EXHIBIT 4.25
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR COMPLIANCE WITH
AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.
RAPTOR NETWORKS TECHNOLOGY, INC.
W-6.15.04.1 June 21, 2004
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
THIS CERTIFIES THAT, for value received, and subject to the provisions and
upon the terms and conditions hereinafter set forth, XXXXX & XXXXXX, LLP is
entitled to subscribe for and purchase, at an exercise price per share equal to
Two Dollars ($2.00) (as adjusted herein, the "WARRANT PRICE"), one hundred fifty
thousand (150,000) shares of the fully paid and nonassessable Common Stock (as
adjusted herein) of RAPTOR NETWORKS TECHNOLOGY, INC., a COLORADO corporation
(the "COMPANY") located at 00 Xxxxxxxxxx Xxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000. As
used herein, (i) "DATE OF GRANT" shall mean the date first set forth above, and
(ii) "SHARES" shall mean the Common Stock issued or issuable upon the exercise
of this Warrant.
1. TERM. The purchase right represented by this Warrant is fully vested and
immediately exercisable, in whole or in part, at any time from the date hereof
through the date which is five (5) years from the Date of Grant.
2. METHOD OF EXERCISE; PAYMENT; ISSUANCE OF NEW WARRANT. Subject to SECTION
1 hereof, the purchase right represented by this Warrant may be exercised by the
holder or holder's assignee hereof, in whole or in part and from time to time,
by the surrender of this Warrant (with the notice of exercise form attached
hereto as Exhibit A duly executed) at the principal office of the Company and by
the payment to the Company, by check, of an amount equal to the then applicable
Warrant Price multiplied by the number of Shares then being purchased. The
person or persons in whose name(s) any certificate(s) representing Shares shall
be issuable upon exercise of this Warrant shall be deemed to have become the
holder(s) of record of, and shall be treated for all purposes as the record
holder(s) of, the shares represented thereby (and such shares shall be deemed to
have been issued) immediately prior to the close of business on the date or
dates upon which this Warrant is exercised. This Warrant may be subsequently
assigned by holder. If so assigned, the assignee shall be the subsequent holder
and all provisions contained herein shall apply as if the assignee was the
original holder. In the event of any exercise of the rights represented by this
Warrant, certificates for the shares of stock so purchased shall be delivered to
the holder hereof as soon as possible and in any event within thirty days after
such exercise and, unless this Warrant has been fully exercised or expired, a
new Warrant representing the portion of the Shares, if any, with respect to
which this Warrant shall not then have been exercised shall also be issued to
the holder hereof as soon as possible and in any event within such thirty day
period.
3. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The number and kind of
securities purchasable upon the exercise of this Warrant and the Warrant Price
shall be subject to adjustment from time to time upon the occurrence of certain
events, as follows:
(a) RECLASSIFICATION OR MERGER. In case of any reclassification,
change or conversion of securities of the class issuable upon exercise of this
Warrant (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 merger of the Company with or into another corporation (other
than a merger with another corporation in which the Company is the acquiring and
the surviving corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
case of any sale of all or substantially all of the assets of the Company, the
Company, or such successor or purchasing corporation, as the case may be, or its
parent corporation, shall duly execute and deliver to the holder of this Warrant
a new Warrant (in form and substance reasonably satisfactory to the holder of
this Warrant), so that the holder of this Warrant shall have the right to
receive, at a total purchase price not to exceed that payable upon the exercise
of the unexercised portion of this Warrant, and in lieu of the Shares
theretofore issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and property receivable upon such
reclassification, change or merger by a holder of the number of Shares then
purchasable under this Warrant. Such new Warrant shall provide for adjustments
that shall be as nearly equivalent as may be practicable to the adjustments
provided for in this SECTION 3. The provisions of this subparagraph (a) shall
similarly apply to successive reclassifications, changes, mergers,
consolidations, transfers, amendments and waivers.
(b) SUBDIVISION OR COMBINATION OF SHARES. If the Company at any time
while this Warrant remains outstanding and unexpired shall subdivide or combine
its outstanding Shares, the Warrant Price shall be proportionately decreased in
the case of a subdivision or increased in the case of a combination, effective
at the close of business on the date the subdivision or combination becomes
effective.
(c) STOCK DIVIDENDS AND OTHER DISTRIBUTIONS. In case the Company shall
make or issue, or shall fix a record date for the determination of eligible
holders entitled to receive, a dividend or other distribution with respect to
the Shares (or any shares of stock or other securities at the time issuable upon
exercise of the Warrant) payable in (a) securities of the Company or (b) assets
(excluding cash dividends paid or payable solely out of retained earnings),
then, in each such case, the holder of this Warrant on exercise hereof at any
time after the consummation, effective date or record date of such dividend or
other distribution, shall receive, in addition to the Shares (or such other
stock or securities) issuable on such exercise prior to such date, and without
the payment of additional consideration therefor, the securities or such other
assets of the Company to which such Holder would have been entitled upon such
date if such holder had exercised this Warrant on the date hereof and had
thereafter, during the period from the date hereof to and including the date of
such exercise, retained such shares and/or all other additional stock available
by it as aforesaid during such period giving effect to all adjustments called
for by this SECTION 3.
-2-
(d) ADJUSTMENT OF NUMBER OF SHARES. Upon each adjustment in the
Warrant Price, the number of Shares purchasable hereunder shall be adjusted, to
the nearest whole share, to the product obtained by multiplying the number of
Shares purchasable immediately prior to such adjustment in the Warrant Price by
a fraction, the numerator of which shall be the Warrant Price immediately prior
to such adjustment and the denominator of which shall be the Warrant Price
immediately thereafter.
(e) CONVERSION OF SHARES. In the event that all of the authorized and
outstanding Shares are redeemed or converted or reclassified into other
securities or property pursuant to the Company's Certificate of Incorporation or
otherwise, or the Shares otherwise ceases to exist, then, in such case, the
Holder of this Warrant, upon exercise hereof at any time after the date on which
the Shares are so redeemed or converted, reclassified or ceases to exist (the
"TERMINATION DATE"), shall receive, in lieu of the number of Shares that would
have been issuable upon such exercise immediately prior to the Termination Date,
the securities or property that would have been received if this Warrant had
been exercised in full and the Shares received thereupon had been simultaneously
converted immediately prior to the Termination Date, all subject to further
adjustment as provided in this Warrant. Additionally, the Warrant Price shall be
immediately adjusted to equal the quotient obtained by dividing (x) the
aggregate Warrant Price of the maximum number of Shares for which this Warrant
was exercisable immediately prior to the Termination Date by (y) the number of
Shares for which this Warrant is exercisable immediately after the Termination
Date, all subject to further adjustment as provided herein.
4. NOTICE OF ADJUSTMENTS. Whenever the Warrant Price or the number of
Shares purchasable hereunder shall be adjusted pursuant to SECTION 3 hereof, the
Company shall make a certificate signed by its chief executive officer setting
forth, in reasonable detail, the event requiring the adjustment, the amount of
the adjustment, the method by which such adjustment was calculated, and the
Warrant Price and the number of Shares purchasable hereunder after giving effect
to such adjustment, which shall be sent pursuant to SECTION 12 hereof to the
holder of this Warrant.
5. FRACTIONAL SHARES. No fractional Shares will be issued in connection
with any exercise hereunder, but in lieu of such fractional Shares the Company
shall make a cash payment therefor based on the fair market value of the Shares
on the date of exercise as reasonably determined in good faith by the Company's
Board of Directors.
6. COMPLIANCE WITH SECURITIES ACT: REGISTRATION RIGHTS; DISPOSITION OF
WARRANT OR SHARES OF COMMON STOCK. Subject to the provisions of this SECTION 6,
this Warrant may be assigned or transferred in whole or in part by the holder
hereof. The holder of this Warrant, by acceptance hereof, agrees that this
Warrant, and the Shares to be issued upon exercise hereof are being acquired for
investment and that such holder will not offer, sell or otherwise dispose of
this Warrant, or any Shares to be issued upon exercise hereof except under
circumstances which will not result in a violation of the Securities Act of
1933, as amended (the "Act"). This Warrant and all Shares issued upon exercise
of this Warrant (unless registered under the Act) shall be stamped or imprinted
with a legend in substantially the following form:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. NO SALE OR DISPOSITION
MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR
COMPLIANCE WITH AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS".
-3-
The shares to be issued upon exercise of this Warrant shall be subject to
certain registration rights as set forth on EXHIBIT B attached hereto and, by
this reference, made a part hereof, and may bear additional legends relating
thereto.
7. RIGHTS AS STOCKHOLDERS; INFORMATION. No holder of this Warrant, as such,
shall be entitled to vote or receive dividends or be deemed the holder of Shares
or any other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a stockholder of the Company or any right to vote for the election of
directors or upon any matter submitted to stockholders at any meeting thereof,
or to receive notice of meetings, or to receive dividends or subscription rights
or otherwise until this Warrant shall have been exercised and the Shares
purchasable upon the exercise hereof shall have become deliverable, as provided
herein. Notwithstanding the foregoing, the Company will transmit to the holder
of this Warrant such information, documents and reports as are generally
distributed to the holders of any class or series of the securities of the
Company concurrently with the distribution thereof to the stockholders.
8. RIGHT TO CONVERT WARRANT INTO SHARES; NET ISSUANCE.
(a) RIGHT TO CONVERT. In addition to and without limiting the rights
of the holder under the terms of this Warrant, the holder shall have the right
to convert this Warrant or any portion thereof (the "CONVERSION RIGHT") into
Shares as provided in this SECTION 8 at any time or from time to time during the
term of this Warrant, provided, however, that the holder shall not be permitted
to employ the cashless exercise rights under this SECTION 8 if there is
effective with the Securities and Exchange Commission a registration statement
which registers the Shares issuable upon exercise of this Warrant under SECTION
2. Upon exercise of the Conversion Right with respect to a particular number of
shares subject to this Warrant (the "Converted Warrant Shares"), the Company
shall deliver to the holder (without payment by the holder of any exercise price
or any cash or other consideration) (X) that number of shares of fully paid and
nonassessable Shares equal to the quotient obtained by dividing the value of
this Warrant (or the specified portion hereof) on the Conversion Date (as
hereinafter defined), which value shall be determined by subtracting (A) the
aggregate Warrant Price of the Converted Warrant Shares immediately prior to the
exercise of the Conversion Right from (B) the aggregate fair market value of the
Converted Warrant Shares issuable upon exercise of this Warrant (or the
specified portion hereof) on the Conversion Date (as herein defined) by (Y) the
fair market value of one Share on the Conversion Date (as herein defined).
-4-
Expressed as a formula, such conversion shall be computed as follows:
X= B-A
---
Y
Where: X = The number of Shares that may be issued to holder.
Y = The fair market value (FMV) of one Share.
A = The aggregate Warrant Price (i.e., Converted Warrant Shares x
Warrant Price).
B = The aggregate FMV (i.e., FMV x Converted Warrant Shares).
No fractional shares shall be issuable upon exercise of the Conversion
Right, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
holder an amount in cash equal to the fair market value of the resulting
fractional share on the Conversion Date (as hereinafter defined). All references
herein to an "exercise" of the Warrant shall include an exchange pursuant to
this SECTION 8.
(b) METHOD OF EXERCISE. The Conversion Right may be exercised by the
holder by the surrender of this Warrant at the principal office of the Company
together with a notice of exercise substantially in the form attached hereto as
EXHIBIT A-1, specifying that the holder thereby intends to exercise the
Conversion Right and indicating the number of shares subject to this Warrant
that are being surrendered (referred to in subsection (a) hereof as the
Converted Warrant Shares) in exercise of the Conversion Right. Such conversion
shall be effective upon receipt by the Company of this Warrant together with the
aforesaid notice of exercise, or on such later date as is specified therein (the
"CONVERSION DATE"), and, at the election of the holder hereof, may be made
contingent upon the closing of the sale of the Company's Common Stock to the
public in an offering pursuant to a Registration Statement under the Act (a
"PUBLIC OFFERING"). Certificates for the shares issuable upon exercise of the
Conversion Right and, if applicable, a new warrant evidencing the balance of the
shares remaining subject to this Warrant, shall be issued as of the Conversion
Date and shall be delivered to the holder within thirty days following the
Conversion Date.
(c) DETERMINATION OF FAIR MARKET VALUE. For purposes of this SECTION
8, "FAIR MARKET VALUE" of a Share as of a particular date (the "DETERMINATION
DATE") shall mean:
(i) If the Conversion Right is exercised in connection with and
contingent upon a Public Offering, and if the Company's Registration Statement
relating to such Public Offering ("REGISTRATION STATEMENT") has been declared
effective by the Securities and Exchange Commission, then the initial "PRICE TO
PUBLIC" specified in the final prospectus with respect to such offering.
(ii) If the Conversion Right is not exercised in connection with
and contingent upon a Public Offering, then as follows:
-5-
(A) If traded on a securities exchange or The Nasdaq Stock
Market, the fair market value of the Common Stock shall be deemed to be the
average of the closing or last reported sale prices of the Common Stock on such
exchange or market over the thirty day period ending five business days prior to
the Determination Date, and the fair market value of the Shares shall be deemed
to be such fair market value of the Common Stock;
(B) If otherwise traded in an over-the-counter market, the
fair market value of the Common Stock shall be deemed to be the average of the
closing ask prices of the Common Stock over the thirty day period ending five
business days prior to the Determination Date, and the fair market value of the
Shares shall be deemed to be such fair market value of the Common Stock; and
(C) If there is no public market for the Common Stock, then
fair market value shall be the price reasonably determined in good faith by the
Board of Directors of the Company.
9. RESERVATION OF COMMON STOCK. The Company hereby covenants that at all
times following the date hereof there shall be reserved for issuance and
delivery upon exercise of this Warrant such number of Shares as are from time to
time issuable upon exercise of this Warrant. The Company hereby further
covenants that from time to time following the date hereof, the Company will
take all steps necessary to amend its Certificate of Incorporation to provide
sufficient reserves of Shares issuable upon exercise of this Warrant. All such
shares shall be duly authorized, and when issued upon such exercise, shall be
validly issued, fully paid and non-assessable, free and clear of all liens,
security interests, charges and other encumbrances or restrictions on sale and
free and clear of all preemptive rights, except encumbrances or restrictions
arising under federal or state securities laws.
10. MODIFICATION AND WAIVER. This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is sought.
11. MARKET STANDOFF. The holder of this Warrant hereby agrees not to sell,
transfer or otherwise dispose of any part of this Warrant or any shares acquired
pursuant hereto during a period specified by the representative of the
underwriters of the Company's initial public offering (not to exceed 180 days)
following the effectiveness of such initial public offering, and such holder
further agrees that the Company may impose stop-transfer instructions with
respect to such securities during such period.
12. NOTICES. Any notice, request, communication or other document required
or permitted to be given or delivered to the holder hereof or the Company shall
be delivered, or shall be sent by certified or registered mail, postage prepaid,
to each such holder at its address as shown on the books of the Company or to
the Company at the address indicated therefor on the signature page of this
Warrant.
-6-
13. BINDING EFFECT ON SUCCESSORS. Until the issuance of any new warrant
required to be issued under SECTION 3(A), this Warrant shall be binding upon any
corporation that issues securities in exchange for securities of the class
issuable upon exercise of this Warrant in connection with any merger,
consolidation or acquisition of all or substantially all of the Company's
assets, and all of the obligations of the Company relating to the Shares
issuable upon the exercise or conversion of this Warrant shall survive the
exercise, conversion and termination of this Warrant and all of the covenants
and agreements of the Company shall inure to the benefit of the successors and
assigns of the holder hereof. The Company will, at the time of the exercise or
conversion of this Warrant, in whole or in part, upon request of the holder
hereof but at the Company's expense, acknowledge in writing its continuing
obligation to the holder hereof in respect of any rights (including, without
limitation, any right to registration of the shares) to which the holder hereof
shall continue to be entitled after such exercise or conversion in accordance
with this Warrant; provided, that the failure of the holder hereof to make any
such request shall not affect the continuing obligation of the Company to the
holder hereof in respect of such rights.
14. LOST WARRANTS OR STOCK CERTIFICATES. The Company covenants to the
holder hereof that, upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate and, in the case of any such loss, theft or destruction, upon
receipt of an indemnity reasonably satisfactory to the Company, or in the case
of any such mutilation upon surrender and cancellation of such Warrant or stock
certificate, the Company will make and deliver a new Warrant or stock
certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated
Warrant or stock certificate.
15. DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Warrant are inserted for convenience only and do not
constitute a part of this Warrant.
16. GOVERNING LAW. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the
internal laws of the State of California without regard to its conflicts of laws
principles and the venue for any controversy concerning this Warrant shall be
the state and federal courts located in Orange County, California.
17. SURVIVAL. All agreements of the Company and the holder hereof contained
herein shall survive indefinitely until, by their respective terms, they are no
longer operative.
18. REMEDIES. In case any one or more of the covenants and agreements
contained in this Warrant shall have been breached, the holders hereof (in the
case of a breach by the Company), or the Company (in the case of a breach by a
holder), may proceed to protect and enforce their or its rights either by suit
in equity and/or by action at law, including, but not limited to, an action for
damages as a result of any such breach and/or an action for specific performance
of any such covenant or agreement contained in this Warrant.
19. ACCEPTANCE. Receipt of this Warrant by the holder hereof shall
constitute acceptance of and agreement to the foregoing terms and conditions.
20. NO IMPAIRMENT OF RIGHTS. The Company will not, by amendment of its
Articles of Incorporation or through any other means, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of this Warrant against impairment. Without limiting
the generality of the foregoing, the Company will take all such action as may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and non-assessable Shares upon exercise of this Warrant.
-7-
21. SEVERABILITY. If any term, provision, covenant, or restriction of this
Warrant is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Warrant shall remain in full force and effect and shall in
no way be affected, impaired or invalidated.
22. NOTICES OF RECORD DATE. In case:
(a) the Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive any dividend or other distribution,
or any right to subscribe for or purchase any shares of stock of any class or
any other securities or to receive any other right; or
(b) of any consolidation or merger of the Company with or into another
corporation, any capital reorganization of the Company, any reclassification of
the capital stock of the Company, or any conveyance of all or substantially all
of the assets of the Company to another corporation in which holders of the
Company's stock are to receive stock, securities or property of another
corporation; or
(c) of any voluntary dissolution, liquidation or winding-up of the
Company; or
(d) of any redemption or conversion of all outstanding Common Stock.
then, and in each such case, the Company will mail or cause to be mailed to the
holder of this Warrant a notice specifying, as the case may be, (i) the date on
which a record is to be taken for the purpose of such dividend, distribution or
right, or (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation, winding-up,
redemption or conversion is to take place, and the time, if any is to be fixed,
as of which the holders of record of Common Stock shall be entitled to exchange
their shares of Common Stock, for securities or other property deliverable upon
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be delivered at least
seven (7) days prior to the date therein specified.
RAPTOR NETWORKS TECHNOLOGY, INC.
ACKNOWLEDGED AND AGREED:
XXXXX & XXXXXX, LLP By: /s/ Xxx xxx Xxxxx
----------------------------------
By: /s/ Xxxxxx X. Xxxxx Name: Xxx xxx Xxxxx
Its: Partner, duly authorized
Title: CFO
Name of Holder
Title (if applicable)
-8-
EXHIBIT A
NOTICE OF EXERCISE
To: RAPTOR NETWORKS TECHNOLOGY, INC.
1. The undersigned hereby elects to purchase __________ shares of Common
Stock of RAPTOR NETWORKS TECHNOLOGY, INC. pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price of such shares in
full.
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name or names as are specified
below:
______________________________
(Name)
______________________________
(Address)
3. The undersigned represents that the aforesaid shares are being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares. In support
thereof, the undersigned has executed an Investment Representation Statement
attached hereto as Schedule 1.
___________________________________
Signature
Date
-9-
EXHIBIT A-1
NOTICE OF EXERCISE OF NET ISSUANCE CONVERSION RIGHTS
To: RAPTOR NETWORKS TECHNOLOGY, INC.
1. The undersigned, the registered holder of the Warrant delivered herewith
(the "Warrant"), hereby elects to exercise the Conversion Right (as defined in
SECTION 8 of the Warrant) as provided herein. __________ shares subject to the
Warrant are being surrendered hereby in exercise of the Conversion Right. The
number of shares to be issued pursuant to this exercise shall be determined by
reference to the formula in SECTION 8(A) of the Warrant, which requires the use
of the "fair market value" of the Company's stock. As of the Determination Date
(as defined in the Warrant), the "fair market value" of one of the Shares shall
be determined in the manner provided in SECTION 8(C) of the Warrant, which
amount has been determined by the undersigned (or agreed to by the holder of the
Warrant and RAPTOR NETWORKS TECHNOLOGY, INC.) to be $_____ per share. Therefore,
___________ shares are to be issued to the undersigned pursuant to this
exercise.
2. Please issue a certificate or certificates representing said shares in
the name of the undersigned or in such other name or names as are specified
below:
______________________________
(Name)
______________________________
(Address)
3. The undersigned represents that the aforesaid shares are being acquired
for the account of the undersigned for investment and not with a view to, or for
resale in connection with, the distribution thereof and that the undersigned has
no present intention of distributing or reselling such shares. In support
thereof, the undersigned has executed an Investment Representation Statement
attached hereto as Schedule l.
___________________________________
Signature
Date
-10-
SCHEDULE 1
----------
INVESTMENT REPRESENTATION STATEMENT
Purchaser: XXXXX & XXXXXX, LLP
Company: RAPTOR NETWORKS TECHNOLOGY, INC.
Security: Common Stock
Amount:
Date:
In connection with the purchase of the above-listed securities (the
"Securities"), the undersigned (the "Purchaser") represents to the Company as
follows:
(a) The Purchaser is aware of the Company's business affairs and
financial condition, and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the Securities. The
Purchaser is purchasing the Securities for its own account for investment
purposes only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Securities Act of 1933, as amended
(the "Act").
(b) The Purchaser understands that the Securities have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of the Purchaser's investment intent as expressed herein. In this
connection, the Purchaser understands that, in the view of the Securities and
Exchange Commission ("SEC"), the statutory basis for such exemption may be
unavailable if the Purchaser's representation was predicated solely upon a
present intention to hold these Securities for the minimum capital gains period
specified under tax statutes, for a deferred sale, for or until an increase or
decrease in the market price of the Securities, or for a period of one year or
any other fixed period in the future.
(c) The Purchaser further understands that the Securities must be held
indefinitely unless subsequently registered under the Act or unless an exemption
from registration is otherwise available. Moreover, the Purchaser understands
that the Company is under no obligation to register the Securities except as set
forth in the Warrant under which the Securities are being acquired. In addition,
the Purchaser understands that the certificate evidencing the Securities will be
imprinted with the legend referred to in the Warrant under which the Securities
are being purchased.
(d) The Purchaser is aware of the provisions of Rule 144 and 144A,
promulgated under the Act, which, in substance, permit limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
-11-
to the satisfaction of certain conditions, if applicable, including, among other
things: The availability of certain public information about the Company, the
resale occurring not less than one year after the party has purchased and paid
for the securities to be sold; the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934, as
amended) and the amount of securities being sold during any three-month period
not exceeding the specified limitations stated therein.
(e) The Purchaser further understands that at the time it wishes to
sell the Securities there may be no public market upon which to make such a
sale, and that, even if such a public market then exists, the Company may not be
satisfying the current public information requirements of Rule 144 and 144A, and
that, in such event, the Purchaser may be precluded from selling the Securities
under Rule 144 and 144A even if the one-year minimum holding period had been
satisfied.
(f) The Purchaser further understands that in the event all of the
requirements of Rule 144 and 144A are not satisfied, registration under the Act,
compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
Staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.
Purchaser:__________________________
Date: ______________________, 20____
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EXHIBIT B
REGISTRATION RIGHTS
1. Certain Definitions.
As used in this EXHIBIT B, the following terms shall have the following
respective meanings:
"COMMISSION" means the United States Securities and Exchange Commission
or any other federal agency at any time administering the Securities Act and the
Exchange Act.
"COMMON STOCK" means the Common Stock of the Company, any shares into
which such Common Stock shall have been changed, or any shares resulting from
any reclassification of such Common Stock.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
or any successor statute thereto, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect at the
time.
"HOLDER" means the person holding Registrable Securities to whom these
registration rights have been assigned pursuant to this Agreement.
"PERSON" means an individual, partnership, corporation, association,
trust, joint venture, unincorporated organization and any government,
governmental department or agency or political subdivision thereof.
"REGISTRABLE SECURITIES" means (i) any Common Stock held by Holder that
was acquired upon conversion of this Warrant, (ii) any Common Stock issued or
issuable as a result of a stock split, stock dividend, recapitalization or
similar event with respect to securities described in clause (i) above and (iii)
securities issued in replacement or exchange of any of the securities issued in
clauses (i) or (ii) above; provided, however, that notwithstanding anything to
the contrary contained herein, "Registrable Securities" shall not at any time
include any shares of Common Stock (i) registered and sold pursuant to the
Securities Act, or (ii) sold to the public pursuant to Rule 144 promulgated
under the Securities Act.
"REGISTRATION EXPENSES" means all expenses incident to the Company's
performance of or compliance with this Agreement, including, without limitation,
all registration, filing, listing and National Association of Securities
Dealers, Inc. ("NASD") fees, all fees and expenses of complying with securities
or blue sky laws, all word processing, duplicating and printing expenses, all
messenger and delivery expenses, any transfer taxes, the fees and expenses of
the Company's legal counsel and independent public accountants, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance, fees and disbursements of not more than one
counsel for the Holder, and any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities; provided, however, that
Registration Expenses shall not include underwriting discounts and commissions.
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"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor statute thereto, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect at the time.
2. REGISTRATION.
(a) INCIDENTAL REGISTRATION. If the Company for itself or any of
its security holders shall at any time or times after the date hereof determine
to register under the Securities Act any shares of its capital stock (other than
(i) the registration of an offer, sale or other disposition of securities solely
to employees of, or other persons providing services to, the Company, or any
subsidiary pursuant to an employee or similar benefit plan or (ii) securities to
be issued in connection with a merger, acquisition or other transaction of the
type described in Rule 145 under the Securities Act or a comparable or successor
rule, registered on Form S-4 or similar or successor forms), on each such
occasion the Company will notify Holder of such determination at least thirty
(30) days prior to the filing of such registration statement, and upon the
request of Holder given in writing within twenty (20) days after the receipt of
such notice, the Company will use its best efforts as soon as practicable
thereafter to cause any of the Registrable Securities specified by Holder to be
included in such registration statement to the extent such registration is
permissible under the Securities Act and subject to the conditions of the
Securities Act (an "INCIDENTAL REGISTRATION").
(b) EXPENSES. The Company shall pay all Registration Expenses
incurred in connection with any Incidental Registration other than underwriter
fees, discounts and commissions which shall be paid pro rata by each holder of
Registrable Securities participating in such registrations.
(c) EFFECTIVE REGISTRATION STATEMENT. An Incidental Registration
requested pursuant to SECTION 2(B) shall not be deemed to have been effected
unless it has become effective with the Commission. Notwithstanding the
foregoing, a registration statement will not be deemed to have been effected if
(i) after it has become effective with the Commission, such registration is made
subject to any stop order, injunction, or other order or requirement of the
Commission or other governmental agency or any court proceeding for any reason
other than a misrepresentation or omission by Holder or (ii) the conditions to
closing specified in the purchase agreement or underwriting agreement entered
into in connection with such registration are not satisfied, other than solely
by reason of some act or omission by Holder.
3. INDEMNIFICATION AND CONTRIBUTION.
(a) INDEMNIFICATION BY THE COMPANY. In the event of any
registration under the Securities Act pursuant to SECTION 2 of any Registrable
Securities covered by such registration, the Company will, and hereby does,
indemnify and hold harmless each Holder of Registrable Securities to be sold
under such registration statement, Holder's legal counsel, each other person who
participates as an underwriter in the offering or sale of such securities (if so
required by such underwriter as a condition to including the Registrable
Securities of the Holder in such registration) and each other person, if any,
who controls or is a member (partner) of Holder or any such underwriter within
the meaning of the Securities Act (collectively, the "INDEMNIFIED PARTIES"),
against any losses, claims, damages or liabilities, joint or several, to which
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the Indemnified Parties may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in any registration
statement under which such securities were registered under the Securities Act,
any preliminary prospectus, final prospectus or summary prospectus contained
therein or any document incorporated therein by reference, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or arise out of any violation by the Company of any rule
or regulation promulgated under the Securities Act or state securities law
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, and the Company will reimburse
the Indemnified Parties for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided, however, that the Company shall not
be liable to any Indemnified Party in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus, amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Indemnified Party specifically for use therein;
and provided further, that the Company shall not be required to indemnify any
Person against any liability arising from any untrue or misleading statement or
omission contained in any preliminary prospectus if such deficiency is corrected
in the final prospectus or for any liability that arises out of the failure by
an Indemnified Person seeking indemnity hereunder to deliver a prospectus if and
to the extent required by the Securities Act.
(b) INDEMNIFICATION BY THE HOLDER. The Company may require, as a
condition to including any Registrable Securities of any person or entity in any
registration statement filed pursuant to SECTION 2, that the Company shall have
received an undertaking reasonably satisfactory to it from such person or entity
to indemnify and hold harmless (in the same manner and to the same extent as set
forth in paragraph (a) of this SECTION 3, including the reimbursement for any
legal or other expenses reasonably incurred by the Company in connection
therewith) the Company, each director of the Company, each officer of the
Company and each other person, if any, who controls the Company within the
meaning of the Securities Act, with respect to any statement or alleged
statement in or omission or alleged omission from such registration statement,
any preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, if, and only if, such statement
or alleged statement or omission or alleged omission was made in reliance upon
and in conformity with information furnished in writing to the Company directly
by such person or entity specifically for use therein; provided, however, that
the obligation of Holder hereunder shall be limited to an amount equal to the
proceeds received by Holder upon the sale of Registrable Securities sold in the
offering covered by such registration.
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(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an
Indemnified Party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding paragraphs of this SECTION 3,
such Indemnified Party will, if a claim in respect thereof is to be made against
a party required to provide indemnification (an "INDEMNIFYING PARTY"), give
written notice to the latter of the commencement of such action, provided,
however, that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligation under the
preceding paragraphs of this SECTION 3, except to the extent that the
Indemnifying Party is actually prejudiced by such failure to give notice. In
case any such action is brought against an Indemnified Party, unless in such
Indemnified Party's reasonable judgment a conflict of interest between such
Indemnified and Indemnifying Parties may exist in respect of such claim, the
Indemnifying Party shall be entitled to participate in and to assume the defense
thereof, jointly with any other Indemnifying Party similarly notified to the
extent that it may wish, with counsel reasonably satisfactory to such
Indemnified Party, and after notice from the Indemnifying Party to such
Indemnified Party of its election so to assume the defense thereof, the
Indemnifying Party shall not be liable to such Indemnified Party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No Indemnifying
Party shall consent to entry of any judgment or enter into any settlement
without the consent of the Indemnified Party which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) INDEMNIFICATION PAYMENT. The indemnification required by this
SECTION 3 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
(e) SURVIVAL OF OBLIGATIONS. The obligations of the Company and of
the Holder under this SECTION 3 shall survive the conversion of the Warrant and
the completion of any offering of Registrable Securities pursuant to the terms
hereof.
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