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 (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO, (ii) AN OPINION OF COUNSEL FOR THE HOLDER, REASONABLY
SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED,
(iii) RECEIPT OF A NO-ACTION LETTER(S) FROM THE APPROPRIATE
GOVERNMENTAL AUTHORITY(IES), OR (iv) OTHERWISE COMPLYING WITH THE
PROVISIONS OF SECTION 7 OF THIS WARRANT.
LASERSIGHT INCORPORATED
-----------------------
WARRANT TO PURCHASE 500,000 SHARES
OF COMMON STOCK (this "Warrant")
LASERSIGHT INCORPORATED, a Delaware corporation (the "Company"), hereby
certifies that, for value received, Foothill Capital Corporation, a California
corporation, or registered assigns, is the registered holder of warrants (the
"Warrants") to subscribe for and purchase Five Hundred Thousand (500,000) shares
of the fully paid and nonassessable Common Stock (as adjusted pursuant to
Section 4 hereof, the "Shares") of the Company, at a price equal to $6.0667 per
share (such price and such other price as shall result, from time to time, from
the adjustments specified in Section 4 hereof is herein referred to as the
"Warrant Price"), subject to the provisions and upon the terms and conditions
hereinafter set forth. As used herein, (a) the term "Common Stock" shall mean
the Company's presently authorized Common Stock, $0.001 par value per share, and
any stock into or for which such Common Stock may hereafter be converted or
exchanged, (b) the term "Date of Grant" shall mean March 31, 1997, and (c) the
term "Other Warrants" shall mean any warrant issued upon transfer or partial
exercise of this Warrant. The term "Warrant" as used herein shall be deemed to
include Other Warrants unless the context hereof or thereof clearly requires
otherwise.
1. Term. The purchase right represented by this Warrant is exercisable, in
whole or in part, at any time and from time to time from the first anniversary
of the Date of Grant through and including the fifth anniversary thereof, at
which time the Warrant (to the extent unexercised at such time) will be
repurchased by the Company in accordance with Section 10.4(a) hereof; provided,
however, that from and after the date of the Company's giving notice in
accordance with the terms of Section 10.4(c) of its repurchase of certain
unexercised Warrants in accordance with the terms of Section 10.4(b), so long as
there is not default in the payment of the repurchase price therefor, this
Warrant shall cease to be exercisable as to the number of shares of Common Stock
specified in such notice (or, if different, such number of shares as are
actually repurchased).
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 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 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 of Common Stock 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. 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 (30) 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. Stock Fully Paid; Reservation of Shares. All Shares that may be issued
upon the exercise of the rights represented by this Warrant will, upon issuance
pursuant to the terms and conditions herein, be fully paid and nonassessable,
and free from all taxes, liens, charges, and pre-emptive rights with respect to
the issue thereof. The Company shall pay all transfer taxes, if any,
attributable to the issuance of Shares upon the exercise of the Warrants. During
the period within which the rights represented by this Warrant may be exercised,
the Company will at all times have authorized, and reserved for the purpose of
the issue upon exercise of the purchase rights evidenced by this Warrant, a
sufficient number of shares of its Common Stock to provide for the exercise of
the rights represented by this Warrant.
4. 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 on and after the Date of Grant, 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, 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 or to be payable upon the exercise of the
unexercised portion of this Warrant, and in lieu of the shares of Common Stock
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 of Common
Stock 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 4. The provisions of this subparagraph
(a) shall similarly apply to successive reclassifications, changes, mergers and
transfers.
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 of Common Stock, 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. If the Company at any time
while this Warrant is outstanding and unexpired shall (i) pay a dividend with
respect to Common Stock payable in Common Stock, or (ii) make any other
distribution with respect to Common Stock (except any distribution specifically
provided for in the foregoing subparagraphs (a) and (b)) of Common Stock, then
the Warrant Price shall be adjusted, from and after the date of determination of
shareholders entitled to receive such dividend or distribution, to that price
determined by multiplying the Warrant Price in effect immediately prior to such
date of determination by a fraction (i) the numerator of which shall be the
total number of shares of Common Stock outstanding immediately prior to such
dividend or distribution, and (ii) the denominator of which shall be the total
number of shares of Common Stock outstanding immediately after such dividend or
distribution.
d. Rights Offerings. In case the Company shall issue rights, options
or warrants to any person or persons who are at the time of such issuance the
holders of equity securities of the Company, entitling them to subscribe for or
purchase shares of Common Stock (or securities convertible or exchangeable into
Common Stock) at a price per share of Common Stock (or having a conversion or
exchange price per share of Common Stock if a security convertible or
exchangeable into Common Stock) less than the fair market value per share of
Common Stock on the record date for such issuance (or the date of issuance, if
there is no record date), the Warrant Price to be in effect on and after such
record date (or issuance date, as the case may be) shall be determined by
multiplying the Warrant Price in effect immediately prior to such record date
(or issuance date, as the case may be) by a fraction (i) the numerator of which
shall be the number of shares of Common Stock outstanding on such record date
(or issuance date, as the case may be) plus the number of shares of Common Stock
which the aggregate offering price of the total number of shares of such Common
Stock so to be offered (or the aggregate initial exchange or conversion price of
the exchangeable or convertible securities so to be offered) would purchase at
such fair market value on such record date (or issuance date, as the case may
be) and (ii) the denominator of which shall be the number of shares of Common
Stock outstanding on such record date (or issuance date, as the case may be)
plus the number of additional shares of Common Stock to be offered for
subscription or purchase (or into which the convertible securities to be offered
are initially exchangeable or convertible). In case such subscription price may
be paid in part or in whole in a form other than cash, the fair value of such
consideration shall be determined by the Board of Directors of the Company in
good faith as set forth in a duly adopted board resolution certified by the
Company's Secretary or Assistant Secretary. Such adjustment shall be made
successively whenever such an issuance occurs; and in the event that such
rights, options, warrants, or convertible or exchangeable securities are not so
issued or expire or cease to be convertible or exchangeable before they are
exercised, converted, or exchanged (as the case may be), then the Warrant Price
shall again be adjusted to be the Warrant Price that would then be in effect if
such issuance had not occurred, but such subsequent adjustment shall not affect
the number of Shares issued upon any exercise of Warrants prior to the date such
subsequent adjustment is made.
e. Special Distributions. In case the Company shall fix a record date
for the making of a distribution to all holders of shares of Common Stock
(including any such distribution made in connection with a consolidation or
merger in which the Company is the surviving corporation) of evidences of
indebtedness or assets (other than dividends and distributions referred to in
subparagraphs (b) and (c) above and other than cash dividends) or of
subscription rights, options, warrants, or exchangeable or convertible
securities containing the right to subscribe for or purchase shares of any class
of equity securities of the Company (excluding those referred to in subparagraph
(d) above), the Warrant Price to be in effect on and after such record date
shall be adjusted by multiplying the Warrant Price in effect immediately prior
to such record date by a fraction (i) the numerator of which shall be the fair
market value per share of Common Stock on such record date, less the fair value
(as determined by the Board of Directors of the Company in good faith as set
forth in a duly adopted board resolution certified by the Company's Secretary or
Assistant Secretary) of the portion of the assets or evidences of indebtedness
so to be distributed or of such subscription rights, options, warrants, or
exchangeable or convertible securities applicable to one (1) share of the Common
Stock outstanding as of such record date, and (ii) the denominator of which
shall be such fair market value per share of Common Stock. Such adjustment shall
be made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Warrant Price shall again be adjusted to
be the Warrant Price which would then be in effect if such record date had not
been fixed, but such subsequent adjustment shall not affect the number of Shares
issued upon any exercise of Warrants prior to the date such subsequent
adjustment was made.
f. Other Issuances of Securities. In case the Company or any
subsidiary shall issue shares of Common Stock, or rights, options, warrants or
convertible or exchangeable securities containing the right to subscribe for or
purchase shares of Common Stock (excluding (i) shares, rights, options,
warrants, or convertible or exchangeable securities described in subparagraphs
(f) or (g) of Section 11 hereof or issued in any of the transactions described
in subparagraphs (b), (c), (d) or (e) above, (ii) shares issued upon the
exercise of such rights, options or warrants or upon conversion or exchange of
such convertible or exchangeable securities, and (iii) the Warrants and any
shares issued upon exercise thereof), at a price per share of Common Stock
(determined in the case of such rights, options, warrants, or convertible or
exchangeable securities by dividing (x) the total amount receivable by the
Company in consideration of the sale and issuance of such rights, options,
warrants, or convertible or exchangeable securities, plus the total minimum
consideration payable to the Company upon exercise, conversion, or exchange
thereof by (y) the total maximum number of shares of Common Stock covered by
such rights, options, warrants, or convertible or exchangeable securities) lower
than the fair market value per share of Common Stock on the date the Company
fixes the offering price of such shares, rights, options, warrants, or
convertible or exchangeable securities, then the Warrant Price shall be adjusted
so that it shall equal the price determined by multiplying the Warrant Price in
effect immediately prior thereto by a fraction (i) the numerator of which shall
be the sum of (A) the number of shares of Common Stock outstanding immediately
prior to such sale and issuance plus (B) the number of shares of Common Stock
which the aggregate consideration received (determined as provided below) for
such sale or issuance would purchase at such fair market value per share, and
(ii) the denominator of which shall be the total number of shares of Common
Stock outstanding immediately after such sale and issuance. Such adjustment
shall be made successively whenever such an issuance is made. For the purposes
of such adjustment, the maximum number of shares of Common Stock which the
holder of any such rights, options, warrants or convertible or exchangeable
securities shall be entitled to subscribe for or purchase shall be deemed to be
issued and outstanding as of the date of such sale and issuance and the
consideration received by the Company therefor shall be deemed to be the
consideration received by the Company for such rights, options, warrants, or
convertible or exchangeable securities, plus the minimum consideration or
premium stated in such rights, options, warrants, or convertible or exchangeable
securities to be paid for the shares of Common Stock covered thereby. In case
the Company shall sell and issue shares of Common Stock, or rights, options,
warrants, or convertible or exchangeable securities containing the right to
subscribe for or purchase shares of Common Stock for a consideration consisting,
in whole or in part, of property other than cash or its equivalent, then in
determining the price per share of Common Stock and the consideration received
by the Company for purposes of the first sentence of this subparagraph (f), the
Board of Directors of the Company shall determine, in good faith, the fair value
of said property, and such determination shall be described in a duly adopted
board resolution certified by the Company's Secretary or Assistant Secretary. In
case the Company shall sell and issue rights, options, warrants, or convertible
or exchangeable securities containing the right to subscribe for or purchase
shares of Common Stock together with one or more other securities as a part of a
unit at a price per unit, then in determining the price per share of Common
Stock and the consideration received by the Company for purposes of the first
sentence of this subparagraph (f), the Board of Directors of the Company shall
determine, in good faith, which determination shall be described in a duly
adopted board resolution certified by the Company's Secretary or Assistant
Secretary, the fair value of the rights, options, warrants, or convertible or
exchangeable securities then being sold as part of such unit. Such adjustment
shall be made successively whenever such an issuance occurs, and in the event
that such rights, options, warrants, or convertible or exchangeable securities
expire or cease to be convertible or exchangeable before they are exercised,
converted, or exchanged (as the case may be), then the Warrant Price shall again
be adjusted to the Warrant Price that would then be in effect if such sale and
issuance had not occurred, but such subsequent adjustment shall not affect the
number of Shares issued upon any exercise of Warrants prior to the date such
subsequent adjustment is made. Notwithstanding the foregoing, the provisions of
this Section 4(f) shall not apply with respect to director or employee benefit
plans of the Company, to the extent (i) authorized and in existence as of the
Date of Grant, which (except in the case of certain tax-qualified plans) have
been approved by the Company's stockholders as of the Date of Grant, or (ii)
securities are granted under a director or employee benefit plan for
consideration (or at an exercise price) equal to 100% of the fair market value
of such securities on the date of grant, as determined in good faith by the
Board of Directors of the Company without giving effect to Section 4(h) hereof;
provided that for the purposes of this clause (ii) such consideration must equal
at least 95% of the fair market value of the Common Stock as of the date of
grant as determined pursuant to Section 4(h).
g. Adjustment of Number of Shares. Upon each adjustment in the Warrant
Price (other than pursuant to Section 4(a)), the number of Shares of Common
Stock 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.
h. Determination of Fair Market Value. For purposes of this Section 4,
for determining the Warrant Price of this Warrant, and for the purposes of
Section 10.4 hereof, "fair market value" of a share of Common Stock as of a
particular date (the "Determination Date") shall mean (i) if shares of Common
Stock are traded as a national securities exchange (an "Exchange"), the average
of the closing prices of a share of the Common Stock of the Company on each of
the fifteen (15) trading days prior to the Determination Date reported on such
Exchange as reported in The Wall Street Journal, or (ii) if shares of Common
Stock are not traded on an Exchange but trade in the over-the-counter market and
such shares are quoted on the National Association of Securities Dealers
Automated Quotations System ("NASDAQ"), (A) the average of the last sale prices
reported on NASDAQ or (B) if such shares are an issue for which last sale prices
are not reported on NASDAQ, the average of the closing bid and ask prices, in
each case on each of the fifteen (15) trading days (or if the relevant price or
quotation did not exist on any of such days, the relevant price or quotation on
the next preceding business day on which there was such a price or quotation)
prior to the Determination Date as reported in The Wall Street Journal.
i. De Minimis Adjustments. In the event any adjustment to the Warrant
Price pursuant to this Section 4 (without regard to this subparagraph (i)), if
combined with any other adjustments to the Warrant Price not made as a result of
the operation of this subparagraph (i) (such other adjustments, the "Carried
Forward Adjustments"), would result in a change in the Warrant Price of less the
$.01, then notwithstanding any other provision of this Section 4, neither the
Warrant Price nor the number of Shares of Common Stock purchasable hereunder
shall be adjusted; provided, however, that in the event an adjustment to the
Warrant Price pursuant to this Section 4 (without regard to this subparagraph
(i)) would, when combined with the Carried Forward Adjustments, result in a
change in the Warrant Price of $.01 or more, then the Warrant Price and the
number of Shares of Common Stock purchasable hereunder shall be adjusted to
reflect such adjustment and the Carried Forward Adjustments as if this
subparagraph (i) had not applied to any such adjustments.
5. Notice of Adjustments. Whenever the Warrant Price or the number of
Shares purchasable hereunder shall be adjusted pursuant to Section 4 hereof, the
Company shall make a certificate signed by its chief financial 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 mailed (without regard to Section 13 hereof,
by first class mail, postage prepaid) to the holder of this Warrant.
6. Fractional Shares. No fractional shares of Common Stock 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
(as determined in accordance with Section 4(h) above) of a share of Common Stock
on the date of exercise.
7. Compliance with Securities Act; Disposition of Warrant or Shares of
Common Stock.
a. Compliance with Securities Act. The holder of this Warrant, by
acceptance hereof, agrees that this Warrant and the shares of Common Stock 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
of Common Stock 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"). Upon exercise of this Warrant, the holder hereof shall confirm in
writing, by executing the form attached as Schedule 1 to Exhibit A hereto, that
the shares of Common Stock so purchased are being acquired for investment and
not with a view toward distribution or resale. This Warrant and all shares of
Common Stock 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 (i) AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO, (ii) AN OPINION OF COUNSEL FOR
THE HOLDER, REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
REGISTRATION IS NOT REQUIRED, (iii) RECEIPT OF A NO-ACTION LETTER(S)
FROM THE APPROPRIATE GOVERNMENTAL AUTHORITY(IES), OR (iv) OTHERWISE
COMPLYING WITH THE PROVISIONS OF SECTION 7 OF THE WARRANT UNDER WHICH
THESE SECURITIES WERE ISSUED DIRECTLY OR INDIRECTLY."
In addition, in connection with the issuance of this Warrant, the
holder specifically represents to the Company by acceptance of this Warrant as
follows:
(1) The holder is aware of the Company's business affairs
and financial condition, and has acquired information about the Company
sufficient to reach an informed and knowledgeable decision to acquire this
Warrant. The holder is acquiring this Warrant 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 Act.
(2) The holder understands that this Warrant and the Shares
have not been registered under the Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of the holder's investment intent as expressed herein. In this
connection, the holder understands that, in the view of the Securities and
Exchange Commission (the "SEC"), the statutory basis for such exemption may be
unavailable if the holder's representation was predicated solely upon a present
intention to hold the Warrant and the Shares for the minimum capital gains
period specified under applicable tax laws, for a deferred sale, for or until an
increase or decrease in the market price of the Warrant and the Shares, or for a
period of one (1) year or any other fixed period in the future.
(3) The holder further understands that this Warrant and the
Shares must be held indefinitely unless subsequently registered under the Act
and any applicable state securities laws, or unless exemptions from registration
are otherwise available.
(4) The holder 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 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 two (2) years 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.
(5) The holder further understands that at the time it
wishes to sell this Warrant and the Shares 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 holder may be precluded from
selling this Warrant and the Shares under Rule 144 and 144A even if the two-year
minimum holding period had been satisfied.
(6) The holder 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 and 144A 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 and 144A 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.
b. Disposition of Warrant or Shares. With respect to any offer, sale
or other disposition of this Warrant, or any Shares acquired pursuant to the
exercise of this Warrant prior to registration of such Warrant or Shares, the
holder hereof and each subsequent holder of this Warrant agrees to give written
notice to the Company prior thereto, describing briefly the manner thereof,
together with a written opinion of such holder's counsel (in form and substance
reasonably satisfactory to the Company), if reasonably requested by the Company,
to the effect that such offer, sale or other disposition may be effected without
registration or qualification (under the Act as then in effect or any federal or
state law then in effect) of this Warrant or such Shares and indicating whether
or not under the Act certificates for this Warrant or such Shares to be sold or
otherwise disposed of require any restrictive legend as to applicable
restrictions on transferability in order to ensure compliance with applicable
law. Promptly upon receiving such written notice and reasonably satisfactory
opinion, if so requested, the Company, as promptly as practicable, shall notify
such holder that such holder may sell or otherwise dispose of this Warrant or
such Shares, all in accordance with the terms of the notice delivered to the
Company. If a determination has been made pursuant to this subsection (b) that
the opinion of counsel for the holder is not reasonably satisfactory to the
Company, the Company shall so notify the holder promptly after such
determination has been made. The foregoing notwithstanding, this Warrant or such
Shares may, as to such federal laws, be offered, sold or otherwise disposed of
in accordance with Rule 144 and 144A under the Act, provided that the Company
shall have been furnished with such information as the Company may reasonably
request to provide a reasonable assurance that the provisions of Rule 144 and
144A have been satisfied. Each certificate representing this Warrant or the
Shares thus transferred (except a transfer pursuant to Rule 144) shall bear a
legend as to the applicable restrictions on transferability in order to ensure
compliance with such laws, unless in the aforesaid opinion of counsel for the
holder, such legend is not required in order to ensure compliance with such
laws. The Company may issue stop transfer instructions to its transfer agent or,
if acting as its own transfer agent, the Company may stop transfer on its
corporate books, in connection with such restrictions.
8. Rights as Shareholders; Information. No holder of this Warrant, as such,
shall be entitled to vote or receive dividends or be deemed the holder of Common
Stock 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 shareholder of the Company or any right to vote for the election of the
directors or upon any matter submitted to shareholders 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. The foregoing notwithstanding, 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 shareholders.
9. Registration Rights.
9.1. Demand Registration.
a. The Company covenants and agrees that at any time after
receipt of a written request (a "Demand Registration Request") from the holders
of this Warrant and the Other Warrants and/or holders of Shares (this Warrant,
the Other Warrants, and the Shares are referred to herein, collectively, as the
"Securities") (hereinafter, the "Securityholders") constituting at least fifty
percent (50%) of the Securities outstanding on such date (determined on an
as-exercised basis) and then eligible for inclusion in a registration pursuant
to this Section 9.1, stating that the Initiating Securityholders (as defined
below) desire and intend to transfer all or a portion of the Securities held by
them under such circumstances, the Company shall give notice (the "Registration
Notice") to all of the Securityholders within fifteen (15) days of the Company's
receipt of such registration request, and the Company shall cause to be included
in such requested registration all Securities requested to be included therein
by any such Securityholder within fifteen (15) days after such Registration
Notice is effective (subject to the provisions of the final sentence of this
Section 9.1(a)). After such second 15-day period, the Company shall file as
promptly as practicable a registration statement and use its reasonable best
efforts to cause such registration statement to become effective under the Act
and remain effective for one hundred and twenty (120) days or such shorter
period as may be required if all such Securities covered by such registration
statement are sold prior to the expiration of such 120-day period; provided that
the Company shall not be obligated to effect any such registration pursuant to
this Section 9.1 (i) after the Company has effected two (2) such registrations
pursuant to this Section 9.1 or (ii) after the fifth anniversary of the Date of
Grant (provided that a registration effective on or before such anniversary date
shall remain effective for the full 120-day period (or such shorter period) as
is provided for in this sentence above). Each Securityholder making a demand for
registration under this Section 9.1 is referred to herein as an "Initiating
Securityholder." For purposes of this Section 9, a registration shall not be
deemed to have been effected unless a registration statement with regard thereto
has been declared effective and remained effective for a period of one hundred
and twenty (120) days (or such shorter period as is permitted in the second
sentence of this Section 9.1). The foregoing notwithstanding, in the event of an
underwritten offering pursuant to this Section 9.1, if the managing underwriter
of such offering shall advise the Securityholders in writing that, in its
opinion, the distribution of a specified portion of the securities requested to
be included in the registration would materially adversely affect the
distribution of such securities by increasing the aggregate amount of the
offering in excess of the maximum amount of securities which such managing
underwriter believes can reasonably be sold in the contemplated distribution,
then the securities to be included in the registration shall be included in the
following order: (i) first, all of the Securities requested to be included
therein by the Initiating Securityholders, (ii) second, the Securities requested
to be included therein by the other Securityholders, pro rata among such
Securityholders according to the number of Securities requested to be included
by each such Securityholder requesting inclusion therein, and (iii) third, the
securities the Company proposes to include therein and (iv) fourth, such other
securities requested to be included therein, pro rata among the holders of such
other securities according to the number of securities requested to be included
by each such holder requesting inclusion therein.
b. For purposes of this Section 9.1, the Securityholders who have
requested registration of Warrants, or Shares to be acquired upon the exercise
of Warrants not theretofore exercised, shall furnish the Company with an
undertaking that they or the underwriters or other persons to whom such Warrants
will be transferred have undertaken to exercise such Warrants within a 120-day
period determined in accordance with Section 9.1(a).
c. In the event of an underwritten offering pursuant to this
Section 9.1, the Initiating Securityholders requesting registration of the
Securities being registered shall be entitled to select the underwriter;
provided, that the underwriter so selected shall be subject to approval by the
Company, which approval shall not be withheld unreasonably.
d. Notwithstanding the terms of Section 9.1(a), the Company shall
not be required to register the Securities of Securityholders pursuant to
Section 9.1, if the Company elects, at its sole option and to the extent that it
may legally do so, to purchase such Securities and completes such purchase
pursuant to the provisions of this Section 9.1(d). Within fifteen (15) days
after receipt of a Demand Registration Request, the Company may elect to
purchase all and not less than all of the Securities that would otherwise be
subject to registration pursuant to Section 9.1(a) by providing written notice
(the "Purchase Notice") to all of the Securityholders setting forth (i) its
election to purchase such Securities, (ii) the purchase price of the Securities,
and (iii) the closing date for such purchase. The Company shall thereafter
purchase all of the Securities requested to be included in such purchase by the
Securityholders within fifteen (15) days after the Purchase Notice becomes
effective. The purchase price for each Share shall be the fair market value (as
defined in Section 4) of a share of Common Stock on the date of the Demand
Registration Request; the purchase price for each Warrant shall be (x) the fair
market value (as defined in Section 4) of a share of Common Stock on the date of
the Demand Registration Request less (y) the Warrant Price as of such date. The
closing of the purchase of the Securities shall take place on the date set forth
in the Purchase Notice, which date shall be not less than fifteen (15) not more
than forty-five (45) days after the date of the Purchase Notice. At the closing,
the Company shall deliver to each Securityholder, in cash, the purchase price
for the Securities surrendered by such Securityholder.
9.2. Piggy-Back Registration Rights.
a. The Company covenants and agrees with the Securityholders that
in the event, and in each such event, that the Company proposes to file a
registration statement under the Act with respect to any of its equity
securities (other than pursuant to registration statements on Form S-4 or Form
S-8 or any successor or similar forms), whether or not for its own account, then
the Company shall give written notice of such proposed filing to all
Securityholders promptly (and in any event at least twenty (20) days before the
anticipated filing date). Such notice shall offer to such Securityholders,
together with others who have similar rights, the opportunity to include in such
registration statement such number of Securities as they may request. The
Company shall cause the managing underwriter of a proposed underwritten offering
(unless the offering is an underwritten offering of a class of the Company's
equity securities other than Common Stock and the managing underwriter has
advised the Company in writing that, in its opinion, the inclusion in such
offering of Common Stock would materially adversely affect the distribution of
such offering) to permit the holders of Securities requested to be included in
the registration to include such Securities in the proposed offering and the
Company shall use its reasonable best efforts to include such Securities in such
proposed offering on the same terms and conditions as any similar securities of
the Company included therein. If the offering of which the Company gives notice
is a public offering involving an underwriter, the right of a Securityholder to
registration pursuant to this Section 9.2 shall be conditioned upon such
Securityholder's participation in such underwriting and the inclusion of the
Securities to be sold by such Securityholder in the underwriting. All
Securityholders proposing to distribute Securities through such underwriting
shall enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters. The foregoing
notwithstanding, in the case of a firm commitment offering on underwriting terms
appropriate for such a transaction, other than a registration requested by
Securityholders pursuant to Section 9.1, if any such managing underwriter of
recognized standing shall advise the Company and the Securityholders in writing
that, in its opinion, the distribution of all or a specified portion of the
Securities requested to be included in the registration concurrently with the
securities being registered by the Company would materially adversely affect the
distribution of such securities by increasing the aggregate amount of the
offering in excess of the maximum amount of securities which such managing
underwriter believes can reasonably be sold in the contemplated distribution,
then the securities to be included in a registration which is a primary
underwritten offering on behalf of the Company shall be included in the
following order: (i) first, the securities the Company proposes to include
therein and (ii) second, such other securities (including the Securities)
requested to be included, pro rata among the holders (including the
Securityholders) of such other securities according to the aggregate number of
securities held by each such holder requesting inclusion therein.
b. In the event that a holder or holders of the Company's
securities (other than a Securityholder or Securityholders) requests, pursuant
to rights granted to such holder or holders, that the Company file a
registration statement for the public offering of securities and the Company and
the other holders of the Company's securities (including the Securityholders)
who have rights to be included in such registration, request to be included in
such registration and the managing underwriter of such offering shall advise the
Company and the holders requesting inclusion in the offering that, in its
opinion, the distribution of a specified portion of the securities requested to
be included in the registration would materially adversely affect the
distribution of such securities by increasing the aggregate amount of the
offering in excess of the maximum amount of securities which such managing
underwriter believes can reasonably be sold in the contemplated distribution
then, the securities to be included in the registration shall be included in the
following order: (i) first, all of the securities requested to be included
therein by the holder or holders making the initial request for the
registration, and (ii) second, such other securities requested to be included
therein by the holders of such other securities, pro rata among the holders of
such other securities according to the aggregate number of securities held by
each such holder requesting inclusion therein.
9.3. Company Covenants; Registration Right Provisions.
a. In connection with the registration of Securities on behalf of
the holders thereof (such Securityholders being referred to herein as "Sellers")
in accordance with Section 9.1 or Section 9.2 above, the Company agrees to:
(i) enter into a cross-indemnity agreement, in customary
form, with each underwriter, if any, and each Seller;
(ii) subject to the provisions of Section 9.1(a) and Section
9.2(a) regarding reductions by the managing underwriter, include in the
registration statement filed with the SEC, the Securities for which requests for
registration have been made; provided, however, that promptly after filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company shall furnish to each Seller copies of all such documents filed
including documents incorporated by reference in the registration statement; and
notify each Seller of any stop order issued or threatened by the SEC and use its
best efforts to prevent the entry of such stop order or to remove it if entered;
(iii) prepare and file with the SEC such amendments of and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective (A)
in the case of a registration pursuant to Section 9.1, for a period of one
hundred and twenty (120) days, or, in the case of a registration pursuant to
Section 9.2, for a period of ninety (90) days or such shorter period as such
registration may be required of or desired by the Company to be effective or (B)
such shorter period as may be required if all such Securities covered by such
registration statement are sold prior to the expiration of such periods, and
comply with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the Sellers set forth in
such registration statement; provided, however, that the Company shall not be
required to file any registration statement in accordance with Section 9.1
hereof before the first anniversary of the Date of Grant;
(iv) furnish to each Seller and each underwriter, if any,
without charge, such number of copies of the registration statement, each
amendment and supplement thereto (in each case including all exhibits thereto),
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such Seller may reasonably
request in order to facilitate the disposition of the Securities proposed to be
sold by such Seller;
(v) use its reasonable best efforts to register or qualify
such Securities under such other securities or Blue Sky laws of such
jurisdictions as any Seller or any such underwriter reasonably requests and keep
such registrations or qualifications in effect for so long as such registration
statement remains in effect and do any and all acts and things which may be
reasonably necessary or advisable to enable such Seller to consummate the
disposition in such jurisdictions of the Securities owned by such Seller;
provided, however, that the Company shall not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subsection (v), (ii) subject itself to taxation
in any such jurisdiction, or (iii) consent to general service of process in any
jurisdiction;
(vi) notify each Seller, at any time when a prospectus
relating to such Seller's Securities is required to be delivered under the Act,
of the occurrence of any event as a result of which the prospectus included in
such registration statement contains an untrue statement of a material fact or
omits to state any material fact necessary to make the statements therein not
misleading, and as soon as practicable prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Securities, such prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements therein
not misleading;
(vii) cause all such Securities to be listed on any Exchange
on which similar securities issued by the Company are then listed (which shall
not apply to the Warrants unless similar warrants are then listed);
(viii) provide a transfer agent, registrar and CUSIP number
for all such Securities not later than the effective date of such registration
statement;
(ix) enter into such customary agreements (including an
underwriting agreement in customary form) and take all such other actions that
the Sellers or the underwriters, if any, reasonably request in order to expedite
or facilitate the disposition of such Securities;
(x) make available for inspection by the Sellers and their
counsel, any underwriter participating in any disposition pursuant to such
registration statement, and any counsel retained by any such underwriter, all
pertinent financial and other information and corporate documents of the
Company, and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such Seller, underwriter or counsel in
connection with such registration statement;
(xi) use its reasonable best efforts to obtain a "cold
comfort" letter from the Company's independent public accountants in customary
form and covering such matters of the type customarily covered by "cold comfort"
letters as the Sellers or any underwriter may reasonably request;
(xii) in the event of an underwritten registration, obtain
an opinion of counsel to the Company, addressed to the Sellers and any
underwriter, in customary form and including such matters as are customarily
covered by such opinions in underwritten registered offerings of equity
securities as the Sellers or any underwriter may reasonably request, such
opinion to be reasonably satisfactory in form and substance to each Seller; and
(xiii) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
securityholders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve (12) months subsequent to the effective
date of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Act and Rule 158 thereunder.
b. Any other provisions of this Section 9 notwithstanding, upon
receipt by the Securityholders of a written notice signed by the chief executive
officer, chief operating officer or chief financial officer of the Company to
the effect set forth below, the Company shall not be obligated during a
reasonable period of time thereafter to effect any registrations pursuant to
this Section 9, and the Securityholders agree that they will immediately suspend
sales of shares under any effective registration statement for a reasonable
period of time, in either case not to exceed ninety (90) days, at any time at
which, in the Company's reasonable judgment, (i) there is a development
involving the Company or any of its affiliates which is material but which has
not yet been publicly disclosed or (ii) sales pursuant to the registration
statement would materially and adversely affect an underwritten public offering
for the account of the Company or any other material financing project or a
proposed or pending material merger or other material acquisition or material
business combination or material disposition of the Company's assets, to which
the Company or any of its affiliates is, or is expected to be, a party. In the
event a registration is postponed or sales by the Securityholders pursuant to an
effective registration statement are suspended in accordance with this Section
9.3(b), there shall be added (i) to the period during which the Company is
obligated to keep a registration effective and (ii) to the period in which the
Sellers may request the Company effect a registration pursuant to Section
9.1(a), the number of days for which the registration was postponed or sales
were suspended pursuant to this Section 9.3(b).
c. The Company may require each Seller to furnish to the Company
such information regarding the distribution of the Securities proposed to be
sold by such Seller and the ownership of the Securities by the Seller as the
Company may from time to time reasonably request in writing.
d. Each Seller agrees that, upon receipt of any notice from the
Company of the occurrence of any event of the kind described in subsection (vi)
of Section 9.3(a) above, such Seller shall forthwith discontinue disposition of
Securities pursuant to the registration statement covering such Securities until
such Seller's receipt of copies of the supplemented or amended prospectus
contemplated by Section 9.3(a)(vi) above and, if so directed by the Company,
such Seller will deliver to the Company (at the Company's expense) all copies,
other than permanent file copies in such Seller's possession, of the prospectus
covering such Securities current at the time of receipt of such notice. In the
event the Company shall give any such notice, the period mentioned in Section
9.3(a)(iii) above shall be extended by the number of days during the period from
and including the date of giving of such notice to and including the date when
each Seller shall have received the copies of the supplemented or amended
prospectus contemplated by Section 9.3(a)(vi) above.
e. The Company shall not file or permit the filing of any
registration or comparable statement which refers to any Seller by name or
otherwise as the Seller of any securities of the Company unless such reference
to such Seller is specifically required by the Act or any similar federal
statute, rules or regulation then in force.
9.4 Expenses. All expenses incident to the Company's performance of or
compliance with this Warrant, including without limitation all registration and
filing fees, fees and expenses relating to filings with any Exchange, fees and
expenses of compliance with securities or Blue Sky laws in jurisdictions
reasonably requested by any Seller or underwriter pursuant to Section 9.3(a)(v)
(including reasonable fees and disbursements of counsel in connection with Blue
Sky qualifications of the Securities), all word processing, duplicating and
printing expenses, messenger and delivery expenses, fees and disbursements of
counsel for the Company and one (1) counsel for the Sellers, independent public
accountants (including the expenses of any special audit or "cold comfort"
letters required by or incident to such performance) and underwriters (excluding
discounts, commissions or fees of underwriters, selling brokers, dealer managers
or similar securities industry professionals attributable to the securities
being registered, or legal expenses of any person other than the Company and the
Sellers, but including liability insurance if the Company so desires), all the
Company's internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit, the expense of any liability insurance (if the
Company determines to obtain such insurance) and the fees and expenses incurred
in connection with the listing of the securities to be registered on each
Exchange on which such securities issued by the Company are then listed, the
reasonable fees and expenses of any special experts (including attorneys)
retained by the Company (if it so desires) in connection with such registration
and fees and expenses of other persons retained by the Company (all such
expenses being herein called "Registration Expenses"), shall be borne by the
Company. Notwithstanding the foregoing, the Company shall bear the expenses,
fees and disbursements of one (1) counsel for all of the Sellers to the extent,
and only to the extent, such expenses, fees and disbursements are reasonable.
9.5 Registration Statement Preparation; Investigation. In connection
with the preparation and filing of each registration statement under the Act
pursuant to this Section 9, upon the reasonable request of the original holder
of the Warrant, the Company shall give such holder under such registration
statement, its underwriters, if any, and its counsel and accountants, the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and will give each of them such access
to its books and records and such opportunities to discuss the business of the
Company with its officers and the independent public accountants who have
certified its financial statements as shall be necessary, in the opinion of such
holders' and such underwriters' respective counsel, to conduct a reasonable
investigation within the meaning of the Act.
9.6 Indemnification.
a. In the event of any registration of any securities of the
Company under the Act, the Company shall, and hereby does, indemnify and hold
harmless in the case of any registration statement filed pursuant to Section 9.1
or Section 9.2, the Seller of any Securities covered by such registration
statement, its directors, officers and employees, each other person who
participates as an underwriter in the offering or sale of such Securities and
each other person, if any, who controls such Seller or any such underwriter
within the meaning of the Act against any losses, claims, damages, or
liabilities (or actions or proceedings whether commenced or threatened in
respect thereof), joint or several, to which such Seller or any such director or
officer or underwriter or controlling person may become subject under the 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 in any registration statement under which such
Securities were registered under the Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, 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, and the Company shall reimburse such Seller and each
such director, officer, employee, underwriter and controlling person 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 in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding, whether commenced or threatened in respect thereof), or expense
arises out of or is based upon an 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 through an instrument duly executed by such Seller specifically
stating it is for use in the preparation thereof and, provided, further, that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding, whether commenced or
threatened, in respect thereof), or expense arises out of such person's failure
to send or give a copy of the final prospectus, as the same may be then
supplemented or amended, within the time required by the Act to the person
asserting an untrue statement or alleged untrue statement or omission or alleged
omission if such statement or omission was corrected in such final prospectus.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Seller or any such director, officer,
underwriter or controlling person and shall survive the transfer of such
Securities by such Seller.
b. The Company may require, as a condition to including any
Securities in any registration statement filed pursuant to Section 9.3, that the
Company shall have received an undertaking satisfactory to it from the
prospective Seller, to indemnify and hold harmless (in the same manner and to
the same extent as set forth in Section 9.6(a)) the Company, each director,
officer and employee of the Company, and each other person, if any, who controls
the Company within the meaning of the 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 such statement or
alleged statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company through an
instrument duly executed by such Seller specifically stating that it is for use
in the preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment, or supplement. Such indemnity shall
remain in full force and effect, regardless of any investigation made by or on
behalf of the Company or any such director, officer, or controlling person and
shall survive the transfer of such Securities by such Seller. In no event shall
the liability of any selling Seller hereunder (including without limitation
indemnification liability in connection with Section 9.6(d) hereof) be in the
aggregate greater in amount than the dollar amount, if any, by which (1) the
proceeds received by such Seller upon the sale of the Securities giving rise to
such indemnification obligation exceed (2) the purchase or exercise price paid
by such Seller for such Securities. The Company shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers, and similar
securities industry professionals participating in the distribution to the same
extent as provided above with respect to information so furnished in writing by
such persons specifically for inclusion in any prospectus or registration
statement.
c. Promptly after receipt by an indemnified party of notice of
the commencement of any action or proceeding involving a claim referred to in
this Section 9.6, such indemnified party shall, if a claim in respect thereof is
to be made against 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 obligations under the preceding subdivisions of this
Section 9.6, 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 the indemnifying
party 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. If, in the indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, the indemnified party may assume the
defense of such claim, jointly with any other indemnified party that reasonably
determines such conflict of interest to exist, and the indemnifying party shall
be liable to such indemnified parties for the reasonable legal fees and expenses
of one counsel for all such indemnified parties and for other expenses
reasonably incurred in connection with the defense thereof incurred by the
indemnified party. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
of any such action 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, or a covenant not to sue, in respect of such claim or litigation.
No indemnified party shall consent to entry of any judgment or enter into any
settlement of any such action the defense of which has been assumed by an
indemnifying party without the consent of such indemnifying party.
d. Indemnification and contribution similar to that specified in
this Section 9.6 (with appropriate modifications) shall be given by the Company
and may be required of each Seller with respect to any required registration or
other qualification of Securities under any Federal or state law or regulation
of any governmental authority, other than the Act.
e. The indemnification required by this Section 9.6 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.
f. If the indemnification provided for in this Section 9.6 from
the indemnifying party is unavailable to an indemnified party hereunder in
respect of any losses, claims, damages, liabilities, or expenses referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of losses, claims, damages, liabilities, or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified party in connection with the actions which resulted in
such losses, claims, damages, liabilities, or expenses, as well as any other
relevant equitable considerations. The relative fault of such indemnifying party
and indemnified party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such action. The amount paid
or payable by a party as a result of the losses, claims, damages, liabilities,
and expenses referred to above shall be deemed to include any legal or other
fees or expenses reasonably incurred by such party in connection with any
investigation or proceeding. In no event shall the liability of any Seller
hereunder (including without limitation contribution liability in connection
with Section 9.6(d) hereof) be in the aggregate greater in amount than the
dollar amount, if any, by which (1) the proceeds received by such Seller upon
the sale of the Securities giving rise to such contribution obligation exceed
(2) the purchase or exercise price paid by such Seller for such Securities. The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 9.6(f) were determined by pro rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to in this Section 9.6(f). No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person or entity who was not guilty
of such fraudulent misrepresentation.
9.7 Conflicting Rights. The Company hereby represents and covenants
that, prior to and as of the Date of Grant the Company has not granted, and
after the Date of Grant the Company shall not grant, any registration rights
which conflict with the rights under this Section 9.
9.8 Lock-up Period. If requested by the managing underwriter of an
offering for which Shares of such Securityholder have been registered, a
Securityholder shall not sell or otherwise transfer or dispose of any Securities
held by such Securityholder (other than those included in the registration)
during such period following the effective date of such registration as is usual
and customary at such time in similar public offerings of similar securities;
provided, however, that the Company shall use its reasonable best efforts to
cause each holder of a material number of shares of Common Stock to enter into
similar "lock-up" agreements in respect of such offering. The obligations
described in this Section 9.8 shall not apply to offerings pursuant to a
registration statement on Form S-4 or Form S-8 or any successor or similar form.
10. Additional Rights of the Company and Warrant Holder.
10.1 Secondary Sales. The Company agrees that it will make reasonable
efforts to cooperate with the holder of this Warrant in obtaining liquidity if
opportunities to make secondary sales of the Company's securities become
available. To this end, the Company will promptly provide the holder of this
Warrant with notice of any offer to acquire from the Company's security holders
more than five percent (5%) of the total voting power of the Company and will
make reasonable efforts to cooperate with the holder in arranging the sale of
this Warrant to the person or persons making such offer; provided that such
notice may be delayed as necessary to comply with state corporate and Federal
securities laws.
10.2 Mergers. In the event that the Company undertakes to (i) sell,
lease, exchange, convey or otherwise dispose of all or substantially all of its
property or business, or (ii) merge into or consolidate with any other
corporation (other than a wholly-owned subsidiary of the Company), or effect any
transaction (including a merger or other reorganization) or series of related
transactions, in which more than 50% of the voting power of the Company is
disposed of, the Company will use its reasonable best efforts to provide at
least thirty (30) days notice of the terms and conditions of the proposed
transaction. The Company will make reasonable efforts to cooperate with the
holder in consummating the sale of this Warrant in connection with any such
transaction.
10.3 Right to Convert Warrant into Common Stock; 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 (the "Conversion Right"), at any time and from time to time while the
Warrant is exercisable, to convert this Warrant (but only as to an aggregate of
one half (or any lesser portion thereof) of the original number of Shares
represented by this Warrant (as adjusted pursuant to Section 4 hereof) (the "Net
Issuance Warrant")) into shares of Common Stock as provided in this Section
10.3. 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) that number of shares of fully paid and
nonassessable Common Stock equal to the quotient obtained by dividing (i) the
value of the Net Issuance Warrant (or the specified portion hereof) on the
Conversion Date (as defined in subsection (b) hereof), which value shall be
equal to (A) the aggregate fair market value of the Converted Warrant Shares
issuable upon exercise of the Net Issuance Warrant (or the specified portion
hereof) on the Conversion Date less (B) the aggregate Warrant Price of the
Converted Warrant Shares immediately prior to the exercise of the Conversion
Right by (ii) the fair market value of one share of Common Stock on the
Conversion Date.
Expressed as a formula, such conversion shall be computed as follows:
X = A - B
-----
Y
Where: X = the number of shares of Common Stock that may be issued to
holder
Y = the fair market value (FMV) of one share of Common Stock
A = the aggregate FMV (i.e., FMV x Converted Warrant Shares)
B = the aggregate Warrant Price (i.e., Converted Warrant Shares
x Warrant Price)
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. For purposes of Section 9 of this
Warrant, shares issued pursuant to the Conversion Right shall be treated as if
they were issued upon the exercise of this Warrant.
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 written statement specifying that the holder thereby
intends to exercise the Conversion Right and indicating the number of shares
subject to the Net Issuance Warrant which 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 written statement, or on such later
date as is specified therein (the "Conversion Date"). 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 (30) days following the Conversion Date.
c. Determination of Fair Market Value. For purposes of this
Section 10.3, "fair market value" of a share of Common Stock shall have the
meaning set forth in Section 4(h) above.
d. Determination of Net Issuance Warrant; Exercise-Only Warrant.
The portion of the Warrant that is not the Net Issuance Warrant is referred to
herein as the Exercise-Only Warrant, with respect to which Section 10.3 hereof
shall not apply. In the event a Warrant holder exercises any portion of its
Warrant, or if same is repurchased, such exercise or repurchase shall be deemed
to consist of the exercise or repurchase of Exercise-Only Warrants, to the
maximum extent possible, unless the Company is otherwise notified by such holder
prior to such exercise or repurchase. In the event a Warrant holder transfers
any portion of its Warrant, such transfer shall be deemed to consist of the
transfer of Exercise-Only Warrants, to the maximum extent possible, unless the
Company is otherwise notified by such holder prior to such transfer. In case of
any transfer, partial repurchase or partial exercise of this Warrant, the
Company shall be entitled to include in any new Warrant a provisions indicating
the extent to which, in accordance with the provisions of this Section 10.3(d),
such new Warrant is deemed a Net Issuance Warrant or an Exercise-Only Warrant.
10.4 Warrant Repurchase by the Company.
a. Mandatory Repurchase. The Company will repurchase, from any
source of funds legally available therefore, all outstanding and unexercised
Warrants at 5:00 pm (Los Angeles time) on the fifth anniversary of the Date of
Grant, in accordance with the provisions of Section 10.4(c) below. The Company
shall effect such repurchase by paying to the holder of each unexercised Warrant
an amount in cash equal to $1.50 (subject to adjustment pursuant to Section 4
hereof as if such amount were a Warrant Price) multiplied by the number of
shares of Common Stock for which such Warrant could be exercised (by the payment
of the Warrant Price therefor) as of such date (such product, the "Repurchase
Price").
b. Optional Repurchase. Prior to the second anniversary of the
Date of Grant, at the option of the Company, the Company may repurchase certain
of the unexercised Warrants at a repurchase price (the "Repurchase Price") set
forth in the table below, in the event that the fair market value of a share of
Common Stock at the time of the exercise of such optional repurchase right
exceeds the "Minimum Fair Market Value" (as set forth in the table below), in
accordance with the provisions of Section 10.4(c) below. The maximum number of
Warrants repurchasable pursuant to this Section 10.4(b) shall be such number as
could be exercised (by the payment of the Warrant Price therefor) for 250,000
shares of Common Stock (subject to adjustment pursuant to Section 4 hereof) as
of the date of such repurchase. The Company shall effect such repurchase by
paying to the holder of each repurchased unexercised Warrant an amount in cash
equal to the applicable Repurchase Price (set forth below) multiplied by the
number of shares of Common Stock for which such Warrant could be exercised (by
the payment of the Warrant Price therefor) as of the date of such repurchase:
Minimum Fair Market Value Number of Shares Purchasable
Vablue of Common Stock upon Exercise of
on Repurchase Date* Repurchasable Warrants* Repurchase Price*
------------------- ----------------------- -----------------
$12.00 62,500 $1.50
$15.00 62,500 $2.00
$18.00 62,500 $2.50
$21.00 62,500 $3.00
* As adjusted by the application of Section 4 hereof.
c. Method of Repurchase. At least 10 but no more than 20 days
prior to the repurchase of any unexercised Warrant pursuant to this Section
10.4, written notice shall be mailed, first class postage prepaid, to each
holder of record (at the close of business on the business day next preceding
the day on which notice is given) of any unexercised Warrant to be repurchased,
at the address last shown on the records of the Company for such holder,
notifying such holder of the repurchase to be effected, specifying the number of
shares of Common Stock for which the Warrant being repurchased could be
exercised (by the payment of the Warrant Price therefor) as of such date, the
date and time of such repurchase, the Repurchase Price, and the place at which
payment may be obtained, calling upon such holder to surrender to the Company,
in the manner and place designated, such unexercised Warrants being repurchased
pursuant to this Section 10.4; provided, however, that (i) the number of shares
of Common Stock for which the Warrant being repurchased could be exercised (by
the payment of the Warrant Price therefor) as of such date and (ii) the
Repurchase Price, as each is set forth in such notice, shall be estimates only,
the actual amounts being determined pursuant to Section 10.4(a) or 10.4(b), as
applicable, on and as of the date set forth for such repurchase. With respect to
Section 10.4(b) above, the fair market value of a share of Common Stock
(purchasable upon exercise of the Warrants proposed to be repurchased) must
equal or exceeded the Minimum Fair Market Value on the date of such notice as
well as on the date of the noticed repurchase for such repurchase to occur. On
or after the date designated for repurchase, each holder of Warrants to be
repurchased shall surrender to the Company certificates or other documents
representing such Warrants, in the manner and at the place designated in the
repurchase notice, and thereupon (i) the Repurchase Price with respect to such
repurchased Warrant shall be payable to the order of the holder of record of
such Warrant, and each repurchased Warrant shall be cancelled. In the event less
than all of the unexercised Warrants represented by any such certificate or
other document is repurchased, a new certificate or document shall be issued
representing the Warrants to the extent not repurchased. From and after the
designated repurchase date, unless there shall have been a default in the
payment of the Repurchase Price, all rights of the holders of unexercised
Warrants designated for repurchase, as holders of such Warrants, shall cease
except with respect to the right to receive the Repurchase Price therefor. Any
repurchase of Warrants pursuant to this Section 10.4 shall be made pro rata with
respect to all holders of record of unexercised Warrants as of the date of
repurchase.
11. Representations and Warranties. The Company represents and
warrants to the holder of this Warrant as follows, as of the Date of Xxxxx:
a. This Warrant has been duly authorized and executed by the
Company and is a valid and binding obligation of the Company enforceable in
accordance with its terms, subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and the rules of law or
principles at equity governing specific performance, injunctive relief and other
equitable remedies;
b. The Shares have been duly authorized and reserved for issuance
by the Company and, when issued in accordance with the terms hereof, will be
validly issued, fully paid and nonassessable;
c. The rights, preferences, privileges and restrictions granted
to or imposed upon the Common Stock and the holders thereof are as set forth in
the articles or certificate of incorporation of the Company, as amended to the
Date of Grant (as so amended, the "Charter"), a true and complete copy of which
has been delivered to the original holder of this Warrant;
d. (1) The execution and delivery of this Warrant are not, and
the issuance of the Shares upon exercise of this Warrant (to the extent such
Warrant is then held by Foothill Capital Corporation) in accordance with the
terms hereof will not be, inconsistent with the Charter or by-laws of the
Company, do not and will not contravene, in any material respect, any
governmental rule or regulation, judgment or order applicable to the Company,
and do not and will not conflict with or contravene any provision of, or
constitute a default under, any indenture, mortgage, contract or other
instrument of which the Company is a party or by which it is bound or require
the consent or approval of, the giving of notice to, the registration or filing
with or the taking of any action in respect of or by, any Federal, state or
local government authority or agency or other person, except for the filing of
notices pursuant to federal and state securities laws, which filings will be
effected by the time required thereby;
(1) The issuance of the Shares upon exercise of this Warrant
(to the extent such Warrant has been transferred by Foothill Capital
Corporation) in accordance with the terms hereof will not be inconsistent with
the Charter or by-laws of the Company, do not and will not contravene, in any
material respect, any governmental rule or regulation, judgment or order
applicable to the Company, and do not and will not conflict with or contravene
any provision of, or constitute a default under, any indenture, mortgage,
contract or other instrument of which the Company is a party or by which it is
bound or require the consent or approval of, the giving of notice to, the
registration or filing with or the taking of any action in respect of or by, any
Federal, state or local government authority or agency or other person, except
for the filing of notices (which filings will be effected by the time required
thereby), or the filing of registration statements and the delivery of
prospectuses, pursuant to federal and state securities laws;
e. There are no actions, suits, audits, investigations or
proceedings pending or, to the knowledge of the Company, threatened against the
Company in any court or before any governmental commission, board or authority
which, if adversely determined, will have a material adverse effect on the
ability of the Company to perform its obligations under this Warrant;
f. The authorized capital stock of the Company consists of Twenty
Million (20,000,000) shares of Common Stock, $0.001 par value per share, of
which approximately Eight Million Nine Hundred Fourteen Thousand Five Hundred
Fifty-Seven (8,914,557) shares were issued and outstanding as of the close of
business on the Date of Grant, and Ten Million (10,000,000) shares of Preferred
Stock, $0.001 par value per share, of which Eight (8) shares of Series A
Convertible Preferred Stock were issued and outstanding as of the Date of Grant.
All such outstanding shares have been validly issued and are fully paid,
nonassessable shares free of preemptive rights;
g. Other than the Warrants, pursuant to director or employee
benefit plans of the Company which (except in the case of certain tax-qualified
plans) have been approved by the Company's stockholders, or as disclosed in the
Company's most recent Proxy Statement and Form 10-K, there are no subscriptions,
rights, options, warrants, or calls relating to any shares of the Company's
capital stock, including any right of conversion or exchange under any
outstanding security or other instrument; and
h. Other than the Warrants or except as disclosed in the
Company's most recent Proxy Statement and Form 10-K, the Company is not subject
to any obligation (contingent or otherwise) to repurchase or otherwise acquire
or retire any shares of its capital stock or any security convertible into or
exchangeable for any of its capital stock.
12. 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.
13. 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 private courier or 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.
14. Binding Effect on Successors. This Warrant shall be binding upon any
corporation succeeding the Company by 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 Common Stock 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 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.
15. 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 loss, theft or destruction, upon
receipt of an executed lost securities bond or 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.
16. 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.
17. Governing Law. This Warrant shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
the State of Delaware.
18. Survival of Representations, Warranties and Agreements. All
representations and warranties of the Company and the holder hereof contained
herein shall survive the Date of Grant, the exercise or conversion of this
Warrant (or any part hereof) or the termination or expiration of rights
hereunder. All agreements of the Company and the holder hereof contained herein
shall survive indefinitely until, by their respective terms, they are no longer
operative.
19. 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.
20. Acceptance. Receipt of this Warrant by the holder hereof shall
constitute acceptance of and agreement to the foregoing terms and conditions.
21. No Impairment of Rights. The Company will not, by amendment of its
Charter 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.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, LaserSight Incorporated has caused this
Warrant to be executed on its behalf by one of its officers thereunto duly
authorized.
LASERSIGHT INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxx
------------------------
Name: Xxxxxxx Xxxxxx
Title: President/Chief Executive Officer
Address: 00000 Xxxxxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx 00000
Date: March 31, 1997
