EXHIBIT 4.2
AMERICAN COUNTRY HOLDINGS INC.
CLASS A WARRANT AGREEMENT
CLASS A WARRANT AGREEMENT dated as of December 29, 2000, between
American Country Holdings Inc., a Delaware corporation (hereinafter called the
"Company"), and American Stock Transfer and Trust Company, having a corporate
trust office in New York, New York, as warrant agent (hereinafter called the
"Warrant Agent").
WITNESSETH THAT:
WHEREAS, the Company proposes to issue five year common stock purchase
warrants (the "Class A Warrants" or the "Warrants") entitling the holders
thereof to purchase an aggregate of 814,286 shares of common stock of the
Company, par value $.01 per share, (the "Common Stock" or the "Shares") at an
initial cash purchase price of $1.925 per Share, subject to adjustment, at any
time prior to 3:30 p.m., New York City time, on December 29, 2005 (hereinafter
called the "expiration date") (unless extended as provided in Section 9 hereof);
and
WHEREAS, the Warrants will be offered in Units, each of which consists of
one share of Common Stock and one five year common stock purchase Warrant to
purchase one share of Common Stock at $1.925; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, registration, transfer, exchange and exercise of Warrants to be issued
from time to time by the Company,
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
Section 1. APPOINTMENT OF WARRANT AGENT. The Company hereby appoints the
Warrant Agent to act as agent for the Company in accordance with the
instructions hereinafter in this Agreement set forth, and the Warrant Agent
hereby accepts such appointment.
Section 2. FORM OF WARRANT.
A. The text of the Warrants and the form of election to purchase Shares to
be set forth on the reverse thereof shall be substantially as set forth in
Exhibit A attached hereto. Each Warrant shall, subject to the terms of this
Warrant Agreement, entitle the registered holder thereof to initially purchase
the number of Shares specified therein at an initial exercise price of $1.925
per Share; provided, however, that the warrant exercise price and the number of
Shares issuable upon exercise of Warrants are subject to adjustment upon the
occurrence of certain events, all as hereinafter provided. The Warrants shall be
executed on behalf of the Company by the manual or facsimile signature of the
present or any future Chairman of the Board, President or Vice President of the
Company, under its seal, affixed or in facsimile, and by the manual or facsimile
signature of the present or any future Secretary or Assistant Secretary of the
Company.
B. The Company shall promptly notify the Warrant Agent from time to time in
writing of the number of Warrants to be issued and furnish written instructions
in connection therewith signed by an executive officer of the Company; such
notification and instructions may, but need not be, in the form of a general or
continuing authorization to the Warrant Agent.
C. The Warrants shall be dated by the Warrant Agent as of the date of each
initial issuance, and as of the date of issuance thereof upon any transfer or
exchange thereof.
Section 3. COUNTERSIGNATURE AND REGISTRATION. The Warrant Agent shall
maintain books for the transfer and registration of the Warrants. Upon the
initial issuance of the Warrants, the Warrant Agent shall issue and register the
Warrants in the names of the respective registered holders thereof. The Warrants
shall be countersigned by the Warrant Agent (or by any successor to the Warrant
Agent then acting as warrant agent under this Agreement) and shall not be valid
for any purpose unless so countersigned. Such Warrants may be so countersigned,
however, by the Warrant Agent (or by its successor as warrant agent) and be
delivered by the Warrant Agent, notwithstanding that the persons whose manual or
facsimile signatures appear thereon as proper officers of the Company shall have
ceased to be such officers at the time of such countersignature or delivery.
Upon
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issuance of any Warrant, the Company will present the same, or cause the
same to be presented, to the Warrant Agent for countersignature of such Warrant.
Section 4. TRANSFERS AND EXCHANGES. The Warrant Agent shall transfer, from
time to time, any outstanding Warrants upon the books to be maintained by the
Warrant Agent for that purpose, upon the surrender thereof for transfer properly
endorsed or accompanied by appropriate instructions for transfer. Upon any such
transfer, a new Warrant of like tenor shall be issued to the transferee and the
surrendered Warrant shall be cancelled by the Warrant Agent. All such Warrants
so cancelled shall be delivered by the Warrant Agent to the Company from time to
time. The Warrants may be exchanged at the option of the holder thereof, when
surrendered at the office in New York City of the Warrant Agent, for another
Warrant, or other Warrants of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number of Shares. The
Warrant Agent is hereby irrevocably authorized to countersign and deliver, in
accordance with the provisions of this Section and Section 3 of this Agreement,
such new Warrants required pursuant to the provisions of this Section, and the
Company, whenever required by the Warrant Agent, will supply the Warrant Agent
with Warrants duly executed on behalf of the Company for such purpose.
Section 5. EXERCISE OF WARRANTS. The registered holder of each Warrant
shall have the right, which may be exercised as in such Warrant expressed, to
purchase from the Company (and the Company shall issue and sell to such
registered holder) the number of Shares specified in such Warrants, upon
surrender to the Company, at the office in New York, New York of the Warrant
Agent of such Warrant, with the form of election to purchase on the reverse
thereof duly filled in and signed, and upon payment to the Warrant Agent for the
account of the Company of the warrant exercise price, determined in accordance
with the provisions of Section 9 of this Agreement, for the number of Shares in
respect of which such Warrant is then exercised. Payment of such warrant
exercise price may be made in cash, or by certified check or bank draft or
postal or express money order, payable in United States dollars, to the order of
the Warrant Agent. No adjustment shall be made for any dividends on any Shares
issuable upon exercise of any Warrant. Subject to Section 6, upon such surrender
of Warrants, and payment of the warrant exercise price as aforesaid, the Company
shall issue and cause to be delivered with all reasonable dispatch to or upon
the written order of the registered holder of such Warrants, and in such name or
names as such registered holder may designate, a certificate or certificates for
the number of full Shares so purchased upon the exercise of such Warrants,
together with cash, as provided in Section 9 of this Agreement, in respect of
any fraction of a Share otherwise issuable upon such surrender. Such certificate
or certificates shall be deemed to have been issued and any person so designated
to be named therein shall be deemed to have become a holder of record of such
Shares as of the date of the surrender of such Warrants and payment of the
warrant exercise price as aforesaid; provided, however, that if, at the date of
surrender of such Warrants and payment of such warrant exercise price, the
transfer books for the Shares purchasable upon the exercise of such Warrants
shall be closed, no such surrender of such Warrants and no such payment of such
warrant exercise price shall be effective to constitute the person so designated
to be named therein as the holder of record of such Shares on such date, but
shall be effective to constitute such person as the holder of record of such
Shares for all purposes at the opening of business on the next succeeding day on
which the transfer books for the Shares purchasable upon the exercise of such
Warrants shall be opened, and the certificates for the Shares in respect of
which such Warrants are then exercised shall be issuable as of the date on which
such books shall next be opened, and until such date the Company shall be under
no duty to deliver any certificate for such Shares. The rights of purchase
represented by the Warrants shall be exercisable, at the election of the
registered holders thereof, either as an entirety or from time to time for part
only of the Shares specified therein and, in the event that any Warrant is
exercised in respect of less than all of the Shares specified therein at any
time prior to the date of expiration of the Warrants, a new Warrant or Warrants
of like tenor will be issued for the remaining number of Shares specified in the
Warrant so surrendered, and the Warrant Agent is hereby irrevocably authorized
to countersign and to deliver the required new Warrants pursuant to the
provisions of this Section and of Section 3 of this Agreement, and the Company,
whenever required by the Warrant Agent, will supply the Warrant Agent with
Warrants duly executed on behalf of the Company for such purpose.
Section 6. PAYMENT OF TAXES. The Company will pay any documentary stamp
taxes attributable to the initial issuance of Shares issuable upon the exercise
of Warrants; provided, however, that the Company shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved in the
issue or delivery of any certificates for Shares in a name other than that of
the registered holder of Warrants in respect of which such Shares are issued and
the Company shall not be required to issue and deliver the certificates for such
Shares unless and until the holder has paid to the Company the amount of any tax
which may be payable in respect of any transfer involved in such issuance or
shall establish to the satisfaction of the Company that such tax has been paid.
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Section 7. MUTILATED OR MISSING WARRANTS. In case any of the Warrants shall
be mutilated, lost, stolen or destroyed, the Company will issue and the Warrant
Agent will countersign and deliver in exchange and substitution for and upon
cancellation of the mutilated Warrant, or in lieu of and substitution for the
Warrant lost, stolen or destroyed, a new Warrant of like tenor and representing
an equivalent right or interest, but only upon receipt of evidence satisfactory
to the Company and the Warrant Agent of such loss, theft or destruction of such
Warrants and indemnity, if requested, also satisfactory to them. Applicants for
such substitute Warrants shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company or the Warrant
Agent may prescribe. Any such new Warrant shall constitute an original
contractual obligation of the Company whether or not the allegedly lost, stolen,
mutilated or destroyed Warrant shall be at any time enforceable by anyone.
Section 8. RESERVATION OF SHARES, ETC. Prior to the issuance of any
Warrants there shall have been reserved, and the Company shall at all times
through the expiration date keep reserved, out of its authorized and unissued
Common Stock, a number of Shares sufficient to provide for the exercise of the
rights of purchase represented by the Warrants, and the Transfer Agent for the
Shares and every subsequent Transfer Agent for the Shares issuable upon the
exercise of any of the rights of purchase aforesaid are hereby irrevocably
authorized and directed at all times to reserve such number of authorized and
unissued Shares as shall be requisite for such purpose. The Company will keep a
copy of this Agreement on file with the Transfer Agent for the Shares and with
every subsequent Transfer Agent for the Shares issuable upon the exercise of the
rights of purchase represented by the Warrants. The Warrant Agent is hereby
irrevocably authorized to requisition from time to time from such Transfer Agent
certificates required to honor outstanding Warrants that have been exercised.
The Company will supply such Transfer Agent with duly executed certificates for
such purpose and will itself provide or otherwise make available any cash which
may be issuable as provided in Section 9 of this Agreement. All Warrants
surrendered in the exercise of the rights thereby evidenced or surrendered for
transfer, exchange or partial exercise shall be cancelled by the Warrant Agent
and shall thereafter be delivered to the Company.
Section 9. AJUSTMENT OF UNDERLYING SHARE PURCHASE PRICE AND NUMBER OF
UNDERLYING SHARES. The number of Shares that are the subject of the Warrants
(the "Underlying Shares") purchasable upon the exercise of the Warrants and the
payment of the Underlying Share purchase price which shall mean $1.925
("Underlying Share Purchase Price") shall be subject to adjustment from time to
time as follows:
(a) Stock Splits, Combinations, etc. In case the Company shall
hereafter, but prior to 5:00 p.m. (New York City time) on the Underlying Share
Expiration Date: (i) pay a dividend or make a distribution on its Common Stock
in shares of its capital stock (whether such distribution consists of shares of
Common Stock or of capital stock of any other class); (ii) subdivide its
outstanding shares of Common Stock; (iii) combine its outstanding shares of
Common Stock into a smaller number of shares; or (iv) issue by reclassification
of its shares of Common Stock any shares of capital stock of the Company, the
Underlying Share Purchase Price in effect and the number of Underlying Shares
issuable upon exercise of the Warrants immediately prior to such action shall be
adjusted so that the Warrant Holder shall be entitled to receive that number of
shares of capital stock of the Company at the same aggregate Underlying Share
Purchase Price that the Warrant Holder would have owned immediately following
such action had the Warrants been exercised immediately prior thereto. An
adjustment made pursuant to this paragraph shall become effective on the day
which is immediately after the record date in the case of a dividend and shall
become effective on the day which is immediately after the effective date in the
case of a subdivision, combination or reclassification. If, as a result of an
adjustment made pursuant to this paragraph, the Warrant Holder shall become
entitled to receive shares of two or more classes of capital stock of the
Company, the Board of Directors of the Company (whose determination shall be
conclusive) shall determine the allocation of the adjusted Underlying Share
Purchase Price between or among shares of such classes of capital stock.
(b) Reclassification, Combination, Mergers, etc. In case of any
reclassification or change of outstanding shares of Common Stock issuable upon
exercise of the Warrants (other than as set forth in paragraph (a) above and
other than a change in par value, or from par value to no par value, or from no
par value to par value or as a result of a subdivision or combination), or in
case of any consolidation or merger of the Company with or into another
corporation or entity (other than a merger in which the Company is the
continuing corporation and which does not result in any reclassification or
change of the then outstanding shares of Common Stock or other capital stock
issuable upon exercise of the Warrants), or in the case of any sale or
conveyance of all or substantially all of the assets of the Company followed by
a related distribution to holders of shares of Common Stock or cash, securities
or other property, then as a condition of such reclassification, change,
consolidation, merger, or sale of assets, the Company or such successor
corporation or entity, as the case may be, shall forthwith make lawful and
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adequate provision whereby the Warrant Holder shall have the right thereafter to
receive on exercise of the Warrants (provided such exercise occurs prior to 5:00
p.m. (New York City time) on the Underlying Share Expiration Date) the kind and
amount of shares of stock and other securities and property receivable upon such
reclassification, change, consolidation, merger, or sale of assets, by a holder
of shares of Common Stock immediately prior to such reclassification, change,
consolidation, merger, or sale of assets, and the Company or such successor
corporation or entity shall enter into a supplemental warrant agreement with the
Warrant Holder so providing. Such provisions shall include provision for
adjustments that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 4. If the issuer of securities
deliverable upon exercise of the Warrants under the supplemental warrant
agreement is an affiliate of the formed or surviving corporation or other
entity, that issuer shall join in the supplemental warrant agreement.
(c) Issuance of Options or Convertible Securities. In the event
the Company shall, at any time or from time to time after the date hereof, but
prior to 5:00 p.m. (New York City time) on the Underlying Share Expiration Date,
issue, sell, distribute or otherwise grant in any manner (including by
assumption) any rights to subscribe for or to purchase, or any warrants or
options for the purchase of, Common Stock or any stock or securities convertible
into or exchangeable for Common Stock (any such rights, warrants or options
being herein called "Options" and any such convertible or exchangeable stock or
securities being herein called "Convertible Securities"), whether or not such
Options or rights to convert or exchange such Convertible Securities are
immediately exercisable, and the price per share at which Common Stock is
issuable upon the exercise of such Options or upon the conversion or exchange of
such Convertible Securities (determined by dividing (1) the aggregate amount, if
any, received or receivable by the Company as consideration for the issuance,
sale, distribution or granting of such Options or such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the exercise of all such Options or upon conversion or
exchange of all such Convertible Securities, plus, in the case of Options to
acquire Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or exchange of all such
Convertible Securities, by (2) the total maximum number of shares of Common
Stock issuable upon the exercise of all such Options or upon the conversion or
exchange of all such Convertible Securities or upon the conversion or exchange
of all Convertible Securities issuable upon the exercise of all such Options)
shall be less than the current market price per share of the Common Stock on the
record date that the Company becomes obligated to make such issuance, sale,
distribution or granting of such Options or Convertible Securities (any such
event being herein called an "Option Issuance"), then, effective upon such
Option Issuance:
(1) the Underlying Share Purchase Price shall be reduced to
the price (calculated to the nearest one tenth of one cent ($0.001)) determined
by multiplying the Underlying Share Purchase Price in effect immediately prior
to such Option Issuance by a fraction, the numerator of which shall be the sum
of (X) the number of shares of Common Stock outstanding (exclusive of any
treasury shares) immediately prior to such Option Issuance multiplied by the
current market price per share of Common Stock on the date of such Option
Issuance, plus (Y) the consideration, if any, received by the Company upon such
Option Issuance, and the denominator of which shall be the product of (A) the
total number of shares of Common Stock outstanding (exclusive of any treasury
shares) immediately after such Option Issuance, multiplied by (B) the current
market price per share of Common Stock on the record date for such Option
Issuance; and
(2) the number of Underlying Shares purchasable upon the
exercise of the Warrants shall be increased to a number determined by
multiplying the number of Underlying Shares so purchasable immediately prior to
the record date for such Option Issuance by a fraction, the numerator of which
shall be the Underlying Share Purchase Price in effect immediately prior to the
adjustment required by clause (i) of this Section 4(c) and the denominator of
which shall be the Underlying Share Purchase Price in effect immediately after
such adjustment.
For purposes of the foregoing, the total maximum number of shares of Common
Stock issuable upon exercise of all such Options or upon conversion or exchange
of all such Convertible Securities or upon the conversion or exchange of the
total maximum amount of the Convertible Securities issuable upon the exercise of
all such Options shall be deemed to have been issued as of the date of such
Option Issuance and thereafter shall be deemed to be outstanding and the Company
shall be deemed to have received as consideration therefor such price per share,
determined as provided above. Except as provided in paragraphs (j) and (k)
below, no additional adjustment of the Underlying Share Purchase Price shall be
made upon the actual exercise of such Options or upon conversion or exchange of
the Convertible Securities or upon the conversion or exchange of the Convertible
Securities issuable upon the exercise of such Options.
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(d) Sale of Common Stock Below its Current Market Price. In the event the
Company shall, at any time or from time to time after the date hereof, issue or
sell any shares of Common Stock and the price per share at which such shares
were issued or sold shall be less than the current market price per share of the
Common Stock on the date the Company becomes obligated to make such issuance or
sale, then, effective upon such issuance or sale:
(1) the Underlying Share Purchase Price shall be reduced to
the price (calculated to the nearest one tenth of one cent ($0.001)) determined
by multiplying the Underlying Share Purchase Price in effect immediately prior
to such issuance or sale by a fraction, the numerator of which shall be the sum
of (A) the number of shares of Common Stock outstanding (exclusive of any
treasury shares) immediately prior to such issuance or sale multiplied by the
current market price per share of Common Stock on the date of such issuance or
sale, plus (B) the consideration received by the Company upon such issuance or
sale, and the denominator of which shall be the product of (X) the total number
of shares of Common Stock outstanding (exclusive of any treasury shares)
immediately after such issuance or sale, multiplied by (Y) the current market
price per share of Common Stock on the date of such issuance or sale; and
(2) the number of Underlying Shares purchasable upon the
exercise of the Warrants shall be increased to a number determined by
multiplying the number of Underlying Shares so purchasable immediately prior to
the date of such issuance or sale by a fraction, the numerator of which shall be
the Underlying Share Purchase Price in effect immediately prior to the
adjustment required by clause (i) of this sentence and the denominator of which
shall be the Underlying Share Purchase Price in effect immediately after such
adjustment.
(e) In the event the Company shall, at any time or from time to
time after the date hereof, sell any shares of Common Stock or Convertible
Securities for a consideration per share less than the Underlying Share Purchase
Price in effect immediately prior to such sale then, and thereafter upon Each
further such sale, the Underlying Share Purchase Price in effect immediately
prior to such sale shall be changed to a price (including any applicable
fraction of a cent) determined by multiplying the Underlying Share Purchase
Price in effect immediately prior thereto by a fraction, the numerator of which
shall be the sum of the number of shares of Common Stock outstanding immediately
prior to the issuance of such additional shares and the number of shares of
Common Stock which the aggregate consideration received for the issuance of such
additional shares would purchase at the Underlying Share Purchase Price in
effect immediately prior to such sale, and the denominator of which shall be the
sum of the number of shares of Common Stock outstanding immediately after the
issuance of such additional shares. Such adjustment shall be made successively
whenever such an issuance is made.
Upon each adjustment of the warrant exercise price pursuant to this Section
9(e), the total number of shares of Common Stock purchasable upon the exercise
of each Warrant shall be such number of shares (calculated to the nearest tenth)
purchasable at the Underlying Share Purchase Price in effect immediately prior
to such adjustment multiplied by a fraction, the numerator of which shall be the
Underlying Share Purchase Price in effect immediately prior to such adjustment
and the denominator of which shall be the Underlying Share Purchase Price in
effect immediately after such adjustment.
(f) Current Market Price. For the purpose of any computation of
current market price under this Agreement, the current market price per share of
the Common Stock at any date shall be the closing price on the Business Day
immediately prior to the date in question. The closing price for any day shall
be the last reported sale price or, in case no such reported sale takes place on
such day, the average of the closing bid and asked prices for such day, in each
case in the over-the-counter market as included for quotation on Nasdaq or any
comparable system or if the Common Stock is not included for quotation on Nasdaq
or a comparable system, as furnished by two members of the National Association
of Securities Dealers, Inc. selected from time to time in good faith by the
Board of Directors of the Company for that purpose. In the absence of all of the
foregoing, or if for any reason the current market price per share cannot be
determined pursuant to the foregoing provisions of this paragraph, the current
market price per share shall be the fair market value thereof as determined in
good faith by the Board of Directors of the Company.
(g) Consideration Received. If any shares of Common Stock,
Options or Convertible Securities shall be issued, sold or distributed for
consideration other than cash, the amount of the consideration other than cash
received by the Company in respect thereof shall be deemed to be the then fair
market value of such consideration (as determined in good faith by the Board of
Directors of the Company). If any Options shall be issued in connection with the
issuance and sale of other securities of the Company, together comprising one
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transaction in which no specific consideration is allocated to such Options by
the parties thereto, such Options shall be deemed to have been issued without
consideration. If the Company shall pay a dividend or make any other
distribution payable in Options or Convertible Securities, then such Options or
Convertible Securities shall be deemed to have been issued or sold without
consideration.
(h) Deferral of Certain Adjustments. No adjustment to the
Underlying Share Purchase Price (including the related adjustment to the number
of Underlying Shares) shall be required hereunder unless such adjustment,
together with other adjustments carried forward as provided below, would result
in an increase or decrease of at least one percent (1%) of the Underlying Share
Purchase Price. No adjustment need be made for a change in the par value of the
Common Stock. All calculations under this Section 4 shall be made to the nearest
one tenth of one cent ($0.001) or to the nearest whole share, as the case may
be.
(i) Changes in Options and Convertible Securities. If the
exercise price provided for in any Options referred to in paragraph (c) above,
the additional consideration, if any, payable upon the conversion or exchange of
any Convertible Securities referred to in paragraph (c) above, or the rate at
which any Convertible Securities referred to in paragraph (c) above 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 upon an event which results in a related adjustment pursuant to this
Section), the Underlying Share Purchase Price then in effect and the number of
Underlying Shares purchasable upon the exercise of the Warrants shall forthwith
be readjusted (effective only with respect to any exercise of the Warrants after
such readjustment) to the Underlying Share Purchase Price and number of
Underlying Shares so purchasable that would then be in effect had the adjustment
made upon the issuance, sale, distribution or granting of such Options or
Convertible Securities been made based upon such changed purchase price,
additional consideration or conversion rate, as the case may be, but only with
respect to such Options and Convertible Securities as then remain outstanding.
(j) Expiration of Options and Convertible Securities. If, at
any time after any adjustment to the number of Underlying Shares purchasable
upon the exercise of the Warrants shall have been made pursuant to paragraph (c)
or (h) above or this paragraph, any Options or Convertible Securities shall have
expired unexercised, the number of Underlying Shares so purchasable with respect
to any then outstanding Warrants shall, upon such expiration, be readjusted and
shall thereafter be such as they would have been had the Warrants outstanding at
the time of the original adjustment been adjusted (or had the original
adjustment not been required, as the case may be) as if (i) the only shares of
Common Stock deemed to have been issued in connection with such Options or
Convertible Securities were the shares of Common Stock, if any, actually issued
or sold upon the exercise of such Options or Convertible Securities and (ii)
such shares of Common Stock, if any, were issued or sold for the consideration
actually received by the Company upon such exercise plus the aggregate
consideration, if any, actually received by the Company for the issuance, sale,
distribution or granting of all such Options or Convertible Securities, whether
or not exercised; provided that no such readjustment shall have the effect of
decreasing the number of such Underlying Shares so purchasable by an amount
(calculated by adjusting such decrease to account for all other adjustments made
pursuant to this Section following the date of the original adjustment referred
to above) in excess of the amount of the adjustment initially made in respect of
the issuance, sale, distribution or granting of such Options or Convertible
Securities.
(k) Other Adjustments. In the event that at any time, as a
result of an adjustment made pursuant to this Section, the Warrant Holder shall
become entitled to receive any securities of the Company other than Underlying
Shares, thereafter the number of such other securities so receivable upon
exercise of the Warrants and the Underlying Share Purchase Price applicable to
such exercise shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect to
the shares of Common Stock contained in this Section.
(l) Common Stock. As used in this Section, the term "Common
Stock" shall mean and include the Common Stock issued and outstanding on the
date hereof and shall also include any capital stock of any class of the Company
thereafter authorized for issuance that is not limited to a fixed sum or
percentage in respect of the rights of the holders thereof to participate in
dividends and in the distribution of assets upon the voluntary liquidation,
dissolution or winding up of the Company; provided, however, that the Underlying
Shares shall include only shares of such class designated in the Company's
Certificate of Incorporation as Common Stock or (i) in the case of any
reclassification, change, consolidation, merger, or sale of assets of the
character referred to in Section 9(b) hereof, the stock, securities or property
provided for in such section or (ii) in the case of any reclassification or
change in the number of Underlying Shares as a result of a subdivision or
combination or consisting of a change in
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par value, or from par value to no par value, or from no par value to par value,
such Underlying Shares as so reclassified or changed.
(m) Determination of Net Sales Price. In case of the sale for
cash of any shares of Common Stock, Options, or Convertible Securities, the
consideration received by the Company therefor shall be deemed to be the net
sales price therefor (after deducting therefrom any expense paid or incurred by
the Company or any underwriting discounts or commissions or concessions paid or
allowed by the Company in connection therewith).
(n) Events Resulting in no Adjustments. No adjustment to the
Underlying Share Purchase Price or to the number of Underlying Shares, however,
ill be made upon (i) the exercise of any stock options issued under the
Company's Stock Option Plan (the "Stock Option Plan") or the Employee Stock
Purchase Plan of the Company under the terms of such plans, (ii)the exercise of
any warrants by officers and directors of the Company that are outstanding as of
the date hereof, (iii) the sale of any shares of Common Stock pursuant to the
exercise of the Warrants (collectively, the "Exempt Securities"), (iv) any
shares of Common Stock issuable upon conversion of the Series A Convertible
Preferred Stock and (v) any shares of Common Stock issued in connection with a
merger, acquisition or other similar business combination in which the Company
is the surviving corporation.
(o) Notice of Change in Underlying Share Purchase Price. Upon
any adjustment pursuant to this Section, the Company shall promptly thereafter
(i) cause to be prepared a certificate of the President and Chief Financial
Officer of the Company setting forth the Underlying Share Purchase Price after
such adjustment and setting forth in reasonable detail the method of calculation
and the facts upon which such calculations are based and setting forth the
number of Underlying Shares (or portion thereof) issuable after such adjustment
in the Underlying Share Purchase Price, upon exercise of the Warrants and
payment of the adjusted Underlying Share Purchase Price, which certificate shall
be conclusive evidence of the correctness of the matters set forth therein
absent manifest error and (ii) send to the Warrant Holder at the address
appearing on the registry books maintained by the Company and to the Warrant
Agent written notice of such adjustments by first-class mail, postage prepaid.
Notice of Certain Events. With respect to any Notice Event, the Company shall
cause to be given to the Warrant Holder at such Warrant Holder's address on the
registry books maintained by the Company, and to the Warrant Agent at least 20
days prior to the applicable record date hereinafter specified, or in the case
of events for which there is no record date, at least fifteen (15) days prior to
the taking of such proposed action, by certified mail, return receipt requested,
postage prepaid, a written notice stating (i) the date as of which the holders
of record of shares of Common Stock entitled to receive any such rights,
options, warrants or distribution is to be determined, (iii) the initial
expiration date set forth in any tender offer or exchange offer for shares of
Common Stock, or (iii) the date on which any such consolidation, merger,
conveyance, transfer, dissolution, liquidation or winding up is expected to
become effective or consummated and the date as of which it is expected that
holders of record of shares of Common Stock shall be entitled to exchange such
shares for securities or other property, if any, deliverable upon such
reclassification, consolidation, merger, conveyance, transfer, dissolution,
liquidation or winding up. The failure to give the notice required by this
Section 4(q) or any defect therein shall not affect the legality or validity of
any distribution, right, option, warrant, consolidation, merger, conveyance,
transfer, dissolution, or liquidation or winding up, or the vote upon any
action.
Section 10. OTHER PROVISIONS RELATING TO RIGHTS OF WARRANTHOLDERS.
A. Warrant Holder not a Stockholder. The Warrant Holder, as such, shall not
be entitled to vote or receive dividends or be deemed holders of Common Stock
for any purpose whatsoever, nor shall anything contained in this Agreement be
construed to confer upon the Warrant Holder, as such, any of the rights of a
stockholder of the Company including, but not limited to, the right to vote for
the election of directors or on any other matter, give or withhold consent to
any action by the Company (whether upon any recapitalization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings or other action affecting stockholders (except for
notices provided for in this Agreement), receive dividends or subscription
rights, or otherwise until Warrants shall have been exercised to purchase
Underlying Shares, at which time the person or persons in whose name or names
the certificate or certificates for the shares of Common Stock are registered
shall be deemed the holder or holders of record of such shares of Common Stock
for all purposes.
B. Fractional Shares. Anything contained herein to the contrary
notwithstanding, the Company shall not be required to issue any fractional
shares of Common Stock in connection with the exercise of the Warrants. In any
case where the Warrant Holder would, except for the provisions of this Section,
be entitled under the terms of this
7
Agreement to receive a fraction of a share of Common Stock upon the exercise of
the Warrants, the Company shall, upon the exercise of the Warrants and receipt
of the Underlying Share Purchase Price, issue the largest number of whole shares
of Common Stock purchasable upon exercise of the Warrants. The Warrant Holder
expressly waives his or her right to receive a certificate of any fraction of a
share of Common Stock upon the exercise hereof. However, with respect to any
fraction of a share of Common Stock called for upon any exercise hereof, the
Company shall pay to the Warrant Holder an amount in cash equal to such fraction
multiplied by the current market price per share of Common Stock determined
pursuant to Section 9 hereof.
Section 11. CERTAIN COVENANTS OF THE COMPANY.
A. So long as any unexpired Warrants remain outstanding and if required in
order to comply with the Securities Act of 1933, as amended (the "Act"), Company
covenants and agrees that it will obtain and keep effective all permits,
consents and approvals of governmental agencies and authorities, and will use
its best efforts to take all action which may be necessary to qualify the Shares
for sale under the securities laws of such of the United States, as may be
necessary to permit the free exercise of the Warrants, and the issuance, sale,
transfer and delivery of the Shares issued upon exercise of the Warrants, and to
maintain such qualifications during the entire period in which the Warrants are
exercisable.
B. The Company covenants and agrees that it shall take all such action as
may be necessary to ensure that all Shares will at the time of delivery of
certificates for such Shares (subject to payment of the warrant exercise price)
be duly and validly authorized and issued and fully paid and nonassessable
Shares, free from any preemptive rights and taxes, liens, charges and security
interests created by or imposed upon the Company.
C. The Company covenants and agrees that it will take all action which may
be necessary to cause the Shares to be duly listed on the Nasdaq National Market
or any securities exchange on which the other shares of Common Stock of the
Company are listed.
Section 12. DISPOSITION OF PROCEEDS, ETC.
A. The Warrant Agent shall account promptly to the Company with respect to
Warrants exercised and concurrently pay to the Company all moneys received by
the Warrant Agent for the purchase of Shares through the exercise of such
Warrants.
B. The Warrant Agent shall keep copies of this Agreement available for
inspection by holders of Warrants during normal business hours at its principal
office in the City of New York.
Section 13. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT. Any
corporation into which the Warrant Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Warrant Agent shall be a party, or any corporation succeeding to the
corporate trust business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Warrant Agent under
the provisions of (S)15 of this Agreement. In case at the time such successor to
the Warrant Agent shall succeed to the agency created by this Agreement, and if
any of the Warrants shall have been countersigned but not delivered, any such
successor to the Warrant Agent may adopt the countersignature of the original
Warrant Agent and deliver such Warrants so countersigned; and in case at that
time any of the Warrants shall not have been countersigned, any successor to the
Warrant Agent may countersign such Warrants either in the name of the
predecessor Warrant Agent or in the name of the successor Warrant Agent; and in
all such cases such Warrant shall have the full force provided in the Warrants
and in this Agreement.
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrants shall have been countersigned but not delivered,
the Warrant Agent may adopt the countersignature under its prior name and
deliver Warrants so countersigned; and in case at that time any of the Warrants
shall not have been countersigned, the Warrant Agent may countersign such
Warrants either in its prior name or in its changed name; and in all such cases
such Warrants shall have the full force provided in the Warrants and in this
Agreement.
Section 14. DUTIES OF WARRANT AGENT. The Warrant Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Warrants, by their
acceptance thereof, shall be bound:
8
A. The statements contained herein and in the Warrants shall be taken as
statements of the Company, and the Warrant Agent assumes no responsibility for
the correctness of any of the same except such as describe the Warrant Agent or
action taken or to be taken by it. The Warrant Agent assumes no responsibility
with respect to the distribution of the Warrants except as herein otherwise
provided.
B. The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants contained in this Agreement or in
the Warrants to be complied with by the Company.
C. The Warrant Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys, agents or employees, and the Warrant Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys, agents or employees or for any loss to the Company resulting
from such neglect or misconduct, provided reasonable care shall have been
exercised in the selection and continued employment thereof.
D. The Warrant Agent may consult at any time with counsel satisfactory to
it (who may be counsel for the Company), and the Warrant Agent shall incur no
liability or responsibility to the Company or to any holder of any Warrant in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in accordance with the opinion or the advice of such counsel.
E. The Warrant Agent shall incur no liability or responsibility to the
Company or to any holder of any Warrant for any action taken in reliance on any
notice, resolution, waiver, consent, order, certificate, or other paper,
document or instrument believed by it to be genuine and to have been signed,
sent or presented by the proper party or parties.
F. The Company agrees to pay to the Warrant Agent agreed upon compensation
for all services rendered by the Warrant Agent in the execution of this
Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges of any kind and nature incurred by the
Warrant Agent in the execution of this Agreement and to indemnify the Warrant
Agent and save it harmless against any and all liabilities, including judgments,
costs and reasonable counsel fees, for anything done or omitted by the Warrant
Agent in the execution of this Agreement except as a result of the Warrant
Agent's negligence, bad faith or willful misconduct.
G. The Warrant Agent shall be under no obligation to institute any action,
suit or legal proceeding or to take any other action likely to involve expense
unless the Company or one or more registered holders of Warrants shall furnish
the Warrant Agent with reasonable security and indemnity for any costs and
expenses which may be incurred, but this provision shall not affect the power of
the Warrant Agent to take such action as the Warrant Agent may consider proper,
whether with or without any such security or indemnity. All rights of action
under this Agreement or under any of the Warrants may be enforced by the Warrant
Agent without the possession of any of the Warrants or the production thereof at
any trial or other proceeding relative thereto, and any such action, suit or
proceeding instituted by the Warrant Agent shall be brought in its name as
Warrant Agent, and any recovery of judgment shall be for the ratable benefit of
the registered holders of the Warrants, as their respective rights or interests
may appear.
H. The Warrant Agent and any shareholder, director, officer or employee of
the Warrant Agent may buy, sell or deal in any of the Warrants or other
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to or
otherwise act as fully and freely as though it were not Warrant Agent under this
Agreement. Nothing herein shall preclude the Warrant Agent from acting in any
other capacity for the Company or for any other legal entity.
I. The Warrant Agent shall act hereunder solely as agent and not in a
ministerial capacity, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not be liable for anything which it
may do or refrain from doing in connection with this Agreement except for its
own gross negligence or bad faith.
Section 15. CHANGE OF WARRANT AGENT. The Warrant Agent may resign and be
discharged from its duties under this Agreement by giving to the Company notice
in writing, and to the holders of the Warrants notice by publication, of such
resignation, specifying a date when such resignation shall take effect, which
notice shall be published at the expense of the Company at least once a week for
two consecutive weeks in a newspaper of general circulation in the City of New
York prior to the date so specified. The Warrant Agent may be removed by the
Company by like notice from the Company to the Warrant Agent and the holders of
Warrants at the expense of
9
the Company. If the Warrant Agent shall resign or be removed or shall otherwise
become incapable of acting, the Company shall appoint a successor to the Warrant
Agent. If the Company shall fail to make such appointment within a period of 30
days after such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Warrant Agent or by
the registered holder of a Warrant (who shall, with such notice, submit his
Warrant for inspection by the Company), then, at the expense of the Company, the
Warrant Agent or the registered holder of any Warrant may apply to any court of
competent jurisdiction for the appointment of a successor to the Warrant Agent.
Any successor Warrant Agent, whether appointed by the Company or by such a
court, shall be a bank or trust company, in good standing, incorporated under
the laws of any State or of the United States of America, having at the time of
its appointment as Warrant Agent a combined capital and surplus of at least
$50,000,000. After appointment the successor Warrant Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Warrant Agent without further act or deed; but the former
Warrant Agent shall deliver and transfer to the successor Warrant Agent any
property at the time held by it hereunder, and execute and deliver any further
assurance, conveyance, act or deed necessary for the purpose. Failure to file or
publish any notice provided for in this Section, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Warrant Agent or the appointment of the successor Warrant Agent, as the case may
be.
Section 16. IDENTITY OF TRANSFER AGENT. Forthwith upon the appointment of
any Transfer Agent for the Shares or of any subsequent Transfer Agent for Shares
issuable upon the exercise of the rights of purchase represented by the
Warrants, the Company will file with the Warrant Agent a statement setting forth
the name and address of such Transfer Agent.
Section 17. NOTICES. Any notice pursuant to this Agreement to be given or
made by the Warrant Agent or by the registered holder of any Warrant to or on
the Company shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing by the
Company with the Warrant Agent) as follows:
American Country Holdings Inc.
000 X. XxXxxxx Xxxxxx
Xxxxxxx, XX 00000
ATTN: Chief Financial Officer
Any notice pursuant to this Agreement to be given or made by the Company or
by the registered holder of any Warrant to or on the Warrant Agent shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing by the Warrant Agent with
the Company) as follows:
00 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Any notice pursuant to this Agreement to be given or made by the Company or
the Warrant Agent to the registered holder of any Warrant shall be sufficiently
given or made (unless otherwise specifically provided for herein) if sent by
first-class mail, postage prepaid, addressed to said registered holder at his
address appearing on the Warrant register.
Section 18. SUPPLEMENTS AND AMENDMENTS. The parties hereto may from time to
time supplement or amend this Agreement without the approval of any holders of
Warrants in order to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions in regard to matters or
questions arising hereunder which the Company and the Warrant Agent may deem
necessary or desirable and which will not materially adversely affect the
interest of the registered holders of the Warrants. The parties hereto may also
modify or amend this Agreement and the terms of the Warrants with the consent of
the holders of not less than a majority in number of the then outstanding
unexercised Warrants affected thereby; provided that no such modification or
amendment that accelerates the expiration date, increases the exercise price,
reduces the number of outstanding Warrants the consent of the holders of which
is required for any such modification or amendment, or otherwise materially
adversely affects the rights of the holders of the Warrants, may be made without
the consent of each holder affected thereby.
Section 19. SUCCESSORS. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Warrant Agent shall bind and inure
to the benefit of their respective successors and assigns hereunder.
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Section 20. LAW GOVERNING CONTRACT. This Agreement and each Warrant issued
hereunder shall be deemed to be a contract made under the laws of the State of
Illinois and for all purposes shall be construed in accordance with the laws of
said State.
Section 21. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall be
construed to give to any person or entity other than the Company and the Warrant
Agent and the holders of Warrants any legal or equitable right, remedy or claim
under this Agreement, but this Agreement shall be for the sole and exclusive
benefit of the Company and the Warrant Agent and the holders of Warrants.
Section 22. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the day and year first above written.
AMERICAN COUNTRY HOLDINGS INC.
By: /s/ XXXX X. XXXX
------------------------
Name: Xxxx X. Xxxx
Its: Co-Chairman and Chief Executive Officer
WARRANT AGENT
By: /s/ XXXXXXX X. XXXXXX
------------------------
Name: Xxxxxxx X.Xxxxxx
Its: Vice President
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