EXHIBIT 4.9
WARRANT AGREEMENT
WARRANT AGREEMENT ("Agreement") dated as of March 9, 2000 between ENTRADE
Inc., a Pennsylvania corporation (the "Company") and TEXTRON FINANCIAL
CORPORATION, a Delaware corporation ("Warrantholder").
A. On the date hereof, the Company has agreed to issue to Warrantholder
certain warrants to purchase from the Company shares of Common Stock, no par
value ("Common Stock.
B. The Company and the Warrantholder wish to set forth their respective
rights and obligations hereunder.
C. In consideration of the foregoing premises, the mutual covenants,
agreements, representations and warranties hereinafter set forth and for other
good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Unless otherwise defined herein, the following
terms used in this Agreement shall have the meanings specified below.
"Common Stock" means the Company's Common Stock, no par value per share.
"Fully Diluted Basis" means at any time (i) as applied to any calculation
of the number of securities of the Company after giving effect to (x) all shares
of Common Stock of the Company outstanding at the time of determination, (y) all
shares of the Company Common Stock issuable upon the exercise of any option,
warrant (including the Warrant) or similar right outstanding at the time of
determination and (z) all shares of Common Stock of the Company issuable upon
the exercise of any conversion or exchange right contained in any security
(other than Common Stock) convertible into or exchangeable for shares of Common
Stock of the Company and (ii) as applied to any calculation of value, after
giving effect to the foregoing securities and the payment of any consideration
payable upon the exercise of any option, warrant or similar right referred to in
clause (y) above if such option, warrant or similar right were exercisable at
such time.
"Person" means a corporation, an association, a partnership, an
organization, a business, an individual, a government or a subdivision thereof
or a governmental agency.
"Public Sale" means any sale of Common Stock to the public pursuant to an
offering registered under the Securities Act or to the public through a broker,
dealer or market maker pursuant to the provisions of Rule 144 (or any successor
provision then in effect) adopted under the Securities Act.
"Securities Act" means the Securities Act of 1933 or any similar Federal
statute, and the rules and regulations of the Securities and Exchange Commission
thereunder, all as the same shall be in effect at the time.
"Warrant" means the Warrant issued pursuant to this Agreement.
"Warrant Shares" means (i) any shares of the Common Stock or other
securities issued or issuable upon the exercise of any Warrant and (ii) any
securities issued with respect to any of such shares or other securities
referred to in clause (i) upon the conversion thereof into other securities or
by way of stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization or
otherwise; provided that any of such securities shall cease to be Warrant Shares
when such securities shall have (x) been disposed of pursuant to a Public Sale
or (y) ceased to be outstanding.
ARTICLE II
AUTHORIZATION AND ISSUANCE OF WARRANT
SECTION 2.1. Authorization of Warrant. The Company has authorized the
issuance to Warrantholder of its Warrant, containing the terms and conditions
and in the form attached hereto as Exhibit A (the "Warrant").
ARTICLE III
TRANSFER OF WARRANT AND WARRANT SHARES
SECTION 3.1. Legend on Certificates. Unless otherwise expressly provided
herein, the Warrant and each certificate for Warrant Shares and each certificate
issued in exchange for or upon transfer of any thereof shall be stamped or
otherwise imprinted with legends in substantially the following form:
THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR APPLICABLE STATE LAWS. SUCH SECURITIES MAY NOT BE
SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THE
REGISTRATION PROVISIONS OF SAID ACT AND LAWS HAVE BEEN COMPLIED
WITH OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
(ACCEPTABLE TO THE COMPANY) THAT SUCH REGISTRATION IS NOT
REQUIRED.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 The Company represents and warrants to the Warrantholder as
follows:
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SECTION 4.1.1 Due Incorporation. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Pennsylvania and has all requisite corporate power and authority to
enter into this Agreement and perform its obligations hereunder.
SECTION 4.1.2. Authority and Enforceability. This Agreement
and all transactions contemplated hereby have been duly and validly authorized
by all necessary corporate action on the part of the Company and this Agreement
constitutes a legal, valid and binding obligation of the Company enforceable in
accordance with its terms except that such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws affecting or relating to enforcement of creditors' rights
generally.
SECTION 4.1.3. Financial Statements. The Company has
previously delivered to the Warrantholder audited statements of income, and
related balance sheets for the Company. These financial statements have been
prepared from the books and records of the Company and fairly present the
financial position of the Company.
SECTION 4.2 The Warrantholder represents and warrants to the Company as
follows:
SECTION 4.2.1. Due Incorporation. The Warrantholder is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
enter into this Agreement and perform its obligations hereunder.
SECTION 4.2.2. Authority and Enforceability. This Agreement
and all transactions contemplated hereby have been duly and validly authorized
by all necessary corporate action on the part of the Warrantholder and this
Agreement constitutes a legal, valid and binding obligation of the Warrantholder
enforceable in accordance with its terms except that such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws affecting or relating to enforcement of
creditors' rights generally.
SECTION 4.2.3. Investment Representations. The Warrantholder
represents, warrants and covenants that: (a) it (i) is an "Accredited Investor"
within the meaning of Rule 501(a) of the Securities Act, (ii) has such knowledge
and experience in financial and business matters that it is fully capable of
evaluating the merits and risks of an investment in the Warrant and Warrant
Shares, and (iii) can bear the economic risk of its investment in the Warrant
and Warrant Shares; (b) it is familiar with the business of and prospects for
the Company; (c) the Warrant is issued by the Company in a transaction not
involving any public offering within the meaning of Section 4(2) of the
Securities Act; (d) it is purchasing and acquiring the Warrant and Warrant
Shares issuable upon exercise of the Warrants for investment for its own
account, not for the account of any other person, and not with a view to the
resale or distribution thereof, in whole or in part, in violation of the
Securities Act or applicable state securities law; and (f) the representations,
warranties and covenants contained in this Section 4.2.3 shall survive the
execution and delivery of this Agreement and the acquisition of the Warrant and
Warrant Shares.
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ARTICLE V
MISCELLANEOUS
SECTION 5.1. Notices. Notices and other communications provided for herein
shall be in writing and may be given by registered mail, return receipt
requested, courier, confirmed telex or facsimile transmission and shall, unless
otherwise expressly required, be deemed given when received or, if mailed, four
business days after being deposited in the United States mail with postage
prepaid and properly addressed. In the case of any Warrantholder, such notices
and communications shall be addressed to its address as shown on the books
maintained by the Company, unless it shall notify the Company that notices and
communications should be sent to a different address (or telex or facsimile
number), in which case such notices and communications shall be sent to the
address (or telex or facsimile number) so specified.
SECTION 5.2. Binding Nature of Agreement. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the parties hereto or
their successors in interest, except as expressly otherwise provided herein.
SECTION 5.3. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only and
shall not limit or otherwise affect the meaning hereof.
SECTION 5.4. Specific Performance. Without limiting the rights of each
party hereto to pursue all other legal and equitable rights available to such
party for the failure of any party to perform its obligations under this
Agreement, the parties hereto acknowledge and agree that the remedy at law for
any failure to perform their obligations hereunder would be inadequate and that
each of them, respectively, shall be entitled to specific performance,
injunctive relief or other equitable remedies in the event of any such failure.
If a Person who has become obligated to sell Warrant Shares hereunder shall fail
to deliver such Warrant Shares in accordance with this Agreement, the Company
may, in addition to all other remedies it may have, send to that Person by
registered mail, return receipt requested, the purchase price for such Warrant
Shares provided for hereunder. Thereupon, the Company, upon written notice to
that Person, shall cancel on its books the certificate(s) representing the
Warrant Shares to be sold, and all of that Person's rights in and to such
Warrant Shares shall terminate. The effecting of such sale in such manner shall
not relieve that Person of any of its obligations hereunder, including any
obligation to execute and deliver any documents which the Company would
otherwise have been entitled to receive.
SECTION 5.5. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS
OF THE STATE OF PENNSYLVANIA, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF
LAW.
SECTION 5.6. Counterparts. This Agreement may be executed simultaneously in
any number of counterparts, each of which shall be deemed an original, but all
such counterparts shall together constitute one and the same instrument.
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SECTION 5.7. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
parties hereto shall be enforceable to the fullest extent permitted by law.
SECTION 5.8. Entire Agreement. This Agreement, together with the Exhibits
attached hereto, is intended by the parties hereto as a final and complete
expression of their agreement and understanding in respect to the subject matter
contained herein. This Agreement supersedes all prior agreements and
understandings, written or oral, between the parties with respect to such
subject matter.
SECTION 5.9. Amendment and Waiver. Any provision of this Agreement may be
amended if, but only if, such amendment is in writing and is signed by the
Company and Persons owning, or having warrants exercisable for, at least a
majority of shares of the same class as the Warrant Shares either then
outstanding or issuable upon the exercise of all outstanding warrants. Any
provision may be waived if, but only if, such waiver is in writing and is signed
by the party or parties waiving such provision and for whose benefit such
provision is intended.
SECTION 0.00.Xx Third Party Beneficiaries. Nothing in this Agreement shall
convey any rights upon any person or entity which is not a party or an assignee
of a party to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Warrant Agreement
as of the day and year first above written.
ENTRADE INC.
By: _________________________________
Name:
Title:
TEXTRON FINANCIAL CORPORATION
By: _________________________________
Name:
Title:
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THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE
STATE LAWS. SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR
HYPOTHECATED UNLESS THE REGISTRATION PROVISIONS OF SAID ACT AND LAWS HAVE BEEN
COMPLIED WITH OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
(REASONABLY ACCEPTABLE TO THE COMPANY) TO THE EFFECT THAT SUCH REGISTRATION IS
NOT REQUIRED.
WARRANT
To Purchase One Million (1,000,000) Shares of Common Stock
as provided herein
ENTRADE INC.
Dated: March 9, 2000
Expiring: Xxxxx 0, 0000
Xxxxxxx No. _________
THIS IS TO CERTIFY THAT, for value received, upon meeting certain
conditions set forth below, textron financial corporation, a Delaware
corporation (the "Holder") is entitled to purchase from entrade inc., a Delaware
corporation (the "Company"), at any time or from time to time after the date
hereof, one million (1,000,000) shares of the Common Stock at a price per share
equal to $39.65 (the "Exercise Price"), all subject to adjustment and upon the
terms and conditions hereinafter provided.
Certain terms used in this Warrant are defined in Article V.
ARTICLE I
EXERCISE OF WARRANT
1.1. Vesting of Warrant Shares. The Warrant Shares shall vest as follows:
(i) 250,000 of the Warrant Shares shall vest immediately upon execution of this
Warrant; and (ii) the other 750,000 of the Warrant Shares shall vest as set
forth on Schedule 1.1 hereto; provided, however, that all Warrant Shares which
have not previously vested shall immediately vest upon the occurrence of a
Change of Control Event at any time after the date hereof. All Warrant Shares
which have vested pursuant to this Section 1.1 shall be considered to be "Vested
Warrant Shares" under this Warrant.
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1.2. Method of Exercise. This Warrant may be exercised at any time on or
prior to March 9, 2005; provided, however, that this Warrant shall terminate,
and shall no longer be exercisable, ninety (90) days after the date on which the
members of XxxxxXxxxxxx.xxx, LLC have ceased to be engaged in business of the
marketing its end-to-end, business-to-business e-commerce asset disposition
services. Notwithstanding anything provided in this Section 1.2 or elsewhere in
this Warrant or the Warrant Agreement, the Holder may only exercise this Warrant
for Vested Warrant Shares. To exercise this Warrant in whole or in part, the
Holder shall deliver on any Business Day to the Company at its principal
offices: (a) this Warrant, (b) a written notice substantially in the form
attached hereto as Annex A of such Holder's election to exercise this Warrant,
which notice shall specify the number of shares of Vested Warrant Shares to be
purchased (which shall be a whole number of shares divisible by 10,000 if for
less than all the shares then issuable hereunder), the denominations of the
share certificate or certificates desired and the name or names in which such
certificates are to be registered, and (c) payment of the aggregate Exercise
Price with respect to such shares. Such payment of the aggregate Exercise Price
may be made, at the option of the Holder, either by cash, check or wire
transfer, provided that such aggregate Exercise Price may be paid by any
combination of cash, check or wire transfer in immediately available funds to
the Company in an amount equal to the product of the Exercise Price multiplied
by the number of Warrant Shares being purchased with the proceeds of such cash,
check or wire transfer.
The Company shall, as promptly as practicable and in any event within five
Business Days after receipt of such notice and payment, execute and deliver or
cause to be executed and delivered, in accordance with such notice, a
certificate or certificates representing the aggregate number of Warrant Shares
specified in said notice. The share certificate or certificates so delivered
shall be in such denominations as may be specified in such notice, and shall be
issued in the name of the Holder or such other name or names as shall be
designated in such notice. This Warrant shall be deemed to have been exercised
and such certificate or certificates shall be deemed to have been issued, and
such Holder or any other Person so designated to be named therein shall be
deemed for all purposes to have become a holder of record of shares, as of the
date the aforementioned notice and payment is received by the Company. If this
Warrant shall have been exercised only in part, the Company shall, at the time
of delivery of such certificate or certificates, deliver to the Holder a new
Warrant evidencing the rights to purchase the remaining Warrant Shares called
for by this Warrant, which new Warrant shall in all other respects be identical
with this Warrant, or, upon agreement between the parties, appropriate notation
may be made on this Warrant which shall then be returned to the Holder. The
Company shall pay all expenses, taxes and other charges payable in connection
with the preparation, issuance and delivery of share certificates and a new
Warrant, except that, if share certificates or a new Warrant shall be registered
in a name or names other than the name of the Holder, funds sufficient to pay
all transfer taxes payable as a result of such transfer shall be paid by the
Holder at the time of delivery of the aforementioned notice of exercise or
promptly upon receipt of a written request of the Company for payment.
1.3. Shares to be Fully Paid and Nonassessable. All Warrant Shares issued
upon the exercise of this Warrant shall be validly issued, fully paid and
nonassessable.
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1.4. No Fractional Shares Required to be Issued. The Company shall not be
required to issue fractions of Warrant Shares upon exercise of this Warrant.
1.5. Reservation. The Company has duly reserved and will keep available for
issuance upon exercise of this Warrant the total number of Warrant Shares
deliverable from time to time upon exercise of this Warrant.
ARTICLE II
TRANSFER, EXCHANGE AND REPLACEMENT OF WARRANT
2.1. Ownership of Warrant. The Company may deem and treat the person in
whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any person
other than the Company) for all purposes and shall not be affected by any notice
to the contrary, until due presentment of this Warrant for registration of
transfer as provided in this Article II.
2.2. Transfer of Warrant. The transfer of this Warrant is restricted by the
terms of the Warrant Agreement. The Company agrees to maintain at its principal
offices books for the registration of transfers of this Warrant, and transfer of
this Warrant and all rights hereunder shall be registered, in whole or in part,
on such books, upon surrender of this Warrant to the Company, together with a
written assignment of this Warrant duly executed by the Holder or its duly
authorized agent or attorney, with (if the Holder is a natural person)
signatures guaranteed by a bank or trust company or a broker or dealer
registered with the National Association of Securities Dealers, Inc., and funds
sufficient to pay any transfer taxes payable upon such transfer. Upon surrender
and, if required, such payment, the Company shall execute and deliver a new
Warrant in the name of the assignee or assignees and in the denominations
specified in the instrument of assignment (which shall be whole numbers of
shares only) and shall issue to the assignor a new Warrant evidencing the
portion of this Warrant not so assigned, and this Warrant shall promptly be
canceled.
2.3. Division or Combination of Warrant. This Warrant may be divided or
combined with other similar warrants upon presentment hereof and of any Warrant
or warrants with which this Warrant is to be combined, together with a written
notice specifying the names and denominations (which shall be whole numbers of
shares only) in which the new Warrant or warrants are to be issued, signed by
the holders hereof and thereof or their respective duly authorized agents or
attorneys. Subject to compliance with Section 2.2 as to any transfer or
assignment which may be involved in the division or combination, the Company
shall execute and deliver a new Warrant or warrants in exchange for the Warrant
or warrants to be divided or combined in accordance with such notice.
2.4. Loss, Theft, Destruction of Warrant Certificates. Upon receipt of
evidence satisfactory to the Company of the ownership of and the loss, theft,
destruction or mutilation of any Warrant and, in the case of any such loss,
theft or destruction, upon receipt of indemnity or security satisfactory to the
Company or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant, the Company will make and deliver to the Holder, in lieu of
such lost, stolen, destroyed or mutilated Warrant, a new Warrant of like tenor
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and representing the right to purchase the same aggregate number of shares of
Warrant Shares.
ARTICLE III
CERTAIN RIGHTS AND OBLIGATIONS
3.1. Rights and Obligations under the Warrant Agreement. This Warrant is
entitled to the benefits and subject to the terms of that certain Warrant
Agreement dated as of March 9, 2000 between the Company and the initial holder
of this Warrant (as amended from time to time, the "Warrant Agreement"). The
Company shall keep or cause to be kept a copy of the Warrant Agreement, and any
amendments thereto, at its principal offices and shall furnish, without charge,
copies thereof to the Holder upon request.
ARTICLE IV
REGISTRATION RIGHTS
4.1. Certain Definitions.
As used in this Warrant, the following terms shall have the following
respective meanings (and other capitalized terms shall have the meanings
ascribed to such terms elsewhere in this Warrant):
(a) "Commission" means the Securities and Exchange Commission.
(b) "Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor statute thereto, and the rules and regulations of the
Commission promulgated thereunder, all as the same shall be in effect at the
time.
(c) "Holders" means the Holder referred to in the first paragraph of this
Warrant and any other person holding Registrable Securities to whom these
registration rights have been assigned..
(d) "Registrable Securities" means (i) the Common Stock held by any
Holder issued or issuable pursuant to the exercise of this Warrant; (ii) any
Common Stock or other securities issued or issuable pursuant to the exercise of,
or with respect to, this Warrant held by any Holder upon any stock split, stock
dividend, recapitalization, or similar event; and (iii) securities issued in
replacement or exchange of any of the securities issued in clauses (i) or (ii)
above.
(e) "Registration Expenses" means all expenses incident to the Company's
performance of or compliance with this Agreement, including, without limitation,
all registration, filing, listing and National Association of Securities
Dealers, Inc. ("NASD") fees, all fees and expenses of complying with securities
or blue sky laws, all word processing, duplicating and printing expenses, all
messenger and delivery expenses, any transfer taxes, the fees and expenses of
the Company's legal counsel and independent public accountants, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance, reasonable fees and disbursements of one
counsel for all of the Holders acceptable to the Company in its reasonable
discretion, and any fees and disbursements of underwriters customarily paid by
issuers or sellers of securities; provided, however, that Registration Expenses
shall not include underwriting discounts and commissions.
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(f) "Securities Act" means the Securities Act of 1933, as amended, or any
successor statute thereto, and the rules and regulations of the Commission
promulgated thereunder, all as the same shall be in effect at the time.
4.2. Registration.
(a) Requested Registration. At any time on or after September 1, 2000, if
the Registrable Securities have not already been registered under the Securities
Act, upon written request by the Holders of at least 51% of the Registrable
Securities outstanding at the time of the request to the Company, that the
Company effect the registration under the Securities Act of all or part of the
Registrable Securities (a "Requested Registration"), the Company will use its
best efforts to effect the registration under the Securities Act of the
Registrable Securities which the Company has been so requested to register by
the Holders within sixty (60) days after receipt of such request; provided,
however, that the Company shall not be required to effect the registration of
less than 25% of the Vested Warrant Shares. the Company shall not be obligated
to effect more than one Requested Registration hereunder. The Company may
include in such Requested Registration other securities of the Company for sale,
for the Company's account or for the account of any other person, if and to the
extent that the managing underwriter determines that the inclusion of such
additional shares will not interfere with the orderly sale of the underwritten
securities at a price range acceptable to the requesting Holders. Upon receipt
of a written request pursuant to this subdivision (a) the Company shall promptly
give written notice of such request to all Holders, and all Holders shall be
afforded the opportunity to participate in such request. The Company will be
obligated to include in the Requested Registration such number of Registrable
Securities of any Holder joining in such request as are specified in a written
request by the Holder received by the Company within 20 days after receipt of
such written notice from the Company. Notwithstanding the foregoing, the Company
shall have no obligation to file a Requested Registration if at such time the
Holders are eligible to sell the Registrable Securities pursuant to Rule 144
under the Securities Act without volume limitation.
(b) Incidental Registration. If the Company for itself or any of its
security holders shall at any time or times after the date hereof determine to
register under the Securities Act any shares of its capital stock or other
securities (other than: (i) the registration of an offer, sale or other
disposition of securities solely to employees of, or other persons providing
services to, the Company, or any subsidiary pursuant to an employee or similar
benefit plan; or (ii) relating to a merger, acquisition or other transaction of
the type described in Rule 145 under the Securities Act or a comparable or
successor rule, registered on Form S-4 or similar or successor forms), on each
such occasion the Company will notify each Holder of such determination at least
thirty (30) days prior to the filing of such registration statement, and upon
the request of any Holder given in writing within ten (10) days after the
receipt of such notice, the Company will use its best efforts as soon as
practicable thereafter to cause any of the Registrable Securities specified by
any such Holder to be included in such registration statement to the extent such
registration is permissible under the Securities Act and subject to the
conditions of the Securities Act (an "Incidental Registration").
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(c) Registration Statement Form. The Company shall, if permitted by law,
effect any registration requested under Section 4.2 by the filing of a
registration statement on Commission Form S-3 and shall use its best efforts to
become eligible for, and thereafter to maintain its eligibility to utilize,
Commission Form S-3 to permit resales as requested by the Holders with respect
to Transactions Involving Secondary Offerings as described in General
Instruction I.B.3 of Commission Form S-3.
(d) Expenses. The Company shall pay all Registration Expenses incurred
in connection with any Incidental Registration and any Requested Registrations.
(e) Effective Registration Statement. A Requested Registration or an
Incidental Registration requested pursuant to Section 4.2(a) or Section 4.2(b),
respectively, shall not be deemed to have been effected unless it has become
effective with the Commission. Notwithstanding the foregoing, a registration
statement will not be deemed to have been effected if: (i) after it has become
effective with the Commission, such registration is interfered with by any stop
order, injunction, or other order or requirement of the Commission or other
governmental agency or any court proceeding for any reason other than a
misrepresentation or omission by any Holder; or (ii) the conditions to closing
specified in the underwriting agreement entered into in connection with such
registration are not satisfied in any material respect, other than solely by
reason of some act or omission by any Holder.
(f) Priority in Incidental Registration. If an Incidental Registration is
an underwritten registration initiated by the Company, and the managing
underwriters shall give written advice to the Company that, in their opinion,
market conditions dictate that no more than a specified maximum number of
securities (the "Underwriter's Maximum Number") could successfully be included
in such Incidental Registration, then: (i) the Company shall be entitled to
include in such registration that number of securities which the Company
proposes to offer and sell for its own account in such registration and which
does not exceed the Underwriter's Maximum Number; and (ii) the Company will be
obligated and required to include in such registration that number of shares of
Registrable Securities which shall have been requested by the Holders pro rata
with any other holder requesting to include securities in such Incidental
Registration.
If less than all of the Registrable Securities requested to be included
in any such registration by the Holders can be so included due to these priority
requirements, then each requesting Holder's request shall be granted on a pro
rata basis with the other requesting Holders.
(g) Notwithstanding anything in paragraphs (a) and (b) of this Section
4.2, the Company shall have the right to delay any registration of Registrable
Securities requested pursuant to paragraph (a) or (b) of this Section 4.2 for up
to ninety (90) days if such registration would, in the judgment of the Company's
Board of Directors, substantially interfere with any material transaction being
considered at the time of receipt of the request from the Holders.
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4.3. Registration Procedures.
(a) If and whenever the Company is required to use its best efforts to
effect the registration of any Registrable Securities under the Securities Act
as provided in Section 4.2, the Company, as expeditiously as possible and
subject to the terms and conditions of Section 4.2, will:
(i) prepare and file with the Commission the requisite
registration statement to effect such registration and use its best efforts to
cause such registration to become and remain effective;
(ii) permit any Holder which, in the reasonable judgment of the
Holder, might be deemed to be an underwriter or a controlling person of the
Company, to participate in the preparation of such registration statement and to
require the insertion therein of material relating to such Holder, furnished to
the Company in writing, which in the reasonable judgment of such Holder and its
counsel should be included;
(iii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement until the
earlier of such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such registration statement or the expiration of 90 days
after such registration statement becomes effective;
(iv) furnish to the Holders such number of conformed copies of
such registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities Act,
and such other documents, as the purchaser or any Holder of Registrable
Securities to be sold under such registration statement may reasonably request;
(v) use its best efforts to register or qualify all Registrable
Securities covered by such registration statement under such other United States
state securities or blue sky laws of such jurisdictions as any Holder of
Registrable Securities to be sold under registration statement shall reasonably
request, to keep such registration or qualification in effect for so long as
such registration remains in effect, and take any other action which may be
reasonably necessary or advisable to enable the Holder of Registrable Securities
to be sold under such registration statement to consummate the disposition in
such jurisdictions of the securities owned by such Holder, except that the
Company shall not for any such purpose be required to (a) qualify generally to
do business as a foreign corporation in any jurisdiction wherein it would not
but for the requirements of this subdivision (v) be obligated to be so
qualified, or (b) subject itself to taxation in any such jurisdiction.
13
(vi) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or approved by such
other United States state governmental agencies or authorities as may be
necessary to enable the Holder of Registrable Securities to be sold under such
registration statement to consummate the intended disposition of such
Registrable Securities;
(vii) in the event of the issuance of any stop order suspending
the effectiveness of the registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Registrable Securities included in such registration statement for sale in
any jurisdiction, the Company shall use its best efforts promptly to obtain the
withdrawal of such order;
(viii) use it best efforts to furnish to the Holders of
Registrable Securities to be sold under such registration statement (1) an
opinion, dated the effective date of the registration statement, of the
independent counsel representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and to the Holders making
such request, in such form as may be reasonably satisfactory to the Holders and
their counsel; and (2) a letter, dated the effective date of the registration
statement, from the independent certified public accountants of the Company,
addressed to the underwriters, if any, and to the Holders making such request,
stating that they are independent certified public accountants within the
meaning of the Securities Act and that in the opinion of such accountants, the
financial statements and other financial data of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereto, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act.
Such opinion of counsel shall cover such legal matters with
respect to the registration in respect of which such opinion is being given as
the Holders may reasonably request. Such letter from the independent certified
public accountants shall additionally cover such other financial matters with
respect to the registration in respect of which such letter is being given as
the Holders may reasonably request.
(ix) promptly notify the Holders of Registrable Securities
included in such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the happening
of any event as result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
under which they were made, and at the request of the Holders promptly prepare
and furnish to the Holders a reasonable number of copies of a supplement to or
an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made;
14
(x) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to the Holders, as
soon as reasonably practicable, an earnings statement covering the period of at
least twelve months, but not more than eighteen months, beginning with the first
full calendar month after the effective date of such registration statement,
which earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder, and not file any amendment or supplement
to such registration statement or prospectus to which any Holder shall have
reasonably objected in writing on the grounds that such amendment or supplement
does not comply in all material respects with the requirements of the Securities
Act or of the rules or regulations thereunder, having been furnished with a copy
thereof at least two business days prior to the filing thereof;
(xi) provide a transfer agent for all Registrable Securities
covered by such registration statement not later than the effective date of such
registration statement; and
(xii) use its best efforts to list all Registrable Securities
covered by such registration statement on any securities exchange on which any
of the Registrable Securities are then listed.
(b) The Company may require each Holder of Registrable Securities to be
sold under such registration statement, at the Company's expense, to furnish the
Company with such information and undertakings as it may reasonably request
regarding such Holder and the distribution of such securities as the Company may
from time to time reasonably request in writing.
(c) Each Holder, by execution of this Agreement, agrees (A) that upon
receipt of any notice of the Company of the happening of any event of the kind
described in subdivision (a)(ix) of this Section 4.3, such Holder will forthwith
discontinue its disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities until the receipt
by such Holder of the copies of the supplemented or amended prospectus
contemplated by subdivision (a)(ix) of this Section 4.3 and, if so directed by
the Company, will deliver to the Company all copies other than permanent file
copies, then in possession of the Holders of the prospectus relating to such
Registrable Securities current at the time of receipt of such notice and (B)
that it will immediately notify the Company, at any time when a prospectus
relating to the registration of such Registrable Securities is required to be
delivered under the Securities Act, of the happening of any event as a result of
which information previously furnished by such Holder to the Company for
inclusion in such prospectus contains an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
under which they were made. In the event the Company or any such Holder shall
give any such notice, the period referred to in subdivision (a)(iii) of this
Section 4.3 shall be extended by a number of days equal to the number of days
during the period from and including the giving of notice pursuant to
subdivision (a)(ix) of this Section 4.3 to and including the date when such
Holder shall have received the copies of the supplemented or amended prospectus
contemplated by subdivision (a)(ix) of this Section 4.3.
15
4.4. Underwritten Offerings.
(a) Underwritten Offering. In connection with any underwritten offering
pursuant to a registration requested under Section 4.2(a), the Company will
enter into an underwriting agreement with the underwriters for such offering,
such agreement to be in form and substance reasonably satisfactory to the
Holders owning at least 51% of the Registrable Securities to be registered
pursuant to such registration and such Holders' underwriters in their reasonable
judgment and to contain such representations and warranties by the Company and
such other terms as are customarily contained in agreements of that type,
including, without limitation, indemnities to the effect and to the extent
provided in Section 4.6. Each such Holder shall be a party to such underwriting
agreement and may, at its or their option, require that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of each such
Holder. No Holder requesting such registration shall be required to make any
representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements regarding such
Holder, its indemnification obligations with respect to such registration, its
intended method of distribution and any other representation required by law.
(b) Selection of Underwriters. If a Requested Registration pursuant to
Section 4.2(a) involves an underwritten offering, then the Holders of a majority
of the Registrable Securities to be included in such registration shall select
the underwriter subject to the approval of the Company (which approval shall not
be withheld or delayed unreasonably).
(c) Holdback Agreements. Each Holder agrees not to effect any public sale
or distribution of Registrable Securities or sales of such Registrable
Securities pursuant to Rule 144 or Rule 144A under the Securities Act, during
the seven (7) days prior to and the 180 days after any firm commitment
underwritten registration has become effective (except as part of such
underwritten registration) or, if the managing underwriter advises the Company
that, in its opinion, no such public sale or distribution should be effected for
a period of not more than 180 days after such underwritten registration in order
to complete the sale and distribution of securities included in such
registration and the Company gives notice to such effect to such Holders of such
advice, each Holder shall not effect any public sale or distribution of
Registrable Securities or sales of such Registrable Securities pursuant to Rule
144 or Rule 144A under the Securities Act during such period after such
underwritten registration, except as part of such underwritten registration,
whether or not such Holder participates in such registration.
4.5. Preparation, Reasonable Investigation.
In connection with the preparation and filing of each registration
statement under the Securities Act, the Company will give the Holders of
Registrable Securities to be sold under such registration statement, the
underwriters, if any, and their respective counsel and accountants, drafts and
final copies of such registration statement, each prospectus included therein or
filed with the Commission and each amendment thereof or supplement thereto, at
least 5 business days prior to the filing thereof with the Commission, 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 reasonable opinion of such Holders' and such underwriters' respective
counsel, to conduct a reasonable investigation within the meaning of the
Securities Act.
16
4.6. Indemnification and Contribution.
(a) Indemnification by the Company. In the event of any registration
under the Securities Act pursuant to Section 4.2 of any Registrable Securities
covered by such registration, the Company will, and hereby does, indemnify and
hold harmless each Holder of Registrable Securities to be sold under such
registration statement, each such Holder's legal counsel, each other person who
participates as an underwriter in the offering or sale of such securities (if so
required by such underwriter as a condition to including the Registrable
Securities of the Holders in such registration) and each other person, if any,
who controls any such Holder or any such underwriter within the meaning of the
Securities Act (collectively, the "Holder Indemnified Parties"), against any
losses, claims, damages or liabilities, joint or several, to which the Holders
or underwriter or controlling person may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
or proceedings, whether commenced or threatened, in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein or any document
incorporated therein by reference, or any amendment or supplement thereto, or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
arise out of any violation by the Company of any rule or regulation promulgated
under the Securities Act or state securities law applicable to the Company and
relating to action or inaction required of the Company in connection with any
such registration, and the Company will reimburse the Holder Indemnified Parties
for any legal or any other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, liability, action or
proceeding; provided, however, that the Company shall not be liable to any
Holder Indemnified Party in any such case to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or expense
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by such Holder Indemnified Party.
(b) Indemnification by the Holders. The Company may require, as a
condition to including any Registrable Securities of any person or entity in any
registration statement filed pursuant to Section 4.2, that the Company shall
have received an undertaking reasonably satisfactory to it from such person or
entity to indemnify and hold harmless (in the same manner and to the same extent
as set forth in subdivision (a) of this Section 4.6) the Company, each director
of the Company, each officer of the Company and each other person, if any, who
controls the Company within the meaning of the Securities Act (the "Company
Indemnified Parties"), with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if, and only if, such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with information furnished in writing to the Company directly by such
person or entity specifically for use therein; provided, however, that the
obligation of any Holder hereunder shall be limited to an amount equal to the
proceeds received by such Holder upon the sale of Registrable Securities sold in
the offering covered by such registration.
17
(c) Notices of Claims, etc. Promptly after receipt by a Holder
Indemnified Party or a Company Indemnified Party (collectively, the "Indemnified
Parties") of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this Section 4.6, such
Indemnified Party will, if a claim in respect thereof is to be made against a
party required to provide indemnification (an "Indemnifying Party"), give
written notice to the latter of the commencement of such action, provided,
however, that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligation under the
preceding subdivisions of this Section 4.6, 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 it may wish, with counsel reasonably satisfactory to such
Indemnified Party, and after notice from the Indemnifying Party to such
Indemnified Party of its election so to assume the defense thereof, the
Indemnifying Party shall not be liable to such Indemnified Party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No Indemnifying
Party shall consent to entry of any judgment or enter into any settlement
without the consent of the Indemnified Party which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) Other Indemnification. Indemnification similar to that specified in
the preceding subdivisions of this Section 4.6 (with appropriate modifications)
shall be given by the Company and each Holder of Registrable Securities included
in any registration statement 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 Securities Act.
(e) Indemnification Payment. The indemnification required by this Section
4.6 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) Survival of Obligations. The obligations of the Company and of the
Holders under this Section 4.6 shall survive the completion of any offering of
Registrable Securities under this Agreement.
(g) Contribution. If the indemnification provided for in this Section 4.6
is unavailable or insufficient to hold harmless an Indemnified Party, then each
Indemnifying Party shall contribute to the amount paid or payable to such
Indemnified Party as a result of the losses, claims, damages or liabilities
18
referred to in this Section 4.6 an amount or additional amount, as the case may
be, in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party or parties on the one hand and the Indemnified Party on the
other in connection with the statements or omissions which resulted in such
losses, claims, demands or liabilities 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 Indemnifying Party or parties on the one hand or the
Indemnified Party on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The amount paid to an Indemnified Party as a result of
the losses, claims, damages or liabilities referred to in the first sentence of
this Section 4.6(g) shall be deemed to include any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any action or claim which is the subject of this Section 4.6. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person
who was not guilty of such fraudulent misrepresentation.
4.7. Covenants Relating to Rule 144.
With a view to making available the benefits of certain rules and
regulations of the Commission which may at any time permit the sale of
securities of the Company to the public without registration after such time as
a public market exists for the Common Stock of the Company, the Company agrees:
(a) to make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times after the effective date of the first registration under the Securities
Act filed by the Company for an offering of its securities to the general
public;
(b) to use its best efforts to then file with the Commission in
a timely manner all reports and other documents required of the Company under
the Securities Act and the Exchange Act, as amended (at any time after it has
become subject to such reporting requirements); and
(c) so long as a Holder owns any Registrable Securities, to
furnish to the Holder forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of said Rule 144 (at any
time after 90 days after the effective date of the first registration statement
filed by the Company for an offering of its securities to the general public),
and of the Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements) a copy of the most recent annual or
quarterly report of the Company, and such other reports and documents of the
Company as a Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such securities
without registration.
19
4.8. Other Registration Rights.
Except for stock currently being registered pursuant to a Form S-1,
the Company represents and warrants that it has not granted any registration
rights to any Person which are more favorable than or inconsistent with any of
those contained herein. The Company shall not grant to any Person any
registration rights more favorable than or inconsistent with any of those
contained herein, so long as any of the registration rights under this Agreement
remain in effect.
ARTICLE V
ANTIDILUTION PROVISIONS
5.1. Adjustment Generally. The Exercise Price and the number of Warrant
Shares (or other securities or property) issuable upon exercise of this Warrant
shall be subject to adjustment from time to time upon the occurrence of certain
events as provided in this Article V; provided that notwithstanding anything to
the contrary contained herein, the Exercise Price shall not be less than the par
value of the Warrant Shares.
5.2. Common Stock Reorganization. If after the original issuance date of
this Warrant the Company shall subdivide its outstanding shares of Common Stock
(or any class thereof) into a greater number of shares or consolidate its
outstanding shares of Common Stock (or any class thereof) into a smaller number
of shares or declare a stock dividend on its Common Shares (any such event being
called a "Common Stock Reorganization"), then (a) the Exercise Price shall be
adjusted, effective immediately after the effective date of such Common Stock
Reorganization, to a price determined by multiplying the Exercise Price in
effect immediately prior to such effective date by a fraction, the numerator of
which shall be the number of shares of Common Stock outstanding (on a Fully
Diluted Basis) on such effective date before giving effect to such Common Stock
Reorganization, and the denominator of which shall be the number of shares of
Common Stock outstanding (on a Fully Diluted Basis) after giving effect to such
Common Stock Reorganization, and (b) the number of Warrant Shares subject to
purchase upon exercise of this Warrant shall be adjusted, effective at such
time, to a number determined by multiplying the number of Warrant Shares subject
to purchase immediately before such Common Stock Reorganization by a fraction
the numerator of which shall be the number of shares of Common Stock outstanding
(on a Fully Diluted Basis) after giving effect to such Common Stock
Reorganization, and the denominator of which shall be the number of shares of
Common Stock outstanding (on a Fully Diluted Basis) immediately before such
Common Stock Reorganization.
5.3. Capital Reorganizations. If there shall be any consolidation or merger
to which the Company is a party, other than a consolidation or a merger in which
the Company is the continuing corporation and which does not result in any
reclassification of, or change (other than a Common Stock Reorganization) in,
outstanding shares of the same class as the Warrant Shares, or any sale or
conveyance of the property of the Company as an entirety or substantially as an
entirety, or any recapitalization of the Company (any such event being called a
"Capital Reorganization"), then, effective upon the effective date of such
Capital Reorganization, the Holder shall no longer have the right to purchase
the Warrant Shares, but shall have instead the right to purchase, upon exercise
of this Warrant, the kind and amount of shares of stock and other securities and
property (including cash) which the Holder would have owned or have been
entitled to receive pursuant to such Capital Reorganization if this Warrant had
been exercised immediately prior to the effective date of such Capital
Reorganization. As a condition to effecting any Capital Reorganization, the
Company or the successor or surviving corporation, as the case may be, shall
execute and deliver to each Warrantholder and to the Company an agreement as to
the Warrantholder's rights in accordance with this Section 5.3, providing, to
the extent of any right to purchase equity securities hereunder, for subsequent
adjustments as nearly equivalent as may be practicable to the adjustments
provided for in this Article V. The provisions of this Section 5.3 shall
similarly apply to successive Capital Reorganizations.
20
5.4. Adjustment Rules. Any adjustments pursuant to this Article V shall be
made successively whenever an event referred to herein shall occur, except that
notwithstanding any other provision of this Article V, no adjustment shall be
made to the number of Warrant Shares to be delivered to each Holder (or to the
Exercise Price) if such adjustment represents less than 1% of the number of
shares previously required to be so delivered, but any lesser adjustment shall
be carried forward and shall be made at the time and together with the next
subsequent adjustment which together with any adjustments so carried forward
shall amount to 1% or more of the number of shares to be so delivered. No
adjustment shall be made pursuant to this Article V in respect of the issuance
from time to time of Warrant Shares upon the exercise of any of this Warrant. If
the Company shall take a record of the holders of its shares of the same class
as the Warrant Shares for any purpose referred to in this Article V, then such
record date shall be deemed to be the date of the issuance, sale, distribution
or grant in question unless the Company shall legally abandon such action prior
to effecting such action, in which case no adjustment shall be made pursuant to
this Article V in respect of such action.
5.5. Proceedings Prior to Any Action Requiring Adjustment. As a condition
precedent to the taking of any action which would require an adjustment pursuant
to this Article V, the Company shall use its best efforts to take any action
which may be necessary, including obtaining regulatory approvals or exemptions,
in order that the Company may thereafter validly and legally issue as fully paid
and nonassessable all Warrant Shares which the Holder is entitled to receive
upon exercise thereof.
5.6. Notice of Adjustment. Not less than 10 nor more than 30 days prior to
the record date or effective date, as the case may be, of any action which will
require an adjustment or readjustment pursuant to this Article V, the Company
shall give notice to each Warrantholder of such event, describing such event in
reasonable detail and specifying the record date or effective date, as the case
may be, and, if determinable, the required adjustment and the computation
thereof. If the required adjustment is not determinable at the time of such
notice, the Company shall give notice to each Warrantholder of such adjustment
and computation promptly after such adjustment becomes determinable.
ARTICLE VI
DEFINITIONS
The following terms, as used in this Warrant, have the following meanings:
21
"Business Day" means any day excluding Saturday, Sunday and any day on
which banking institutions located in New York are authorized by law or other
governmental action to be closed, unless there shall have been an offering of
Common Stock registered under the Securities Act, in which case "Business Day"
means (a) if Common Stock is listed or admitted to trading on a national
securities exchange, a day on which the principal national securities exchange
on which the Common Stock is listed or admitted to trading is open for business
or (b) if Common Stock is not so listed or admitted to trading, a day on which
the New York Stock Exchange is open for business.
"Capital Reorganization" has the meaning set forth in Section 5.3.
"Change of Control Event" means the occurrence of any of the following: (i)
the acquisition of voting securities of the Company by any person or group of
persons that results in such person or group, together with its affiliates,
becoming, directly or indirectly, the beneficial owner of in excess of 50% of
the outstanding voting securities of the Company; (ii) a merger or consolidation
of the Company with any other corporation or legal entity regardless of which
entity is the survivor, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or being converted into
voting securities of the surviving entity) in excess of 50% of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation; or (iii) the sale or disposition of all or
substantially all of the Company's assets other than in a transaction in which
holders of the voting securities of the Company immediately prior to such
transaction receive voting securities of the acquiror of such assets or its
affiliate that represent in excess of 50% of the voting securities of such
entity after consummation of such transaction.
"Common Stock" means the Company's Common Stock, no par value per share.
"Common Stock Reorganization" has the meaning set forth in Section 5.2.
"Company" has the meaning set forth in the first paragraph of this Warrant.
"Exercise Price" means the applicable exercise price set forth in the first
paragraph of this Warrant.
"Fully Diluted Basis" means at any time: (i) as applied to any calculation
of the number of securities of the Company after giving effect to (x) all shares
of Company Common Stock outstanding at the time of determination, whether or not
vested, (y) all shares of the Company Common Stock issuable upon the exercise of
any option, warrant (including the Warrant) or similar right outstanding at the
time of determination, whether or not vested, and (z) all shares of Common Stock
of the Company issuable upon the exercise of any conversion or exchange right
contained in any security (other than Common Stock) convertible into or
exchangeable for shares of Common Stock of the Company and (ii) as applied to
any calculation of value, after giving effect to the foregoing securities and
the payment of any consideration payable upon the exercise of any option,
warrant or similar right referred to in clause (y) above if such option, warrant
or similar right were exercisable at such time.
22
"Person" means any natural person, corporation, limited partnership,
general partnership, joint stock company, joint venture, association, company,
trust, bank, trust company, land trust, business trust or other organization,
whether or not a legal entity, and any government agency or political
subdivision thereof.
"Vested Warrant Shares" has the meaning set forth in Section 1.1.
"Warrant Agreement" has the meaning set forth in Section 3.1.
"Warrant" means this Warrant.
"Warrantholder" means a holder of a Warrant.
"Warrant Shares" means the shares of Common Stock issuable upon the
exercise of the Warrant.
ARTICLE VII
MISCELLANEOUS
7.1. Notices. Notices and other communications provided for herein shall be
in writing and may be given by mail, courier, confirmed telex or facsimile
transmission and shall, unless otherwise expressly required, be deemed given
when received or, if mailed, four Business Days after being deposited in the
United States mail with postage prepaid and properly addressed. In the case of
the Holder, such notices and communications shall be addressed to its address as
shown on the books maintained by the Company unless the Holder shall notify the
Company that notices and communications should be sent to a different address
(or telex or facsimile number), in which case such notices and communications
shall be sent to the address (or telex or facsimile number) specified by the
Holder.
7.2. Waivers; Amendments. No failure or delay of the Holder in exercising
any power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. No notice
or demand on the Company in any case shall entitle the Company to any other or
future notice or demand in similar or other circumstances. The rights and
remedies of the Holder are cumulative and not exclusive of any rights or
remedies which it would otherwise have. The provisions of this Warrant may be
amended, modified or waived with (and only with) the written consent of the
Company and the holder of this Warrant. The provisions of the Warrant Agreement
may be amended, modified or waived only in accordance with the respective
provisions thereof. Any such amendment, modification or waiver effected pursuant
to and in accordance with the provisions of this Section or the applicable
provisions of the Warrant Agreement shall be binding upon the holders of the
Warrant and Warrant Shares, upon each future holder thereof and upon the
Company. In the event of any such amendment, modification or waiver the Company
shall give prompt notice thereof to all holders of the Warrant and Warrant
Shares and, if appropriate, notation thereof shall be made on the Warrant
thereafter surrendered for registration of transfer or exchange.
23
7.3. GOVERNING LAW. THIS WARRANT SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF PENNSYLVANIA (WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW).
7.4. Covenants to Bind Successor and Assigns. The provisions of this
Warrant shall be binding upon and inure to the benefit of the Holder hereof and
its permitted successors and assigns. All covenants, stipulations, promises and
agreements in this Warrant contained by or on behalf of the Company or the
Holder shall bind its successors and assigns, whether so expressed or not.
24
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed in
its corporate name by one of its officers thereunto duly authorized as of the
day and year first above written.
ENTRADE INC.
By: _________________________________________
Title:
Schedule 1.1
The Warrant Shares shall vest as follows:
250,000 Shares Upon the date of this Warrant
187,500Shares When "Gross Asset Disposition Value"
(as defined below) reaches $6.25
million; provided, however, that if the
Gross Asset Disposition Value has not
reached $6.25 million on or prior to
March 9, 2003, such shares shall not
vest and shall be forfeited by the
Holder.
187,500 Shares When Gross Asset Disposition Value
reaches $12.5 million; provided,
however, that if the Gross Asset
Disposition Value has not reached $12.5
million on or prior to March 9, 2003,
such shares shall not vest and shall be
forfeited by the Holder.
187,500 Shares When Gross Asset Disposition Value
reaches $18.75 million; provided,
however, that if the Gross Asset
Disposition Value has not reached
$18.75 million on or prior to March 9,
2003, such shares shall not vest and
shall be forfeited by the Holder.
187,500 Shares When Gross Asset Disposition Value
reaches $25 million; provided, however,
that if the Gross Asset Disposition
Value has not reached $25 million on or
prior to March 9, 2003, such shares
shall not vest and shall be forfeited
by the Holder.
For purposes of this warrant, the term "Gross Asset Disposition Value" means the
cumulative sum of the gross sales price (actual or imputed) invoiced or sourced
(including inventory or other asset sales facilitated through the application of
XxxxxXxxxxxx.xxx's software) by XxxxxXxxxxxx.xxx, LLC or any XxxxxXxxxxxx.xxx
fulfillment partner. For convenience, Gross Asset Disposition Value shall be
measured monthly.
ANNEX A FORM OF NOTICE OF
EXERCISE
To: Entrade Inc.
Date: ___________________
Reference is made to the Warrant to Purchase Shares of Common Stock of Entrade
Inc. (Warrant No.[]) dated March 9 2000, registered in the name of the
undersigned (the "Warrant"). Terms defined therein are used herein as therein
defined.
The undersigned, pursuant to the provisions set forth in the Warrant, hereby
represents that he, she or it is the registered Holder of the Warrant, and
hereby irrevocably elects and agrees to purchase ________ shares (such sum being
an integral multiple of 10,000) of Common Stock and herewith makes payment in
full for such shares at the Exercise Price of $__________ per share in the form
set forth below. The undersigned requests that a certificate for such shares be
registered in the name of the undersigned or his, her or its nominee set forth
below, and further that such certificate be delivered to the undersigned at the
address set forth below or to such other person as is set forth below.
If said number of shares is less than all of the shares purchasable hereunder,
the undersigned hereby requests that a new Warrant certificate representing the
remaining balance of the shares be registered in the name of the undersigned or
his, her or its nominee set forth below, and further that such certificate be
delivered to the address set forth below.
The undersigned represents and warrants that the undersigned is acquiring the
shares of Common Stock by such exercise for investment only and not with any
intent to sell, distribute or dispose of the same and the undersigned agrees not
to sell, distribute, encumber or dispose of the Common Stock, except (i)
pursuant to a registration statement filed and rendered effective with respect
to the Common Stock or (ii) pursuant to an opinion of counsel acceptable to the
Company or other evidence satisfactory to the Company that such action may be
taken without compliance with federal or state registration requirements, which
opinion or other evidence shall be obtained at the cost of the Holder.
Certificate for shares of Common Stock
to be registered and delivered as follows:
Name: _______________________________
Address: ____________________________
____________________________
Social Security or Tax I.D. No. ______________
Signature
Name:____________________________
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