock), at the initial
exercise price, subject to adjustment in certain events (the "Exercise Price"),
of $[____] per share of Common stock and $[____] per Warrant, upon surrender of
this Warrant Certificate and payment of the Exercise Price at an office or
agency of the Company, or by surrender of this Warrant Certificate in lieu of
cash payment, but subject to the conditions set forth herein and in the warrant
agreement dated as of _________________, 2001 between the Company and Xxxxx &
Company, Inc. (the "Warrant Agreement"). Payment of the Exercise Price shall be
made by certified or official bank check in New York Clearing House funds
payable to the order of the Company or by surrender of this Warrant Certificate.
No Representative Warrant may be exercised after 5:00 p.m., New York
time, on the Expiration Date, at which time all Representative Warrants
evidenced hereby, unless exercised prior thereto, hereby shall thereafter be
void.
17
A-1
The Representative Warrants evidenced by this Warrant Certificate are
part of a duly authorized issue of Representative Warrants issued pursuant to
the Representative's Warrant Agreement, which Representative's Warrant Agreement
is hereby incorporated by reference in and made a part of this instrument and is
hereby referred to for a description of the rights, limitation of rights,
obligations, duties and immunities thereunder of the Company and the holders
(the words "holders" or "holder" meaning the registered holders or registered
holder) of the Representative Warrants.
The Representative's Warrant Agreement provides that upon the
occurrence of certain events the Exercise Price and the type 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
Representative 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 Representative's
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 Representative Warrants shall be issued to the transferee(s) in exchange for
this Warrant Certificate, subject to the limitations provided herein and in the
Representative's Warrant Agreement, without any charge except for any tax or
other governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the Representative Warrants
evidenced by this Warrant Certificate, the Company shall forthwith issue to the
holder hereof a new Warrant Certificate representing such Representative
Warrant.
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
Representative's Warrant Agreement shall have the meanings assigned to them in
the Representative's Warrant Agreement.
18
A-2
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated as of ___________, 2001
XXXXXXXXXXX.XXX, INC.
[SEAL] By:________________________
Name:
Title:
Attest:
-------------------
Secretary
19
A-3
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _____________ Units (each
Unit consisting of three (3) shares of Common Stock and four (4) Warrants) and
herewith tenders in payment for such securities a certified or official bank
check payable in New York Clearing House Funds to the order of XXXXXXXXXXX.XXX,
INC. in the amount of $__________, all in accordance with the terms of Section
3.1 of the Representative's Warrant Agreement dated as of ___________, 2001
between XXXXXXXXXXX.XXX, INC. and Xxxxx & Company, Inc. The undersigned requests
that certificates for such securities be registered in the name of
_______________ whose address is __________________________ and that such
certificates 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)
20
A-4
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.2]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ____________ Units (each
Unit consisting of three (3) shares of Common Stock and four (4) Warrants) all
in accordance with the terms of Section 3.2 of the Representative's Warrant
Agreement dated as of ______________, 2001 between XXXXXXXXXXX.XXX, INC. and
Xxxxx & Company, Inc. The undersigned requests that certificates for such
securities be registered in the name of __________________ whose address is
_______________________ and that such certificates 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)
21
A-5
[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 Holder)
22
