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EXHIBIT 4.3
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THIS WARRANT MAY NOT BE SOLD OR
TRANSFERRED, EXCEPT UPON SUCH REGISTRATION OR UPON DELIVERY TO MAKER OF AN
OPINION OF COUNSEL SATISFACTORY TO MAKER THAT REGISTRATION IS NOT REQUIRED FOR
SUCH SALE OR TRANSFER. IN ADDITION, FOR A PERIOD OF NINE MONTHS FROM THE DATE OF
THE LAST SALE BY THESE WARRANTS, ALL RESALES OF THE WARRANTS, BY ANY PERSON,
SHALL BE MADE ONLY TO PERSONS RESIDENT WITHIN THE STATE OF NEVADA.
XXXXXX INCORPORATED
Warrant for the Purchase of Shares of Common Stock
No. _____ _______ Shares
FOR VALUE RECEIVED, Xxxxxx Incorporated, a Nevada corporation
(the "Company"), hereby certifies that __________________ or its permitted
assigns, is entitled to purchase from the Company, at any time or from time to
time during the Exercise Period (as hereinafter defined)
_________________________________________________________ (_______) fully paid
and non-assessable shares of the common stock, $.001 par value per share, of the
Company for an aggregate purchase price of $_______ (computed on the basis of $
* per share). As used herein, Exercise Period shall mean the period commencing
on the date the Company's independent auditors determine that the Company has
achieved "after tax net income" of not less than $7.4 million for the year
ending December 31, 1997 and aggregate "after tax net income" of not less than
$18.4 million for the year ending December 31, 1997 and 1998 (the "Commencement
Date") and ending on 5:00 p.m., Las Vegas time on the fifth anniversary of the
Commencement Date. As used herein, "after tax net income" for any year shall
mean the amount presented as net income on the Company's audited Combined
Statement of Income calculated in accordance with generally accepted accounting
principles and in a manner consistent with the calculation of net income in the
Company's audited Combined Statement of Income for the year ended December 31,
1996 ("1996 Income Statement"); provided, however, that in calculating "after
tax net income" for purposes of this Agreement (i) provision for income taxes
shall be made at the federal, state and local rates in effect for 1996 and
utilized in the 1996 Income Statement and (ii) any expenses related to the
Warrants charged against the Company's income before provision for income taxes
shall be added back. Hereinafter, (i) said common stock, together with any other
equity securities which may be issued by the Company with respect thereto or in
substitution therefor, is referred to as the "Common Stock," (ii) the shares of
the Common Stock purchasable hereunder or under any other Warrant (as
hereinafter defined) are referred to individually as a "Warrant Share" and
collectively as the "Warrant Shares," (iii) the aggregate purchase price payable
for the Warrant Shares hereunder is referred to as the "Aggregate Warrant
Price," (iv) the price payable for each of the Warrant Shares hereunder is
referred to as the "Per Share Warrant Price," (v) this Warrant,
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* Amount to be 120% of the per share initial public offering price.
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all similar Warrants issued on the date hereof and all Warrants hereafter issued
in exchange or substitution for this Warrant or such similar Warrants are
referred to as the "Warrants", and (vi) the holder of this Warrant is referred
to as the "Holder" and the holder of this Warrant and all other Warrants or
Warrant Shares issued upon the exercise of any Warrant are referred to as the
"Holders." The Aggregate Warrant Price is not subject to adjustment. The Per
Share Warrant Price is subject to adjustment as hereinafter provided, and in the
event of any such adjustment, the number of Warrant Shares shall be adjusted to
equal the number determined by dividing the Aggregate Warrant Price by the Per
Share Warrant Price in effect immediately after such adjustment.
1. Exercise of Warrant. (a) This Warrant may be
exercised in whole at any time or in part from time to time, during the Exercise
Period, by the Holder by the surrender of this Warrant (with the subscription
form at the end of this Warrant duly executed) at the address set forth in
Section 10(a) hereof, together with proper payment of the Aggregate Warrant
Price, or the proportionate part thereof if this Warrant is exercised in part.
Payment for Warrant Shares shall be made by certified or official bank check
payable to the order of the Company. If this Warrant is exercised in part, this
Warrant must be exercised for a number of whole shares of the Common Stock, and
the Holder is entitled to receive a new Warrant covering the Warrant Shares in
respect of which this Warrant has not been exercised and setting forth the
proportionate part of the Aggregate Warrant Price applicable to such Warrant
Shares. Upon such exercise and surrender of this Warrant, the Company will (i)
issue a certificate or certificates in the name of the Holder for the largest
number of whole shares of the Common Stock to which the Holder shall be entitled
and, if this Warrant is exercised in whole, in lieu of any fractional share of
the Common Stock to which the Holder shall be entitled, pay to the Holder cash
in an amount equal to the fair value of such fractional share (determined in
such reasonable manner as the Board of Directors of the Company shall determine)
and (ii) deliver the other securities and properties receivable upon the
exercise of this Warrant, or the proportionate part thereof if this Warrant is
exercised in part, pursuant to the provisions of this Warrant.
(b) In lieu of exercising this Warrant in the manner
set forth in Section 1(a) above, this Warrant may be exercised in whole at any
time or in part from time to time during the Exercise Period, by the Holder by
surrendering the Warrant at the address set forth in Section 10(a) hereof,
without payment of any other consideration, commission or remuneration, together
with the subscription form at the end of this Warrant, duly executed. The number
of shares of the Common Stock to be issued by the Company shall be calculated
using the following formula:
X = Y(A-B)
------
A
Where X = the number of shares of the Common
Stock to be issued to the Holder
Y = the number of shares of the
Common Stock purchasable under
this Warrant or, if this
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Warrant is being exercised in part,
under the portion of the Warrant
being exercised (at the date of the
surrender of this Warrant and the
subscription form)
A = the Market Price (at the date of the
surrender of this Warrant and the
subscription form)
B = the Per Share Warrant Price (as
adjusted to the date of the
surrender of this Warrant and the
subscription form)
If this Warrant is exercised in part pursuant to this Section 1(b), this Warrant
must be exercised for a number of whole shares of the Common Stock, and the
Holder is entitled to receive a new Warrant covering the Warrant Shares in
respect of which this Warrant has not been exercised and setting forth the
proportionate part of the Aggregate Warrant Price applicable to such Warrant
Shares. Upon such exercise and surrender of this Warrant, the Company will (i)
issue a certificate or certificates in the name of the Holder for the largest
number of whole shares of the Common Stock to which the Holder shall be entitled
and, if this Warrant is exercised in whole, in lieu of any fractional share of
the Common Stock to which the Holder shall be entitled, pay cash equal to the
fair value of such fractional share (determined in such reasonable manner as the
Board of Directors of the Company shall determine) and (ii) deliver the other
securities and properties receivable upon the exercise of this Warrant, or the
proportionate part thereof if this Warrant is exercised in part, pursuant to the
provisions of this Warrant.
(c) The market price of a share of the Common Stock
(the "Market Price") on any date of determination shall be (i) the last reported
sale price per share of the Common Stock on the business day immediately
preceding the date of determination as reported on the Nasdaq National Market
(the "National Market"), or (ii) if there is no such reported sale on the date
in question, the average of the closing bid and asked quotations as so reported
on the National Market, or (iii) if the Common Stock is not then listed on the
National Market, the last reported sale price per share of the Common Stock on
such national securities exchange upon which the Common Stock is then listed, or
(iv) if the Common Stock is not then listed on any national securities exchange,
the average of the closing bid and asked quotations in the over-the-counter
market as reported by Nasdaq, or if not so reported, as reported by the National
Quotations Bureau or a similar organization. In the absence of such quotations,
the Board of Directors of the Company shall determine in good faith the fair
market value per share of the Common Stock, which shall for these purposes be
deemed to be the Market Price, which determination shall be set forth in a
certificate executed by an officer of the Company showing the facts upon which
the Market Price is based.
2. Reservation of Warrant Shares; Listing. The Company agrees
that, prior to the expiration of this Warrant, the Company will at all times (a)
have authorized and in reserve, and will keep available, solely for issuance or
delivery upon the exercise of this Warrant, the shares of the Common Stock and
other securities and properties as from time to time shall be receivable upon
the exercise of this Warrant, free and clear
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of all restrictions on sale or transfer (other than restrictions imposed
hereunder or under applicable securities laws) and free and clear of all
preemptive rights and rights of first refusal and (b) if the Company hereafter
lists the Common Stock on any national securities exchange, keep the shares of
the Common Stock receivable upon the exercise of this Warrant authorized for
listing on such exchange upon notice of issuance.
3. Protection Against Dilution. (a) If, at any time or
from time to time after the date of this Warrant, the Company shall issue or
distribute to the holders of shares of the Common Stock (i) securities, other
than shares of the Common Stock, or (ii) property, other than cash, without
payment therefor, with respect to the Common Stock, then, and in each such case,
the Holder, upon the exercise of this Warrant, shall be entitled to receive the
securities and property which the Holder would hold on the date of such exercise
if, on the date of this Warrant, the Holder had been the holder of record of the
number of shares of the Common Stock subscribed for upon such exercise and,
during the period from the date of this Warrant to and including the date of
such exercise, had retained such shares and the securities and properties
receivable by the Holder during such period. Notice of each such distribution
shall be forthwith mailed to the Holder.
(b) If, at any time or from time to time after the
date of this Warrant, the Company shall (i) pay a dividend or make a
distribution on its capital stock in shares of the Common Stock, (ii) subdivide
its outstanding shares of the Common Stock into a greater number of shares,
(iii) combine its outstanding shares of the Common Stock into a smaller number
of shares or (iv) issue by reclassification of the Common Stock any shares of
capital stock of the Company, the Per Share Warrant Price shall be adjusted so
that the Holder upon the exercise hereof shall be entitled to receive the number
of shares of the Common Stock or other capital stock of the Company which the
Holder would have owned immediately following such action had such Warrant been
exercised immediately prior thereto. An adjustment made pursuant to this Section
3(b) shall become effective immediately after the record date in the case of a
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or reclassification.
(c) Except as provided in Section 3(f), in case
the Company shall hereafter issue or sell any shares of the Common Stock for a
consideration per share less than the then current Market Price in effect
immediately prior to the date of such issuance or sale, the Per Share Warrant
Price shall be adjusted as of the date of such issuance or sale so that the same
shall equal the price determined by dividing (i) the sum of (A) the number of
shares of the Common Stock outstanding immediately prior to such issuance or
sale multiplied by the Per Share Warrant Price plus (B) the consideration
received by the Company upon such issuance or sale by (ii) the total number of
shares of the Common Stock outstanding after such issuance or sale. Except as
provided in Section 3(f), in case the Company shall hereafter issue or sell any
rights, options, warrants or securities convertible into the Common Stock
entitling the holders thereof to purchase the Common Stock or to convert such
securities into the Common Stock at a price per share (determined by dividing
(i) the total amount, if any, received or receivable by the Company in
consideration of the issuance or sale of such rights, options, warrants or
convertible securities plus the total consideration, if any, payable to the
Company upon exercise or conversion thereof (the "Total Consideration") by (ii)
the number of additional shares of the Common Stock
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issuable upon exercise or conversion of such securities) less than the then
current Market Price in effect on the date of such issuance or sale, the Per
Share Warrant Price shall be adjusted as of the date of such issuance or sale so
that the same shall equal the price determined by dividing (i) the sum of (A)
the number of shares of the Common Stock outstanding on the date of such
issuance or sale multiplied by the Per Share Warrant Price plus (B) the Total
Consideration by (ii) the number of shares of the Common Stock outstanding on
the date of such issuance or sale plus the maximum number of additional shares
of the Common Stock issuable upon exercise or conversion of such securities. No
adjustment in the Per Share Warrant Price shall be required in the case of (i)
the issuance of up to 1,054,410 shares of the Common Stock upon the exercise of
options and warrants outstanding or issuable on the date hereof as described in
the Company's Registration Statement on Form S-1, Registration No. ____, as
declared effective by the Securities and Exchange Commission on ___________,
1997, (ii) the issuance by the Company of the Common Stock pursuant to the
exercise of any Warrant or (iii) the issuance by the Company of any shares of
the Common Stock pursuant to the exercise of the over-allotment option granted
in the Underwriting Agreement, dated ________, 1997, by and between the Company
and Ladenburg Xxxxxxxx & Co. Inc. and Xxxxxx, Xxxxxxxx & Company Incorporated,
as representatives of the several underwriters named therein.
(d) In case of any consolidation or merger to
which the Company is a party other than a merger or consolidation in which the
Company is the continuing corporation, or in case of any sale or conveyance to
another entity of the property of the Company as an entirety or substantially as
an entirety, or in the case of any statutory exchange of securities with another
entity (including any exchange effected in connection with a merger of another
corporation with the Company), the Holder of this Warrant shall have the right
thereafter to receive on the exercise of this Warrant the kind and amount of
securities, cash or other property which the Holder would have owned or have
been entitled to receive immediately after such consolidation, merger, statutory
exchange, sale or conveyance had this Warrant been exercised immediately prior
to the effective date of such consolidation, merger, statutory exchange, sale or
conveyance and, in any such case, if necessary, appropriate adjustment shall be
made in the application of the provisions set forth in this Section 3 with
respect to the rights and interests thereafter of the Holder of this Warrant to
the end that the provisions set forth in this Section 3 shall thereafter
correspondingly be made applicable, as nearly as may reasonably be, in relation
to any shares of stock or other securities or property thereafter deliverable on
the exercise of this Warrant. In the event of a merger described in Section
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended, in which the
Company is the surviving corporation, the right to purchase Warrant Shares
pursuant to the Warrants shall terminate on the date of such merger and
thereupon the Warrants shall become null and void, but only if the controlling
corporation shall agree to substitute for the Warrants its warrant which
entitles the holder thereof to purchase upon its exercise the kind and amount of
shares and other securities and property which it would have owned or been
entitled to receive had the Warrants been exercised immediately prior to such
merger. The above provisions of this Section 3(d) shall similarly apply to
successive consolidations, mergers, statutory exchanges, sales or conveyances.
The issuer of any shares of stock or other securities or property thereafter
deliverable on the exercise of this Warrant shall be responsible for all of the
agreements and obligations of the Company hereunder. Notice of any such
consolidation, merger, statutory exchange, sale or conveyance and of said
provisions so
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proposed to be made, shall be mailed to the Holders of the Warrants not less
than 10 days prior to such event. A sale of all or substantially all of the
assets of the Company for a consideration consisting primarily of securities
shall be deemed a consolidation or merger for the foregoing purposes.
(e) In case any event shall occur as to which
the other provisions of this Section 3 are not strictly applicable but as to
which the failure to make any adjustment would not fairly protect the purchase
rights represented by this Warrant in accordance with the essential intent and
principles hereof, then, in each such case, if the Holders of Warrants
representing the right to purchase a majority of the Warrant Shares subject to
all outstanding Warrants and the Company are unable to agree on an appropriate
adjustment, such Holders of Warrants representing the rights to purchase a
majority of the Warrant Shares subject to all outstanding Warrants may appoint a
firm of independent public accountants of recognized national standing
reasonably acceptable to the Company, which may be the Company's regular
accounting firm which shall give their opinion as to the adjustment, if any, on
a basis consistent with the essential intent and principles established herein,
necessary to preserve the purchase rights represented by the Warrants. Upon
receipt of such opinion, the Company will promptly mail a copy thereof to the
Holder of this Warrant and shall make the adjustments described therein. The
fees and expenses of such independent public accountants shall be borne by the
Company if the Company's regular accounting firm is retained to provide such
opinion or the Holders of the Warrants if any accounting firm other than the
Company's regular accounting firm is retained to provide such opinion.
(f) No adjustment in the Per Share Warrant Price
shall be required unless such adjustment would require an increase or decrease
of at least $0.05 per share of the Common Stock; provided, however, that any
adjustments which by reason of this Section 3(f) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment;
provided further, however, that adjustments shall be required and made in
accordance with the provisions of this Section 3 (other than this Section 3(f))
not later than such time as may be required in order to preserve the tax-free
nature of a distribution to the Holder of this Warrant or the Common Stock
issuable upon exercise hereof. All calculations under this Section 3 shall be
made to the nearest cent or to the nearest 1/100th of a share, as the case may
be. Anything in this Section 3 to the contrary notwithstanding, the Company
shall be entitled to make such reductions in the Per Share Warrant Price, in
addition to those required by this Section 3, as it in its discretion shall deem
to be advisable in order that any stock dividend, subdivision of shares or
distribution of rights to purchase stock or securities convertible or
exchangeable for stock hereafter made by the Company to its stockholders shall
not be taxable.
(g) Whenever the Per Share Warrant Price is
adjusted as provided in this Section 3 and upon any modification of the rights
of a Holder of Warrants in accordance with this Section 3, the Company shall
promptly prepare a notice of such adjustment and a certificate of the chief
financial officer of the Company setting forth the Per Share Warrant Price and
the number of Warrant Shares after such adjustment or the effect of such
modification, a brief statement of the facts requiring such adjustment or
modification and the manner of
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computing the same, and cause copies of such certificate to be mailed to the
Holders of the Warrants.
(h) If the Board of Directors of the Company
shall (i) declare any dividend or other distribution with respect to the Common
Stock, other than a cash dividend payable otherwise than out of earnings or
earned surplus, (ii) offer to the holders of shares of the Common Stock any
additional shares of the Common Stock, any securities convertible into or
exercisable for shares of the Common Stock or any rights to subscribe thereto or
(iii) propose a dissolution, liquidation or winding up of the Company, the
Company shall mail notice thereof to the Holders of the Warrants not less than
10 days prior to the record date fixed for determining stockholders entitled to
participate in such dividend, distribution, offer or subscription right or to
vote on such dissolution, liquidation or winding up.
(i) Upon the expiration of any rights, options,
warrants or conversion privileges, if such shall not have been exercised, the
number of Warrant Shares purchasable upon exercise of the Warrants, to the
extent the Warrants have not then been exercised, shall, upon such expiration,
be readjusted and shall thereafter be such as they would have been had they been
originally adjusted (or had the original adjustment not been required, as the
case may be) on the basis of (A) the fact that the only shares of Common Stock
so issued were the shares of Common Stock, if any, actually issued or sold upon
the exercise of such rights, options, warrants or conversion privileges, and (B)
the fact that such shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise plus the
consideration, if any, actually received by the Company for the issuance, sale
or grant of all such rights, options, warrants or conversion privileges whether
or not exercised; provided, however, that no such readjustment shall have the
effect of decreasing the number of Warrant Shares purchasable upon exercise of
the Warrants by an amount in excess of the amount of the adjustment initially
made in respect of the issuance, sale or grant of such rights, options, warrants
or conversion privileges.
(j) Except as provided in this Section 3, no
adjustment in respect of any dividends or distributions out of earnings shall be
made during the term of the Warrants or upon the exercise of the Warrants.
(k) If, as a result of an adjustment made
pursuant to this Section 3, the Holder of any Warrant thereafter surrendered for
exercise shall become entitled to receive shares of two or more classes of
capital stock or shares of the Common Stock and other capital stock of the
Company, the Board of Directors of the Company (whose determination shall be
conclusive and shall be described in a written notice to the Holder of any
Warrant promptly after such adjustment) shall determine the allocation of the
adjusted Per Share Warrant Price between or among shares or such classes of
capital stock or shares of the Common Stock and other capital stock and any
subsequent adjustments made pursuant to this Section 3 shall apply equally to
each such resulting class of capital stock.
4. Fully Paid Stock; Taxes. The Company agrees that the shares
of the Common Stock represented by each and every certificate for Warrant Shares
delivered on the
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exercise of this Warrant shall, at the time of such delivery, be validly issued
and outstanding, fully paid and nonassessable, and not subject to preemptive
rights, rights of first refusal or other contractual rights to purchase
securities of the Company, and the Company will take all such actions as may be
necessary to assure that the par value or stated value, if any, per share of the
Common Stock is at all times equal to or less than the then Per Share Warrant
Price. The Company further covenants and agrees that it will pay, when due and
payable, any and all federal and state stamp, original issue or similar taxes
which may be payable in respect of the issuance of any Warrant Share or
certificate therefor.
5. Registration Under Securities Act of 1933.
(a) If the Holders of the Warrants and holders
of the Warrant Shares have not been previously offered the opportunity, pursuant
to Section 5(b) hereof, to include all of such securities in a registration
statement which was subsequently declared effective, the Company agrees that if,
at any time during the Exercise Period, (i) the Holders of any Warrants and
Warrant Shares who or which shall hold, collectively, not less than 50% of the
Warrants and/or Warrant Shares outstanding at such time shall request that the
Company file a registration statement under the Securities Act of 1933, as
amended (the "Act"), covering more than 50% of the Warrant Shares issued or
issuable upon the exercise of the Warrants, the Company will (i) promptly notify
each Holder of the Warrants and each holder of Warrant Shares that such
registration statement will be filed and that the Warrant Shares which are then
held, or may be acquired upon exercise of the Warrants by the Holder and such
Holders, will be included in such registration statement at the Holder's and
such Holders' request, (ii) cause such registration statement to cover all
Warrant Shares which it has been so requested to include, (iii) use its best
efforts to cause such registration statement to become effective as soon as
practicable and (iv) take all other action necessary under any federal or state
law or regulation of any governmental authority to permit all Warrant Shares
which it has been so requested to include in such registration statement to be
sold or otherwise disposed of, and will maintain such compliance with each such
federal and state law and regulation of any governmental authority for the
period, but in no event to exceed nine months, necessary for such Holders to
effect the proposed sale or other disposition. The Company shall be required to
effect a registration or qualification pursuant to this Section 5(a) on one
occasion only.
(b) The Company agrees that if, at any time and
from time to time during the Exercise Period, the Board of Directors of the
Company shall authorize the filing of a registration statement (any such
registration statement being hereinafter called a "Subsequent Registration
Statement") under the Act (otherwise than pursuant to Section 5(a) hereof, and
other than a registration statement on Form S-8 or other form which does not
permit secondary sales or include substantially the same information as would be
required in a form for the general registration of securities) in connection
with the proposed offer of any of its securities by it or any of its
stockholders, the Company will (i) promptly notify each Holder of the Warrants
and each holder of Warrant Shares not previously sold pursuant to this Section
5(b) that such Subsequent Registration Statement will be filed and that the
Warrant Shares which are then held, and which may be acquired upon the exercise
of the Warrants, by the Holder and such Holders, will, at the Holder's and such
Holders' request, be included in such Subsequent Registration
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Statement, (ii) upon the written request of a Holder made within 10 days after
the giving of such notice by the Company, include such request therefor setting
forth the facts with respect to such proposed disposition and all other
information with respect to such person reasonably necessary to be included in
such Subsequent Registration Statement, in the securities covered by such
Subsequent Registration Statement all Warrant Shares which it has been so
requested to include, (iii) use its best efforts to cause such Subsequent
Registration Statement to become effective as soon as practicable and (iv) take
all other action necessary under any federal or state law or regulation of any
governmental authority to permit all Warrant Shares which it has been so
requested to include in such Subsequent Registration Statement to be sold or
otherwise disposed of, and will maintain such compliance with each such federal
and state law and regulation of any governmental authority for the period, but
in no event to exceed nine months, necessary for the Holder and such Holders to
effect the proposed sale or other disposition. In the event that the managing
underwriter for any such offering advises the Company in writing that the
inclusion of all or any portion of such securities in the offering would be
detrimental to the offering, such securities shall not be included in the
Subsequent Registration Statement; provided, however, that if any securities
held by persons with similar registration rights are to be included in the
Subsequent Registration Statement, the Warrant Shares which have been requested
to be so included shall be included on a pro rata basis.
(c) Whenever the Company is required pursuant to
the provisions of this Section 5 to include Warrant Shares in a registration
statement or a post-effective amendment to a registration statement, the Company
shall (i) furnish each Holder of any such Warrant Shares and each underwriter of
such Warrant Shares with such copies of the prospectus, including the
preliminary prospectus, conforming to the Act (and such other documents as each
such Holder or each such underwriter may reasonably request) in order to
facilitate the sale or distribution of the Warrant Shares, (ii) use its best
effort to register or qualify such Warrant Shares under the blue sky laws (to
the extent applicable) of such jurisdiction or laws (to the extent applicable)
of such jurisdiction or jurisdictions as the Holders of any such Warrant Shares
and each underwriter of Warrant Shares being sold by such Holders shall
reasonably request and (iii) take such other actions as may be reasonably
necessary or advisable to enable such Holders and such underwriters to
consummate the sale or distribution in such jurisdiction or jurisdictions in
which such Holders shall have reasonably requested that the Warrant Shares be
sold, including entering into an underwriting agreement in customary form for
transactions of this nature.
(d) The Company shall pay all expenses incurred
in connection with any registration or other action pursuant to the provisions
of this Section 5, including reasonable out-of-pocket expenses of the Holder(s)
of the Warrant Shares covered by such registration incurred in connection with
such registration or other action, other than (i) underwriting discounts and
applicable transfer taxes relating to the Warrant Shares and (ii) attorneys'
fees of the Holders.
(e) If any Holder of Warrants or holder of
Warrant Shares shall be entitled to registration of any Warrant or Warrant
Shares as provided in this Section 5 and so request, in lieu of such
registration the Company shall have the right, for a period of 60 days following
such request, to purchase or cause to be purchased all of the securities to
which such
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request for registration pertains, at the Current Market Price (as defined in
Section 1(c)) less the Per Share Warrant Price, if any, of the Warrants or
Warrant Shares otherwise entitled to such registration.
(f) The Company shall not be required by this
Section 5 to file any such registration statement if, in the opinion of counsel
for the Company, the proposed public offering or other transfer as to which such
registration statement is requested is exempt from applicable federal and state
securities laws and will result in all purchasers or transferees obtaining
securities which are not "restricted securities" as defined in Rule 144 under
the Act.
6. Indemnification.
(a) The Company agrees to indemnify and hold
harmless each selling holder (including, for purposes of this Section 6, any
Holder) of Warrant Shares and each person who controls any such selling holder
within the meaning of Section 15 of the Act, and each and all of them ("Holder
Indemnified Parties"), from and against any and all losses, claims, damages,
liabilities or actions, joint or several, to which any selling holder of Warrant
Shares or they or any of them may become subject under the Act or otherwise and
to reimburse the persons indemnified above for reasonable legal or other
expenses (including the cost of any investigation and preparation) incurred by
them in connection with any litigation or threatened litigation, whether or not
resulting in any liability, but only insofar as such losses, claims, damages,
liabilities or actions arise out of, or are based upon, (i) any untrue statement
or alleged untrue statement of a material fact contained in any registration
statement pursuant to which Warrant Shares were registered under the Act
(hereinafter called a "Registration Statement"), any preliminary prospectus, the
final prospectus or any amendment or supplement thereto (or in any application
or document filed in connection therewith) or document executed by the Company
based upon written information furnished by or on behalf of the Company filed in
any jurisdiction in order to register or qualify the Warrant Shares under the
securities laws thereof or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or (ii) the employment by the Company of any device, scheme or
artifice to defraud, or the engaging by the Company in any act, practice or
course of business which operates or would operate as a fraud or deceit, or any
conspiracy (other than with a Holder Indemnified Party) with respect thereto, in
which the Company shall participate, in connection with the issuance and sale of
any of the Warrant Shares; provided, however, that (i) the indemnity agreement
contained in this Section 6(a) shall not extend to any selling holder of Warrant
Shares in respect of any such losses, claims, damages, liabilities or actions
arising out of, or based upon, any such untrue statement or alleged untrue
statement, or any such omission or alleged omission, if such statement or
omission was based upon and made in conformity with information furnished in
writing to the Company by a selling holder of Warrant Shares specifically for
use in connection with the preparation of such Registration Statement, any final
prospectus, any preliminary prospectus or any such amendment or supplement
thereto. The Company agrees to pay any legal and other expenses for which it is
liable under this Section 6(a) from time to time (but not more frequently than
monthly) within 30 days after its receipt of a xxxx therefor.
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(b) Each selling holder (including, for purposes
of this Section 6, any Holder) of Warrant Shares, and each person who controls
any such selling holder within the meaning of Section 15 of the Act, severally
and not jointly, will indemnify and hold harmless the Company, its directors,
its officers who shall have signed the Registration Statement and each person,
if any, who controls the Company within the meaning of Section 15 of the Act to
the same extent as the foregoing indemnity from the Company, but in each case to
the extent, and only to the extent, that any statement in or omission from or
alleged omission from such Registration Statement, any final prospects, any
preliminary prospectus or any amendment or supplement thereto was made in
reliance upon information furnished in writing to the Company by such selling
holder specifically for use in connection with the preparation of the
Registration Statement, any final prospectus or the preliminary prospectus or
any such amendment or supplement thereto; provided, however, that the obligation
of any holder of Warrant Shares to indemnify the Company under the provisions of
this Section 6(b) shall be limited to (X) the product of the Market Price and
the number of the Warrant Shares being sold by the selling holder minus (Y) the
product of the Per Share Warrant Price and the number of such Warrant Shares.
Each selling holder of Warrant Shares agrees to pay any legal and other expenses
for which it is liable under this Section 6(b) from time to time (but not more
frequently than monthly) within 30 days after receipt of a xxxx therefor.
(c) If any action is brought against a person
entitled to indemnification pursuant to the foregoing Section 6(a) or Section
6(b) (an "Indemnified Party") in respect of which indemnity may by sought
against a person granting indemnification (an "Indemnifying Party") pursuant to
such section, such Indemnified Party shall promptly notify such Indemnifying
Party in writing of the commencement thereof; but the omission so to notify the
Indemnifying Party of any such action shall not release the Indemnifying Party
from any liability it may have to such Indemnified Party otherwise than on
account of the indemnity agreement contained in Section 6(a) or Section 6(b)
hereof. In case any such action is brought against an Indemnified Party and it
notifies an Indemnifying Party of the commencement thereof, the Indemnifying
Party against which a claim is to be made will be entitled to participate
therein at its own expense and, to the extent that it may wish, to assume at its
own expense the defense thereof, with counsel reasonably satisfactory to such
Indemnified Party; provided, however, that if the Indemnified Party shall have
reasonably concluded based upon written advice of counsel that there may be
legal defenses available to it and/or other Indemnified Parties which are
different from or additional to those available to the Indemnifying Party, the
Indemnified Party shall have the right to select separate counsel to assume such
legal defenses and otherwise to participate in the defense of such action on
behalf of such Indemnified Party or Parties. Upon receipt of notice from the
Indemnifying Party to such Indemnified Party of its election so to assume the
defense of such action and approval by the Indemnified Party of counsel, the
Indemnifying Party will not be liable to such Indemnified Party under this
Section 6 for any legal or other expenses subsequently incurred by such
Indemnified Party in connection with the defense thereof unless (i) the
Indemnified Party shall have employed such counsel in connection with the
assumption of legal defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that the Indemnifying Party
shall not be liable for the expenses of more than one separate counsel), (ii)
the Indemnifying Party shall not have employed counsel reasonably satisfactory
to the Indemnified Party to represent the Indemnified
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Party within a reasonable time after notice of commencement of the action or
(iii) the Indemnifying Party has authorized the employment of counsel for the
Indemnified Party at the expense of the Indemnifying Party. An Indemnifying
Party shall not be liable for any settlement of any action or proceeding
effected without its written consent (which consent shall not be unreasonably
withheld).
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6(a) or (b) hereof is unavailable in accordance with its terms, the
Company and the selling holder of Warrant Shares shall contribute to the
aggregate losses, claims, damages and liabilities, of the nature contemplated by
said indemnity agreement, incurred by the Company and the selling holder of
Warrant Shares, in such proportions as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the selling holder of
Warrant Shares, on the other hand, from any offering of the Warrant Shares;
provided, however, that if such allocation is not permitted by applicable law or
if the Indemnified Party failed to give the notice required under Section 6(c),
then the relative fault of the Company and the selling holder of Warrant Shares
in connection with the statements or omissions which result in such losses,
claims, damages and liabilities and other relevant equitable considerations will
be considered together with such relative benefits.
(e) The respective indemnity and contribution
agreements by the Company and the selling holder of Warrant Shares in Sections
6(a), (b), (c) and (d) hereof shall remain operative and in full force and
effect regardless of (i) any investigation made by any selling holder of Warrant
Shares or by or on behalf of any person who controls such selling holder or by
the Company or any controlling person of the Company or any director or any
officer of the Company, (ii) the exercise of this Warrant or (iii) payment for
any of the Warrant Shares, and shall survive the delivery of the Warrant Shares,
and any successor of the Company, or of any selling holder of Warrant Shares, or
of any person who controls the Company, or of any selling holder of Warrant
Shares, as the case may be, shall be entitled to the benefit of such respective
indemnity and contribution agreements. The respective indemnity and contribution
agreements by the Company and the selling holders of Warrant Shares contained in
Sections 6(a), (b), (c) and (d) hereof shall be in addition to any liability
which the Company and the selling holders of Warrant Shares may otherwise have.
7. Limitations of Transfer of the Warrant; Legend on
Certificates; Investment Representation.
(a) The Holder agrees that prior to making any
transfer or disposition of the Warrant or the Warrant Shares or any interest
therein, the Holder shall give written notice to the Company describing briefly
the manner in which any such proposed transfer or disposition is to be made; and
no such transfer or disposition shall be made if the Company has notified the
Holder that in the opinion of counsel to the Company (i) a registration
statement or other notification or post-effective amendment thereto (hereinafter
collectively a "Registration Statement") under the Act is required with respect
to such transfer or disposition and no such registration Statement has been
filed by the Company with, and declared effective, if necessary, by, the
Commission, or (ii) unfulfilled requirements under any federal or state
securities laws
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prohibit or restrict the proposed transfer or disposition. The Company shall not
be required to cause the Warrant or the Warrant Shares to be registered under
any securities laws except as otherwise expressly provided herein.
(b) Each certificate for the Warrant or Warrant
Shares shall bear substantially the following legend, unless, at the time of
exercise, such Warrant or Warrant Shares are subject to a currently effective
Registration Statement under the Act and, if required, are subject to a
currently effective qualification or registration under any applicable
securities laws of any other jurisdiction:
THIS WARRANT HAS [THESE SHARES HAVE] BEEN ACQUIRED FOR INVESTMENT AND
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE. THIS WARRANT [THESE SHARES] MAY
NOT BE SOLD OR TRANSFERRED, EXCEPT UPON SUCH REGISTRATION OR UPON
DELIVERY TO MAKER OF AN OPINION OF COUNSEL SATISFACTORY TO MAKER THAT
REGISTRATION IS NOT REQUIRED FOR SUCH SALE OR TRANSFER.
In addition, if the Warrant or Warrant Shares are being issued in
reliance on Rule 147 under the Act, the following additional sentence shall be
included in the legend:
FOR A PERIOD OF NINE MONTHS FROM THE DATE OF SALE OF THIS WARRANT [THE
SHARES], ALL RESALES THEREOF SHALL BE MADE ONLY TO PERSONS RESIDENT
WITHIN THE STATE OF NEVADA.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a registered distribution) shall also bear the above legends unless, in the
opinion of the Company's counsel, the securities represented thereby need no
longer be subject to such restrictions.
(c) By accepting delivery of this Warrant, the
Holder represents and warrants (i) that it is acquiring the Warrant for its own
account for investment purposes only and not with a view to or for sale in
connection with a distribution of the Warrant or the Warrant Shares and (ii) it
is a bona fide resident of the State of Nevada, is not a temporary or transient
resident of the State of Nevada and is at least 21 years of age.
8. Loss, etc., of Warrant. Upon receipt of evidence
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant, and of indemnity reasonably satisfactory to the Company, if lost,
stolen or destroyed, and upon surrender and cancellation of this Warrant, if
mutilated, the Company shall execute and deliver to the Holder a new Warrant of
like date, tenor and denomination.
9. Warrant Holder Not Stockholder. Except as otherwise
provided herein, this Warrant does not confer upon the Holder any right to vote
or to consent to or receive notice
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as a stockholder of the Company, as such, in respect of any matters whatsoever,
or any other rights or liabilities as a stockholder, prior to the exercise
hereof.
10. Communication. No notice or other communication
under this Warrant shall be effective unless, but any notice or other
communication shall be effective and shall be deemed to have been given if, the
same is in writing and is mailed by first-class mail, postage prepaid, addressed
to:
(a) the Company at 0000 Xxxx Xxxxxx Xxxxxx, Xxx
Xxxxx, XX 00000, or such other address as the Company has
designated in writing to the Holder, with a copy to Xxxxxx
Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxxx X. Xxxxx, Esq.,
or
(b) the Holder at _____________________________
__________________________________________, or such other
address as the Holder has designated in writing to the
Company.
11. Headings. The headings of this Warrant have been
inserted as a matter of convenience and shall not affect the construction
hereof.
12. Applicable Law. This Warrant shall be governed by
and construed in accordance with the law of the State of Nevada without giving
effect to the principles of conflicts of law thereof.
IN WITNESS WHEREOF, Xxxxxx Incorporated has caused this
Warrant to be signed by its President and its corporate seal to be hereunto
affixed and attested by its Secretary this _____ day of ______________, 1997.
XXXXXX INCORPORATED
By: _______________________________
Name: Xxxxx X. Xxxxxx
Title: President
ATTEST:
-----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Secretary
[Corporate Seal]
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ASSIGNMENT
FOR VALUE RECEIVED __________________________ hereby sells,
assigns and transfers unto _______________________________ the foregoing Warrant
and all rights evidenced thereby, and does irrevocably constitute and appoint
_________________________, attorney, to transfer said Warrant on the books of
Xxxxxx Incorporated
Dated: ________________ Signature: _____________________________
Address: _______________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED __________________________ hereby sells,
assigns and transfers unto __________________________ the right to purchase
_____________ shares of the Common Stock of Xxxxxx Incorporated covered by the
foregoing Warrant, and a proportionate part of said Warrant and the rights
evidenced thereby, and does irrevocably constitute and appoint
__________________________, attorney, to transfer that part of said Warrant on
the books of Xxxxxx Incorporated
Dated: ________________ Signature: _____________________________
Address: _______________________________
16
SUBSCRIPTION FORM
The undersigned hereby irrevocably elects to exercise the
right of purchase represented by the attached Warrant for, and to purchase
thereunder, _____________ shares of the Common Stock of Xxxxxx Incorporated, as
provided for in Section 1 thereof.
The undersigned herewith makes payment for such shares in full
at the price per share provided by such Warrant in the following manner (please
check the type or types of payment and indicate the portion of the aggregate
payment to be paid by each type of payment):
____ Exercise for cash as provided in Section 1(a) of such
Warrant.
____ Exercise by surrender of such Warrant (or a portion
thereof) in accordance with Section 1(b) of such Warrant.
Please issue a certificate or certificates for such shares in
the name of, and pay any cash for any fractional share to:
Name ___________________________________
(Please Print Name, Address and Social
Security No. or Taxpayer Identification
No.)
Address ________________________________
--------------------------------
Social Security No. or Taxpayer
Identification No. _____________
Signature ______________________________
NOTE: The above signature
should correspond
exactly with the name
on the first page of
such Warrant or with
the name of the
assignee appearing in
the assignment form
attached to the
Warrant.
And if such number of shares shall not be all the shares
purchasable under the attached Warrant, a new Warrant is to be issued in the
name of said undersigned for the balance remaining of the shares purchasable
thereunder and delivered to the address set forth above.
