Exhibit 10.5
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FORM OF
AMENDED AND RESTATED
WARRANT
To Subscribe for and Purchase Common Stock of
XXXXXXXX, INC.
THIS CERTIFIES THAT, for value received____________ or registered
assigns is entitled to subscribe for and purchase from Xxxxxxxx, Inc. (herein
called the "Company"), a corporation organized and existing under the laws of
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the State of Minnesota, at the price specified below (subject to adjustment as
noted below) at any time from and after the date hereof to and including October
25, 2006, ______________ fully paid and nonassessable shares of the Company's
Common Stock (subject to adjustment as noted below). This Warrant has been
issued in connection with the purchase from the Company of promissory notes of
the Company pursuant to a Credit and Security Agreement dated June 19, 1998
among the Company, the Agent named therein and the Lenders referred to therein
(as amended, the "Credit Agreement").
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The Warrant purchase price (subject to adjustment as noted below)
shall be $.38371 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 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 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 5 days, after the rights represented by this Warrant shall
have been so 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 8 hereof and
the restrictive legend under the heading "Restriction on Transfer" below.
3. The Company covenants and agrees that all shares which may be
issued upon the exercise of the rights represented by this Warrant 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 hereof,
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) Except for (i) options to purchase shares of Common Stock and the
issuance of awards of Common Stock pursuant to employee and consultant benefit
plans adopted by the Company and except for shares of Common Stock issued upon
the exercise of such options granted pursuant to such plans (provided that the
aggregate number of shares thus awarded and covered by unexercised options and
thus issued pursuant to such options shall not be in excess of 2,000,000
(appropriately adjusted to reflect stock splits, stock dividends,
reorganizations, consolidations and similar changes)), (ii) shares of Common
Stock issued upon conversion of any shares of convertible preferred stock of the
Company issued prior to the date hereof, (iii) shares of Common Stock issued
upon exercise of any options or warrants issued on or prior to the date hereof,
and (iv) shares of preferred stock, common stock or rights of the Company issued
pursuant to the Company's Rights Agreement dated June 16, 1996 with Norwest Bank
Minnesota, N.A., if and whenever the Company shall issue or sell any shares of
its Common Stock after the date hereof for a consideration per share less than
the warrant purchase price in effect immediately prior to the time of such issue
or sale, then, forthwith upon such issue or sale, the warrant purchase price
shall be reduced to the price (calculated to the nearest cent) determined by
dividing (A) an amount equal to the sum of (1) the number of shares of Common
Stock outstanding immediately prior to such issue or sale multiplied by the then
existing warrant purchase price, and (2) the consideration, if any, received by
the Company upon such issue or sale, by (B) an amount equal to the sum of (1)
the number of shares of Common Stock outstanding immediately prior to such issue
or sale and (2) the number of shares of Common Stock thus issued or sold.
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No adjustment of the warrant purchase price, however, shall be made in
an amount less than 2% of the warrant purchase price in effect on the date of
such adjustment, but any such lesser adjustment shall be carried forward and
shall be made at the earlier of (i) the time and together with the next
subsequent adjustment which, together with any such adjustment so carried
forward, shall be an amount equal to or greater than 4% of the warrant purchase
price then in effect and (ii) exercise of this Warrant or any of the rights
represented hereby.
(c) For the purposes of paragraph (b), and subject to the exceptions
set forth therein, the following provisions (i) to (v), inclusive, shall also be
applicable:
(i) In case at any time the Company shall grant (whether directly or
by assumption in a merger or otherwise) any rights to subscribe for or to
purchase, or any options for the purchase of, (aa) Common Stock or (bb) 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 called "Convertible Securities") whether or not
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such rights or options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price per share
for which Common Stock is issuable upon the exercise of such rights or
options or upon conversion or exchange of such Convertible Securities
(determined by dividing (aa) the total amount, if any, received or
receivable by the Company (or predecessor company by merger or otherwise)
as consideration for the granting of such rights or options, plus the
minimum aggregate amount of additional consideration paid or payable to the
Company upon the exercise of such rights or options, plus, in the case of
such rights or options which relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, paid or payable upon
the issue or sale of such Convertible Securities and upon the conversion or
exchange thereof, by (bb) the total maximum number of shares of Common
Stock issuable upon the exercise of such rights or options or upon the
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such rights or options) shall be less than the warrant purchase
price in effect immediately prior to the time of the granting of such
rights or options, then the total maximum number of shares of Common Stock
issuable upon the exercise of such rights or options or upon conversion or
exchange of the total maximum amount of such Convertible Securities
issuable upon the exercise of such rights or options shall (as of the date
of granting of such rights or options) be deemed to have been issued for
such price per share. Except as provided in paragraph (f) below, no further
adjustments of the warrant purchase price shall be made upon the actual
issue of such Common Stock or of such Convertible Securities upon exercise
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of such rights or options or upon the actual issue of such Common Stock
upon conversion or exchange of such Convertible Securities.
(ii) In case the Company shall issue or sell (whether directly or by
assumption in a merger or otherwise) any Convertible Securities, whether or
not the rights to exchange or convert thereunder are immediately
exercisable, and the price per share for which Common Stock is issuable
upon such conversion or exchange (determined by dividing (aa) the total
amount received or receivable by the Company (or predecessor company by
merger or otherwise) as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or
exchange thereof, by (bb) the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of all such Convertible
Securities) shall be less than the warrant purchase price in effect
immediately prior to the time of such issue or sale, then the total maximum
number of shares of Common Stock issuable upon conversion or exchange of
all such Convertible Securities shall (as of the date of the issue or sale
of such Convertible Securities) be deemed to be outstanding and to have
been issued for such price per share, provided that (x) except as provided
in paragraph (f) below, no further adjustments of the warrant purchase
price shall be made upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities, and (y) if any such
issue or sale of such Convertible Securities is made upon exercise of any
rights to subscribe for or to purchase or any option to purchase any such
Convertible Securities for which adjustments of the warrant purchase price
have been or are to be made pursuant to other provisions of this paragraph
(c), no further adjustment of the warrant purchase price shall be made by
reason of such issue or sale.
(iii) In case any shares of Common Stock or Convertible Securities
or any rights or options to purchase any such Common Stock or Convertible
Securities shall be issued or sold for cash, the consideration received
therefor shall be deemed to be the amount received by the Company therefor,
without deduction therefrom of any expenses incurred or any underwriting
commissions, discounts or concessions paid or allowed by the Company in
connection therewith. In case any shares of
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Common Stock or Convertible Securities or any rights or options to purchase
any such Common Stock or Convertible Securities shall be issued or sold for
a consideration other than cash, the amount of the consideration other than
cash received by the Company shall be deemed to be the fair value of such
consideration as determined by the Board of Directors of the Company,
without deducting therefrom of any expenses incurred or any underwriting
commissions, discounts or concessions paid or allowed by the Company in
connection therewith. In case any shares of Common Stock or Convertible
Securities or any rights or options to purchase such Common Stock or
Convertible Securities shall be issued in connection with any merger or
consolidation in which the Company is the surviving corporation, the amount
of consideration therefor shall be deemed to be the fair value as
determined by the Board of Directors of the Company of such portion of the
assets and business of the non-surviving corporation or corporations as
such Board shall determine to be attributable to such Common Stock,
Convertible Securities, rights or options, as the case may be. In the event
of any consolidation or merger of the Company in which the Company is not
the surviving corporation or in the event of any sale of all or
substantially all of the assets of the Company for stock or other
securities of any other corporation, the Company shall be deemed to have
issued a number of shares of its Common Stock for stock or securities of
the other corporation computed on the basis of the actual exchange ratio on
which the transaction was predicated and for a consideration equal to the
fair market value on the date of such transaction of such stock or
securities of the other corporation, and if any such calculation results in
adjustment of the warrant purchase price, the determination of the number
of shares of Common Stock issuable upon exercise of this Warrant
immediately prior to such merger, conversion or sale, for purposes of
paragraph (g) below, shall be made after giving effect to such adjustment
of the warrant purchase price.
(iv) In case the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them (aa) to receive a dividend
or other distribution payable in Common Stock or in Convertible Securities,
or in any rights or options to purchase any Common Stock or Convertible
Securities, or (bb) to subscribe for or purchase Common Stock or
Convertible Securities, then such record date shall be deemed to be the
date of the issue or sale of the shares of Common Stock deemed to have been
issued or sold upon the declaration of such dividend or the making of such
other distribution or the date of the granting of such rights of
subscription or purchase, as the case may be.
(v) The number of shares of Common Stock outstanding at any given
time shall not include shares owned or held by or for the account of the
Company, and the disposition of any such shares shall be considered an
issue or sale of Common Stock for the purposes of this paragraph (c).
(d) In case the Company shall after the date hereof (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
paragraph (e) below) or Convertible Securities, or in any rights or options to
purchase 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
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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, 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
dividends or distributions if continuously since the date hereof such holder (i)
had been the record holder of the number of shares of Common Stock then
received, and (ii) had retained all dividends or distributions in stock or
securities (including Common Stock or Convertible Securities, and 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 earned surplus
only to the extent that such earnings or earned surplus are charged an amount
equal to the fair value of such dividend or distribution as determined by the
Board of Directors of the Company.
(e) In case the Company shall at any time after the date hereof 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.
(f) If (i) the purchase price provided for in any right or option referred
to in clause (i) of paragraph (c), or (ii) the additional consideration, if any,
payable upon the conversion or exchange of Convertible Securities referred to in
clause (i) or clause (ii) of paragraph (c), or (iii) the rate at which any
Convertible Securities referred to in clause (i) or clause (ii) of paragraph (c)
are convertible into or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to protect against
dilution), the warrant purchase price then in effect shall forthwith be
increased or decreased to such warrant purchase price which would have obtained
had the adjustments made upon the issuance of such rights, options or
Convertible Securities been made upon the basis of (i) the issuance of the
number of shares of Common Stock theretofore actually delivered upon the
exercise of such options or rights or upon the conversion or exchange of such
Convertible Securities, and the total consideration received therefor, and (ii)
the issuance at the time of such change of any such options, rights or
Convertible Securities then still outstanding for the consideration, if any,
received by the Company therefor and to be received on the basis of such changed
price; and on the expiration or termination of any such option or right or the
termination of any such right to convert or exchange such Convertible
Securities, the warrant purchase price then in effect hereunder shall forthwith
be increased to such warrant purchase price which would have obtained had the
adjustments made upon the issuance of such rights or options or Convertible
Securities been made upon the basis of the issuance of the shares of Common
Stock theretofore actually delivered (and the total consideration received
therefor) upon the exercise of such rights or options or upon the conversion or
exchange of such
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Convertible Securities. If the purchase price provided for in any such right or
option referred to in clause (i) of paragraph (c) or the rate at which any
Convertible Securities referred to in clause (i) or clause (ii) of paragraph (c)
are convertible into or exchangeable for Common Stock shall decrease at any time
under or by reason of provisions with respect thereto designed to protect
against dilution, then in case of the delivery of Common Stock upon the exercise
of any such right or option or upon conversion or exchange of any such
Convertible Security, the warrant purchase price then in effect hereunder shall
forthwith be decreased to such warrant purchase price as would have obtained had
the adjustments made upon the issuance of such right, option or Convertible
Securities been made upon the basis of the issuance of (and the total
consideration received for) the shares of Common Stock delivered as aforesaid.
(g) If any capital reorganization or reclassification of the capital stock
of the Company, or consolidation or merger of the Company with another entity,
or the sale of all or substantially all of its assets to another entity 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. The Company shall not effect any such consolidation,
merger or sale, unless prior to the consummation thereof the successor entity
(if other than the Company) resulting from such consolidation or merger or the
entity 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.
(h) Upon the establishment of the warrant exercise price and 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
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the warrant purchase price as originally established or resulting from such
adjustment and the increase or decrease, if any, in the number of shares
purchasable at such price upon the exercise of this Warrant, setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based.
(i) In case any time:
(1) the Company shall declare any cash dividend on its Common Stock at
a rate in excess of the rate of the last cash dividend theretofore paid;
(2) the Company shall pay any dividend payable in stock upon its
Common Stock or make any distribution (other than regular cash dividends)
to the holders of its Common Stock;
(3) the Company shall offer for subscription pro rata to the holders
of its Common Stock any additional shares of stock of any class or other
rights;
(4) 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 (other than a merger of a wholly-owned subsidiary of the
Company into the Company or another wholly-owned subsidiary of the
Company);
(5) a tender offer shall be made for the capital stock of the
Company; or
(6) 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 (aa) the books of the Company shall close or a record shall be
taken for such dividend, distribution or subscription rights, or (bb) such
reorganization, reclassification, consolidation, merger, sale, tender offer,
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 Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, tender offer, dissolution, liquidation or winding
up, as the case may be. Such written notice shall be given at least 20 days
prior to the action in question and not less than 20 days prior to the record
date or the date on which the Company's transfer books are closed in respect
thereto. Failure to provide the notice required by this paragraph 4(i) shall
not affect the validity of the corporate action at issue.
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(j) 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.
(k) 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 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" for purposes
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of this paragraph 4(k) and for purposes of paragraph 12(d) hereof shall mean, if
the Common Stock is traded on a securities exchange or on the Nasdaq National
Market, the closing price of the Common Stock on such exchange or the Nasdaq
National Market, or, if the Common Stock is otherwise traded in the over-the-
counter market, the closing bid price, in each case averaged over a period of 20
consecutive business days prior to the date as of which "market price" is being
determined. 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 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 l5 days of the date as
of which the determination is to be made.
5. As used herein, the term "Common Stock" shall mean and include the
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Company's presently authorized Common Stock and shall also include 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 hereof or, in the
case of any reclassification of the outstanding shares thereof, the stock,
securities or assets provided for in paragraph 4(g) above.
6. So long as this Warrant remains outstanding, the Company will not
issue any additional capital stock of any class preferred as to dividends or as
to the distribution of assets upon voluntary or involuntary liquidation,
dissolution or winding up, unless the rights of the
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holders thereof shall be limited to a fixed sum or percentage of par,
liquidation or redemption value in respect of participation in dividends and in
the distribution of such assets.
7. This Warrant shall not entitle the holder hereof to any voting rights
or other rights as a stockholder of the Company.
8. 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 xxxxxx's intention as to the disposition to be made of
shares of Common Stock issuable or issued upon the exercise hereof. If
requested by the Company, such holder shall also provide the Company with an
opinion of counsel (who may be an employee of such holder or an affiliate
thereof) 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, if requested, 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. Any legends evidencing the restrictions on
transfer contained herein shall be removed (i) with respect to securities held
for at least two years (including with respect to any Common Stock issued upon
the exercise of the Conversion Right described in paragraph 12 hereof the period
during which this Warrant had been held) by a person who has not been an
affiliate of the Company (as defined in Rule 144 under the Securities Act of
1933, as amended (the "Securities Act")) during the three months preceding the
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request for removal of such legend, (ii) if such security is being disposed of
pursuant to registration under the Securities Act and any applicable state acts
or pursuant to Rule 144 or any similar rule then in effect, or (iii) if such
holder provides the Company with an opinion of counsel (who may be an employee
of such holder or an affiliate thereof) satisfactory to the Company to the
effect that a sale, transfer, assignment, offer, pledge or distribution for
value of such security may be made without registration and that such legend is
not required to satisfy the applicable exemption from registration. Clause (i)
of the foregoing legend removal requirement is based on Rule 144(k) under the
Securities Act as currently in force, and assumes that such Rule (or a successor
thereto) in substantially its current form shall be in effect at the time of
such request for legend removal.
9. Subject to the provisions of paragraph 8 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,
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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 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.
10. 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.
11. The holder of this Warrant and of the Common Stock issuable or issued
upon the exercise hereof shall be entitled to the registration rights set forth
in Annex A hereto.
12. (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
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thereof into shares of Common Stock as provided in this paragraph 12 at any time
or from time to time prior to its expiration, subject to the restrictions set
forth in paragraph (c) below. Upon exercise of the Conversion Right with respect
to a particular number of shares subject to this Warrant (the "Converted Warrant
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Shares"), the Company shall deliver to the holder of this warrant, without
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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 (d) 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
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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 12 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.
(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
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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
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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) In the event the Conversion Right would, at any time this Warrant
remains outstanding, be deemed by the Company's independent certified public
accountants to give rise to a charge to the Company's earnings for financial
reporting purposes, then the Conversion Right shall automatically terminate upon
the Company's written notice to the holder of this Warrant of such adverse
accounting treatment.
(d) For purposes of this paragraph 12, 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(k) hereof.
(e) Notwithstanding anything to the contrary contained in this paragraph
12, in the event the holder of this Warrant notifies the Company of its
intention to exercise this Warrant in whole or in part and the Company
determines it would be in the Company's best interests for the holder to
exercise the Conversion Right in whole or in part as opposed to exercising this
Warrant in whole or in part, the holder of this Warrant agrees to exercise the
Conversion Right in lieu of exercising this Warrant to the extent that the
holder has a continued interest in exercising this Warrant.
13. This Warrant amends and restates in their entirety (i) the Warrant
dated June 19, 1998 originally issued to Norwest Bank Minnesota, National
Association (n/k/a/ Xxxxx Fargo Bank Minnesota, National Association) to
purchase 25,000 shares of Common Stock, (ii) the Warrant dated June 19, 1998
originally issued to Xxxxxx Trust and Savings Bank to purchase 25,000 shares of
Common Stock, and (iii) the Warrant dated June 19, 1998 originally issued to NBD
Bank to purchase 25,000 shares of Common Stock.
14. All questions concerning this Warrant will be governed and interpreted
and enforced in accordance with the internal law of the State of Minnesota. This
Warrant (including Annex A hereto) may be amended only in a writing executed by
the holder of this Warrant and the Company.
12
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer and this Warrant to be dated as of October 25,
2001.
XXXXXXXX, INC.
By____________________________
Its_________________________
RESTRICTION ON TRANSFER
The securities evidenced hereby may not be transferred without (i) the
opinion of counsel satisfactory to the Company that such transfer may be
lawfully made without registration under the Federal Securities Act of 1933 and
all applicable state securities laws or (ii) such registration.
13
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)
14
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: Xxxxxxxx, 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
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.
15
ANNEX A
REGISTRATION RIGHTS PROVISIONS
------------------------------
1.1 Definitions.
-----------
"Commission" shall mean the Securities and Exchange Commission.
----------
"Registrable Securities" shall mean (i) the Two Hundred Forty-Three
----------------------
Thousand Seven Hundred Seventeen (243,717) shares of Common Stock issued or
issuable upon exercise of the Warrants issued pursuant to the Credit Agreement,
and (ii) any additional securities issued in a stock split or reclassification
of, or stock dividend or other distribution on or in substitution or exchange
for, or otherwise in connection with, any of the foregoing securities, or in a
merger or consolidation involving the Company or a sale of all or substantially
all of the Company's assets.
All other capitalized terms used in this Annex A and not defined
herein shall have the meanings specified in the Warrant to which this Annex A is
attached.
1.2 Required Registration. If the Company shall receive a written
---------------------
request therefor from any record holder or holders of an aggregate of at least a
majority of the Registrable Securities not theretofore registered under the
Securities Act and sold, the Company shall prepare and file a registration
statement under the Securities Act covering the Registrable Securities which are
the subject of such request and shall use its best efforts to cause such
registration statement to become effective. In addition, upon the receipt of
such request, the Company shall promptly give written notice to all other record
holders of Registrable Securities not theretofore registered under the
Securities Act and sold that such registration is to be effected. The Company
shall include in such registration statement such Registrable Securities for
which it has received written requests to register by such other record holders
within 30 days after the delivery of the Company's written notice to such other
record holders. The Company shall be obligated to prepare, file and cause to
become effective any number of registration statements on Form S-3 or any
successor form promulgated by the Commission ("Form S-3") (if such form is then
available for use by the Company and the holders of Registrable Securities)
pursuant to this Section 1.2, and to pay the expenses associated with such
registration statements.
If, at the time any written request for registration is received by the
Company pursuant to this Section 1.2, the Company has determined to proceed with
the actual preparation and filing of a registration statement under the
Securities Act in connection with the proposed offer and sale for cash of any of
its securities by it or any of its security holders, such written request shall
be deemed to have been given pursuant to Section 1.3 hereof rather than this
Section 1.2, and the rights of the holders of Registrable Securities covered by
such written request shall be governed by Section 1.3 hereof.
Without the written consent of the holders of a majority of the Registrable
Securities for which registration has been requested pursuant to this Section
1.2, neither the Company nor any other holder of securities of the Company may
include securities in such registration if in the good faith judgment of the
managing underwriter of such public offering the inclusion of such securities
would interfere with the successful marketing of the Registrable Securities or
require the exclusion of any portion of the Registrable Securities to be
registered.
1.3 Incidental Registration. Each time the Company shall determine
-----------------------
to proceed with the actual preparation and filing of a registration statement
under the Securities Act in connection with the proposed offer and sale for cash
of any of its securities by it or any of its security holders (other than a
registration statement on a form that does not permit the inclusion of shares by
its security holders), the Company will give written notice of its determination
to all record holders of Registrable Securities not theretofore registered under
the Securities Act and sold. Upon the written request of a record holder of any
shares of Registrable Securities given within 30 days after receipt of any such
notice from the Company, the Company will, except as herein provided, cause all
such shares of Registrable Securities, the record holders of which have so
requested registration thereof, to be included in such registration statement,
all to the extent requisite to permit the sale or other disposition by the
prospective seller or sellers of the Registrable Securities to be so registered;
provided, however, that nothing herein shall prevent the Company from, at any
time, abandoning or delaying any such registration initiated by it; provided
further, however, that if the Company determines not to proceed with a
registration after the registration statement has been filed with the Commission
and the Company's decision not to proceed is primarily based upon the
anticipated public offering price of the securities to be sold by the Company,
the Company shall promptly complete the registration for the benefit of those
selling security holders who wish to proceed with a public offering of their
securities and who bear all expenses in excess of $25,000 incurred by the
Company as the result of such registration after the Company has decided not to
proceed. If any registration pursuant to this Section 1.3 shall be underwritten
in whole or in part, the Company may require that the Registrable Securities
requested for inclusion pursuant to this Section 1.3 be included in the
underwriting on the same terms and conditions as the securities otherwise being
sold through the underwriters. In the event that the Registrable Securities
requested for inclusion pursuant to this Section 1.3 would constitute more than
25% of the total number of shares to be included in a proposed underwritten
public offering, and if in the good faith judgment of the managing underwriter
of such public offering the inclusion of all of the Registrable Securities
originally covered by a request for registration would reduce the number of
shares to be offered by the Company or interfere with the successful marketing
of the shares of stock offered by the Company, the number of shares of
Registrable Securities otherwise to be included in the underwritten public
offering may be reduced pro rata (by number of shares) among the holders thereof
requesting such registration, provided, however, that after any such required
reduction the Registrable Securities to be included in such offering shall
constitute at least 25% of the total number of shares to be included in such
offering. Those shares of Registrable Securities which are thus excluded from
the underwritten public offering shall be withheld from the market by the
Annex A-2
holders thereof for a period, not to exceed 90 days, which the managing
underwriter reasonably determines is necessary in order to effect the
underwritten public offering. Notwithstanding anything to the contrary
contained in this Section 1.3, the holders of Registrable Securities shall have
no incidental registration rights in connection with registration statements
filed by the Company pursuant to that certain Registration Rights Agreement
dated August 27, 1997 among the Company and the Purchasers named therein or
pursuant to any agreement with holders of convertible preferred stock of the
Company issued by the Company to raise Net Equity Proceeds (as defined in the
Credit Agreement).
1.4 Registration Procedures. If and whenever the Company is required
-----------------------
by the provisions of Section 1.2 or 1.3 hereof to effect the registration of
shares of Registrable Securities under the Securities Act, the Company will:
(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 for such period as
may be reasonably necessary to effect the sale of such securities, not to
exceed nine months;
(b) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained therein
as may be necessary to keep such registration statement effective for such
period as may be reasonably necessary to effect the sale of such
securities, not to exceed nine months;
(c) furnish to the security holders participating in such
registration and to the underwriters of the securities being registered
such reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such underwriters
may reasonably request in order to facilitate the public offering of such
securities;
(d) use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue
sky laws of such jurisdictions as such participating holders may reasonably
request in writing within 20 days following the original filing of such
registration statement, except that the Company shall not for any purpose
be required to execute a general consent to service of process or to
qualify to do business as a foreign corporation in any jurisdiction wherein
it is not so qualified;
(e) notify the security holders participating in such registration,
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;
Annex A-3
(f) notify such holders promptly of any request by the Commission for
the amending or supplementing of such registration statement or prospectus
or for additional information;
(g) prepare and file with the Commission, promptly upon the request
of any such holders, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for such holders
(and concurred in by counsel for the Company), is required under the
Securities Act or the rules and regulations thereunder in connection with
the distribution of the Registrable Securities by such holder;
(h) prepare and promptly file with the Commission and promptly notify
such 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;
(i) advise such 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 or
to obtain its withdrawal if such stop order should be issued;
(j) not file any amendment or supplement to such registration
statement or prospectus to which a majority in interest of such 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 five 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; and
(k) at the request of any such 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 holder or holders making such request, covering such matters as such
Annex A-4
underwriters and holder or 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 holder or
holders making such request, covering such matters as such underwriters and
holder or holders may reasonably request.
1.5 Expenses. With respect to each registration requested pursuant
--------
to Section 1.2 hereof and with respect to each inclusion of shares of
Registrable Securities in a registration statement pursuant to Section 1.3
hereof (except as otherwise provided in Section 1.3 with respect to
registrations initiated by the Company but with respect to which the Company has
determined not to proceed), the Company shall bear the following fees, costs and
expenses: all registration, filing and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, fees and disbursements
of counsel for the underwriter or underwriters of such securities (if the
Company and/or selling security holders are required to bear such fees and
disbursements), all internal Company expenses, all legal fees and disbursements
and other expenses of complying with state securities or blue sky laws of any
jurisdictions in which the securities to be offered are to be registered or
qualified, and the premiums and other costs of policies of insurance against
liability (if any) arising out of such public offering. Fees and disbursements
of counsel and accountants for the selling security holders, underwriting
discounts and commissions and transfer taxes relating to the shares included in
the offering by the selling security holders, and any other expenses incurred by
the selling security holders not expressly included above, shall be borne by the
selling security holders.
1.6 Indemnification. In the event that any Registrable Securities
---------------
are included in a registration statement under Section 1.2 or 1.3 hereof:
(a) The Company will indemnify and hold harmless each holder of
shares of Registrable Securities which are included in a registration
statement pursuant to the provisions of this Annex A, its directors and
officers, and any underwriter (as defined in the Securities Act) for such
holder and each person, if any, who controls such holder or such
underwriter within the meaning of the Securities Act, from and against, and
will reimburse such holder and each such underwriter and controlling person
with respect to, any and all loss, damage, liability, cost and expense to
which such holder or any such underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses,
damages, liabilities, costs or expenses are caused by any untrue statement
or alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment
or supplement thereto, 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, in light of the
circumstances in which
Annex A-5
they were made, not misleading; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, damage,
liability, cost or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so
made in conformity with information furnished by such holder, such
underwriter or such controlling person in writing specifically for use in
the preparation thereof.
(b) Each holder of shares of Registrable Securities which are included
in a registration pursuant to the provisions of this Annex A will indemnify
and hold harmless the Company, its directors and officers, any controlling
person and any underwriter from and against, and will reimburse the
Company, its directors and officers, any controlling person and any
underwriter with respect to, any and all loss, damage, liability, cost or
expense to which the Company or any controlling person and/or any
underwriter may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are caused
by any untrue or alleged untrue statement of any material fact contained in
such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading, in each case
to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was so made in
reliance upon and in strict conformity with written information furnished
by such holder specifically for use in the preparation thereof.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of paragraph (a) or (b) of this Section 1.6 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to
be made against the indemnifying party pursuant to the provisions of said
paragraph (a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than hereunder. In case such action is brought against any
indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party shall have the right to
participate in, and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party, provided, however, if the
defendants in any action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or
Annex A-6
additional to those available to the indemnifying party, or if there is a
conflict of interest which would prevent counsel for the indemnifying party
from also representing the indemnified party, the indemnified party or
parties shall have the right to select separate counsel to participate in
the defense of such action on behalf of such indemnified party or parties.
After notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party pursuant to the provisions of said
paragraph (a) or (b) for any legal or other expense subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation, unless (i) the indemnified party shall
have employed counsel in accordance with the proviso of the preceding
sentence, (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after the notice of the commencement of the
action, or (iii) the indemnifying party has authorized the employment of
counsel for the indemnified party at the expense of the indemnifying party.
Annex A-7
