UNDERWRITERS’ WARRANT AGREEMENT
Exhibit
1.2
(Social Security No. or Tax I.D. No.)
THIS
UNDERWRITER’S WARRANT AGREEMENT (the “Agreement”), dated as of [DATE], is made
and entered into by and between US Dry Cleaning Corporation, a Delaware
corporation (the “Company”), Marino Capital Partners, Inc., a California
corporation (“MCP”) and US EURO Securities, Inc., a California Corporation (“US
EURO”) (collectively with MCP, the “Underwriters” and, once they have received
the Warrants, each of them, a “Warrantholder”).
Concurrently
herewith, the Company is offering for sale, in a public offering (the
“Offering”) up to 3,000,000 Units at a purchase price of $[___] per Unit. On
[DATE], the
Company entered into an Underwriting Agreement with the Underwriters with MCP
becoming the Lead Managing Underwriter and US EURO becoming a Co-Managing
Underwriter (the “Underwriting Agreement”). The Underwriting Agreement provides
that, on consummation of the Offering, the Company shall issue to the
Underwriters warrants (the “Warrants”) entitling the Underwriters to purchase,
on the terms and conditions hereinafter set forth, the number of shares of
Company common stock (the “Shares”) equal to 10% of the total Units sold in the
Offering.
In
consideration of the foregoing and in satisfaction of the Company’s obligations
contained in the Underwriting Agreement and for the purpose of defining the
terms and provisions of the Warrants and the respective rights and obligations
with respect thereto, the Company and the Underwriters, for value received,
hereby agree as follows:
Section
1. Issuance
of Warrants; Transferability and Form of Warrants.
1.1 Issuance
of the Warrants.
The
Company agrees that on the Closing Date (as defined in the Underwriting
Agreement), the Company shall issue to the Underwriters the Warrants entitling
each of the Underwriters to purchase, on the terms and conditions hereinafter
set forth, the number of Shares equal to 10% of the total Units sold in the
Offering, subject to adjustment as set forth in Section 9 hereof. Each Warrant
will entitle the Warrantholder to purchase one share of the Company’s common
stock, at the Warrant Price (as defined in Section 7 hereof). The Warrants
being
sold and issued pursuant to this Agreement shall be evidenced by a Warrant
Certificate substantially in the form of Exhibit A hereto (the “Warrant
Certificate”).
1.2 Registration.
The
Warrants shall be numbered and shall be registered on the books of the Company
when issued. The Company shall be entitled to treat the registered holder of
any
Warrant on the books of the Company as the owner in fact thereof for all
purposes and shall not be bound to recognize any equitable or other claim to
or
interest in such Warrant on the part of any other person. The Warrants shall
be
transferable only on the books of the Company upon delivery thereof duly
endorsed by the holder thereof or by its duly authorized attorney or
representative, or accompanied by proper evidence of succession, assignment
or
authority to transfer. Notwithstanding the foregoing, the Company shall have
no
obligation to cause the Warrants to be transferred on its books to any person
if, in the opinion of counsel to the Company, such transfer does not comply
with
the provisions of the Securities Act of 1933, as amended (the “Act”), or
applicable state blue sky laws and the rules and regulations
thereunder.
1.3 Form
of Warrants.
The
text of the Warrants and of the form of election to purchase Shares shall be
substantially as set forth in Exhibit A attached hereto. The number of Shares
issuable upon exercise of the Warrants is subject to adjustment upon the
occurrence of certain events, all as hereinafter provided. The Warrants shall
be
executed on behalf of the Company by its President or by a Vice President.
A
Warrant bearing the signature of an individual who was at the time of signature
the proper officer of the Company shall bind the Company, notwithstanding that
such individual shall have ceased to hold such office prior to the delivery
of
such Warrant or did not hold such office on the date of this Agreement. The
Warrants shall be dated as of the date of signature thereof by the Company
either upon initial issuance or upon division, exchange, substitution or
transfer.
Section
2. Exchange
of Warrant Certificate.
Any
Warrant certificate may be exchanged for another certificate or certificates
entitling the Warrantholder to purchase a like aggregate number of Shares as
the
certificate or certificates surrendered then entitled such Warrantholder to
purchase. Any Warrantholder desiring to exchange a Warrant certificate shall
make such request in writing delivered to the Company, and shall surrender,
properly endorsed, with signatures guaranteed, the certificate evidencing the
Warrant to be so exchanged. Thereupon, the Company shall execute and deliver
to
the person or persons entitled thereto a new Warrant certificate as so
requested.
Section
3. Term
of Warrants; Exercise of Warrants.
3.1 Subject
to the terms of this Agreement, each Warrantholder shall have the right, at
any
time during the period commencing at 9:00 a.m., Pacific Time, on the date of
issuance of the Warrants (the “Issuance Date”) and ending at 5:00 p.m. of the
day preceding the fifth anniversary of the date of the issuance (the
“Termination Date”), to purchase from the Company up to the number of fully paid
and nonassessable Shares to which the Warrantholder may at the time be entitled
to purchase pursuant to this Agreement. Such purchase of Shares shall be
effectuated by the surrender to the Company, at its principal office, of the
certificate evidencing the Warrants to be exercised, together with the purchase
form on the reverse thereof duly filled in and signed, with signatures
guaranteed, and upon payment to the Company of the Warrant Price (as defined
in
and determined in accordance with the provisions of this section 3 and section
8
hereof), for the number of Shares in respect of which such Warrants are then
exercised.
3.2 Payment
of the aggregate Warrant Price shall be made pursuant to Section 3.3 hereof.
Upon surrender of the Warrants and payment of such Warrant Price as aforesaid,
the Company shall issue and cause to be delivered with all reasonable dispatch
to or upon the written order of the Warrantholder, and in such name or names
as
the Warrantholder may designate, a certificate or certificates for the number
of
full Shares so purchased upon the exercise of the Warrant, together with cash,
as provided in Section 11 hereof, in respect of any fractional Shares otherwise
issuable upon such surrender. Such certificate or certificates shall be deemed
to have been issued and any person so designated to be named therein shall
be
deemed to have become a holder of record of such securities as of the date
of
surrender of the Warrants and payment of the Warrant Price, as aforesaid,
notwithstanding that the certificate or certificates representing such
securities shall not actually have been delivered or that the stock transfer
books of the Company shall then be closed. The Warrants shall be exercisable,
at
the election of each Warrantholder, either in full or from time to time in
part
and, in the event that a certificate evidencing the Warrants is exercised in
respect of less than all of the Shares specified therein at any time prior
to
the Termination Date, a new certificate evidencing the remaining portion of
the
Warrants shall be issued by the Company to such Warrantholder.
2
3.3 Manner
of Exercising Warrant.
(a) In
order
to exercise this Warrant with respect to all or any part of the Shares for
which
this Warrant is at the time exercisable, Warrantholder (or any other person
or
persons exercising the Warrant) must take the following actions:
(i) Execute
and deliver to the Company a written notice of exercise stating the number
of
Shares being purchased (in whole shares only) and such other information set
forth on the form of Notice of Exercise attached hereto as Appendix A;
and
(ii)
Pay
the
aggregate Warrant Price for the Shares in one or more of the following
forms:
(A) Cash
or
check made payable to the Company.
Should
the Company’s Common Stock be registered under Section 12 of the Exchange Act at
the time the Warrant is exercised, then the Warrant Price may also be paid
as
follows:
(B) By
surrender of this Warrant at the principal office of the Company together with
notice of cashless election, in which event the Company shall issue to
Warrantholder a number of shares of Common Stock computed using the following
formula:
X
=
Y
(A-B)
A
where:
X
= the
number of shares of Common Stock to be issued to Holder.
Y
= the
number of shares of Common Stock for which this Warrant is being
exercised.
A
= the
Market Price of one share of Common Stock (for purposes of this Section
3(a)(ii)(B), the "Market Price" shall be defined as the average closing price
of
the Common Stock for the five trading days prior to the date of exercise of
this
Warrant (the "Average Closing Price"), as reported by the O.T.C. Bulletin Board
or any other over-the-counter market; provided, however, that if the Common
Stock is listed on a national exchange, the Market Price shall be the Average
Closing Price on such exchange for the five trading days prior to the date
of
exercise of the Warrants. If the Common Stock is/was not traded during the
five
trading days prior to the date of exercise, then the closing price for the
last
publicly traded day shall be deemed to be the closing price for any and all
(if
applicable) days during such five trading day period.
3
B
= the
Warrant Price.
For
purposes of Rule 144 and sub-section 3.3(a)(ii)(B) thereof, it is intended,
understood and acknowledged that the Common Stock issuable upon exercise of
this
Warrant in a cashless exercise transaction shall be deemed to have been acquired
at the time this Warrant was issued. Moreover, it is intended, understood and
acknowledged that the holding period for the Common Stock issuable upon exercise
of this Warrant in a cashless exercise transaction shall be deemed to have
commenced on the date this Warrant was issued.
(C) Through
a
special sale and remittance procedure compliant with applicable federal and
state securities law pursuant to which the Warrantholder (or any other person
or
persons exercising the Warrant) shall concurrently provide irrevocable
instructions (a) to a Company-approved brokerage firm to effect the immediate
sale of the purchased shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
Warrant Price payable for the purchased shares plus all applicable Federal,
State and local income and employment taxes required to be withheld by the
Company by reason of such exercise and (b) to the Company to deliver the
certificates for the purchased shares directly to such brokerage firm in order
to complete the sale.
(b) As
soon
as practical after the Exercise Date, the Company shall issue to or on behalf
of
the Warrantholder (or any other person or persons exercising this Warrant)
a
certificate for the purchased Shares, with the appropriate legends affixed
thereto. Unless the Shares are registered on the Exercise Date, the Shares
issued upon exercise of the Warrants shall be subject to a stop transfer order
and the certificate or certificates evidencing any such Shares shall bear the
following legend:
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, NOR HAVE
THEY BEEN REGISTERED UNDER THE SECURITIES (“BLUE SKY”) LAWS OF ANY STATE. THESE
SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS THEY
HAVE FIRST BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND UNDER THE
APPLICABLE BLUE SKY LAWS OR UNLESS THE AVAILABILITY OF AN EXEMPTION FROM
REGISTRATION UNDER SUCH ACT AND LAWS IS ESTABLISHED TO THE SATISFACTION OF
THE
COMPANY, WHICH MAY NECESSITATE A WRITTEN OPINION OF SELLER’S COUNSEL
SATISFACTORY TO COMPANY COUNSEL.
(c) In
no
event may this Warrant be exercised for any fractional Shares.
Section
4. Payment
of Taxes.
The
Company will pay all documentary stamp taxes, if any, attributable to the
initial issuance of the Warrants or the securities comprising the Shares;
provided, however, the Company shall not be required to pay any tax which may
be
payable in respect of any secondary transfer of the Warrants or the securities
comprising the Shares.
4
Section
5. Mutilated
or Missing Warrants.
In case
the certificate or certificates evidencing the Warrants shall be mutilated,
lost, stolen or destroyed, the Company shall, at the request of the
Warrantholder, issue and deliver in exchange and substitution for and upon
cancellation of the mutilated certificate or certificates, or in lieu of and
substitution for the certificate or certificates lost, stolen or destroyed,
a
new Warrant certificate or certificates of like tenor and representing an
equivalent right or interest, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction of such Warrant
and payment of the reasonable out-of-pocket expenses incurred by the Company
in
issuing a replacement Warrant Certificate and of an agreement by the
Warrantholder to indemnify the Company from and against any and all liability
relating to the loss and replacement of such the certificate or
certificates.
Section
6. Reservation
of Shares.
There
has been reserved, out of its authorized Capital Stock, such number of shares
of
common stock as shall be subject to purchase under the Warrants, and the Company
shall at all times keep reserved, for so long as any of the Warrants remain
outstanding, such shares of common stock that from time to time are, and such
additional Shares or other securities that, pursuant to Section 8 hereof, become
issuable on exercise of the Warrants.
Section
7. Warrant
Price.
The
price per Share at which Shares shall be purchasable upon the exercise of the
Warrants shall equal
125% of the offering price per share of Units sold in the Offering,
subject
to any adjustments thereto required by this Agreement (and as so adjusted,
the
“Warrant Price”).
Section
8. Anti-dilution
Provisions.
The
Exercise Price of the Warrants shall be subject to adjustment from time to
time
as follows:
8.1 Stock
Splits and Dividends.
In the
event the Company should at any time or from time to time after the Purchase
Date, fix a record date for the effectuation of a split or subdivision of the
outstanding shares of common stock or the determination of holders of common
stock entitled to receive a dividend or other distribution payable in additional
shares of common stock or other securities or rights convertible into, or
entitling the holder thereof to receive directly or indirectly, additional
shares of common stock (hereinafter referred to as “Common Stock Equivalents”)
without payment of any consideration by such holder for the additional shares
of
common stock or the Common Stock Equivalents (including the additional shares
of
common stock issuable upon exercise thereof), then, as of such record date
(or
the date of such dividend distribution, split or subdivision if no record date
is fixed), the Exercise Price of the Warrants shall be appropriately decreased
and the number of shares of common stock issuable on exercise of each Warrant
shall be increased in proportion to such increase of the aggregate of shares
of
common stock outstanding and those issuable with respect to such Common Stock
Equivalents.
8.2 Reverse
Stock Splits. If
the
number of shares of common stock outstanding at any time after the Purchase
Date
is decreased by a combination of the outstanding shares of common stock, then,
following the record date of such combination, the Exercise Price for the
Warrants shall be appropriately increased and the number of shares of common
stock issuable on exercise of the Warrants shall be decreased in proportion
to
such decrease in outstanding shares.
5
Section
9. Adjustment
of Number of Shares.
Unless
otherwise set forth in Section 8 of this Agreement, the number and kind of
securities purchasable upon the exercise of the Warrants and the Warrant Price
shall be subject to adjustment from time to time upon the happening of certain
events, as follows:
9.1 Par
Value of Shares of Common Stock.
Before
taking any action which would cause an adjustment effectively reducing the
portion of the Warrant Price allocable to each Share below the then par value
(if any) per share of the common stock issuable upon exercise of the Warrants,
the Company will take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable common stock upon exercise of the
Warrants.
9.2 Independent
Public Accountants.
The
Company may retain a firm of independent public accountants of recognized
national standing (which may be any such firm regularly employed by the Company)
to make any computation required under this Section 9, and a certificate signed
by such firm shall be conclusive evidence of the correctness of any computation
made under this Section 9.
9.3 Statement
on Warrant Certificates.
Irrespective of any adjustments in the number of Shares or other securities
issuable upon exercise of Warrants, Warrant certificates theretofore or
thereafter issued may continue to express the same number of securities as
are
stated in the similar Warrant certificates initially issuable pursuant to this
Agreement. However, the Company may, at any time in its sole discretion (which
shall be conclusive), make any change in the form of Warrant certificate that
it
may deem appropriate and that does not affect the substance thereof; and any
Warrant certificate thereafter issued, whether upon registration of transfer
of,
or in exchange or substitution for, an outstanding Warrant certificate, may
be
in the form so changed.
Section
10. Fractional
Interests; Current Market Price.
The
Company shall not be required to issue fractional Shares on the exercise of
any
of the Warrants. If any fraction of a Warrant Share would, except for the
provisions of this Section 10, be issuable on the exercise of the Warrants
(or
any specified portion thereof being exercised), the Company shall pay to the
Warrantholder, in lieu of the issuance of such fractional Warrant Share, an
amount in cash equal to the then Current Market Price multiplied by such
fraction.
For
Purposes of this Agreement, the term “Current Market Price” shall be determined
by the Company’s Board of Directors in good faith; provided however (i) that in
the event that this Warrant is exercised in connection with the Company’s
initial public offering of its common stock, the Current Market Price per share
shall be the per share offering price to the public of the Company’s initial
public offering; provided, however, that in the event this Warrant is exercised
and the Company’s common stock is then publicly traded, the Current Market Price
of one share of common stock shall be the average closing price of the common
stock for the five trading days prior to the date of exercise of this Warrant
(the “Average Closing Price”), as reported by the O.T.C. Bulletin Board or in
any over-the-counter market; provided, however, that if the common stock is
listed on a national exchange, the Current Market Price shall be the Average
Closing Price on such exchange for the five trading days prior to the date
of
exercise of the Warrant. If the common stock is/was not traded during the five
trading days prior to the date of the exercise, then the closing price for
the
last publicly traded day shall be deemed to be the closing price for any and
all
(if applicable) days during such five trading day period.
6
Section
11. No
Rights as Shareholder; Notices to Warrantholder.
Nothing
contained in this Agreement or in the Warrants shall be construed as conferring
upon the Warrantholder or its transferees any rights as a shareholder of the
Company, including the right to vote, receive dividends, consent or receive
notices as a shareholder in respect of any meeting of shareholders for the
election of directors of the Company or any other matter, unless and until
the
Warrantholder or such transferee (as the case may be) exercises the Warrants,
in
whole or in part, and pays the Warrant Price thereof to the Company.
Notwithstanding the foregoing, however, if at any time prior to the earlier
of
the expiration of the Warrants and or their exercise in full, any one or more
of
the following events shall occur:
(a) any
action which would require an adjustment pursuant to Section 8;
or
(b) a
dissolution, liquidation or winding up of the Company (other than in connection
with a consolidation, merger or sale of its property, assets and business as
an
entirety or substantially as an entirety) shall be proposed;
then,
the
Company shall give notice in writing of such event to the Warrantholder, in
the
manner provided in Section 14 hereof, at least 20 days prior to the date fixed
as a record date or the date of closing the transfer books for the determination
of the shareholders entitled to any relevant dividend, distribution,
subscription rights or other rights or for the determination of shareholders
entitled to vote on such proposed dissolution, liquidation or winding up. Such
notice shall specify such record date or the date of closing of the transfer
books, as the case may be.
Section
12. Indemnification.
12.1 Indemnification
of Warrantholder.
The
Company agrees to indemnify and hold harmless each Warrantholder and any holder
of such Shares and each person, if any, who controls the Warrantholder or any
holder of such Shares within the meaning of the Act, against any losses, claims,
damages or liabilities, joint or several (which shall, for all purposes of
this
Agreement, include, but not be limited to, all reasonable costs of defense
and
investigation and all reasonable attorneys’ fees), to which such Warrantholder
or any holder of such Shares or such controlling person may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any
untrue statement or alleged untrue statement of any material fact contained
in
the Company’s registration statement, or any related preliminary prospectus,
final prospectus, or amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out
of
or is based upon an untrue statement or alleged untrue statement or omission
or
alleged omission made in such registration statement, preliminary prospectus,
final prospectus or amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company by such
Warrantholder or the holder of such Shares specifically for inclusion therein.
This indemnity will be in addition to any liability which the Company may
otherwise have.
7
12.2 Indemnification
of the Company.
The
Warrantholder and the holders of the Shares agree that they will indemnify
and
hold harmless the Company, each other person referred to in subparts (1), (2),
(3) and (4) of Section 11(a) of the Act in respect of the registration statement
and each person, if any, who controls the Company within the meaning of the
Act,
against any losses, claims, damages or liabilities (which shall, for all
purposes of this Agreement, include but not be limited to, all reasonable costs
of defense and investigation and all reasonable attorneys’ fees) to which the
Company or any such director, officer or controlling or other person may become
subject under the Act or otherwise, insofar as such losses, claims, damages
or
liabilities (or actions in respect thereof) arise out of or are based upon
any
untrue statement or alleged untrue statement of any material fact contained
in
such registration statement, or any related preliminary prospectus, final
prospectus or amendment or supplement thereto, or arise out of or are based
upon
the omission or the alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
but in each case only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in such registration
statement, preliminary prospectus, final prospectus or amendment or supplement
thereto in reliance upon, and in conformity with, written information furnished
to the Company by the Warrantholder or such holder of Shares specifically for
inclusion therein. This indemnity agreement will be in addition to any liability
which the Warrantholder or such holder of Shares may otherwise
have.
12.3 Indemnification
Procedures.
Promptly after receipt by an indemnified party under this Section 12 of any
claim or notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party
under
this Section 12, notify the indemnifying party of the commencement thereof;
but
the omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability which it may have to any indemnified
party, except to the extent that the indemnifying party did not otherwise have
knowledge of the assertion of such claim or the commencement of the action
and
the indemnifying party’s ability to defend against the claim or action was
prejudiced by such failure. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to
the
extent that it may wish, jointly with any other indemnifying party similarly
notified, reasonably assume the defense thereof, subject to the provisions
herein stated, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the indemnifying party
will not be liable to such indemnified party under this Section 12 for any
legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation, unless
the indemnifying party shall not pursue the action to its final conclusion.
The
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses
of
such counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the indemnified party; provided, however, that if the
indemnified party is a Warrantholder or a holder of Shares or a person who
controls a Warrantholder or a holder of Shares within the meaning of the Act,
the fees and expenses of such counsel shall be at the expense of the
indemnifying party if (i) the employment of such counsel has been specifically
authorized in writing by the indemnifying party or (ii) the named parties to
any
such action, including any impleaded parties, include both a Warrantholder
or a
holder of Shares or such controlling person and the indemnifying party and
a
Warrantholder or a holder of Shares or such controlling person shall have been
advised by such counsel that it would be advisable for such Warrantholder or
holder of the Shares to assert one or more legal defenses available to a
Warrantholder or a holder of Shares or controlling person which are in conflict
with any legal defenses which may be available to the indemnifying party (in
which case the indemnifying party shall not have the right to assume the defense
of such action on behalf of a Warrantholder or a holder of Shares or such
controlling person, it being understood, however, that the indemnifying party
shall not, in connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys for the Warrantholder,
the
holders of the Shares and their controlling persons, which firm shall be
designated in writing by a majority in interest of such holders and controlling
persons based upon the value of the securities included in the registration
statement). No settlement of any action against an indemnified party shall
be
made without the consent of the indemnified and the indemnifying parties, which
shall not be unreasonably withheld in light of all factors of importance to
such
parties.
8
Section
13. Contribution.
In
order to provide for just and equitable contribution under the Act in any case
in which (i) a Warrantholder or any holder of the Shares or controlling person
makes a claim for indemnification pursuant to Section 12 hereof but it is
judicially determined (by the entry of a final judgment or decree by a court
of
competent jurisdiction and the expiration of time to appeal or the denial of
the
last right of appeal) that such indemnification may not be enforced in such
case
notwithstanding the fact that the express provisions of Section 12 hereof
provide for indemnification in such case or (ii) contribution under the Act
may
be required on the part of any Warrantholder or any holder of the Shares or
controlling person, then the Company and any Warrantholder or any such holder
of
the Shares or controlling person shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (which shall, for
all purposes of this Agreement, include, but not be limited to, all reasonable
costs of defense and investigation and all reasonable attorneys’ fees), in
either such case (after contribution from others) on the basis of relative
fault
as well as any other relevant equitable considerations. The relative fault
shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state
a material fact relates to information supplied by the Company on the one hand
or a Warrantholder or holder of Shares or controlling person on the other and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company and such holders
of such securities and such controlling persons agree that it would not be
just
and equitable if contribution pursuant to this Section 13 were determined by
pro
rata allocation or by any other method which does not take account of the
equitable considerations referred to in this Section 13. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages
or
liabilities (or actions in respect thereof) referred to above in this Section
13
shall be deemed to include any legal or other expenses reasonably incurred
by
such indemnified party in connection with investigating or defending any such
action or claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any
person who was not guilty of such fraudulent misrepresentation.
Section
14. Notices.
Any
notice pursuant to this Agreement by the Company or by a Warrantholder or a
holder of Shares shall be in writing and shall be deemed to have been duly
given
on the date of delivery or refusal indicated on the return receipt if delivered
or mailed by certified mail, return receipt requested:
14.1 Warrantholder
Address.
If to
the Warrantholder or a holder of Shares, addressed to the holder listed on
the
transfer letter for the warrants at the final closing.
14.2 Company
Address.
If to
the Company, addressed to it 000 Xxxxxxxx Xxxxxx Xxx, Xxxxx 000, Xxxx Xxxxxxx,
Xxxxxxxxxx 00000, Attention: Xxxxxx X. Xxx, Chief Executive
Officer.
Each
party may from time to time change the address to which notices to it are to
be
delivered or mailed hereunder by notice in accordance herewith to the other
party.
Section
15. Survival
of Representations and Warranties.
All
statements contained in any schedule, exhibit, certificate or other instrument
delivered by or on behalf of the parties hereto, or in connection with the
transactions contemplated by this Agreement, shall be deemed to be
representations and warranties hereunder. Notwithstanding any investigations
made by or on behalf of the parties to this Agreement, all representations,
warranties and agreements made by the parties to this Agreement or pursuant
hereto shall survive.
9
Section
16. Miscellaneous.
16.1 Applicable
Law.
This
Agreement shall be deemed to be a contract made under the laws of the State
of
California and for all purposes shall be construed in accordance with the laws
of said State.
16.2 Jurisdiction.
The
parties submit to the jurisdiction of the Courts of the County of Orange, State
of California or a Federal Court empanelled in the State of California for
the
resolution of all legal disputes arising under the terms of this Agreement,
including, but not limited to, enforcement of any arbitration
award.
16.3 Successors
and Assigns.
The
Warrants may not be sold, transferred, assigned, pledged or hypothecated until
_______________, 2007 [180 days from the Effective Date of the Registration
Statement on which they are initially registered] except that they may be
transferred, in whole or in part, (i) to one or more officers of the
Warrantholder who are also shareholders of the Warrantholders; (ii) to a member
of the underwriting syndicate and/or its officers who are also shareholders
of
such firm, managers, members or partners; or (iii) by operation of law. After
_______________, 2007, the Warrants may be sold, assigned or hypothecated in
accordance with applicable law. All the covenants and provisions of this
Agreement by or for the benefit of the Company, the Warrantholders, or the
holders of Shares shall bind and inure to the benefit of their respective
successors and assigns hereunder. Notwithstanding the foregoing, however,
nothing in this Agreement shall be construed to give to any person or
corporation other than the Company, the Warrantholder and the holders of Shares,
and their respective permitted transferees (other than transferees who acquire
any Shares that are free of restrictions on transfer under this Agreement and
under the Act), any legal or equitable right, remedy or claim under this
Agreement. This Agreement shall be for the sole and exclusive benefit of the
Company, the Warrantholder and the holders of Shares and such permitted
transferees (other than transferees who acquire any Shares that are free of
restrictions on transfer under this Agreement and under the Act).
16.4 Amendments.
This
Agreement may be amended only by a written instrument executed by duly
authorized representatives of the Company and the Warrantholder.
16.5 Severability.
In the
event any provision of this Agreement becomes or is declared by a court of
competent jurisdiction to be illegal, unenforceable or void, this Agreement
shall continue in full force and effect without said provision, but only to
the
extent necessary to cure the infirmity that caused such provision to be held
illegal, unenforceable or void.
16.6 Interpretation.
This
Agreement is the result of arms’-length negotiations between the parties hereto
and no provision hereof, because of any ambiguity found to be contained in
any
of the provisions hereof, shall be construed against a party by reason of the
fact that such party or its legal counsel was the draftsman of those provisions.
Unless otherwise indicated elsewhere in this Agreement, (i) the term “or” shall
not be exclusive, (ii) the term “including” shall mean “including, but not
limited to,” and (iii) unless the context indicates otherwise the terms
“herein,” “hereof,” “hereto,” “hereunder” and other terms similar to such terms
shall refer to this Agreement as a whole and not merely to the specific section,
subsection, paragraph or clause where such terms may appear.
10
16.7 Attorneys’
Fees.
In the
event any party hereto shall commence legal proceedings against the other to
enforce the terms hereof, or to declare rights hereunder, as the result of
a
breach of any covenant or condition of the Agreement, the prevailing party
in
any such proceeding shall be entitled to recover from the losing party its
costs
of suit, including reasonable attorneys’ fees, as may be fixed by the
court.
16.8 Headings.
The
captions or headings of the sections and subsections of this Agreement are
for
convenience of reference only and shall be disregarded in interpreting,
construing or applying any of the provisions of this Agreement.
16.9 Counterparts.
This
Agreement may be executed in separate counterparts, each of which shall be
an
original of and all of which together shall constitute one and the same
instrument.
(SIGNATURE
PAGE FOLLOWS)
11
IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed,
all
as of the day and year first above written.
| U.S. DRY CLEANING CORPORATION | |||
|
By: Xxxxxx X. Xxx |
|||
|
Its:
Chief Executive Officer
|
| US EURO SECURITIES, INC. | MARINO CAPITAL PARTNERS, INC. | ||
|
By: Xxxxxxx Xxx Xxxxxx |
By: Xxxxx Xxxxxx |
||
| Its: Chairman | Its: Chief Executive Officer |
12
Exhibit
A
Warrant
Certificate No. _____
UNDERWRITER
WARRANTS TO PURCHASE ___________ SHARES OF COMMON STOCK
THE
WARRANTS EVIDENCED AND REPRESENTED BY THIS CERTIFICATE (THE “WARRANTS”) AND THE
SECURITIES ISSUABLE UPON EXERCISE HEREOF (THE “SHARES”) HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, PURSUANT TO A REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
THIS
WARRANT IS GOVERNED BY THE TERMS OF UNDERWRITERS’ WARRANT AGREEMENT (THE
“UNDERWRITERS’ WARRANT AGREEMENT”) BY AND AMONG U.S. DRY CLEANING CORPORATION
AND MARINO CAPITAL PARTNERS, INC. AND US EURO SECURITIES, INC. THIS WARRANT
MAY
NOT BE SOLD, TRANSFERRED OR ASSIGNED EXCEPT AS OTHERWISE PROVIDED IN THE
UNDERWRITERS WARRANT AGREEMENT AND THE HOLDER OF THIS WARRANT, BY ITS ACCEPTANCE
HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS WARRANT EXCEPT
AS
OTHERWISE PROVIDED IN THE UNDERWRITERS’ WARRANT AGREEMENT.
U.S.
DRY CLEANING CORPORATION,
A
DELAWARE CORPORATION
This
certifies that, for $10.00 and other value received, ________________________,
a
California corporation, the registered holder hereof or assigns (the
“Warrantholder”), is entitled to purchase from U.S. Dry Cleaning Corporation
(the “Company”), at any time subsequent to [DATE], 2007 and prior to [DATE],
2012,
at the
purchase price per share equal
to
125% of the offering price per unit of the Units sold in the
Offering
(the
“Warrant Price”), the number of Shares of Common Stock of the Company set forth
above (the “Shares”). The number of Shares issuable upon exercise of each
Warrant evidenced hereby and the Warrant Price shall be subject to adjustment
from time to time as set forth in the Underwriters’ Warrant
Agreement.
The
Warrants evidenced hereby represent the right to purchase an aggregate of up
to
__________ Shares, subject to certain adjustments, and are issued under and
in
accordance with the Underwriters’ Warrant Agreement, dated as of [DATE], 2007,
and are subject to the terms and provisions contained in the Underwriters’
Warrant Agreement, to all of which the Warrantholder by acceptance hereof
consents. All capitalized terms in this Warrant Certificate, to the extent
not
otherwise defined herein, shall have the meaning assigned to such terms in
the
Underwriters’ Warrant Agreement.
The
Warrants evidenced hereby may be exercised in whole or in part by presentation
of this Warrant Certificate with the Purchase Form attached hereto duly executed
(with a signature guarantee as provided thereon) and simultaneous payment of
the
Warrant Price at the principal office of the Company. Payment of such price
shall be made by the Warrantholder in cash, by check, or any combination
thereof.
Upon
any
partial exercise of the Warrants evidenced hereby, there shall be signed and
issued to the Warrantholder a new Warrant Certificate in respect of the Shares
as to which the Warrants evidenced hereby shall not have been exercised. These
Warrants may be exchanged at the office of the Company by surrender of this
Warrant Certificate properly endorsed for one or more new Warrants of the same
aggregate number of Shares as evidenced by the Warrant or Warrants exchanged.
No
fractional Shares of Common Stock will be issued upon the exercise of rights
to
purchase hereunder, but the Company shall pay the cash value of any fraction
upon the exercise of one or more Warrants. These Warrants are transferable
at
the office of the Company in the manner and subject to the limitations set
forth
in the Underwriters’ Warrant Agreement.
This
Warrant Certificate does not entitle any Warrantholder to any of the rights
of a
stockholder of the Company unless and until the Warrantholder exercises its
rights to purchase Shares hereunder.
| Dated: _________________________________ | U.S. Dry Cleaning Corporation |
| _____________________________________ | |
|
By:
__________________________________
|
|
| Its: __________________________________ |
13
Appendix
A
PURCHASE
FORM
U.S.
Dry
Cleaning Corporation
000
Xxxxxxxx Xxxxxx Xxx, Xxxxx 000
Xxxx
Xxxxxxx, Xxxxxxxxxx 00000
The
undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant Certificate for, and to purchase thereunder,
____________ Shares of Common Stock (the “Shares”) provided for therein, and
requests that certificates for the Shares be issued in the name of:
(Please
Print or Type Name)
(Address,
including zip code)
(Social Security No. or Tax I.D. No.)
and,
if
said number of Shares shall not be all the Shares purchasable hereunder, that
a
new Warrant Certificate for the balance of the Shares purchasable under the
within Warrant Certificate be registered in the name of the undersigned
Warrantholder or his Assignee as below indicated and delivered to the address
stated below.
Name
of
Warrantholder
or
Assignee:
________________________________________________________________________________________________________________
(Please
Print)
Address:
___________________________________________________________________________________________________________________
Signature:
_________________________________________________________________
Dated:___________________________________________
Note:
The
above signature must correspond with the name as written upon the face of this
Warrant Certificate in every particular, without alteration or enlargement
or
any change whatever, unless these Warrants have been assigned.
14
ASSIGNMENT
(To
be
signed only upon assignment of Warrants)
FOR
VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto the assignee
named below all of the rights of the undersigned represented by the attached
Warrant with respect to the number of Shares covered by the Warrant set forth
below:
(Name
and
Address of Assignee Must Be Printed or Typewritten)
Name
of
Assignee
Social
Security No. Address
No.
of
or Tax ID
No.
Shares
__________________________________________________________________________________________________________
and
does
hereby irrevocably constitute and appoint _________________________________
Attorney to transfer said Warrants on the books of the Company, with full power
of substitution in the premises.
Dated:
_________________________________________
_________________________________________________________________
Signature of Registered Holder
Note: The
signature on this assignment must correspond with the name as it appears upon
the face of the within Warrant Certificate in every particular, without
alteration or enlargement or any change whatever.
15
