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XXXX.XXX CORPORATION
AND
XXXXXXX AND COMPANY SECURITIES, INC.
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REPRESENTATIVE'S
WARRANT AGREEMENT
Dated as of July ___, 1997
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REPRESENTATIVE'S WARRANT AGREEMENT dated as of July ___, 1997
by and between xxxx.xxx CORPORATION, a Washington corporation (the "Company"),
and XXXXXXX AND COMPANY SECURITIES, INC., a Delaware corporation (the
"Representative").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to the Representative,
or at the direction of the Representative, to any co-managing underwriter
warrants ("Warrants") to purchase up to an aggregate of 100,000 shares of common
stock, no par value, of the Company ("Common Stock"); and
WHEREAS, the Representative has agreed pursuant to the
Underwriting Agreement (the "Underwriting Agreement") dated as of July __, 1997
by and between the Company and the Representative, to act as the Representative
of the underwriters named in Schedule I thereto (the "Underwriters") in
connection with the Company's proposed public offering (the "Offering") of
1,000,000 shares of Common Stock at an initial public offering price of $_____
per share of Common Stock (the "Public Offering"); and
WHEREAS, the 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, or its designees, in
consideration for, and as part of the Representative's compensation in
connection with, the Representative acting as such pursuant to the terms of the
Underwriting Agreement;
NOW, THEREFORE, in consideration of the premises hereof, the
payment by the Representative to the Company of an aggregate $100, the
agreements herein set forth and other good and valuable consideration, hereby
acknowledged, the parties hereto agree as follows:
1. Grant. The Representative and, at the direction of the
Representative, any co-managing underwriter of the Offering, is hereby granted
the right to purchase, at any time from July __, 1998, until 5:30 P.M., New York
time, on July __, 2002 (the "Expiration Date"), up to an aggregate of 100,000
shares of Common Stock (the "Shares") (subject to adjustment as provided in
Section 8 hereof) at the initial Exercise Price (as hereinafter defined)
(subject to the terms and conditions of this Agreement). Except as set forth
herein, the Shares issuable upon exercise of the Warrants will be in all
respects identical to the shares of Common Stock being purchased by the
Representative for resale to the public pursuant to the terms and provisions of
the Underwriting Agreement. Any Warrant that is not exercised on or prior to the
Expiration Date shall be void and all rights hereunder shall cease.
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.
3. Exercise of Warrant.
3.1 Method of Exercise. The Warrants are exercisable at the
Exercise Price payable by certified or official bank check in New York Clearing
House funds. Upon surrender of a Warrant Certificate with a duly executed
Election to Purchase (in the form of Annex A to the Warrant Certificate),
together with payment at the Company's principal offices (presently located at
0000 Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000) of the aggregate Exercise Price of
the Warrants being exercised, 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. The purchase rights
represented by each 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 underlying the Warrants). In the case of the purchase of less than
all the shares of Common Stock purchasable under any Warrant 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 Warrants exercisable thereunder.
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3.2 Exercise by Surrender of Warrant. In addition to the
method of payment set forth in Section 3.1 and in lieu of any cash payment
required thereunder, Holders shall have the right, at any time, and from time to
time, to exercise the Warrants in full or in part by surrendering Warrant
Certificates representing a certain number of additional Warrants as payment of
the aggregate Exercise Price for the shares of Common Stock being acquired upon
exercise of the Warrants. The Warrants are exercisable pursuant to this Section
3.2 by surrender of the Warrant Certificate with a duly executed Election to
Purchase (in the form of Annex B to the Warrant Certificate) and surrender of a
certain number of Warrants in addition to those being exercised. The number of
additional Warrants to be surrendered in payment of the aggregate Exercise Price
for the Warrants being exercised shall be determined by multiplying the number
of Warrants to be exercised by the Exercise Price, and then dividing the product
thereof by an amount equal to the Market Price (as defined below) minus the
Exercise Price. Solely for the purposes of this Section 3.2, Market Price shall
be calculated either (i) on the date which the Election to Purchase (in the form
of Annex B to the Warrant Certificate) is deemed to have been sent to the
Company pursuant to Section 13 hereof ("Notice Date") or (ii) as the average of
the Market Prices for each of the five trading days preceding the Notice Date,
whichever of (i) or (ii) is greater.
3.3 Definition of Market Price. 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 bid prices for the last three (3) trading days, in either case as
officially reported by the Nasdaq SmallCap Market or the principal securities
exchange on which the Common Stock is listed or admitted to trading or by the
Nasdaq National Market ("NNM"), or, if the Common Stock is not quoted by the
Nasdaq SmallCap Market, listed or admitted to trading on any national securities
exchange or quoted by the NNM, the average closing bid price as furnished by the
NASD through the Nasdaq SmallCap Market or similar organization if the Nasdaq
SmallCap Market is no longer reporting such information, or if the Common Stock
is not quoted on the Nasdaq SmallCap Market, as determined in good faith by
resolution of the Board of Directors of the Company, based on the best
information available to it.
4. Issuance of Certificates. Upon the exercise of the
Warrants, the issuance of certificates for the total number of whole shares of
Common Stock for which such Warrants were exercised shall be made promptly (and
in any event within five (5) business days thereafter) without charge to the
Holder thereof including, without limitation, any stock transfer or similar 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; 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 the satisfaction of the Company
that such tax has been paid.
The Warrant Certificates and the certificates representing the
Shares underlying the Warrants shall be executed on behalf of the Company by the
manual or facsimile signature of the then present Chairman of the Board of
Directors or President of the Company under its corporate seal reproduced
thereon and by the then present Treasurer or Secretary of the Company. Warrant
Certificates shall be dated the date of execution by the Company upon initial
issuance, division, exchange, substitution or transfer. Certificates
representing the shares of Common Stock issuable upon exercise of the Warrants
shall be dated the date on which the Company receives the Election to Purchase,
Warrant Certificate and payment of the Exercise Price.
5. Restriction On Transfer of Warrants. 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 effective date of the
Registration Statement on Form SB-2 (File No. 333-26855), except that the
Warrants may be (i) assigned in whole or part to any officer or partner of the
Representative or any member of the underwriting group and (ii) transferred by
operation of law as a result of the death or divorce of any transferee to whom
the Warrants may have been transferred. Any assignment shall be effected by a
duly executed assignment in the form of Annex C to the Warrant Certificate.
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6. Exercise Price.
6.1 Initial and Adjusted Exercise Price. The initial exercise
price of each Warrant shall be $_____ per share of Common Stock. 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 Piggyback Registration. If, at any time commencing after
July ___, 1998 and expiring six (6) years thereafter, the Company proposes to
register any of its securities under the Securities Act of 1933, as amended (the
"Securities Act") (other than pursuant to a Form X-0, Xxxx X-0 or any other
successor form of limited purpose), it 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 Warrants and
Warrant Securities of its intention to do so. If the Representative or other
Holders of Warrants and Warrant Securities notify the Company within twenty (20)
business days after receipt of any such notice of its or their desire to include
any of their respective Warrant Securities in such proposed registration
statement, the Company shall afford the Representative and such Holders of
Warrants and Warrant Securities the opportunity to have any such Warrant
Securities registered under such registration statement, provided, however, that
if the managing underwriter advises the Company in writing that the inclusion of
all Warrant Securities that Holders have proposed be included in such
registration statement would interfere with the successful marketing of the
securities proposed to be registered by the Company, then the securities to be
included in such registration shall be included in the following order:
(a) first, the securities proposed to be included in
such registration by the Company or, if such registration is
for securities of specified security holders of the Company,
by such holders; and
(b) second, the Warrant Securities held by the Holders
requested to be included in such registration; and
(c) third, all other holders of Common Stock entitled to
be included in such registration statement (pro rata among the
holders requesting such registration based upon the number of
shares of Common Stock requested by each such holder to be
registered).
Notwithstanding the provisions of this Section 7.1, the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 7.1 (irrespective of whether a written request
for inclusion of any such Warrant 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.
7.2 Demand Registration.
(a) At any time commencing on July ___, 1998 and expiring four
(4) years thereafter (which date is the fifth anniversary of the effective date
of the Registration Statement on Form SB-2 (File No. 333-26855)) (or such
earlier time as the Warrant Securities are eligible for sale under Rule 144(k),
the Holders of the Warrants and/or Warrant Securities representing at least 26%
of such securities (assuming the exercise of all of the Warrants) shall have the
right (which right is in addition to the registration rights under Section 7.1
hereof), exercisable by written notice to the Company, on one occasion only to
request to have the Company prepare and file with the Securities and Exchange
Commission (the "Commission"), a registration statement and such other
documents, including a prospectus, as may be necessary in the opinion of counsel
for the Company and, if either the Representative or a majority of the Holders
electing to participate in the registration requested pursuant to this Section
7.2(a) have retained counsel in connection with such registration, counsel for
each of the Representative and
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a majority of the Holders electing to participate in such registration, in order
to comply with the provisions of the Securities Act, so as to permit a public
offering and sale of their respective Warrant Securities for nine consecutive
months by such Holders and any other Holders of the Warrants and/or Warrant
Securities who notify the Company of their decision to join within fifteen (15)
days after receiving notice from the Company pursuant to Section 7.2(b).
(b) The Company covenants and agrees to give written notice of
any registration request under this Section 7.2 by any Holder or Holders to all
other registered Holders of Warrants and Warrant Securities within ten (10) days
from the date of the receipt of any such registration request.
(c) In addition to the registration rights under Section 7.1
and Section 7.2(a), at any time commencing after July __, 1998 and expiring six
(6) years thereafter (or such earlier time as the Warrant Securities are
eligible for sale under Rule 144(k)), any Holder(s) of Warrants and/or Warrant
Securities shall have the right, exercisable by written request to the Company,
to require the Company to prepare and file, with the Commission a registration
statement and such other documents, including a prospectus, as may be necessary
in the opinion of counsel for the Company and, if either the Representative or a
majority of the Holders electing to participate in the registration requested
pursuant to this Section 7.2(c) have retained counsel in connection with such
registration, counsel for each of the Representative and the majority of the
Holders electing to participate in such registration, so as to permit a public
offering and sale for nine consecutive months by any such Holder(s) of their
respective Warrant Securities, provided, however, that (i) a minimum of 26% of
the Warrant Securities issuable upon exercise of the Warrants issued on the date
hereof must be registered under such registration statement, and (ii) the
provisions of Section 7.3(b) hereof shall not apply to any such registration
request and all reasonable costs, fees and expenses in connection therewith,
including, without limitation, registration fees, legal and accounting fees,
printing fees, blue sky fees and expenses, that have been approved in advance by
a majority of the Holders participating in such registration, shall be at the
expense of the Holder or Holders making such request.
(d) Notwithstanding the provisions of Sections 7.2(a) and
7.2(c), if the Company shall not have filed a registration statement relating to
the Warrant Securities within the time period specified in Section 7.3(a)
hereof, the Company shall have the obligation, upon the written notice of
election of at least 26% of the Holders of the Warrants and/or Warrant
Securities, to repurchase (i) any and all Warrant Securities held by such
persons at the higher of the Market Price per share of Common Stock on (x) the
date of the notice sent pursuant to Section 7.2(a) or (y) the expiration of the
period specified in Section 7.3(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 7.3(a) or (ii) the
delivery of the written notice of election specified in this Section 7.2(d).
(e) Notwithstanding the provisions of Sections 7.2(a) and (c),
if at any time during which the Company is obligated to maintain the
effectiveness of a registration statement pursuant to such Sections 7.2(a) and
(c), the Company's Board of Directors, after the consultation with counsel to
the Company (which counsel shall be experienced in securities matters) has
determined in good faith that the filing of such registration statement or the
compliance by the Company with its disclosure obligations thereunder would
require the disclosure of material information which the Company has a bona fide
business purpose for preserving as confidential, then the Company may delay the
filing or the effectiveness of such registration statement (if not then filed or
effective, as appropriate) and shall not be required to maintain the
effectiveness thereof for a period expiring upon the earlier to occur of (i) the
date on which such information is disclosed to the public or ceases to be
material or the Company is so able to comply with its disclosure obligations or
(ii) 30 days after the Company's Board of Directors makes such good faith
determination. There shall not be more than one such delay period with respect
to any registration pursuant to Section 7.2(a) or (c). Notice of any such delay
period and of the termination thereof will be promptly delivered by the Company
to each Holder and shall be maintained in confidence by each such Holder.
7.3 Covenants of the Company With Respect to Registration. In
connection with any registration under Section 7.1 or 7.2 hereof, the Company
covenants and agrees as follows:
(a) The Company shall use its best efforts to file a
registration statement, as soon as practicable, but in any event within sixty
(60) days of receipt of any demand therefor, shall use its best efforts to have
any
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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; provided, however, that the
Company shall not be obligated to effect such registration under the Securities
Act except in accordance with the following provisions:
(i) the Company shall not be obligated to use its
best efforts to file and cause to become effective any
registration statement for a period of up to 90 days if at the
time of such request any other registration statement pursuant
to which shares of Common Stock of the Company are to be or
were sold has been filed with the Commission and not withdrawn
or has been declared effective within the prior 60 days; and
(ii) the Company may delay the filing or
effectiveness of the registration statement for a period of up
to 90 days after the date of a request for registration if at
the time of such request the Company is engaged in a firm
commitment underwritten public offering of Common Stock in
which the Holders may include their Warrant Securities
pursuant to Section 7.1 hereof.
(b) The Company shall pay all costs, fees and expenses in
connection with all registration statements filed pursuant to Sections 7.1 and
7.2(a) hereof (excluding fees and expenses of the Representative's and Holders'
counsel and accountants and any underwriting or selling commissions) including,
without limitation, the Company's legal and accounting fees, printing expenses,
blue sky fees and expenses. The Holder(s) whose Warrant Securities are the
subject of a Registration Statement filed pursuant to Section 7.2(c) will pay
all reasonable costs, fees and expenses in connection therewith, including,
without limitation, registration fees, legal and accounting fees, printing fees,
blue sky fees and expenses that have been approved in advance by a majority of
the Holders participating in such registration. If the Company shall fail to
comply with the provisions of Section 7.3(a) hereof, the Company shall, in
addition to any other equitable or other relief available to such Holders,
extend the Exercise Period by such number of days as shall equal the delay
caused by the Company's failure and be liable for any or all incidental, special
and consequential damages sustained by such Holders.
(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 qualify generally to do business in
any jurisdiction where it is not then so qualified or to take any action which
would subject it to general service of process or to taxation in any
jurisdiction where it is not then so subject.
(d) The Company shall furnish without charge to each Holder of
Warrant Securities, promptly after filing thereof with the Commission, at least
one copy of the registration statement filed pursuant to Section 7.1 or 7.2 (a
"Registration Statement") and each amendment thereto or each amendment or
supplement to the prospectus included therein (the "Prospectus") including all
financial statements and schedules, documents incorporated by reference therein
and if the Holder so requests in writing, all exhibits thereto.
(e) The Company shall take such action as may be reasonably
necessary so that (i) the Registration Statement and any amendment thereto and
any Prospectus forming a part thereof and any supplement or amendment thereto
complies in all material respects with the Securities Act and the rules and
regulations thereunder, (ii) the Registration Statement and any amendment
thereto (in either case, other than with respect to written information
furnished to the Company by or on behalf of any Holder specifically for
inclusion therein) does not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
any statement therein not misleading and (iii) the Prospectus and any supplement
thereto (in either case, other than with respect to such information from
Holders), does not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(f) The Company shall promptly advise the Holders of Warrant
Securities registered under the Registration Statement (which advice pursuant to
clauses (ii) - (iv) shall be accompanied by an instruction to
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suspend the use of the Prospectus until the requisite changes have been made)
and, if requested by such persons, shall confirm such advice in writing:
(i) when the Registration Statement and any amendment
thereto has been filed with the Commission and when the
Registration Statement or any post-effective amendment thereto
has become effective;
(ii) of any request by the Commission for amendments to
the Registration Statement or amendments or supplements to the
Prospectus or for additional information relating thereto;
(iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration
Statement or of the suspension by any state securities
commission of the qualification of the Warrant Securities for
offering or sale in any jurisdiction, or the initiation of any
proceeding for any of the preceding purposes; and
(iv) of the happening of any event that requires the
making of any changes in the Prospectus so that, as of such
date, the Prospectus does not contain an untrue statement of a
material fact and does not omit to state a material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
(g) If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the Warrant
Securities under state securities or Blue Sky laws, the Company shall use its
reasonable best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(h) The Company shall, during the period the Company is
obligated to maintain the effectiveness of a Registration Statement under
Section 7.2 hereof, deliver to each Holder of Warrant Securities included under
the Registration Statement, without charge, such reasonable number of copies of
the Prospectus (including each preliminary prospectus) included in the
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request to facilitate the public sale or other disposition of the
Warrant Securities by the selling Holder.
(i) The Company shall cooperate with the Holders and the
underwriter(s), if any, to facilitate the timely preparation and delivery of
certificates representing Warrant Securities to be sold under the Registration
Statement, free of any restrictive legends and in such denominations and
registered in such names as the Holders or the underwriter(s), if any, may
reasonably request in connection with the sales of Warrant Securities pursuant
to the Registration Statement.
(j) Upon the occurrence of any event contemplated by Section
7.3(f)(ii) - (iv) hereof or any request by the Commission for any amendments to
the Registration Statement or for additional information relating thereto or the
happening of any event that requires the making of any changes in the
Registration Statement, the Company shall file (and use its reasonable best
efforts to have declared effective as soon as possible) a post-effective
amendment to the Registration Statement or an amendment or supplement to the
Prospectus or file any other required document so that, as thereafter delivered
to the purchasers of Warrant Securities registered under the Registration
Statement, the Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements therein
in light of the circumstances under which they were made not misleading. Each
Holder of Warrant Securities registered under the Registration Statement agrees
by acquisition of such Warrant Securities that, upon receipt of any notice from
the Company of the existence of any fact of the kind described in Section
7.3(f)(ii) - (iv) hereof, such Holder will forthwith discontinue disposition of
Warrant Securities pursuant to the Registration Statement until such Holder
receives copies of the supplemented or amended Prospectus contemplated by this
Section 7.3(j), or until such Holder is advised in writing by the Company that
the use of the Prospectus may be resumed, and such Holder has received copies of
any additional or supplemental filings which are incorporated by reference in
the Prospectus. If so directed by the Company, each Holder will
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deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Warrant Securities current at the time of receipt of such notice.
(k) Nothing contained in this Agreement shall be construed as
requiring the Holders to exercise their Warrants prior to the initial filing of
any registration statement or the effectiveness thereof.
(l) The Company shall not permit the inclusion of any
securities other than Warrant Securities to be included in any Registration
Statement filed pursuant to Section 7.2(a) or 7.2(c) hereof without the prior
written consent of the Holders representing a majority of the Holders then
requesting registration under such Section 7.2(a) or Section 7.2(c),
respectively.
(m) 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) if and to the extent
permitted by Statement of Auditing Standards No. 72, 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.
(n) 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 Securities Act) an earnings statement (which need
not be audited) complying with Section 11(a) of the Securities Act and covering
a period of at least 12 consecutive months beginning after the effective date of
the Registration Statement.
(o) The Company shall deliver promptly to each Holder
participating in the offering upon request, and to the managing underwriters, if
any, copies of all correspondence between the Commission and the Company, its
counsel or accountants and all memoranda relating to discussions with the
Commission or its staff with respect to the Registration Statement and shall
permit each Holder and such 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 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 accountants, all to
such reasonable extent and at such reasonable times and as often as any Holder
or underwriter shall reasonably request.
(p) With respect to the registration of Warrant Securities
pursuant to Section 7.2 to be sold to an underwriter for reoffering to the
public, the Company shall negotiate in good faith with respect to entering into
an underwriting agreement with the managing underwriters selected for such
underwriting by Holders holding a majority of the Warrant Securities requested
to be included in such underwriting, which may include 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 underwriting agreement relating to an
underwritten sale of their Warrant 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 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 except as they
may relate to such Holders and their intended methods of distribution and shall
not be requested by the Company to provide indemnification except as provided in
Section 7.3(s) hereof.
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(q) In addition to Warrant Securities, and except as otherwise
provided in Section 7.3(l) hereof, upon the written request therefor by any
Holders, the Company shall include in the Registration Statement any other
securities of the Company held by such Holders as of the date of filing of such
Registration Statement, including without limitation restricted shares of Common
Stock, options, warrants or securities convertible into shares of Common Stock
and shall not be requested by the Company to provide indemnification except as
provided in Section 7.3(s) hereof.
(r) For purposes of this Agreement, wherever a specified
percent of Holders is required to take action, such percentage shall be
calculated: (i) assuming the immediate exercise of all of the outstanding
Warrants for Common Stock and (ii) excluding the shares of Common Stock then
issued or issuable pursuant to Warrants that (x) are held by the Company, an
affiliate or officer thereof or any of their respective affiliates, members of
their family or persons acting as their nominees or in conjunction therewith or
(y) have been resold to the public pursuant to a Registration Statement filed
with the Commission under the Securities Act.
(s) Indemnification and Contribution.
(1) The Company agrees to indemnify and hold harmless each
Holder (for purposes of this Section 7.3(s), "Holder" shall include the
officers, directors, partners, employees and agents, and each person, if any,
who controls any Holder ("controlling person") within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange Act, from and against any
and all losses, claims, damages, expenses or liabilities, joint or several (and
actions, proceedings, suits and litigation in respect thereof), whatsoever, as
the same are incurred, to which such Holder or any such controlling person may
become subject, under the Securities Act, the Exchange Act or any other statute
or at common law or otherwise insofar as such losses, claims, damages, expenses
or liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, or
any preliminary Prospectus or Prospectus (as from time to time amended and
supplemented) or arise out of or are based upon the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to make
the statements therein (with respect to any preliminary Prospectus or
Prospectus, in the light of the circumstances under which they were made), not
misleading; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, expense or liability
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in the Registration Statement, or any
preliminary Prospectus or Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any Holder specifically for inclusion therein and
provided, further, that the Company shall not be liable to any such Holder under
the indemnity agreement in this subsection (1): (i) with respect to any
preliminary Prospectus or Prospectus (if such Prospectus has then been amended
or supplemented) to the extent that any such loss, liability, claim, damage or
expense of such Holder arises out of a sale of Warrant Securities by such Holder
to a person to whom (a) there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Prospectus (or of the Prospectus as
then amended or supplemented) if the Company has previously furnished copies
thereof to such Holder a reasonable time in advance or (b) prior to written
confirmation of such sale, such Holder received notice from the Company pursuant
to Section 7.3(j) to discontinue disposition pursuant to such Prospectus and, in
either case, the loss, liability, claim, damage or expense of such Holder
results from an untrue statement or alleged untrue statement or omission or
alleged omission of a material fact contained in the preliminary Prospectus (or
the Prospectus) which was corrected in the Prospectus (or the Prospectus as
amended or supplemented) or (ii) to the extent that any such loss, claim,
damage, expense or liability arises out of or is based upon any action or
failure to act by such Holder that is found in a final judicial determination
(or a settlement tantamount thereto) to constitute bad faith, willful misconduct
or gross negligence on the part of such Holder. The indemnity agreement in this
subsection (1) shall be in addition to any liability which the Company may have
at common law or otherwise, to the extent not inconsistent therewith.
The Company also agrees to indemnify or contribute to losses
of any underwriters of Warrant Securities registered under the Registration
Statement, their officers and directors and each person, if any, who controls
any such underwriter (within the meaning of the Securities Act) on substantially
the same basis as that of the indemnification of the Holders provided in this
Section 7.3(s)(1) and shall, if requested by Holders holding a
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majority of the Warrant Securities sought to be registered pursuant to Section
7.2 hereof, enter into an underwriting agreement reflecting such agreement, as
provided in Section 7.3(p) hereof.
(2) Each Holder agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers and each other person, if
any, who controls the Company within the meaning of the Securities Act, to the
same extent as the foregoing indemnity from the Company to the Holders, but only
with respect to (i) statements or omissions, if any, made in conformity with
information relating to such Holder furnished in writing by such Holder
specifically for use in the Registration Statement, or any preliminary
Prospectus or the Prospectus or any amendment thereof or supplement thereto, and
(ii) any breach of such Holder's representations, covenants or agreements set
forth herein; provided, however, that the obligation to indemnify will be
individual to each Holder and will be limited to the amount of net proceeds
received by such Holder from the sale of Warrant Securities pursuant to the
Registration Statement.
(3) Promptly after receipt by an indemnified party under this
Section 7.3(s) of notice of the commencement of any action, suit or proceeding,
such indemnified party shall, if a claim in respect thereof is to be made
against one or more indemnifying parties under this Section 7.3(s), notify each
party against whom indemnification is to be sought in writing of the
commencement thereof (but the failure to notify an indemnifying party shall not
relieve it from any liability which it may have under Sections 7.3(s)(1) or (2)
unless and to the extent that it has been prejudiced in a material respect by
such failure or from the forfeiture of substantial rights and defenses). In case
any such action, suit or proceeding is brought against any indemnified party,
and it notifies an indemnifying party or parties of the commencement thereof,
the indemnifying party or parties will be entitled to participate therein, and
to the extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party, which may be the same counsel as counsel to the indemnifying
party. Notwithstanding the foregoing, the indemnified party or parties shall
have the right to employ its or their own counsel in any such case but the fees
and expenses of such counsel shall be at the expense of such indemnified party
or parties unless (i) the employment of such counsel shall have been authorized
in writing by the indemnifying parties in connection with the defense of such
action at the expense of the indemnifying party, (ii) the indemnifying parties
shall not have employed counsel reasonably satisfactory to such indemnified
party to take charge of the defense of such action within a reasonable time
after notice of commencement of the action or (iii) such indemnified party or
parties shall have reasonably concluded, after consultation with counsel to such
indemnified party or parties, that a conflict of interest exists which makes
representation by counsel chosen by the indemnifying party not advisable (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses of one additional counsel shall be borne by
the indemnifying parties. In no event shall the indemnifying parties be liable
for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
Anything in this Section 7.3(s) to the contrary notwithstanding, an indemnifying
party shall not be liable for any settlement of any claim or action effected
without its written consent.
(4) In order to provide for just and equitable contribution in
any case in which (i) an indemnified party makes claim for indemnification
pursuant to this Section 7.3(s), but it is judicially determined (by the entry
of a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that the express provisions of this Section 7.3(s) provide for indemnification
in such case, or (ii) contribution under the Securities Act may be required,
then each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid as a result of such losses, claims, damages,
expenses or liabilities (or actions, suits, proceedings or litigation in respect
thereof) in such proportion as is appropriate to reflect the relative fault of
each of the contributing parties, on the one hand, and the party to be
indemnified, on the other hand, in connection with the statements or omissions
that resulted in such losses, claims, damages, expenses or liabilities, as well
as any other relevant equitable considerations. Relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by a Holder,
and the parties' relative
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intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, expenses or liabilities (or
actions, suits, proceedings or litigation in respect thereof) referred to above
in this subsection (4) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating,
preparing or defending any such action, claim, suit, proceeding or litigation.
Notwithstanding the provisions of this subsection (4), no Holder shall be
required to contribute any amount in excess of the amount by which the total
price at which the Warrant Securities sold by such indemnifying party and
distributed to the public were offered to the public exceeds the amount of any
damages that such indemnifying party has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 12(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 7.3(s), each person, if any, who controls the Company within the
meaning of the Securities Act, each executive officer of the Company and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to this subsection (4). Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit, proceeding or litigation against such party in respect to which a
claim for contribution may be made against another party or parties under this
subsection (4), notify such party or parties from whom contribution may be
sought, but the omission so to notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have hereunder or otherwise than under this subsection (4), or to
the extent that such party or parties were not adversely affected by such
omission. The contribution agreement set forth above shall be in addition to any
liabilities which any indemnifying party may have at common law or otherwise.
(t) Notwithstanding the foregoing provisions of this Section
7.3, no registration rights shall be extended pursuant to this Section 7 with
respect to any Warrant Securities (i) which have been sold pursuant to and in
accordance with an effective Registration Statement, (ii) sold in accordance
with Rule 144 under the Securities Act or (iii) eligible for sale under Rule
144(k) under the Securities Act.
8. Adjustments to Exercise Price and Number of Securities.
8.1 Adjustments.
(a) In the event that the Company shall subdivide its
outstanding shares of Common Stock into a greater number of shares or combine
its outstanding shares of Common Stock into a smaller number of shares, the
Exercise Price in effect immediately prior thereto shall be forthwith
proportionately decreased in the case of a subdivision or increased in the case
of a combination. An adjustment made pursuant to this Section 8.1(a) shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such dividend or distribution and shall become
effective immediately after the date of such subdivision or combination, as the
case may be.
(b) In the event that the Company shall (i) issue or
distribute (for no consideration or at a price per share less than the Market
Price per share on the date of such issuance or distribution) shares of any
class of capital stock of the Company (such shares being hereafter referred to
as "Capital Stock") (excluding an issuance or distribution of Common Stock
described in Section 8.1(a)) or (ii) issue or distribute any rights, warrants,
options or convertible or exchangeable securities entitling the holder thereof
to subscribe for, purchase, convert into or exchange for Capital Stock at a
price per share less than the Market Price per share of such Capital Stock on
the date of such issuance or distribution, then, in each such case, at the
earliest of (A) the date the Company enters into a firm contract for such
issuance or distribution, (B) the record date for the determination of
stockholders entitled to receive any such Capital Stock or any such rights,
warrants, options or convertible or exchangeable securities or (C) the date of
actual issuance or distribution of any such Capital Stock or any such rights,
warrants, options or convertible or exchangeable securities, the Exercise Price
shall be reduced by multiplying the Exercise Price in effect immediately prior
to such earliest date by:
(x) if such Capital Stock is Common Stock, a fraction the
numerator of which is the number of shares of Common Stock
outstanding on such earliest date plus the number of shares of
Common Stock which could be purchased at the Market Price per
share of Common Stock on the date of
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such issuance or distribution with the aggregate consideration
(based on the Fair Market Value thereof) received or
receivable by the Company either (A) in connection with such
issuance or distribution or (B) upon the conversion, exchange,
purchase or subscription of all such rights, warrants, options
or convertible or exchangeable securities (the "Aggregate
Consideration"), and the denominator of which is the number of
shares of Common Stock outstanding on such earliest date plus
the number of shares of Common Stock to be so issued or
distributed or to be issued upon the conversion, exchange,
purchase or subscription of all such rights, warrants, options
or convertible or exchangeable securities; or
(y) if such Capital Stock is other than Common Stock, a
fraction the numerator of which is the Market Price per share
of Common Stock on such earliest date minus an amount equal to
(A) the difference between (1) the Market Price per share of
such Capital Stock multiplied by the number of shares of such
Capital Stock to be so issued and (2) the Aggregate
Consideration, divided by (B) the number of shares of Common
Stock outstanding on such date, and the denominator of which
is the Market Price per share of Common Stock on such earliest
date.
Such adjustment shall be made successively whenever any such Capital Stock,
rights, warrants, options or convertible or exchangeable securities are so
issued or distributed. In determining whether any rights, warrants, options or
convertible or exchangeable securities entitle the holders thereof to subscribe
for, purchase, convert into or exchange for shares of such Capital Stock at less
than such Market Price, there shall be taken into account the Fair Market Value
of any consideration received or receivable by the Company for such rights,
warrants, options or convertible or exchangeable securities (including upon
exercise thereof.) If any right, warrant, option or convertible or exchangeable
securities, the issuance of which resulted in an adjustment in the Exercise
Price pursuant to this Section 8.1(b), shall expire and shall not have been
exercised, the Exercise Price shall immediately upon such expiration be
recomputed to the Exercise Price which would have been in effect if such right,
warrant, option or convertible or exchangeable securities had never been
distributed or issued. Notwithstanding anything contained in this paragraph to
the contrary, the issuance of Capital Stock upon the exercise of such rights,
warrants or options or the conversion or exchange of such convertible or
exchangeable securities will not cause an adjustment in the Exercise Price if no
such adjustment would have been required at the time such right, warrant, option
or convertible or exchangeable security was issued or distributed; provided,
however, that, if the consideration payable upon such exercise, conversion or
exchange or the Capital Stock receivable thereupon are changed after the time of
the issuance or distribution of such right, warrant, option or convertible or
exchangeable security, then such change shall be deemed to be the expiration
thereof without having been exercised and the issuance or distribution of new
options, rights, warrants or convertible or exchangeable securities.
Notwithstanding anything contained in this Agreement to the
contrary, options, rights or warrants issued or distributed by the Company,
including options, rights or warrants distributed prior to the date of this
Agreement, to holders of Common Stock generally which, until the occurrence of a
specified event or events (a "Trigger Event"), (i) are deemed to be transferred
with Common Stock, (ii) are not exercisable and (iii) are also issued on a pro
rata basis with respect to future issuances of Common Stock, shall be deemed not
to have been issued or distributed for purposes of this Section 8.1 (and no
adjustment to the Exercise Price under this Section 8.1 will be required) until
the occurrence of the earliest Trigger Event. Upon the occurrence of a Trigger
Event, such options, rights or warrants shall continue to be deemed not to have
been issued or distributed for purposes of this Section 8.1 (and no adjustment
to the Exercise Price under this Section 8.1 will be required) if and for so
long as each Holder who thereafter exercises such Holder's Warrants shall be
entitled to receive upon such exercise, in addition to the shares of Common
Stock issuable upon such conversion, a number of such options, rights or
warrants, as the case may be, equal to the number of options, rights or warrants
to which a holder of the number of shares of Common Stock equal to the number of
shares of Common Stock issuable upon exercise of such Holder's Warrants is
entitled to receive at the time of such exercise in accordance with the terms
and provisions of and applicable to such options, rights or warrants. Upon the
expiration of any such options, rights or warrants or at such time, if any, as a
Holder is not entitled to receive such options, rights or warrants upon exercise
of such Holder's Warrants, an adjustment (if any is required) to the Exercise
Price shall be made in accordance with this Section 8.1 with respect to the
issuance of all such options, rights and warrants as of the date of issuance
thereof, but subject to the provisions of the preceding paragraph. If any such
option, right or warrant, including any such
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options, rights or warrants distributed prior to the date of this Agreement, are
subject to events, upon the occurrence of which such options, rights or warrants
become exercisable to purchase different securities, evidences of indebtedness,
cash, properties or other assets or different amounts thereof, then, subject to
the preceding provisions of this paragraph, the date of the occurrence of any
and each such event shall be deemed to be the date of distribution and record
date with respect to new options, rights or warrants with such new purchase
rights (and a termination or expiration of the existing options, rights or
warrants without exercise thereof). In addition, in the event of any
distribution (or deemed distribution) of options, rights or warrants, or any
Trigger Event or other event of the type described in the preceding sentence,
that required (or would have required but for the provisions of Section 8.3) an
adjustment to the Exercise Price under this Section 8.1 and such options, rights
or warrants shall thereafter have been redeemed or repurchased without having
been exercised, then the Exercise Price shall be adjusted upon such redemption
or repurchase to give effect to such distribution, Trigger Event or other event,
as the case may be, as though it had instead been a cash distribution, equal on
a per share basis to the result of the aggregate redemption or repurchase price
received by holders of such options, rights or warrants divided by the number of
shares of Common Stock outstanding as of the date of such repurchase or
redemption, made to holders of Common Stock generally as of the date of such
redemption or repurchase.
Notwithstanding anything contained in this Section 8.1(b) to
the contrary, no adjustment shall be made in the Exercise Price pursuant to this
Section 8.1(b) with respect to the issuance of Common Stock or options or other
rights to purchase an aggregate maximum of 307,157 shares of Common Stock
pursuant to the Company's 1996 Incentive Stock Option Plan and the Company's
1997 Stock Option Plan.
(c) If the Company shall pay or distribute, as a dividend or
otherwise, generally to holders of Common Stock or any class or series of
Capital Stock which is convertible into or exercisable or exchangeable for
Common Stock, any assets, properties or rights (including, without limitation,
evidences of indebtedness of the Company, any subsidiary or any other person or
entity, cash or Capital Stock or other securities of the Company, any subsidiary
or any other person or entity, but excluding payments and distributions as
described in Section 8.1(a) or 8.1(b), dividends and distributions in connection
with the liquidation, dissolution or winding up of the Company in its entirety
and distributions consisting solely of cash described in Section 8.1(d)), then
in each such case the Exercise Price shall be reduced by multiplying the
Exercise Price in effect immediately prior to the date of such payment or
distribution by a fraction, the numerator of which is the Market Price per share
of Common Stock on the record date for the determination of stockholders
entitled to receive such payment or distribution less the Fair Market Value per
share on such record date of the assets, properties or rights so paid or
distributed and the denominator shall be the Market Price per share of Common
Stock on such record date. For purposes of this Section 8.1(c), such Fair Market
Value per share shall equal the aggregate Fair Market Value on such record date
of the assets, properties or rights paid or distributed divided by the number of
shares of Common Stock outstanding on such record date. Such adjustment shall
become effective immediately after the record date for the determination of
shareholders entitled to receive such distribution.
(d) If the Company shall, by dividend or otherwise, make a
distribution (other than in connection with the liquidation, dissolution or
winding up of the Company in its entirety), generally to holders of Common Stock
or any class or series of Capital Stock which is convertible into or exercisable
or exchangeable for Common Stock, consisting solely of cash where (x) the sum of
(i) the aggregate amount of such cash plus (ii) the aggregate amount of all cash
so distributed (by dividend or otherwise) to such holders within the 12-month
period ending on the record date for determining stockholders entitled to
receive such distribution with respect to which no adjustment has been made to
the Exercise Price pursuant to this Section 8.1(d) exceeds (y) 10% of the result
of the multiplication of (1) the Market Price per share of Common Stock on such
record date times (2) the number of shares of Common Stock outstanding on such
record date, then the Exercise Price shall be reduced, effective immediately
prior to the opening of business on the day following such record date, by
multiplying the Exercise Price in effect immediately prior to the close of
business on the day prior to such record date by a fraction, the numerator of
which is the Market Price per share of Common Stock on such record date less the
aggregate amount of cash per share so distributed and the denominator of which
is such Market Price; provided, however, that, if the aggregate amount of cash
per share is equal to or greater than such Market Price, then, in lieu of the
foregoing adjustment, adequate provision shall be made so that each Holder shall
have the right to receive upon conversion (with respect to each share of Common
Stock issued upon such conversion and in addition to the Common Stock
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issuable upon conversion) the aggregate amount of cash per share such Holder
would have received had such Holder's Warrants been exercised immediately prior
to such record date. In no event shall the Exercise Price be increased pursuant
to this Section 8.1(d); provided, however, that if such distribution is not so
made, the Exercise Price shall be adjusted to be the Exercise Price which would
have been in effect if such distribution had not been declared. For purposes of
this paragraph of this Section 8.1(d), such aggregate amount of cash per share
shall equal such sum divided by the number of shares of Common Stock outstanding
on such record date.
(e) Anything in this Section 8 to the contrary
notwithstanding, the Company shall be entitled to make such reductions in the
Exercise Price, in addition to those required by this Section 8.1, as it in its
discretion shall determine to be advisable.
(f) For purposes of this Agreement, "Fair Market Value" means,
at any date as to any asset, property or right (including without limitation,
capital stock or any person, evidences of indebtedness or other securities, but
excluding cash), the fair market value of such item as determined in good faith
by the Board of Directors, whose determination shall be conclusive; provided,
however, that, if there is a Market Price for such item on such date, "Fair
Market Value" means such Market Price (without giving effect to the last
sentence of the definition thereof).
8.2 Merger or Consolidation. In the event of (i) any
reclassification (including, without limitation, a reclassification effected by
means of an exchange or tender offer by the Company or any Subsidiary) or change
of outstanding Common Stock (other than a change relating to par value, or as a
result of a subdivision or combination), (ii) any consolidation, merger or
combination of the Company with another corporation as a result of which holders
of Common Stock shall be entitled to receive securities or other assets
(including cash) with respect to or in exchange for Common Stock or (iii) any
sale or conveyance of the assets of the Company as, or substantially as, an
entirety to any other corporation as a result of which holders of Common Stock
shall be entitled to receive securities or other assets (including cash) with
respect to or in exchange for Common Stock, then the Company or the successor or
purchasing corporation, as the case may be, shall execute and deliver to the
Holder upon surrender of the Warrant Certificate held by such Holder a
supplemental warrant agreement providing that the holder of each Warrant then
outstanding or to be outstanding shall have the right thereafter (until the
expiration of such Warrant) to receive, upon full exercise of such Warrant, the
kind and amount of shares of stock and/or other securities and/or property
receivable upon such consolidation or merger, by a holder of the number of
shares of Common Stock for which such Warrant might have been exercised
immediately prior to such reclassification, change, consolidation, merger,
combination, sale or conveyance. Such supplemental warrant agreement shall
provide for adjustments which shall be as nearly equivalent as practicable to
the adjustments provided for in this Section 8. The above provision of this
subsection shall similarly apply to successive events of the type described in
this Section 8.2.
8.3 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 two cents ($0.02) 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 two cents ($0.02) per Warrant Security.
8.4 Adjustment in Number of Securities. Upon each adjustment
of the Exercise Price pursuant to the provisions of this Section 8.1, the number
of shares of Common Stock issuable upon exercise at the adjusted Exercise Price
of each Warrant shall be adjusted to the nearest full amount by multiplying a
number equal to the Exercise Price in effect immediately prior to such
adjustment by the number of shares of Common Stock issuable upon exercise of
Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
8.5 Certificate of Adjustment. After each adjustment of the
Exercise Price or the amount of Warrant Securities purchasable upon exercise of
Warrants pursuant to this Section 8, the Company will promptly prepare a
certificate signed by the Chairman, President, Treasurer or Secretary of the
Company setting forth: (i) the Exercise Price, as so adjusted; (ii) the amount
of Warrant Securities purchasable upon exercise of each Warrant
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after such adjustment; and (iii) a brief statement of the facts accounting for
such adjustment. The Company will promptly file such certificate with its
records and cause a brief summary thereof to be sent by ordinary first class
mail to each Holder at such Holder's last address as it shall appear on the
registry books of the Company.
8.6 Validity of Warrant Certificate. Notwithstanding any
adjustments or changes in the Exercise Price or the amount of Warrant Securities
purchasable upon exercise of Warrants, Warrant Certificates theretofore and
thereafter issued shall continue to express the Exercise Price per share and the
amount of Warrant Securities purchasable thereunder as of the date such Warrant
Certificates were originally issued; provided, the Holders shall be entitled to
exercise Warrants represented by such Warrant Certificates after giving effect
to each such adjustment and change, and such Warrant Certificate shall be deemed
to incorporate each such adjustment and change as if new Warrant Certificates
reflecting each such adjustment and change had been issued to the Holders.
9. Exchange and Replacement of Warrant Certificates. Each
Warrant Certificate is exchangeable, without expense, upon the surrender thereof
by the 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 Warrant Securities 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
such Warrant Certificates, if mutilated, the Company will make and deliver a new
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 upon the exercise of the Warrants to purchase Common Stock, nor shall it
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
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 capital stock,
solely for the purpose of issuance upon the exercise of the Warrants, such
number of shares of Common Stock or other securities, property or rights as
shall be issuable upon 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 and other securities issued by the Company upon such
exercise shall be duly and validly issued, fully paid, non-assessable and not
subject to the preemptive rights of any security holder of the Company. As long
as the Warrants shall be outstanding, the Company shall use its reasonable best
efforts to cause the Common Stock issuable upon the exercise of the Warrants to
be listed (subject to official notice of issuance) on all securities exchanges
on which the Common Stock may then be listed and/or quoted on the Nasdaq
National Market or Nasdaq SmallCap Market if the Common Stock issued to the
public is so quoted.
12. Notices to Holders. Nothing contained in this Agreement
shall be construed as conferring upon the Holders the right to receive dividends
or 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 Warrants and their exercise, any of the
following events shall occur:
(a) the Company shall set a record date for the
purpose of entitling holders of shares of Common Stock 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;
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(b) the Company shall offer to all the holders of
shares of 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 to each Holder at least 15 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 or offer, 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 any of the events
described in this Section 12.
13. Notices.
All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made and
sent when delivered, or mailed by registered or certified mail, return receipt
requested:
(a) If to a Holder, 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.
14. Supplements and Amendments. The Company and the
Underwriters may from time to time supplement or amend this Agreement without
the approval of any Holders (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
in any material respect.
15. 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.
16. Termination. This Agreement shall terminate at the close
of business on July ___, 2004. Notwithstanding the foregoing, the
indemnification provisions of Section 7 shall survive such termination until the
close of business on July ___, 2009.
17. Governing Law; Submission to Jurisdiction. This Agreement
and each Warrant Certificates 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 and also hereby irrevocably waive any right or claim to trial by jury in
connection with any such action, proceeding or claim. 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 set forth in
Section 13
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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.
18. Entire Agreement; Modification. This Agreement (including
the Underwriting Agreement to the extent portions thereof are referred to
herein) contains the entire understanding between the parties hereto with
respect to the subject matter hereof. Except as set forth in Section 14 hereof,
this Agreement may not be modified or amended except by a writing duly signed by
the Company, Holders of Warrants or Warrant Securities representing a majority
of the shares of Common Stock issuable or issued hereunder and the party against
whom enforcement of the modification or amendment is sought.
19. 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.
20. 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.
21. Benefits of this Agreement. Nothing in this Agreement
shall be construed to give to any person, corporation or entity other than the
Company, the Representative and any other Holders of Warrants and/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 Holders of Warrants and/or Warrant
Securities.
22. 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.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
[SEAL] XXXX.XXX CORPORATION
By:______________________________________
Name:
Title:
Attest:
_______________________________
Name:
Title:
XXXXXXX AND COMPANY SECURITIES, INC.
By:______________________________________
Name:
Title:
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EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
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
5:30 P.M., NEW YORK TIME, JULY __, 2002
No. W- ____ Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that , or registered
assigns, is the registered holder of Warrants to purchase initially, at any time
from July __, 1998 until 5:30 p.m. New York time on July __, 2002 (the
"Expiration Date"), up to __________ fully paid and nonassessable shares of
Common Stock, no par value (the "Common Stock"), of xxxx.xxx 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
Representative's Warrant Agreement dated as of July __, 1997 by and between the
Company and Xxxxxxx and Company Securities, 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 and by
surrender of this Warrant Certificate.
No Warrant may be exercised after 5:30 p.m., New York 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 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 Warrants.
The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the amount the type and/or number of the
Company's securities issuable hereunder may, subject to certain conditions, be
adjusted. Subject to Section 8.6 of the Warrant Agreement, 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 transferee(s) in
exchange for this Warrant Certificate, 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 with such transfer.
A-1
20
Upon the exercise of less than all of the Warrants evidenced
by this Warrant 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 as of _______________________, _______
XXXX.XXX CORPORATION
[SEAL] By:______________________________________
Name:
Title:
Attest:
_____________________________
Name:
Title:
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ANNEX A
TO WARRANT CERTIFICATE
[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
___________________shares of Common Stock 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 ___________________________________ in the amount of
$_________________, all in accordance with the terms of Section 3 of the
Representative's Warrant Agreement dated as of July __, 1997 by and between
xxxx.xxx Corporation and Xxxxxxx and Company Securities, Inc. The undersigned
requests that a certificate for such securities 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)
A-3
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ANNEX B
TO WARRANT CERTIFICATE
[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 __________ shares of
Common Stock all in accordance with the terms of Section 3.2 of the
Representative's Warrant Agreement dated as of July , 1997 by and between
xxxx.xxx Corporation and Xxxxxxx and Company Securities, Inc. The undersigned
requests that a certificate for such securities 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)
23
ANNEX C
TO WARRANT CERTIFICATE
[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)
the within 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)
