1
EXHIBIT 10.4
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, TRANSFERRED OR
OTHERWISE DISPOSED OF, UNLESS REGISTERED PURSUANT TO THE PROVISIONS OF THAT ACT
OR AN OPINION OF COUNSEL TO THE COMPANY IS OBTAINED STATING THAT SUCH
DISPOSITION IS IN COMPLIANCE WITH AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION.
----------------------------
CONSERVER CORPORATION OF AMERICA
(Incorporated under the laws of the State of Delaware)
VOID AFTER 5:00 P.M., NEW YORK CITY TIME, ON _____________, 1999
DATED: ___________, 1996 WARRANT TO PURCHASE
_________ SHARES OF
COMMON STOCK
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
FOR VALUE RECEIVED, CONSERVER CORPORATION OF AMERICA, a Delaware
corporation (the "Company"), hereby certifies that
______________________________ or assigns (the "Holder") is entitled, subject to
the provisions of this warrant (the "Warrant"), to purchase from the Company
during the period commencing on the day hereof and expiring at 5:00 p.m. New
York City local time, on_____________, 1999 (the "Expiration Date") up to
_____________ fully paid and nonassessable shares of Common Stock of the Company
at a price of $5.00 per share (such exercise price per share being hereinafter
referred to as the "Exercise Price" and, if and as adjusted as herein provided,
the "Pro Forma Adjusted Exercise Price").
The term "Common Stock" means the common shares of the Company as
constituted on ______________, 1996 (the "Base Date"), together with any other
equity securities that may be issued by the Company in addition thereto or in
substitution therefor. The number of shares of Common Stock to be received upon
the exercise of this Warrant may be adjusted from time to time as hereinafter
set forth. The shares of Common Stock deliverable upon such exercise, and as
adjusted from time to time, are hereinafter sometimes referred to as "Warrant
Stock".
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of
2
this Warrant, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company shall execute and deliver a new Warrant of
like tenor and date. Any such new Warrant executed and delivered shall
constitute an additional contractual obligation on the part of the Company,
whether or not this Warrant so lost, stolen, destroyed or mutilated shall be at
any time enforceable by anyone.
The Holder agrees with the Company that this Warrant is issued, and all
the rights hereunder shall be held, subject to all of the conditions,
limitations and provisions set forth herein.
1. EXERCISE OF WARRANT.
1.1 PRIMARY MANNER OF EXERCISE. This Warrant may be exercised
in whole at any time, or in part from time to time, during the period commencing
on the Base Date and expiring on the Expiration Date or, if any such day is a
day on which banking institutions in the City of New York are authorized by law
to close, then on the next succeeding day that shall not be such a day, by
presentation and surrender of this Warrant to the Company at its principal
office, or at the office of its stock transfer agent, if any, with the Warrant
Exercise Form attached hereto duly executed and accompanied by payment (either
in cash or by certified or official bank check, payable to the order of the
Company) of the Exercise Price for the number of shares specified in such Form
and instruments of transfer, if appropriate, duly executed by the Holder or its
duly authorized attorney.
1.2 ALTERNATIVE MANNER OF EXERCISE. In lieu of exercising this
Warrant in the manner set forth in Section 1.1, this Warrant may be exercised in
whole at any time, or in part from time to time, during the period commencing on
the Base Date and expiring on the Expiration Date or, if any such day is a day
on which banking institutions in the City of New York are authorized by law to
close, then on the next succeeding day that shall not be such a day, by
presentation and surrender of this Warrant to the Company at its principal
office, or at the office of its stock transfer agent, if any, with the Warrant
Exercise Form attached hereto duly executed and accompanied by payment (either
in cash or by certified or official bank check, payable to the order of the
Company) of $.001 for each share issuable upon exercise of this Warrant, the
number of such shares (collectively, the "Alternative Option Shares") to be
determined as hereinafter set forth, and instruments of transfer, if
appropriate, duly executed by the Holder or its duly authorized attorney.
Alternative Option Shares shall be determined according to the following
formula:
Z = A x (MP - EP)
-------------
MP
2
3
For the purpose of this Section 1.2, the following definitions
shall apply:
(a) "Z" shall mean the Alternative Option Shares;
(b) "A" shall mean that number of shares of Common
Stock issuable upon exercise of this Warrant had such Warrant
been exercised pursuant to Section 1.1;
(c) "MV" shall mean the market price of the Common
Stock on the date this Warrant is presented and
surrendered to the Company; and
(d) "EP" shall mean the Exercise Price (as herein-
above defined).
1.3 PARTIAL EXERCISE. If this Warrant should be exercised in
part only, the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a new Warrant evidencing the rights of the Holder thereof to
purchase the balance of the shares purchasable hereunder. Upon receipt by the
Company of this Warrant, together with the Exercise Price, at its office, or by
the stock transfer agent of the Company at its office, in proper form for
exercise, the Holder shall be deemed to be the holder of record of the shares of
Common Stock issuable upon such exercise, notwithstanding that the stock
transfer books of the Company shall then be closed or that certificates
representing such shares of Common Stock shall not then be actually delivered to
the Holder. The Company shall pay any and all documentary stamp or similar issue
taxes payable in respect of the issue or delivery of shares of Common Stock on
exercise of this Warrant.
2. RESERVATION OF SHARES. The Company will at all times reserve for
issuance and delivery upon exercise of this Warrant all shares of Common Stock
or other shares of capital stock of the Company (and other securities and
property) from time to time receivable upon exercise of this Warrant. All such
shares (and other securities and property) shall be duly authorized and, when
issued upon such exercise, shall be validly issued, fully paid and nonassessable
and free of all preemptive rights.
3. ABSENCE OF REGISTRATION UNDER SECURITIES ACT OF 1933.
3.1 ABSENCE OF REGISTRATION UNDER SECURITIES ACT OF 1933. The
shares of Common Stock issuable upon exercise of this Warrant are not presently,
and upon their issuance will not be, registered under the Securities Act of
1933, as amended (the "Act"). Such shares of Common Stock, however, will be
subject to certain registration rights as more fully set forth in Schedule 3.1
attached hereto (the "Registration Rights Schedule"). This Warrant is not and
will not be registered under the Act.
3
4
3.2 RESTRICTIONS UPON TRANSFERABILITY. The Warrant Stock and
the Warrant may be sold or otherwise disposed only in accordance with the
provisions of Sections 4 and 5 of the Registration Rights Schedule.
4. FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant, but the
Company shall issue one additional share of its Common Stock in lieu of each
fraction of a share otherwise called for upon any exercise of this Warrant.
5. EXCHANGE, TRANSFERS, ASSIGNMENT OF WARRANT. This Warrant is not
registered under the Act nor under any applicable state securities law or
regulation. This Warrant cannot be exchanged, transferred or assigned, except in
accordance with the provisions of Section 3.2 hereof. Upon such event and upon
surrender of this Warrant to the Company or at the office of its stock transfer
agent, if any, with the Assignment Form annexed hereto duly executed and funds
sufficient to pay any transfer tax, the Company shall, without charge, execute
and deliver a new Warrant in the name of the assignee named in such instrument
of assignment and this Warrant shall promptly be cancelled.
6. RIGHTS OF THE HOLDER. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder of the Company, either at law or in
equity, and the rights of the Holder are limited to those expressed in this
Warrant.
7. REDEMPTION. This Warrant is not redeemable by the Company.
8. ANTI-DILUTION PROVISIONS.
8.1 ADJUSTMENT FOR DIVIDENDS IN OTHER SECURITIES, PROPERTY,
ETC.; RECLASSIFICATION, ETC. In case at any time or from time to time after the
Base Date the holders of Common Stock (or any other securities at the time
receivable upon the exercise of this Warrant) shall have received, or on or
after the record date fixed for the determination of eligible stockholders,
shall have become entitled to receive without payment therefor: (a) other or
additional securities or property (other than cash) by way of dividend, (b) any
cash paid or payable except out of earned surplus of the Company at the Base
Date as increased (decreased) by subsequent credits (charges) thereto (other
than credits in respect of any capital or paid-in surplus or surplus created as
a result of a revaluation of property) or (c) other or additional (or less)
securities or property (including cash) by way of stock-split, spin-off,
split-up, reclassification, combination of shares or similar corporate
rearrangement, then, and in each such case, the Holder of this Warrant, upon the
exercise thereof as provided in Section 1, shall be entitled to receive the
amount of securities and property (including cash in the cases referred to in
clauses
4
5
(b) and (c) above) which such Holder would hold on the date of such exercise if
on the Base Date it had been the holder of record of the number of shares of
Common Stock (as constituted on the Base Date) subscribed for upon such exercise
as provided in Section 1 and had thereafter, during the period from the Base
Date to and including the date of such exercise, retained such shares and/or all
other additional (or less) securities and property (including cash in the cases
referred to in clauses (b) and (c) above) receivable by it as aforesaid during
such period, giving effect to all adjustments called for during such period by
Section 8.2.
8.2 ADJUSTMENT FOR REORGANIZATION, CONSOLIDATION, MERGER, ETC.
In case of any reorganization of the Company (or any other corporation, the
securities of which are at the time receivable on the exercise of this Warrant)
after the Base Date or in case after such date the Company (or any such other
corporation) shall consolidate with or merge into another corporation or convey
all or substantially all of its assets to another corporation, then, and in each
such case, the Holder of this Warrant upon the exercise thereof as provided in
Section 1 at any time after the consummation of such reorganization,
consolidation, merger or conveyance, shall be entitled to receive, in lieu of
the securities and property receivable upon the exercise of this Warrant prior
to such consummation, the securities or property to which such Holder would have
been entitled upon such consummation if such Holder had exercised this Warrant
immediately prior thereto, all subject to further adjustment as provided in
Section 8.1; in each such case, the terms of this Warrant shall be applicable to
the securities or property receivable upon the exercise of this Warrant after
such consummation.
8.3 NO IMPAIRMENT. The Company will not, by amendment of its
Certificate of Incorporation or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale of assets or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
of the Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder of this Warrant against
dilution or other impairment. Without limiting the generality of the foregoing,
while any Warrant is outstanding, the Company (a) will not permit the par value,
if any, of the shares of stock receivable upon the exercise of this Warrant to
be above the amount payable therefor upon such exercise, (b) will take all such
action as may be necessary or appropriate in order that the Company may validly
and legally issue or sell fully-paid and nonassessable stock upon the exercise
of all Warrants at the time outstanding, (c) will not issue or sell any stock of
any class which is preferred as to dividends or as to the distribution of assets
upon voluntary or involuntary dissolution, liquidation or winding-up, unless the
rights of the holders thereof shall be limited to a fixed sum or percentage of
par value in respect to participation in dividends and in any such distribution
5
6
of assets and (d) will take no action to amend its Certificate of Incorporation
which would change to the detriment of the holders of Common Stock the dividend
or voting rights of the Company's Common Stock (as constituted on the Base
Date).
8.4 CERTIFICATE AS TO ADJUSTMENTS. In each case of an
adjustment in the number of shares of Common Stock (or other securities or
property) receivable on the exercise of the Warrant, the Company at its expense
will promptly compute such adjustment in accordance with the terms of the
Warrant and prepare a certificate setting forth such adjustment and showing in
detail the facts upon which such adjustment is based, including a statement of
(a) the consideration received or to be received by the Company for any
additional shares of Common Stock issued or sold or deemed to have been issued
or sold, (b) the number of shares of Common Stock outstanding or deemed to be
outstanding, and (c) the Pro Forma Adjusted Exercise Price. The Company will
forthwith mail a copy of each such certificate to each holder of the Warrant.
8.5 NOTICES OF RECORD DATE, ETC.
In case:
(a) the Company shall take a record of the holders
of its Common Stock (or other securities at the time receivable upon the
exercise of the Warrant) for the purpose of entitling them to receive any
dividend (other than a cash dividend) or other distribution, or any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities, or to receive any other right; or
(b) of any capital reorganization of the Company
(other than a stock split or reverse stock split), any reclassification of the
capital stock of the Company, any consolidation or merger of the Company with or
into another corporation (other than a merger for purposes of change of
domicile) or any conveyance of all or substantially all of the assets of the
Company to another corporation; or
(c) of any voluntary or involuntary dissolution,
liquidation or winding-up of the Company, then, and in each such case, the
Company shall mail or cause to be mailed to each holder of the Warrant at the
time outstanding a notice specifying, as the case may be, (i) the date on which
a record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right, or
(ii) the date on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up is to take place, and
the time, if any, is to be fixed, as to which the holders of record of Common
Stock (or such other securities at the time receivable upon the exercise of the
Warrant) shall be entitled to exchange their shares of Common Stock (or such
other securities) for securities or other property deliverable upon
6
7
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be mailed at least
twenty (20) days prior to the date therein specified and the Warrant may be
exercised prior to said date during the term of the Warrant no later than five
days prior to said date.
9. LEGEND. Upon exercise of any of the Warrants and the issuance of any
of the shares thereunder, all certificates representing shares shall bear on the
face thereof substantially the following legends, insofar as is consistent with
Delaware law:
"The shares of common stock represented by this certificate
have not been registered under the Securities Act of 1933, as
amended, and may not be sold, offered for sale, assigned,
transferred or otherwise disposed of, unless registered
pursuant to the provisions of that Act or an opinion of
counsel to the Corporation is obtained stating that such
disposition is in compliance with an available exemption from
such registration. "
10. APPLICABLE LAW. The Warrant is issued under and shall for all
purposes be governed by and construed in accordance with the laws of the State
of Delaware.
11. NOTICE. Notices and other communications to be given to the Holder
of the Warrant evidenced by this certificate shall be deemed to have been
sufficiently given, if delivered or mailed, addressed in the name and at the
address of such owner appearing on the records of the Company, and if mailed,
sent registered or certified mail, postage prepaid. Notices or other
communications to the Company shall be deemed to have been sufficiently given if
delivered by hand or mailed, by registered or certified mail, postage prepaid,
to the Company at 0000 XxXxxxx Xxxx, Xxxxx Xxxxxx, Xxxxxxx 00000, Attn:
President, or at such other address as the Company shall have designated by
written notice to such registered owner as herein provided. Notice by mail shall
be deemed given when deposited in the United States mail as herein provided.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed on
its behalf, in its corporate name, by its duly authorized officer, all as of the
day and year first above written.
CONSERVER CORPORATION OF AMERICA
By: __________________________________
Name: Xxxxxxx X. Xxxxx
Title: President
7
8
WARRANT EXERCISE FORM
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing ___________________ shares of Common Stock
of CONSERVER CORPORATION OF AMERICA and hereby makes payment at the rate of
$5.00 per share, or an aggregate of $ ______________, in payment therefor.
______________________________________
Name of Registered Holder
______________________________________
Signature
______________________________________
Signature, if held jointly
______________________________________
Date
9
INSTRUCTIONS FOR ISSUANCE OF STOCK
(if other than to the registered Holder of the within Warrant)
Name__________________________________________________________________________
(Please typewrite or print in block letters)
Address_______________________________________________________________________
_______________________________________________________________________
Social Security or Taxpayer Identification Number ____________________________
ASSIGNMENT FORM
(See Section 5 for terms of Assignment)
The Holder hereby assigns and transfers unto
Name__________________________________________________________________________
(Please typewrite or print in block letters)
Address_______________________________________________________________________
_______________________________________________________________________
the right to purchase shares of Common Stock of CONSERVER CORPORATION OF AMERICA
represented by this Warrant to the extent of ________________________ shares as
to which such right is exercisable and does hereby irrevocably constitute and
appoint Attorney, to transfer the same on the books of CONSERVER CORPORATION OF
AMERICA with full power of substitution in the premises.
Dated: __________________________, 19____
__________________________________
Name of Registered Holder
__________________________________
Signature
__________________________________
Signature, if held jointly
10
SCHEDULE 3.1
REGISTRATION RIGHTS, PROCEDURES
AND
RESTRICTIONS UPON TRANSFER
1. RESTRICTION ON TRANSFER. The Restricted Securities (as hereinafter
defined), and any shares of capital stock received in respect thereof, whether
by reason of a stock split or share reclassification thereof, a stock dividend
thereon or otherwise, shall not be transferable except upon the conditions
specified in this Schedule, which conditions are intended to insure compliance
with the provisions of the Securities Act in respect of the transfer thereof.
2. DEFINITIONS. As used in this Schedule, the following terms shall
have the following respective meanings:
"Commission" shall mean the Securities and Exchange
Commission, or any other Federal agency at the time administering the Securities
Act.
"Corporation" shall mean CONSERVER CORPORATION OF AMERICA, a
Delaware corporation, and its successors and assigns.
"Person" shall mean and include an individual, a corporation,
a partnership, a trust, an unincorporated organization and a government or any
department, agency or political subdivision thereof.
"Purchaser" shall mean the registered holder of the Warrants,
or such Purchaser's permitted successors or assigns.
"Restricted Securities" shall mean (i) the Warrants, and (ii)
the shares of Common Stock, $.001 par value, of the Corporation issuable upon
exercise of the Warrants.
"Restricted Shares" shall mean the shares of Common Stock of
the Corporation constituting Restricted Securities.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
11
"Transfer" shall include any disposition of Restricted
Securities or of any interest therein which would constitute a sale thereof
within the meaning of the Securities Act.
"Warrants" shall mean those common stock purchase warrants of
even date herewith, initially pertaining to the purchase of up to _____________
shares of Common Stock of the Corporation, and any common stock purchase
warrants issued in replacement or substitution therefor, to which this Schedule
is appended.
3. RESTRICTIVE LEGENDS. Each certificate for the Restricted Securities
and any shares of capital stock received in respect thereof, whether by reason
of a stock split or share reclassification thereof, a stock dividend thereon or
otherwise, and each certificate for any such securities issued to subsequent
transferees of any such certificate shall (unless otherwise permitted by the
provisions of Sections 4 or 11 hereof) be stamped or otherwise imprinted with a
legend in substantially the form set forth in Section 9 of the Warrant to which
this Schedule refers.
4. NOTICE OF TRANSFER. The holder of any Restricted Securities, by
acceptance thereof agrees, prior to any transfer of any Restricted Securities,
to give written notice to the Corporation of such holder's intention to effect
such transfer and to comply in all other respects with the provisions of this
Section 4, and Section 3.2 of the Warrant to which this Schedule refers. Each
such notice shall describe the manner and circumstances of the proposed transfer
and shall be accompanied by (a) the written opinion, addressed to the
Corporation, of counsel for the holder of Restricted Securities, as to whether
in the opinion of such counsel (which opinion shall be satisfactory to counsel
for the Corporation) such proposed transfer involves a transaction requiring
registration of such Restricted Securities under the Securities Act, and (b) in
the case of Restricted Shares, if in the opinion of such counsel such
registration is required, a written request addressed to the Corporation by the
holder of Restricted Securities, describing in detail the proposed method of
disposition and requesting the Corporation to effect the registration of such
Restricted Shares pursuant to the terms and provisions of Section 5 hereof;
provided, however, that no such opinion shall be required in connection with a
transaction complying with the requirements of Rule 144 (as amended from time to
time) promulgated under the Securities Act (or successor Rule thereto). If in
the opinion of such counsel (if such opinion is required hereunder) and counsel
for the Corporation, the proposed transfer of Restricted Securities may be
effected without registration under the Securities Act, the holder of Restricted
Securities shall thereupon be entitled to transfer Restricted Securities in
accordance with the terms of the notice delivered by it to the Corporation. Each
certificate or other instrument evidencing the securities issued upon the
transfer
2
12
of any Restricted Securities (and each certificate or other instrument
evidencing any untransferred balance of such securities) shall bear the legend
described in Section 3 hereof unless (a) in the opinion of such counsel and
counsel for the Corporation registration of future transfer is not required by
the applicable provisions of the Securities Act or (b) the Corporation shall
have waived the requirement of such legends; provided, however, that such legend
shall not be required on any certificate or other instrument evidencing the
securities issued upon such transfer in the event such transfer shall be made in
compliance with the requirements of Rule 144 (as amended from time to time)
promulgated under the Securities Act (or successor Rule thereto). The holder of
Restricted Securities shall not transfer such Restricted Securities until such
opinion of counsel has been given to the Corporation (unless waived by the
Corporation or unless such opinion is not required in accordance with the
provisions of this Section 4) or until registration of the Restricted Shares
involved in the above-mentioned request has become effective under the
Securities Act.
5. REGISTRATION. (a) If the Corporation at any time and from time to
time during the period commencing on ____________, 1997 and ending on
_____________, 2002 proposes for any reason to register any of its securities
under the Securities Act (other than pursuant to a registration statement on
Forms S-8, S-4 or similar or successor forms), it shall each such time promptly
give written notice to the Purchaser, if still a holder of outstanding
Restricted Securities, and to each other holder of outstanding Restricted
Securities, of its intention so to do, and, upon the written request, given
within 30 days after receipt of any such notice, of the holder(s) of any such
Restricted Securities to register any Restricted Shares (which request shall
specify the Restricted Shares intended to be sold or disposed of by such
holder(s) and shall state the intended method of disposition of such Restricted
Shares by the prospective seller(s)), the Corporation shall use its best efforts
to cause all such Restricted Shares to be registered under the Securities Act
promptly upon receipt of the written request of such holders for such
registration, all to the extent requisite to permit the sale or other
disposition (in accordance with the intended methods thereof, as aforesaid) by
the prospective seller(s) of the Restricted Shares so registered.
(b) Anything contained herein to the contrary notwithstanding,
with respect to any registration pursuant to this Section 5, the Corporation may
include in such registration any authorized but unissued shares of Common Stock
or other of its securities for sale by the Corporation or any issued and
outstanding shares of Common Stock for sale by others.
3
13
(c) In the event that any proposed registration under Section
5 is, in whole or in part, an underwritten public offering of securities of the
Corporation, any request pursuant to this Section 5 to register Restricted
Shares may specify that such shares are to be included in the underwriting (i)
on the same terms and conditions as the shares of Common Stock, if any,
otherwise being sold through underwriters under such registration or (ii) on
terms and conditions comparable to those generally applicable to offerings of
common stock in reasonably similar circumstances in the event that no shares of
Common Stock other than Restricted Shares are being sold through underwriters
under such registration; provided, however, that, as to any such registration,
(i) if the managing underwriter determines and advises in writing that the
inclusion of all Restricted Shares proposed to be included in the underwritten
public offering and other issued and outstanding shares of Common Stock proposed
to be included therein by persons other than holders of Restricted Securities
(the "Other Shares") would interfere with the successful marketing of such
securities, then the number of Restricted Shares and Other Shares excluded from
such registration shall be allocated, when the registration statement has been
filed pursuant to the exercise of a demand registration right by the holders of
Other Shares, first to the holders of Other Shares and, in all other
circumstances, pro rata among the holders of Restricted Shares and Other Shares
(based upon the number of shares of Common Stock requested to be registered in
such offering by the respective holders of Restricted Shares and Other Shares to
be registered in such offering), and (ii) in each case those shares of Common
Stock which are excluded from the underwritten public offering pursuant to this
Section 5 shall be nevertheless included in such registration but withheld from
the market by the holders thereof for a period, not to exceed 90 days, which the
managing underwriter reasonably determines as necessary in order to effect the
underwritten public offering.
6. PREPARATION AND FILING. If and whenever the Corporation is under an
obligation pursuant to the provisions of this Schedule to use its best efforts
to effect the registration of any Restricted Shares, the Corporation shall, as
expeditiously as practicable:
(a) prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to
cause such registration statement to become and remain effective;
(b) prepare and file with the Commission such amendments and
supplements to such registration statements and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for at least nine months and to comply with the
provisions of the Securities Act with respect to the sale or other
disposition of all
4
14
Restricted Shares covered by such registration statement and will
furnish to each selling stockholder prior to the filing thereof a copy
of any amendment or supplement to such registration statement or
prospectus and shall not file any such amendment or supplement to which
any such selling stockholder 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;
(c) furnish to each selling stockholder such number of copies
of such registration statement and of each such amendment or supplement
thereto (in each case including all exhibits) a summary prospectus or
other prospectus, including a preliminary prospectus, in conformity
with the requirements of the Securities Act, and such other documents
as such seller may reasonably request in order to facilitate the public
sale or other disposition of such Restricted Shares;
(d) use its best efforts to register or qualify the Restricted
Shares covered by such registration statement under the securities or
blue sky laws of such jurisdictions as each such seller shall
reasonably request but in no event more than three states in the
aggregate (provided, however, that the Corporation shall not be
required to consent to general service of process for all purposes in
any jurisdiction where it is not then qualified) and do any and all
other acts or things which may be necessary or advisable to enable such
seller to consummate the public sale or disposition in such
jurisdictions of such securities;
(e) notify each seller of Restricted Shares covered by such
registration statement, at any time when a prospectus relating thereto
covered by such registration statement is required to be delivered
under the Securities Act within the appropriate period mentioned in
clause (b) of this Section 6, of the happening of any event as a result
of which the Registration Statement, the prospectus or any document
incorporated therein by reference, 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 and
at the request of such seller, prepare and furnish to such seller a
post-effective amendment or supplement to the registration statement or
the related prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading;
5
15
(f) furnish, at the request of any holder or holders
requesting registration of Restricted Shares pursuant to this Schedule,
on the date that such Restricted Shares are delivered to the
underwriters for sale in connection with a registration pursuant to
this Schedule, if such securities are being sold through underwriters,
or, if such securities are not being sold through underwriters, on the
date that the registration statement with respect to such securities
becomes effective, (i) an opinion, dated such date, of the counsel
representing the Corporation for the purposes of such registration, in
form and substance as is customarily given to underwriters, in an
underwritten public offering, addressed to the underwriters, if any,
and to the holder or holders making such request; and (ii) a letter
dated such date, from the independent certified public accountants of
the Corporation, in form and substance as is customarily given by
independent certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters, if any,
and to the holder or holders making such request;
(g) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its securities holders, as soon as reasonably practicable,
an earnings statement covering the period of at least twelve months,
but not more than eighteen months, beginning with the first month of
the first fiscal quarter after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act; and
(h) notify each selling stockholder and the managing
underwriter or underwriters, if any, promptly, and confirm
such advice in writing;
(A) when the registration statement, any pre-effective
amendment, the prospectus or any prospectus supplement or
post-effective amendment to the registration statement has
been filed, and, with respect to the registration statement or
any post-effective amendment, when the same has become
effective;
(B) of the issuance by the Commission of any stop order
suspending the effectiveness of the registration statement or
the initiation of any proceedings for that purpose;
(C) of the receipt by the Corporation of any qualification of
the Restricted Shares for sale under the securities or "blue
sky" laws of any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and
6
16
(D) of the existence of any fact which results in the
registration statement, the prospectus or any document
incorporated therein by reference containing an untrue
statement of material fact or omitting to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading.
(i) make every reasonable effort to obtain the withdrawal of
any order suspending the effectiveness of the registration statement at
the earliest possible moment;
(j) use its best efforts to cause all Restricted Shares
covered by the registration statement to be listed on each securities
exchange on which the Corporation's Common Stock is listed, if any;
(k) provide and cause to be maintained a transfer agent for
all Restricted Shares covered by such registration statement from and
after a date not later than the effective date of such registration
statement.
7. UNDERWRITTEN OFFERINGS. [Intentionally Omitted].
8. PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each registration statement registering Restricted
Shares under the Securities Act, the Corporation will give the holders of
Restricted Shares on whose behalf such Restricted Shares are to be so registered
and their underwriters, if any, and their respective counsel and accountants,
the opportunity to participate in the preparation of such registration
statement, each prospectus included therein or filed with the Commission, each
document incorporated by reference therein and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Corporation with
its officers and the independent public accountants who have certified its
financial statements as shall be necessary, in the opinion of such holders and
such underwriters or their respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
9. EXPENSES. All expenses incurred by the Corporation in complying with
Sections 5 and 6 hereof, including, without limitation, all registration and
filing fees, fees and expenses of complying with securities and blue sky laws,
printing expenses and fees and disbursements of both counsel and the independent
certified public accountants of the Corporation shall be paid by the
Corporation; provided, however, that all underwriting discounts and selling
commissions and stock transfer taxes applicable to the Restricted Shares covered
by registrations effected pursuant to Section 5 hereof shall be borne by the
seller or sellers thereof,
7
17
in proportion to the number of Restricted Shares sold by such seller or sellers
shall be borne by such holders.
10. INDEMNIFICATION.
(a) In the event of any registration of any Restricted Shares
under the Securities Act pursuant to this Schedule or registration or
qualification of any Restricted Shares pursuant to Section 6(d) hereof, the
Corporation shall indemnify and hold harmless the seller of such shares, each
underwriter of such shares, if any, each broker or any other person acting on
behalf of such seller and each other person, if any, who controls any of the
foregoing persons, within the meaning of the Securities Act, 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 otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any registration statement under which such
Restricted Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, any document incorporated by
reference therein or any amendment or supplement thereto, or any document
prepared and/or furnished by the Corporation incident to the registration or
qualification of any Restricted Shares pursuant to Section 6(d) hereof, or arise
out of or are based upon 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, with respect to any prospectus, necessary to make the
statements therein in light of the circumstances under which they were made, not
misleading, or any violation by the Corporation of the Securities Act or state
securities or blue sky laws applicable to the Corporation and relating to action
or inaction required of the Corporation in connection with such registration or
qualification under such state securities or blue sky laws; and shall reimburse
such seller, such underwriter, broker or other person acting on behalf of such
seller and each such controlling person for any legal or any other expenses
reasonably incurred by any of them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
Corporation shall not be liable in any such case to the extent that such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in said
registration statement, said preliminary prospectus or said prospectus or said
amendment or supplement or any document incident to the registration or
qualification of any Restricted Shares pursuant to Section 6(d) hereof in
reliance upon and in conformity with written information furnished to the
Corporation through an instrument duly executed by such seller or such
underwriter specifically for use in the preparation thereof.
8
18
(b) Before Restricted Shares held by any prospective seller
shall be included in any registration pursuant to this Schedule, such
prospective seller and any underwriter acting on its behalf shall have agreed to
indemnify and hold harmless (in the same manner and to the same extent as set
forth in the preceding paragraph (a) of this Section 10) the Corporation, each
director of the Corporation, each officer of the Corporation who shall sign such
registration statement and any person who controls the Corporation within the
meaning of the Securities Act, with respect to any untrue statement or omission
from such registration statement, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, if such untrue
statement or omission was made in reliance upon and in conformity with written
information furnished to the Corporation through an instrument duly executed by
such seller or such underwriter specifically for use in the preparation of such
registration statement, preliminary prospectus, final prospectus or amendment or
supplement; provided, however, that the maximum amount of liability in respect
of such indemnification shall be limited, in the case of each prospective seller
of Restricted Shares, to an amount equal to the gross proceeds actually received
by such prospective seller from the sale of Restricted Shares effected pursuant
to such registration.
(c) Promptly after receipt by an indemnified party of notice
of the commencement of any actions involving a claim referred to in paragraph
(a) or (b) of this Section 10, such indemnified party will, if a claim in
respect thereof is made against an indemnifying party, give written notice to
the latter of the commencement of such action. In case any such action is
brought against an indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party, and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be responsible for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof; provided, however, that if any indemnified
party shall have reasonably concluded that there may be one or more legal
defenses available to such indemnified party which are differed from or
additional to those available to the indemnifying party, or that such claim or
litigation involves or could have an effect upon matters beyond the scope of the
indemnity agreement provided in this Section 10, the indemnifying party shall
reimburse such indemnified party for that portion of the fees and expenses of
any counsel retained by the indemnified party which are reasonably related to
the matters covered by the indemnity agreement provided in this Section 10.
(d) The failure to notify an indemnifying party promptly
of the commencement of any such action, if materially prejudicial
9
19
to the ability of the indemnifying party to defend such action, shall relieve
such indemnifying party of any liability to the indemnified party under this
Section 10, but the omission so to notify the indemnifying party will not
relieve the indemnifying party of any liability that it may have to any
indemnified party otherwise than under this Schedule.
The indemnifying party shall not make any settlement of any
claims indemnified against hereunder without the written consent of the
indemnified party or parties, which consent shall not be unreasonably withheld.
(e) If the indemnification provided for in Section 10 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received from the offering by the Corporation, the holders of
Restricted Shares and any underwriter; but if such allocation is not permitted
by applicable law or if the indemnified party failed to give the notice required
under paragraph (c) above, each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportions as are
appropriate to reflect not only such relative benefits but also relative fault
of the Corporation, the holders of Restricted Securities and any underwriter in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The parties agree that the 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
untrue statement of a material fact relates to information supplied by the
Corporation, the holders of Restricted Shares or underwriter and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission; that it would not be just and equitable if
contribution pursuant to such agreement were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable consideration referred to above in this paragraph (e); that the amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof), referred to above in
this paragraph (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim; that the holders of Restricted Shares
shall not be required to contribute any amount in excess of the dollar amount by
which the proceeds to be received by such holders from the sale of their
respective Restricted Shares exceeds the amount
10
20
of damages such holders of Restricted Shares would have otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission, and no underwriter shall be required to contribute any amount
in excess of the amount by which the total price at which the shares or
securities underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission; and that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
11. REMOVAL OF LEGENDS, ETC. Notwithstanding the foregoing provisions
of this Schedule, the restrictions imposed by this Schedule upon the
transferability of any Restricted Securities shall cease and terminate when any
such Restricted Securities are sold or otherwise disposed of in accordance with
the intended method of disposition by the seller or sellers thereof set forth in
the registration statement or as otherwise contemplated by Section 4 hereof.
Whenever the restrictions imposed by this Schedule shall terminate, as herein
provided, the holder of any Restricted Securities as to which such restrictions
have terminated shall be entitled to receive from the Corporation, without
expense, a new certificate not bearing the restrictive legends referred to in
Section 3 hereof and not containing any other reference to the restrictions
imposed by this Schedule.
11
