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EXHIBIT 4.1.3
THIS WARRANT WAS ORIGINALLY ISSUED ON JULY 28, 1997, AND HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1993, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS AND MAY NOT BE SOLD, EXCHANGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED WITHOUT (I) THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH TRANSFER MAY BE LAWFULLY MADE WITHOUT REGISTRATION UNDER THE
ACT AND APPLICABLE STATE SECURITIES LAWS OR (II) REGISTRATION UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS.
STOCK PURCHASE WARRANT
To Subscribe for and Purchase
_______ Shares of Common Stock of
GRANITE FINANCIAL, INC.
THIS CERTIFIES THAT, for value received, __________________ (herein
called the "Purchaser"), or its registered assigns, is entitled to subscribe
for and purchase from Granite Financial, Inc. (herein called the "Company"), a
corporation organized and existing under the laws of the State of Delaware, at
the price specified below (subject to adjustment as noted below) at any time
after the first anniversary of the date hereof to and including the fifth
anniversary of the date hereof (the "Expiration Date"), _____________________
(_____________) fully paid and nonassessable shares of common stock, $0.001 par
value per share (herein the "Common Stock"), subject to adjustment as noted
below. This Warrant has been issued pursuant to a Purchase Agreement dated as
of July ____, 1997 (the "Agreement"), by and among the Company and the
underwriters named therein, including the Purchaser.
The warrant purchase price (subject to adjustment as noted below)
shall be $__________ per share.
This Warrant is subject to the following provisions, terms and
conditions:
1. The rights represented by this Warrant may be exercised by the
holder hereof, in whole or in part, by written notice of exercise delivered to
the Company on or prior to the intended date of exercise and by the surrender
of this Warrant (properly endorsed if required) at the principal office of the
Company and upon payment to it by check or wire transfer of the purchase price
for such shares. The Company agrees that the shares so purchased shall be and
are deemed to be issued to the holder hereof as the record owner of such shares
as of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. Subject to the
provisions of the next succeeding paragraph, certificates for the shares of
stock so purchased shall be delivered to the holder hereof within a reasonable
time, not exceeding seven days, after the rights represented by this Warrant
shall have been so
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exercised, and, unless this Warrant has expired, a new Warrant representing the
number of shares, if any, with respect to which this Warrant shall not then
have been exercised shall also be delivered to the holder hereof within such
time.
2. Notwithstanding the foregoing, however, the Company shall not
be required to deliver any certificate for shares of stock upon exercise of
this Warrant except in accordance with the provisions, and subject to the
limitations, of paragraph 7 hereof.
3. The Company represents and warrants that this Warrant has been
duly authorized by all necessary corporate action, has been duly executed and
delivered and is a legal and binding obligation of the Company. The Company
covenants and agrees that all shares which may be issued upon the exercise of
the rights represented by this Warrant according to the terms hereof or
represented by the Common Stock will, upon issuance, be duly authorized and
issued, fully paid and nonassessable. The Company further covenants and agrees
that during the period within which the rights represented by this Warrant may
be exercised, the Company will at all times have authorized, and reserved for
the purpose of issue or transfer upon exercise of the subscription rights
evidenced by this Warrant, a sufficient number of shares of its Common Stock to
provide for the exercise of the rights represented by this Warrant.
4. The above provisions are, however, subject to the following:
(a) The warrant purchase price shall, from and after the
date of issuance of this Warrant, be subject to adjustment from time to time as
hereinafter provided. Upon each adjustment of the warrant purchase price, the
holder of this Warrant shall thereafter be entitled to purchase, at the warrant
purchase price resulting from such adjustment, the number of shares obtained by
multiplying the warrant purchase price in effect immediately prior to such
adjustment by the number of shares purchasable pursuant hereto immediately
prior to such adjustment and dividing the product thereof by the warrant
purchase price resulting from such adjustment.
(b) In case the Company shall (i) declare a dividend upon
the Common Stock payable in Common Stock (other than a dividend declared to
effect a subdivision of the outstanding shares of Common Stock, as described in
subparagraph (c) below) or in any obligations or any shares of stock of the
Company which are convertible into or exchangeable for Common Stock (any of
such obligations or shares of stock being hereinafter referred to as
"Convertible Securities"), or in any rights or options to purchase any Common
Stock or Convertible Securities, or (ii) declare any other dividend or make any
other distribution upon the Common Stock payable otherwise than out of earnings
or earned surplus, then thereafter the holder of this Warrant upon the exercise
hereof will be entitled to receive the number of shares of Common Stock to
which such holder shall be entitled upon such exercise, and, in addition and
without further payment therefor, such number of shares of Common Stock, such
that upon exercise hereof, such holder would receive such number of shares of
Common Stock as a result of each dividend described in clause (i) above and
each dividend or distribution described in clause (ii) above which such holder
would have received by way of any such dividend or distribution if continuously
since the record date for any such dividend or distribution such holder (i) had
been the record holder of the number of shares of Common Stock then received,
and (ii) had retained
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all dividends or distributions in stock or securities (including Common Stock
or Convertible Securities, or in any rights or options to purchase any Common
Stock or Convertible Securities) payable in respect of such Common Stock or in
respect of any stock or securities paid as dividends or distributions and
originating directly or indirectly from such Common Stock. For the purposes of
the foregoing, a dividend or distribution other than in cash shall be
considered payable out of earnings or surplus only to the extent that such
earnings or surplus are charged an amount equal to the fair value of such
dividend as determined by the Board of Directors of the Company.
(c) In case the Company shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares, the warrant
purchase price in effect immediately prior to such subdivision shall be
proportionately reduced, and conversely, in case the outstanding shares of
Common Stock of the Company shall be combined into a smaller number of shares,
the warrant purchase price in effect immediately prior to such combination
shall be proportionately increased.
(d) If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company with
another corporation, or the sale of all or substantially all of its assets to
another corporation shall be effected in such a way that holders of Common
Stock shall be entitled to receive stock, securities or assets with respect to
or in exchange for Common Stock, then, as a condition of such reorganization,
reclassification, consolidation, merger or sale, lawful and adequate provision
shall be made whereby the holder hereof shall thereafter have the right to
purchase and receive, upon the basis and upon the terms and conditions
specified in this Warrant and in lieu of the shares of the Common Stock of the
Company immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby, such shares of stock, securities or assets as
may be issued or payable with respect to or in exchange for a number of
outstanding shares of such Common Stock equal to the number of shares of such
stock immediately theretofore purchasable and receivable upon the exercise of
the rights represented hereby had such reorganization, reclassification,
consolidation, merger or sale not taken place, and in any such case appropriate
provision shall be made with respect to the rights and interests of the holder
of this Warrant to the end that the provisions hereof (including without
limitation provisions for adjustments of the warrant purchase price and of the
number of shares purchasable upon the exercise of this Warrant) shall
thereafter be applicable, as nearly as may be, in relation to any shares of
stock, securities or assets thereafter deliverable upon the exercise hereof.
In connection with any such consolidation, merger or sale, the successor
corporation (if other than the Company) resulting from such consolidation or
merger or the corporation purchasing such assets shall assume, by written
instrument executed and mailed to the registered holder hereof at the last
address of such holder appearing on the books of the Company, the obligation to
deliver to such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
purchase.
(e) Upon any adjustment of the warrant purchase price, then
and in each such case the Company shall give written notice thereof, by first-
class mail, postage prepaid, addressed to the registered holder of this Warrant
at the address of such holder as shown on the books of the Company, which
notice shall state the warrant purchase price resulting from such adjustment
and the increase or decrease, if any, in the number of shares purchasable at
such price
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upon the exercise of this Warrant, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based.
(f) In case any time prior to the expiration of this
Warrant:
i) the Company shall declare any cash dividend on its
capital stock at a rate in excess of the rate of the last cash dividend
theretofore paid;
ii) the Company shall pay any dividend payable in stock
upon its capital stock or make any distribution (other than regular cash
dividends) to the holders of its capital stock;
iii) the Company shall offer for subscription pro rata
to the holders of its capital stock any additional shares of stock of any
class or other rights;
iv) there shall be any capital reorganization, or
reclassification of the capital stock of the Company, or consolidation or
merger of the Company with, or sale of all or substantially all of its
assets to, another corporation; or
v) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company.
then, in any one or more of said cases, the Company shall give written notice,
by first-class mail, postage prepaid, addressed to the registered holder of
this Warrant at the address of such holder as shown on the books of the
Company, of the date on which (A) the books of the Company shall close or a
record shall be taken for such dividend, distribution or subscription rights,
or (B) such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation or winding up shall take place, as the case may be.
Such notice shall also specify the date as of which the holders of capital
stock of record shall participate in such dividend, distribution or
subscription rights, or shall be entitled to exchange their capital stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up, as the case may be. Such written notice shall be given at least 30
days prior to the action in question and not less than 30 days prior to the
record date or the date on which the Company's transfer books are closed in
respect thereto.
(g) If any event occurs as to which in the opinion of the
Board of Directors of the Company the other provisions of this paragraph 4 are
not strictly applicable or if strictly applicable would not fairly protect the
purchase rights of the holder of this Warrant or of Common Stock in accordance
with the essential intent and principles of such provisions, then the Board of
Directors shall make an adjustment in the application of such provisions, in
accordance with such essential intent and principles, so as to protect such
purchase rights as aforesaid.
(h) No fractional shares of Common Stock shall be issued
upon the exercise of this Warrant, but, instead of any fraction of a share
which would otherwise be
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issuable, the Company shall pay a cash adjustment (which may be effected as a
reduction of the amount to be paid by the holder hereof upon such exercise) in
respect of such fraction in an amount equal to the same fraction of the Market
Price per share of Common Stock as of the close of business on the date of the
notice required by paragraph 1 above. "Market Price" shall mean, if the Common
Stock is traded on a securities exchange or on the Nasdaq National Market, the
average of the closing prices of the Common Stock on such exchange or the
Nasdaq National Market on the 20 trading days ending on the trading day prior
to the date of determination, or, if the Common Stock is otherwise traded in
the over-the-counter market, the average of the closing bid prices on the 20
trading days ending on the trading day prior to the date of determination. If
at any time the Common Stock is not traded on an exchange or the Nasdaq
National Market, or otherwise traded in the over-the-counter market, the Market
Price shall be deemed to be the higher of (i) the book value thereof as
determined by any firm of independent public accountants of recognized national
standing selected by the Board of Directors of the Company as of the last day
of any month ending within 60 days preceding the date as of which the
determination is to be made, or (ii) the fair value thereof determined in good
faith by the Board of Directors of the Company as of a date which is within 15
days of the date as of which the determination is to be made.
5. This Warrant shall not entitle the holder hereof to any voting
rights or other rights as a stockholder of the Company.
6. The holder of this Warrant, by acceptance hereof, agrees to
give written notice to the Company before transferring this Warrant or
transferring any Common Stock issuable or issued upon the exercise hereof of
such holder's intention to do so, describing briefly the manner of any proposed
transfer of this Warrant or such holder's intention as to the disposition to be
made of shares of Common Stock issuable or issued upon the exercise hereof. If
such notice is required pursuant to the preceding sentence, such holder shall
also provide the Company with an opinion of counsel satisfactory to the Company
to the effect that the proposed transfer of this Warrant or disposition of
shares may be effected without registration or qualification (under any federal
or state law) of this Warrant or the shares of Common Stock issuable or issued
upon the exercise hereof. Upon receipt of such written notice and such opinion
by the Company, such holder shall be entitled to transfer this Warrant, or to
exercise this Warrant in accordance with its terms and dispose of the shares
received upon such exercise or to dispose of shares of Common Stock received
upon the previous exercise of this Warrant, all in accordance with the terms of
the notice delivered by such holder to the Company, provided that an
appropriate legend respecting the aforesaid restrictions on transfer and
disposition may be endorsed on this Warrant or the certificates for such
shares.
7. Subject to the provisions of paragraph 6 hereof, this Warrant
and all rights hereunder are transferable, in whole or in part, at the
principal office of the Company by the holder hereof in person or by duly
authorized attorney, upon surrender of this Warrant properly endorsed. Each
taker and holder of this Warrant, by taking or holding the same, consents and
agrees that the bearer of this Warrant, when endorsed, may be treated by the
Company and all other persons dealing with this Warrant as the absolute owner
hereof for any purpose and as the person entitled to exercise the rights
represented by this Warrant, or to the transfer hereof on the
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books of the Company, any notice to the contrary notwithstanding; but until
such transfer on such books, the Company may treat the registered holder hereof
as the owner for all purposes.
8. This Warrant is exchangeable, upon the surrender hereof by the
holder hereof at the principal office of the Company, for new Warrants of like
tenor representing in the aggregate the right to subscribe for and purchase the
number of shares which may be subscribed for and purchased hereunder, each of
such new Warrants to represent the right to subscribe for and purchase such
number of shares as shall be designated by said holder hereof at the time of
such surrender.
9. The Company covenants and agrees as follows:
(a) For purposes of this Section 9:
i) The term "register," "registered" and
"registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document;
ii) The term "Registrable Securities" means (i) the
Common Stock issuable or issued upon exercise of this Warrant; and (ii)
any Common Stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in
exchange for or in replacement of, such Common Stock; provided, however,
that Common Stock or other securities shall only be treated as
Registrable Securities if and so long as (A) they have not been sold to
or through a broker or dealer or underwriter in a public distribution or
a public securities transaction, (B) they have not been sold in a
transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof so that all
transfer restrictions and restrictive legends with respect thereto are
removed upon the consummation of such sale, and (C) the registration
rights associated with such securities have not been terminated pursuant
to Section 9(n) hereof;
iii) The number of shares of "Registrable Securities
then outstanding" shall be determined by the number of shares of Common
Stock outstanding which are, and the number of shares of Common Stock
issuable pursuant to then exercisable securities which are, Registrable
Securities;
iv) "Securities Act" means the Securities Act of 1933,
as amended;
v) The term "Securities Holder" means any person
owning or having the right to acquire Registrable Securities or any
assignee thereof, including without limitation and without need for an
express assignment, subsequent holders of Registrable Securities; and
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vi) The term "S-3" means such form under the Securities
Act as in effect on the date hereof or any registration form under the
Securities Act subsequently adopted by the Securities and Exchange
Commission ("SEC") which permits inclusion or incorporation of
substantial information by reference to other documents filed by the
Company with the SEC.
(b) i) If the Company shall receive at any time after the
first anniversary of the date hereof, a written request from the
Securities Holders of a majority of the Registrable Securities then
outstanding that the Company file a registration statement under the
Securities Act covering the registration of all or a portion of the
Registrable Securities then outstanding, then the Company shall, within
ten (10) days of the receipt thereof, give written notice of such request
to all Securities Holders and shall, subject to the limitations of
subsections 9(b)(ii) and 9(b)(iii), use its best efforts to effect as
soon as practicable, and in any event within 90 days of the receipt of
such request, the registration under the Securities Act of all
Registrable Securities which the Securities Holders request to be
registered within twenty (20) days of the mailing of such notice by the
Company;
ii) If the Securities Holders initiating the
registration request hereunder ("Initiating Holders") intend to
distribute the Registrable Securities covered by their request by means
of an underwriting, they shall so advise the Company as a part of their
request made pursuant to this Section 9 and the Company shall include
such information in the written notice referred to in subsection 9(b)(i).
In such event, the right of any Securities Holder to include his
Registrable Securities in such registration shall be conditioned upon
such Securities Holder's participation in such underwriting and the
inclusion of such Securities Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority of the
Initiating Securities Holders and such Securities Holder to the extent
provided herein). All Securities Holders proposing to distribute their
securities through such underwriting shall (together with the Company as
provided in subsection 9(d)(v)) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting. Notwithstanding any other provision of this Section 9, if
the underwriter advises the Initiating Holders in writing that marketing
factors require a limitation of the number of shares to be underwritten,
then the Initiating Holders shall so advise all Securities Holders of
Registrable Securities which would otherwise be underwritten pursuant
hereto, and the number of shares of Registrable Securities that may be
included in the underwriting shall be allocated among all Securities
Holders thereof, including the Initiating Holders, in proportion (as
nearly as practicable) to the amount of Registrable Securities of the
Company owned by each Securities Holder; provided, however, that the
number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities are first
entirely excluded from the underwriting; and
iii) The Company is obligated to effect only one such
registration pursuant to this Section 9 (other than on Form S-3). The
Company is obligated to effect one additional such registrations pursuant
to this Section 9 on Form S-3.
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(c) If (but without any obligation to do so) at any time the
Company proposes to file with the SEC a registration statement to register
(including for this purpose a registration effected by the Company for
shareholders other than the Securities Holders) any of its stock or other
securities under the Securities Act in connection with the public offering of
such securities solely for cash (other than a registration relating solely to
the sale of securities to participants in a Company stock plan, or a
registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities or an SEC Rule 145
transaction), the Company shall, at such time, give each Securities Holder
written notice of such registration not later than 30 days prior to filing of
such registration statement. Upon the written request of each Securities
Holder given within thirty (30) days after mailing of such notice by the
Company, the Company shall, subject to the provisions of Section 9(h), cause to
be registered under the Securities Act all of the Registrable Securities that
each such Securities Holder has requested to be registered.
(d) Whenever required under this Section 9 to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
i) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best
efforts to cause such registration statement to become effective, and,
upon the request of the Securities Holders of a majority of the
Registrable Securities registered thereunder, keep such registration
statement effective for up to 90 days;
ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement;
iii) Furnish to the Securities Holders such numbers of
copies of a prospectus, including a preliminary prospectus, in conformity
with the requirements of the Securities Act, and such other documents as
they may reasonably request in order to facilitate the disposition of
Registrable Securities owned by them;
iv) Use its best efforts to register and qualify the
securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Securities Holders, provided that the Company shall not
be required in connection therewith or as a condition thereto to qualify
to do business or to file a general consent to service of process in any
such states or jurisdictions;
v) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement,
in usual and customary form, with the managing underwriter of such
offering;
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vi) Notify each Securities Holder of Registrable
Securities covered by such registration statement, promptly after it
shall receive notice thereof, of the time when such registration
statement has become effective or a supplement to any prospectus forming
a part of such registration statement has been filed;
vii) Notify such Securities Holders promptly of any
request by the Commission for the amending or supplementing of such
registration statement or prospectus or for additional information;
viii) Prepare and file with the Commission,
promptly upon the request of any such Security Holders, any amendments or
supplements to such registration statement or prospectus which, in the
opinion of counsel for such holders, is required under the Securities Act
or the rules and regulations thereunder in connection with the
distribution of the Registrable Securities by such holder;
ix) Prepare and promptly file with the Commission and
promptly notify such Securities Holders of the filing of such amendment
or supplement to such registration statement or prospectus as may be
necessary to correct any statements or omissions if, at the time when a
prospectus relating to such securities is required to be delivered under
the Securities Act, any event shall have occurred as the result of which
any such prospectus or any other prospectus as then in effect would
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances in which they were made, not misleading;
x) Advise such Security Holders, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance of any
stop order by the Commission suspending the effectiveness of such
registration statement or the initiation or threatening of any proceeding
for that purpose and promptly use its best efforts to prevent the
issuance of any stop order to obtain its withdrawal if such stop order
should be issued;
xi) Not file any amendment or supplement to such
registration statement or prospectus to which a majority in interest of
such Security Holders shall have reasonably objected on the grounds that
such amendment or supplement does not comply in all material respects
with the requirements of the Securities Act or the rules and regulations
thereunder, after having been furnished with a copy thereof at least two
business days prior to the filing thereof, unless in the opinion of
counsel for the Company the filing of such amendment or supplement is
reasonably necessary to protect the Company from any liabilities under
any applicable federal or state law and such filing will not violate
applicable law;
xii) At the request of any such Security Holder, furnish
(i) an opinion, dated as of the closing date, of the counsel representing
the Company for the purposes of such registration, addressed to the
underwriters, if any, and to the Security Holder or Security Holders
making such request, covering such matters as such
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underwriters and Security Holder or Security Holders may reasonably
request; and (ii) letters dated as of the effective date of the
registration statement and as of the closing date, from the independent
certified public accountants of the Company, addressed to the
underwriters, if any, and to the Security Holder or Security Holders
making such request, covering such matters as such underwriters and
holder or holders may reasonably request; and
xiii) Notify each Securities Holder of Registrable
Securities covered by such registration statement at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(e) It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Section 9 with respect to the
Registrable Securities of any selling Securities Holder that such Securities
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities and shall be required to effect the registration of such
Securities Holder's Registrable Securities.
(f) All expenses other than underwriting discounts and
commissions incurred in connection with registrations, filings, or
qualifications pursuant to Section 9(b), including (without limitation) all
registration, filing, and qualification fees, printers' and accounting fees,
reasonable fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements of one counsel for the selling Securities
Holders shall be borne by the Company; provided, however, that the Company
shall not be required to pay for any expenses of any registration proceeding
begun pursuant to Section 9(b) if the registration request is subsequently
withdrawn at the request of the Securities Holders of a majority of the
Registrable Securities to be registered (in which case all participating
Securities Holders shall bear such expenses), unless the Securities Holders of
a majority of the Registrable Securities agree to forfeit their right to one
demand registration pursuant to Section 9(b), provided further, however, that
if at the time of such withdrawal, the Securities Holders have learned of a
material adverse change in the condition, business or prospects of the Company
from that known to the Securities Holders at the time of their request and have
withdrawn the request with reasonable promptness following disclosure by the
Company or discovery by the Securities Holders of such material adverse change,
then the Securities Holders shall not be required to pay any such expenses and
shall retain their right pursuant to Section 9(b).
(g) The Company shall bear and pay all expenses incurred in
connection with any registration, filing or qualification of Registrable
Securities with respect to any registrations pursuant to Section 9(c) for each
Securities Holder, including (without limitation) all registration, filing and
qualification fees, printers and accounting fees relating or apportionable
thereto and the reasonable fees and disbursements of one counsel for the
selling Securities Holders
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(if separate counsel is deemed necessary or desirable by such Securities
Holders) selected by them, but excluding underwriting discounts and commissions
relating to Registrable Securities.
(h) In connection with any offering involving an
underwriting of shares of the Company's capital stock, the Company shall not be
required under Section 9(c) to include any of the Securities Holders'
securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected
by the persons entitled to select the underwriters, and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by Securities Holders
to be included in such offering exceeds the amount of securities sold other
than by the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among all selling stockholders according to
the total amount of securities owned by each selling stockholder or in such
other proportions as shall mutually be agreed to by such selling stockholders).
For purposes of the preceding parenthetical concerning apportionment, for any
corporation, the partners, retired partners and stockholders of such holder, or
the estates and family members of any such partners and retired partners and
any trusts for the benefit of any of the foregoing persons shall be deemed to
be a single "selling stockholder," and any pro rata reduction with respect to
such "selling stockholder" shall be based upon the aggregate amount of shares
owned by all entities and individuals included in such "selling stockholder,"
as defined in this sentence. Those Registrable Securities which are thus
excluded from the underwritten public offering shall be withheld from the
market by the holders thereof for a period, not to exceed 90 days, which the
underwriters reasonably determine is necessary in order to effect the
underwritten public offering.
(i) No Securities Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 9.
(j) In the event any Registrable Securities are included in
a registration statement under this Section 9:
i) The Company will indemnify and hold harmless each
Securities Holder, any underwriter (as defined in the Securities Act) for
such Securities Holder and each person, if any, who controls such
Securities Holder or underwriter within the meaning of the Securities Act
or the Securities Exchange Act of 1934, as amended (the "1934 Act"),
against any losses, claims, damages or liabilities (joint or several) to
which they may become subject under the Securities Act, or the 1934 Act
or other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any of the following statements, omissions or violations
(collectively, a "Violation"): (1) any untrue statement or alleged
untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus
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or final prospectus contained therein or any amendments or supplements
thereto, (2) the omission or alleged omission to state therein a material
fact required to be stated therein, or necessary to make the statements
therein not misleading, or (3) any Violation or alleged Violation by the
Company of the Securities Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Securities Act, or the 1934
Act or any state securities law, and the Company will pay to each such
Securities Holder, underwriter or controlling person, as incurred, any
legal or other expenses reasonably incurred by one law firm retained by
them (plus one additional law firm retained by a Securities Holder or
Securities Holders if such Securities Holder or Securities Holders
reasonably believe there exists a conflict of interest among them) in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement
contained in this subsection 9(j)(i) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in
any such case for any such loss, claim, liability or action to the extent
that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such
Securities Holder, underwriter or controlling person;
ii) Each selling Securities Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers
who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any
underwriter, any other Securities Holder selling securities in such
registration statement and any controlling person of any such underwriter
or other Securities Holder, against any losses, claims, damages or
liabilities (joint or several) to which any of the foregoing persons may
become subject, under the Securities Act, or the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based
upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with
written information furnished by such Securities Holder expressly for use
in connection with such registration, and each such Securities Holder
will pay, as incurred, any legal or other expenses reasonably incurred by
any person intended to be indemnified pursuant to this subsection
9(j)(ii), in connection with investigating or defending any such loss,
claim, damage, liability or action; provided however, that the indemnity
agreement contained in this subsection 9(j)(ii) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the
Securities Holder, which consent shall not be unreasonably withheld; and
provided further that, in no event shall any indemnity under this
subsection 9(j)(ii) exceed the net proceeds from the offering received by
such Securities Holder;
iii) Promptly after receipt by an indemnified party
under this Section 9(j) of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a
claim in respect thereto is to be made against any indemnified party
under this Section 9(j), deliver to the indemnified party a written
notice
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of the commencement thereof and the indemnified party shall have the
right to participate in, and to the extent the indemnified party so
desires, jointly with any other indemnified party similarly noticed, to
assume the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party (together with all
other indemnified parties which may be represented without conflict by
one counsel) shall have the right to retain one separate counsel, with
the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend
such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 9(j), but the omission so to
deliver written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than
under this Section 9(j); and
iv) The obligations of the Company and Securities
Holders under this Section 9(j) shall survive the completion of any
offering of Registrable Securities in a registration statement under this
Section 9, and otherwise.
(k) With a view to making available to the Securities Holder
the benefits of rule 144 promulgated under the Securities Act and any other
rule or regulation of the SEC that may at any time permit a Securities Holder
to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:
i) Make and keep public information available, as
those terms are understood and defined in SEC Rule 144, at all times;
ii) Use its best efforts, including maintaining
registration of its Common Stock under Section 12 of the 1934 Act, to
qualify for registration on Form S-3 for the sale of their Registrable
Securities as soon as possible;
iii) File with the SEC in a timely manner all reports
and other documents required by the Company under the Securities Act and
the 1934 Act; and
iv) Furnish to any Securities Holder, so long as the
Securities Holder owns any Registrable Securities, forthwith upon request
(A) a written statement by the Company that it has complied with the
reporting requirements of SEC Rule 144, the Securities Act and the 1934
Act, or that it qualifies as a registrant whose securities may be resold
pursuant to Form S-3 (at any time after it so qualifies), (B) a copy of
the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (C) such other
information as may be reasonably requested in availing any Securities
Holder of any rule or regulation of the SEC which permits the selling of
any such securities without registration or pursuant to such form.
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(l) From and after the date of this Agreement, the Company
shall not, without the prior written consent of the Securities Holders of a
majority of the outstanding Registrable Securities, enter into any agreement
with any holder or prospective holder of any securities of the Company which
would allow such holder or prospective holder to include such securities in any
registration filed under Section 9(b) or 9(c) hereof, unless under the terms of
such agreement, such holder or prospective holder may include such securities
in any registration filed under (i) Section 9(b) hereof only to the extent that
the inclusion of such securities is subject to all Registrable Securities
requested to be included therein by the Securities Holders first being included
pursuant to Section 9(b)(ii) and (ii) under Section 9(c) hereof only to the
extent that the inclusion of such securities does not have priority on
inclusion over any Registrable Securities requested to be included therein by
the Securities Holders if not all securities requested to be included therein
may be included pursuant to Section 9(h) hereof.
(m) Any provision of this Section 9 may be amended and the
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of
the Company and the Securities Holders owning a majority of the Registrable
Securities then outstanding. Any amendment or waiver effected in accordance
with this paragraph shall be binding upon each Securities Holder of any
Registrable Securities then outstanding, each future Securities Holder of all
such Registrable Securities, and the Company.
(n) No Securities Holder shall be entitled to exercise any
right provided for in Section 9(b) or (c) at such time as all Registrable
Securities held by such Securities Holder can be sold within a given
three-month period without compliance with the registration requirements of the
Securities Act pursuant to Rule 144.
10. (a) In addition to and without limiting the rights of the
holder of this Warrant under the terms of this Warrant, the holder of this
Warrant shall have the right (the "Conversion Right") to convert this Warrant
or any portion thereof into shares of Common Stock as provided in this
paragraph 10 at any time or from time to time prior to its expiration. Upon
exercise of the Conversion Right with respect to a particular number of shares
subject to this Warrant (the "Converted Warrant Shares"), the Company shall
deliver to the holder of this Warrant, without payment by the holder of any
exercise price or any cash or other consideration, that number of shares of
Common Stock equal to the quotient obtained by dividing the Net Value (as
hereinafter defined) of the Converted Warrant Shares by the fair market value
(as defined in paragraph (c) below) of a single share of Common Stock,
determined in each case as of the close of business on the Conversion Date (as
hereinafter defined). The "Net Value" of the Converted Warrant Shares shall be
determined by subtracting the aggregate warrant purchase price of the Converted
Warrant Shares from the aggregate fair market value of the Converted Warrant
Shares. Notwithstanding anything in this paragraph 10 to the contrary, the
Conversion Right cannot be exercised with respect to a number of Converted
Warrant Shares having a Net Value below $100. No fractional shares shall be
issuable upon exercise of the Conversion Right, and if the number of shares to
be issued in accordance with the foregoing formula is other than a whole
number, the Company shall pay to the holder of this Warrant an amount in cash
equal to the fair market value of the resulting fractional share.
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(b) The Conversion Right may be exercised by the holder of
this Warrant by the surrender of this Warrant at the principal office of the
Company together with a written statement specifying that the holder thereby
intends to exercise the Conversion right and indicating the number of shares
subject to this Warrant which are being surrendered (referred to in paragraph
(a) above as the Converted Warrant Shares) in exercise of the Conversion Right.
Such conversion shall be effective upon receipt by the Company of this Warrant
together with the aforesaid written statement, or on such later date as is
specified therein (the "Conversion Date"), but not later than the expiration
date of this Warrant. Certificates for the shares of Common Stock issuable
upon exercise of the Conversion Right, together with a check in payment of any
fractional share and, in the case of a partial exercise, a new warrant
evidencing the shares remaining subject to this Warrant, shall be issued as of
the Conversion Date and shall be delivered to the holder of this Warrant within
15 days following the Conversion Date.
(c) For purposes of this paragraph 10, the "fair market
value" of a share of Common Stock as of a particular date shall be its Market
Price, calculated as described in paragraph 4(h) hereof.
11. As used herein, the term "Common Stock" means and includes the
Company's presently authorized Common Stock and also includes any capital stock
of any class of the Company hereafter authorized which shall not be limited to
a fixed sum or percentage in respect of the rights of the holders thereof to
participate in dividends or in the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding up of the Company; provided
that the shares purchasable pursuant to this Warrant shall include shares
designated as Common Stock of the Company on the date of original issue of this
Warrant or, in the case of any reclassification of the outstanding shares
thereof, the stock, securities or assets provided for in Section 4(d) above.
12. All questions concerning this Warrant will be governed and
interpreted and enforced in accordance with the internal law, not the law of
conflicts, of the State of Minnesota.
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IN WITNESS WHEREOF, Granite Financial, Inc. has caused this Warrant
to be signed by its duly authorized officer and this Warrant to be dated as of
July 28, 1997.
GRANITE FINANCIAL, INC.
By
----------------------------------
Its
----------------------------
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SUBSCRIPTION FORM
To be Executed by the Holder of this Warrant if such Holder
Desires to Exercise this Warrant in Whole or in Part
To: Granite Financial, Inc. (the "Company")
The undersigned ______________________________
Please insert Social Security or other
identifying number of Subscriber:
______________________________
hereby irrevocably elects to exercise the right of purchase represented by this
Warrant for, and to purchase thereunder, ______________________ shares of the
Common Stock (the "Common Stock") provided for therein and tenders payment
herewith to the order of the Company in the amount of $___________________,
such payment being made as provided on the face of this Warrant.
The undersigned requests that certificates for such shares of Common
Stock be issued as follows:
Name: ___________________________________________________________________
Address: ___________________________________________________________________
Deliver to : _________________________________________________________________
Address: ___________________________________________________________________
and, if such number of shares of Common Stock shall not be all the shares of
Common Stock purchasable hereunder, that a new Warrant for the balance
remaining of the shares of Common Stock purchasable under this Warrant be
registered in the name of, and delivered to, the undersigned at the address
stated above.
Dated:
Signature _____________________________________________
Note: The signature on this Subscription
Form must correspond with the name as written
upon the face of this Warrant in every
particular, without alteration or enlargement
or any change whatever.
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FORM OF ASSIGNMENT
(To Be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
this Warrant, and appoints
to transfer this Warrant on the books of the Company with the full power of
substitution in the premises.
Dated:
In the presence of:
____________________________________________________
(Signature must conform in all respects to the name
of the holder as specified on the face of this
Warrant without alteration, enlargement or any
change whatsoever, and the signature must be
guaranteed in the usual manner)
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