EXHIBIT 4.2
[Form of Warrant Agreement]
-----------------------------------------------------------------
XXXXXXXXXX.XXX, INC.
AND
XXXXXX, XXXXX XXXXX, INCORPORATED
AND
XXXXXXXXXX & CO. INC.
----------------------------------
WARRANT AGREEMENT
Dated as of , 1999
WARRANT AGREEMENT, dated as of _____________, 1999, between XXXXXXXXXX.XXX,
Inc., a Delaware corporation (the "Company"), XXXXXX, XXXXX XXXXX, INCORPORATED
("FBW") and XXXXXXXXXX & CO. INC. ("Xxxxxxxxxx" and, together with FBW, the
"Representatives").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the underwriting agreement (the "Underwriting
Agreement"), dated as of the date hereof, between the Representatives and X.X.
Xxxxxxxxx, Towbin, as representatives of the several Underwriters (as such term
is defined in the Underwriting Agreement), and the Company, the Representatives
and the other Underwriters have agreed to purchase _______________ shares of
common stock, $.01 par value per share, of the Company, at a public offering
price of $______ per share in connection with the Company's proposed public
offering (the "Public Offering");
WHEREAS, the Company proposes to issue to the Representatives warrants
("Warrants") to purchase up to an aggregate of ten percent (10%) of the total
number of shares of Common Stock (as defined in Section 8.3 hereof) offered to
the public through the Public Offering, including any over-allotments, less
96,831 shares; and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued on the Closing Date (as such term is defined in the Underwriting
Agreement) by the Company to the Representatives in consideration for, and as
part of the Representatives' compensation in connection with, the performance of
the Representatives pursuant to the Underwriting Agreement.
NOW, THEREFORE, in consideration of the premises, the payment by the
Representatives to the Company of an aggregate of one hundred dollars ($100.00),
the agreements herein set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Grant. The Representatives are hereby granted the right to purchase,
-----
at any time from July __________, 2000 until 5:30 p.m., New York time, on July
______, 2004 (the "Exercise Period"), up to an aggregate number of shares of
Common Stock (the "Shares") equal to ten percent (10%) of the total number of
shares of Common Stock offered to the public through the Public Offering,
including any over-allotments, less 96,831 shares, at an initial exercise price
(subject to adjustment as provided in Section 8 hereof) of $______ per share of
Common Stock subject to the terms and conditions of this Agreement. Except as
set forth herein, the Shares issuable upon exercise of the Warrants are in all
respects identical to the shares of Common Stock being purchased by the
Underwriters for resale to the public pursuant to the terms and provisions of
the Underwriting Agreement.
2. Warrant Certificates. The warrant certificates (the "Warrant
--------------------
Certificates") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in Exhibit A,
attached hereto and made a part hereof, with such appropriate insertions,
omissions, substitutions and other variations as required or permitted by this
Agreement.
3. Exercise of Warrant.
-------------------
3.1 Method of Exercise. The Warrants initially are exercisable at an
------------------
aggregate initial exercise price per share of Common Stock set forth in Section
6 hereof (subject to adjustment as provided in Section 8 hereof) payable by wire
or certified or official bank check in New York Clearing House funds. Upon
surrender of a Warrant Certificate with the annexed Form of Election to Purchase
duly executed, together with payment of the Purchase Price (as hereinafter
defined) for the shares of Common Stock purchased at the Company's principal
offices in Virginia (presently located at 0000 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxx
20190) the registered holder of a Warrant Certificate ("Holder" or "Holders")
shall be entitled to receive a certificate or certificates for the shares of
Common Stock so purchased. The purchase rights represented by each Warrant
Certificate are exercisable at the option of the Holder thereof, in whole or in
part for all or part of the shares of Common Stock represented thereby (but not
as to fractional shares of the Common Stock underlying the Warrants). In the
case of the purchase of less than all the shares of Common Stock purchasable
under any Warrant Certificate, the Company shall cancel said Warrant Certificate
upon the surrender thereof and shall execute and deliver a new Warrant
Certificate of like tenor for the balance of the shares of Common Stock
purchasable thereunder.
3.2. Exercise by Surrender of Warrants. In addition to the method of
---------------------------------
payment set forth in Section 3.1 and in lieu of any cash payment required
thereunder, the Holder(s) of the Warrants shall have the right at any time and
from time to time to exercise the Warrants in whole or in part by surrendering
the Warrant Certificate in the manner specified in Section 3.1 in exchange for
the number of shares of Common Stock equal to (x) the number of shares as to
which the Warrants are being exercised multiplied by (y) a fraction, the
-------------
numerator of which is the Market Price (as defined below) of the Common Stock
less the Exercise Price and the denominator of which is such Market Price.
Solely for the purposes of this paragraph, Market Price shall be calculated
either (i) on the date which the form of election attached hereto is deemed to
have been sent to the Company pursuant to Section 13 hereof ("Notice Date") or
(ii) as the average of the Market Prices for each of the five consecutive
trading days preceding the Notice Date, whichever of (i) or (ii) is greater.
4. Issuance of Certificates. Upon the exercise of the Warrants, the
------------------------
issuance of certificates for shares of Common Stock or other securities,
properties or rights underlying such Warrants, shall be made forthwith (and in
any event within three (3) business days thereafter) without charge to the
Holder thereof including, without limitation, any tax which may be payable in
respect of the issuance thereof, and such certificates shall (subject to the
provisions of Sections 5 and 7 hereof) be issued in the name of, or in such
names as may be directed by, the Holder thereof; provided, however, that the
-------- -------
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such certificates in a
name other than that of the Holder, and the Company shall not be required to
issue or deliver
2
such certificates unless or until the person or persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares
(and/or other securities, property or rights issuable upon the exercise of the
Warrants) shall be executed on behalf of the Company by the manual or facsimile
signature of the then present Chairman or Vice Chairman of the Board of
Directors or President or Vice President of the Company under its corporate seal
reproduced thereon, attested to by the manual or facsimile signature of the then
present Secretary or Assistant Secretary of the Company. Warrant Certificates
shall be dated the date of execution by the Company upon initial issuance,
division, exchange, substitution or transfer.
5. Restriction on Transfer of Warrants. The Holder of a Warrant
-----------------------------------
Certificate, by its acceptance thereof, covenants and agrees that the Warrants
are being acquired as an investment and not with a view to the distribution
thereof, and that the Warrants will not be sold, offered for sale, transferred,
assigned or hypothecated for a period of one year from the date of this
agreement other than to officers, employees or partners of the respective
Representatives and members of the selling group and their officers and
partners, in which case, such officers, employees or partners shall be entitled
to receive a replacement Warrant Certificate in accordance with Section 9 hereof
upon presentment of a properly executed Form of Assignment (in the form included
in Exhibit A attached hereto), provided, however, that any such transfer
permitted hereunder shall be for an amount equal to no less than 25,000 Warrant
Shares (as defined in Section 7 below). In no event shall any transfer
hereunder violate applicable federal or state securities laws and the Company
may reasonably request an opinion of counsel to such effect.
6. Exercise Price.
--------------
6.1 Initial and Adjusted Exercise Price. Except as otherwise
-----------------------------------
provided in Section 8 hereof, the initial exercise price of each Warrant shall
be $[_____] [110% of the initial public offering price] per share of Common
Stock. The adjusted exercise price shall be the price which shall result from
time to time from any and all adjustments of the initial exercise price in
accordance with the provisions of Section 8 hereof.
6.2 Exercise Price. The term "Exercise Price" as used herein shall
--------------
mean the initial exercise price or the adjusted exercise price, depending upon
the context.
7. Registration Rights.
-------------------
7.1 Registration under the Securities Act of 1933. The Warrants, the
---------------------------------------------
Shares and any of the other securities issuable upon exercise of the Warrants
have not been registered under the Securities Act of 1933, as amended (the
"Act"). Upon exercise of the Warrants, in part or in whole, the certificates
representing the Shares underlying the Warrants and any of the other
3
securities issuable upon exercise of the Warrants (collectively, the "Warrant
Shares") shall bear the following legend:
The securities represented by this certificates have not been
registered under the Securities Act of 1933, as amended ("Act") or any
state securities laws, and may not be offered or sold except pursuant
to (i) an effective registration statement under the Act and
registration under applicable state securities laws, (ii) to the
extent applicable, Rule 144 under the Act (or any similar rule under
the Act relating to the disposition of securities) and any similar
exemption under state securities laws, or (iii) another available
exemption from registration under the Act and applicable state
securities laws.
7.2 Piggyback Registration. From the date hereof and expiring seven
----------------------
(7) years thereafter, whenever the Company proposes to register any of its
securities under the Act and such registration is a "Piggyback Registration" as
defined in that certain Registration Rights Agreement made as of June 8, 1999
("Registration Rights Agreement") by and among the Company and the "Registration
Rights Holders" (as such term is defined in the Registration Rights Agreement
(as included as Exhibit 10.16 to the Company's Registration Statement filed on
Form S-1 (File No. 333-72685)), the Representatives and each other Holder(s) of
the Warrants and/or the Warrant Shares (the "Registrable Securities") are hereby
granted registration rights pari passu with the Registration Rights Holders
under the Registration Rights Agreement and, therefore, shall be entitled to the
same rights and benefits with respect to the registration of such Registrable
Securities as the Company has granted to the Registration Rights Holders in
Section 3 of the Registration Rights Agreement.
7.3 Demand Registration.
-------------------
(a) From the date hereof and expiring five (5) years hereafter, the
Holders of the Warrants and/or Warrant Shares representing a "Majority" (as
hereinafter defined) of such securities (assuming the exercise of all of the
warrants) not previously sold pursuant to this Section 7 shall have the right
(which right is in addition to the registration rights granted under Section 7.2
hereof), exercisable by written notice to the Company, to have the Company
prepare and file with the Securities and Exchange Commission (the "Commission"),
on not more than one occasion, a registration statement and such other
documents, including a prospectus, as may be necessary in the opinion of both
counsel for the Company and counsel for the Representatives and the Holders, in
order to comply with the provisions of the Act, so as to permit a public
offering and sale of their respective Warrant Shares for six (6) consecutive
months by such Holders and any other Holders of the Warrants and/or Warrant
Shares who notify the Company within twenty (20) days after receiving notice
from the Company of such request. In the event of a registration request and
registration hereunder, (i) the Registration Rights Holders shall be entitled to
participate in such registration in accordance with their respective rights to
participate in a
4
Demand Registration (as such term is defined in the Registration Rights
Agreement) under the Registration Rights Agreement, and (ii) the Representatives
and each other Holder(s) of Registrable Securities hereunder shall be subject to
the same priority as Virgin, Rho and Columbia House with respect to any
cutbacks.
(b) In the event that a Registration Rights Holder makes a request for
a "Demand Registration" as defined in the Registration Rights Agreement, the
Representatives and each other Holder(s) of Registrable Securities are hereby
granted registration rights pari passu with Virgin, Rho and Columbia House (as
such parties are defined in the Registration Rights Agreement) and, therefore,
shall be entitled to the same rights and benefits with respect to the
registration of such Registrable Securities (which shall also be deemed
"Registrable Securities" under the Registration Rights Agreement") as the
Company has granted to Virgin, Rho and Columbia House.
(c) The Company covenants and agrees to give written notice of any
registration request under this Section 7.3 by any Holder or Holders to all
other registered Holders of the Warrants and the Warrant Shares within ten (10)
days from the date of the receipt of any such registration request.
(d) No right of the Holders under Section 7.3(a) shall be deemed to
have been exercised if with respect to such right:
(A) the requisite notice given by Holders pursuant to this
Section 7.3 is withdrawn prior to the date of filing of a registration
statement or if a registration statement filed by the Company under
the Securities Act pursuant to this Section 7.3 is withdrawn prior to
its effective date, in either case, by written notice to the Company
from the Holders of fifty percent (50%) or more of the Warrants and/or
Warrant Shares to be included or which are included in such
registration statement stating that such Holders have elected not to
proceed with the offering contemplated by such registration statement
because (i) a development in the Company's affairs has occurred or has
become known to such Holders subsequent to the date of the notice by
the Holders to the Company requesting registration of the Warrant
Shares of the filing of such registration statement which, in the
judgment of such Holders or the managing underwriter of the proposed
public offering, adversely affects the market price of such Warrant
Shares (provided, however, that the exception under this clause (i)
shall not be available more than once where the withdrawal is at the
election of the Holders) or (ii) a registration statement filed by the
Company pursuant to this Section 7.3, in the reasonable opinion of
counsel for such Holders or the managing underwriter of the proposed
public offering, contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein not
5
misleading in light of the circumstances under which made (other than
any such statement or omission relating to such Holders and based on
information supplied or failed to be supplied by such Holders) and the
Company has not, promptly after written notice thereof, corrected such
statement or omission in an amendment filed to such registration
statement pursuant to Section 7.4(m); or
(B) a registration statement pursuant to this Section 7.3 shall
have become effective under the Securities Act and (i) the
underwriters shall not purchase any Warrant Shares because of a
failure of condition contained in the underwriting agreement (other
than a condition to be performed by or within the control of the
Holders) relating to the offering covered by such registration
statement or (ii) less than 85% of the Warrant Shares included therein
shall have been sold as a result of any stop order, injunction or
other order or requirement of the Commission or other governmental
agency or court.
(e) Notwithstanding anything to the contrary contained herein, if the
Company shall not have filed a registration statement for the Warrant Shares
within the time period specified in Section 7.4(a) hereof pursuant to the
written notice specified in Section 7.3(a) hereof of a Majority of the Holders
of Warrants or Warrant Shares, the Company shall have the option, upon the
consent of a Majority of the Holders of Warrants or Warrant Shares, to
repurchase (i) any and all Warrant Shares at the higher of the Market Price per
share of Common Stock on (A) the date of the notice sent pursuant to Section
7.3(a) or (B) the expiration of the period specified in Section 7.4(a) and (ii)
any and all Warrants at such Market Price less the Exercise Price of such
Warrant. Such repurchase, if elected by the Company, shall be in immediately
available funds and shall close within two (2) days after the later of (x) the
expiration of the period specified in Section 7.4(a) or (y) the delivery of
written notice of election specified in this Section 7.3(e).
7.4 Covenants of the Company with Respect to Registration. In
-----------------------------------------------------
connection with any registration under Section 7.2 or 7.3 hereof, the Company
covenants and agrees as follows:
(a) Consistent with the Registration Rights Agreement, the Company
shall use its best efforts to file a registration statement within ninety (90)
days of receipt of any request therefor, shall use its best efforts to have any
registration statements declared effective at the earliest possible time, and
shall furnish each Holder desiring to sell Warrant Shares such number of
prospectuses as shall reasonably be requested.
Notwithstanding the foregoing, the Company shall be entitled to
postpone, for a period of not more than ninety (90) days after receipt of a
request to effect a registration, the filing of any registration statement
otherwise required to be prepared and filed by it pursuant to Section 7.3 hereof
if, at any time it receives a request for registration, the Board of Directors
of the Company determines in its reasonable business judgment that such
registration and offering would
6
interfere with any material financing, acquisition, corporate reorganization or
other material transaction or development involving the Company and promptly
gives the Holders demanding registration written notice of such determination;
provided that (i) upon such postponement by the Company, the Company shall be
--------
required to file such registration statement as soon as practicable after the
Board of Directors of the Company shall determine, in its reasonable business
judgment, that such registration and offering will not interfere with the
aforesaid material financing, acquisition, corporate reorganization or other
material transaction or development involving the Company, (ii) the Company may
utilize this right once each year; (iii) the Holders who made such written
request to effect such registration, may, at any time in writing, withdraw such
request for such registration and therefore preserve the right provided in
Section 7.3 hereof for such Holders to again request such registration, and (iv)
the Exercise Period shall automatically be extended by an additional one hundred
and twenty (120) days.
(b) The Company shall pay all costs (including fees and expenses of
one counsel to the Holder(s) up to a maximum amount of $25,000 in the case of a
Demand Registration or $15,000 in the case of a Piggyback Registration, but not
underwriting or selling commissions), fees and expenses in connection with all
registration statements filed pursuant to Sections 7.2 and 7.3 hereof including,
without limitation, the Company's legal and accounting fees, printing expenses,
blue sky fees and expenses. If the Company shall fail to comply with the
provisions of Section 7.4(a), the Company shall, in addition to any other
equitable or other relief available to the Holder(s), extend the Exercise Period
by such number of days as shall equal the delay caused by the Company's failure,
and be liable for any or all damages as the Holder(s) may be entitled to as a
matter of law.
(c) The Company will take all necessary action which may be required
in qualifying or registering the Warrant Shares included in a registration
statement for offering and sale under the securities or blue sky laws of a
reasonable number of states as the Holder(s) shall designate; provided that the
--------
Company shall not be obligated to qualify to do business in any such
jurisdiction or to file any general consent to service of process in any
jurisdiction in any action other than one arising out of the offering or the
sale of the Warrant Shares.
(d) The Company shall indemnify each Holder of the Warrant Shares to
be sold pursuant to any registration statement and each person, if any, who
controls such Holder within the meaning of Section 15 of the Act or Section
20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
against all loss, claim, damage, expense or liability (including all expenses
reasonably incurred in investigating, preparing or defending against any claim
whatsoever) to which any of them may become subject under the Act, the Exchange
Act or otherwise, arising from such registration statement, but only to the same
extent and with the same effect as the provisions pursuant to which the Company
has agreed to indemnify the Representative, in its capacity as an Underwriter,
contained in Section 8 of the Underwriting Agreements.
7
(e) The Holder(s) of the Warrant Shares to be sold pursuant to a
registration statement, and their successors and assigns, shall severally, and
not jointly, indemnify the Company, its officers and directors and each person,
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against all loss, claim, damage or expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the Exchange Act or otherwise, arising from information
furnished by or on behalf of such Holders, or their successors or assigns, for
specific inclusion in such registration statement to the same extent and with
the same effect as the provisions contained in Section 8 of the Underwriting
Agreement pursuant to which the Representative, in its capacity as an
Underwriter, has agreed to indemnify the Company.
(f) Nothing contained in this Agreement shall be construed as
requiring a Holder to exercise its Warrants prior to the initial filing of any
registration statement or the effectiveness thereof.
(g) [Reserved].
(h) In connection with any registration statement filed pursuant to
Section 7.2 hereof, the Company shall furnish to each Holder participating in
any underwritten offering and to each underwriter, a signed counterpart,
addressed to such Holder or underwriter, of (i) an opinion of counsel to the
Company, dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, an opinion dated the date
of the closing under the underwriting agreement), and (ii) a "cold comfort"
letter, dated the effective date of such registration statement (and, if such
registration includes an underwritten public offering, a letter dated the date
of the closing under the underwriting agreement), signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such registration statement, in each case covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities.
(i) The Company shall as soon as practicable after the effective date
of the registration statement, and in any event within fifteen (15) months
thereafter, make "generally available to its security holders" (within the
meaning of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the Act and covering a period of at
least twelve (12) consecutive months beginning after the effective date of the
registration statement.
(j) Subject to reasonable confidentiality and privilege
considerations, the Company shall deliver promptly to each Holder participating
in the offering requesting the correspondence and memoranda described below, and
to the managing underwriters, copies of all
8
correspondence between the Commission and the Company, its counsel or auditors
and all memoranda relating to discussions with the Commission or its staff with
respect to the registration statement and permit each Holder and underwriter to
do such investigation, upon reasonable advance notice, with respect to
information contained in or omitted from the registration statement as it deems
reasonably necessary to comply with applicable securities laws or rules of the
National Association of Securities Dealers, Inc. ("NASD"). Such investigation
shall include access to books, records and properties and opportunities to
discuss the business of the Company with its officers and independent auditors,
all to such reasonable extent and at such reasonable times and as often as any
such Holder or underwriter shall reasonably request.
(k) The Company shall enter into an underwriting agreement with the
managing underwriters selected for such underwriting by Holders holding a
Majority of the Warrant Shares requested to be included in such underwriting,
which may be any of the Underwriters. Such agreement shall be reasonably
satisfactory in form and substance to the Company, each Holder and such managing
underwriters, and shall contain such representations, warranties and covenants
by the Company and such other terms as are customarily contained in agreements
of that type used by the managing underwriter. Such Holders shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriters except as they may relate to such Holders' ownership
of the Warrants and the Warrant Shares and their intended methods of
distribution.
(l) [Reserved].
(m) For purposes of this Agreement, the term "Majority," in reference
to the Holders of Warrants or Warrant Shares, shall mean in excess of fifty
percent (50%) of the then outstanding Warrants or Warrant Shares that (i) are
not held by the Company, an officer, creditor, employee or agent thereof or any
of their respective affiliates, members of their family, persons acting as
nominees or in conjunction therewith or (ii) have not been resold to the public
pursuant to a registration statement filed with the Commission under the Act.
(n) The Company shall promptly notify each Holder of Warrants and/or
Warrants Shares covered by such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the Act, upon the
Company's discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement, as then in
effect, includes 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, and at the request of any such Holder promptly prepare and furnish to such
Holder and each underwriter, if any, 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.
9
8. Adjustments to Exercise Price and Number of Shares.
--------------------------------------------------
8.1 Subdivision and Combination. In case the Company shall at any
---------------------------
time subdivide or combine the outstanding shares of Common Stock, the Exercise
Price shall be decreased, in the case of subdivision, or increased, in the case
of combination, in the same proportions as the Common Stock is subdivided or
combined, in each case effective automatically upon, and simultaneously with,
the effectiveness of the subdivision or combination which gives rise to the
adjustment.
8.2 Adjustment in Number of Shares. Upon each adjustment of the
------------------------------
Exercise Price pursuant to the provisions of this Section 8, the number of
Shares issuable upon the exercise of each Warrant shall be adjusted by
multiplying a number equal to the Exercise Price in effect immediately prior to
such adjustment by the number of Warrant Shares issuable upon exercise of the
Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
8.3 Definition of Common Stock. For the purpose of this Agreement,
--------------------------
the term "Common Stock" shall mean (i) the class of stock designated as Common
Stock in the Certificate of Incorporation of the Company as may be amended as of
the date hereof, or (ii) any other class of stock resulting from successive
changes or reclassifications of such Common Stock consisting solely of changes
in par value, or from par value to no par value, or from no par value to par
value.
8.4 Merger or Consolidation. (a) In case the Company after the date
-----------------------
hereof (i) shall consolidate with or merge into any other person and shall not
be the continuing or surviving corporation of such consolidation or merger, or
(ii) shall permit any other person to consolidate with or merge into the Company
and the Company shall be the continuing or surviving person but, in connection
with such consolidation or merger, the Common Stock shall be changed into or
exchanged for stock or other securities of any other person or cash or any other
property, or (iii) shall transfer all or substantially all of its properties or
assets to any other person, or (iv) shall effect a capital reorganization or
reclassification of the Common Stock (other than a capital reorganization or
reclassification resulting in the issue of additional shares of Common Stock for
which adjustment in the Exercise Price is provided in Section 8), then, and in
the case of each such transaction, proper provision shall be made so that, upon
the basis and the terms and in the manner provided in this Agreement and the
Warrants, the Holders of the Warrants, upon the exercise thereof at any time
after the consummation of such transaction, shall be entitled to receive (at the
aggregate Exercise Price in effect at the time of such consummation for all
Common Stock issuable upon such exercise immediately prior to such
consummation), in lieu of the Common Stock or other securities issuable upon
such exercise prior to such consummation, the highest amount of securities, cash
or other property to which such Holders would actually have been entitled as
stockholders upon such consummation if such Holders had exercised the rights
represented by the Warrants immediately prior thereto, subject to adjustments
(subsequent to such consummation) as nearly equivalent as possible to the
adjustments provided for in Section 8; provided that if a
--------
10
purchase, tender or exchange offer shall have been made to and accepted by the
holders of more than 50% of the outstanding shares of Common Stock, and if a
Holder of Warrants so designates in a notice given to the Company on or before
the date immediately preceding the date of the consummation of such transaction,
such Holder of such Warrants shall be entitled to receive the highest amount of
securities, cash or other property to which such Holder would actually have been
entitled as a stockholder if such Holder of such Warrants had exercised such
Warrants prior to the expiration of such purchase, tender or exchange offer and
accepted such offer, subject to adjustments (from and after the consummation of
such purchase, tender or exchange offer) as nearly equivalent as possible to the
adjustments provided for in Section 8.
8.5 Assumption of Obligations. Notwithstanding anything contained in
-------------------------
the Warrants to the contrary, the Company will not effect any of the
transactions described in clauses (i) through (iv) of Section 8.4 unless, prior
to the consummation thereof, each person (other than the Company) which may be
required to deliver any stock, securities, cash or property upon the exercise of
the Warrants as provided herein shall assume, by written instrument delivered
to, and reasonably satisfactory to, the Holders of the Warrants, (a) the
obligations of the Company under this Agreement and the Warrants (and if the
Company shall survive the consummation of such transaction, such assumption
shall be in addition to, and shall not release the Company from, any continuing
obligations of the Company under this Agreement and the Warrants) and (b) the
obligation to deliver to such Holders such shares of stock, securities, cash or
property as, in accordance with the foregoing provisions of this Section 8, such
Holders may be entitled to receive, and such person shall have similarly
delivered to such Holders an opinion of counsel for such person, which counsel
shall be reasonably satisfactory to such Holders, stating that this Agreement
and the Warrants shall thereafter continue in full force and effect and the
terms hereof (including, without limitation, all of the provisions of this
Section 8) shall be applicable to the stock, securities, cash or property which
such person may be required to deliver upon any exercise of the Warrants or the
exercise of any rights pursuant hereto.
8.6 Stock Dividends. In the event that the Company shall at any time
---------------
prior to the exercise of all Warrants declare a stock dividend, the Holders of
the unexercised Warrants shall thereafter be entitled, in addition to the shares
of Common Stock or other securities receivable upon the exercise thereof, to
receive, upon the exercise of such Warrants, such stock dividend that they would
have been entitled to receive at the time such stock dividend was declared as
if the Warrants had been exercised immediately prior to such stock dividend. At
the time of any such stock dividend, the Company shall make appropriate reserves
to ensure the timely performance of the provisions of this Section 8.6.
8.7 [Reserved].
----------
8.8 Notice of Adjustment Events. Whenever the Company contemplates
---------------------------
the occurrence of an event which would give rise to adjustments under this
Section 8, the Company shall mail to each Holder, at least thirty (30) days
prior to the record date with respect to such event or, if no record date shall
be established, at least thirty (30) days prior to such event, a
11
notice specifying (i) the nature of the contemplated event, (ii) the date of
which any such record is to be taken for the purpose of such event, (iii) the
date on which such event is expected to become effective and (iv) the time, if
any is to be fixed, when the holders of record of Common Stock shall be entitled
to exchange their shares of Common Stock for securities deliverable in
connection with such event.
8.9 Notice of Adjustments. Whenever the Exercise Price or the kind
---------------------
of securities or property issuable upon exercise of the warrants, or both, shall
be adjusted pursuant to this Section 8, the Company shall make a certificate
signed by its President or a Vice President and by its Chief Financial officer,
Secretary or Assistant Secretary, setting forth, in reasonable detail, the event
requiring the adjustment, the amount of the adjustment, the method of which such
adjustment was calculated (including a description of the basis on which the
Company made any determination hereunder), and the Exercise Price and the kind
of securities issuable upon exercise of the Warrants after giving effect to such
adjustment, and shall cause copies of such certificate to be mailed (by first
class mail postage prepaid) to each Holder promptly after each adjustment.
8.10 Preservation of Rights. The Company will not, by amendment of
----------------------
its certificate of incorporation or through any consolidation, merger,
reorganization, transfer of assets, dissolution, issue or sale of securities or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Agreement or the Warrants or the rights represented
thereby, but will at all times in good faith assist in the carrying out of all
such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holders of the Warrants
against dilution.
9. Exchange and Replacement of Warrant Certificates. Each Warrant
------------------------------------------------
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Shares in such denominations as
shall be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity, bond or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company shall not be
-----------------------------------
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of the Warrants, nor shall it be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated as the Company's Board of
Directors shall determine subject to compliance with Delaware General Corporate
Law.
12
11. Reservation and Listing of Securities. The Company shall at all times
-------------------------------------
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of the Warrants, such number of
shares of Common Stock or other securities, properties or rights as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock and other securities issuable upon such exercise shall be duly
and validly issued, fully paid, nonassessable and not subject to the preemptive
rights of any stockholder. As long as the Warrants shall be outstanding, the
Company shall use its best efforts to cause all shares of Common Stock issuable
upon the exercise of the Warrants approved for automated quotation system of the
Nasdaq National Market System (subject to official notice of issuance) with
respect to which the Common Stock issued to the public in connection herewith
may then be so listed and/or quoted.
12. Notices to Warrant Holders. Nothing contained in this Agreement shall
--------------------------
be construed as conferring upon the Holders the right to vote or to consent or
to receive notice as a stockholder in respect of any meetings of stockholders
for the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company. If, however, at any time prior to
the expiration of the Warrants and their exercise, any of the following events
shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of determining the holders thereof who are entitled
to receive any dividend or other distribution payable; or
(b) the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any option, right
or warrant to subscribe therefor; or
(c) a voluntary or involuntary dissolution, liquidation or winding-up
of the Company (other than in connection with a consolidation or merger) or any
capital reorganization, recapitalization or reclassification or a sale of all or
substantially all of its property, assets and business as an entirety shall be
proposed;
then, in any one or more of said events, the Company will mail to each Holder of
a Warrant a notice specifying (i) the date or expected date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or right, and (ii)
the date or expected date on which any such reorganization, reclassification,
recapitalization, consolidation, merger, sale, dissolution, liquidation or
winding-up is to take place and the time, if any such time is to be fixed, as of
which the holders of record of Common Stock shall be entitled to exchange their
shares of Common Stock for the securities or other property deliverable upon
such reorganization, reclassification, recapitalization, consolidation, merger,
sale, dissolution, liquidation or winding-up. Such notice shall be mailed
13
at least thirty (30) days prior to the date therein specified. Failure to give
such notice or any defect therein shall not affect the validity of any action
taken in connection with the declaration or payment of any such dividend,
distribution or rights, or any proposed dissolution, liquidation, winding up or
sale of the Company
13. Notices.
-------
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly given or made at the time
delivered by hand if personally delivered; five calendar days after mailing if
sent by registered or certified mail; when answered back, if telexed; when
receipt is acknowledged, if telecopied; and the next business day after timely
delivery to the courier, if sent by overnight air courier guaranteeing next day
delivery (except that a notice of change of address shall not be deemed to have
been given until actually received by the addressee):
(a) If to the registered Holder of the Warrants, to the address of
such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 3 hereof or
to such other address as the Company may designate by notice to the Holders.
14. Supplements and Amendments. The Company and the Representatives may
--------------------------
from time to time supplement or amend this Agreement without the approval of any
holders of warrant Certificates (other than the Representative) in order to cure
any ambiguity, to correct or supplement any provision contained herein which may
be defective or inconsistent with any provisions herein, or to make any other
provisions in regard to matters or questions arising hereunder which the Company
and the Representatives may deem necessary or desirable and which the Company
and the Representatives deem shall not adversely affect the interests of the
Holders of Warrant Certificates. This Agreement may be amended with the mutual
agreement of the Company and the holders of a Majority of the Warrants or
Warrant Shares
15. Successors. All the covenants and provisions of this Agreement shall
----------
be binding upon and inure to the benefit of the Company, the Holders and their
respective successors and assigns hereunder.
16. Termination. This Agreement shall terminate at the close of business
-----------
on May __, 2004, provided, however, that the indemnification provisions in
Section 7 hereof shall survive such termination until such time for filing an
action for which indemnification is provided under Section 7 has expired under
the applicable statute of limitation.
17. Governing Law; Submission to Jurisdiction. This Agreement and each
-----------------------------------------
Warrant Certificate issued hereunder shall be deemed to be a contract made under
the laws of the state of
14
New York and for all purposes shall be construed in accordance with the laws of
said State without giving effect to the rules of said State governing the
conflicts of laws.
Any process or summons to be served upon any of the Company, the
Representatives and the Holders (at the option of the party bringing such
action, proceeding or claim) may be served by transmitting a copy thereof, by
registered or certified mail, return receipt requested, postage prepaid,
addressed to it at the address set forth in Section 13 hereof. Such mailing
shall be deemed personal service and shall be legal and binding upon the party
so served in any action, proceeding or claim.
18. Entire Agreement; Modification. This Agreement (including the
------------------------------
Underwriting Agreement to the extent portions thereof are referred to herein)
contains the entire understanding between the parties hereto with respect to the
subject matter hereof and may not be modified or amended except by a writing
duly signed by the party against whom enforcement of the modification or
amendment is sought.
19. Severability. If any provision of this Agreement shall be held to be
------------
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
20. Captions. The caption headings of the Sections of this Agreement are
--------
for convenience of reference only and are not intended to be, nor should they be
construed as, part of this agreement and shall be given no substantive effect.
21. Benefits of This Agreement. Nothing in this Agreement shall be
--------------------------
construed to give any person or corporation other than the Company and each of
the Representatives and any other registered Holder(s) of the Warrant
Certificates or Warrant Shares any legal or equitable right, remedy or claim
under this Agreement; and this Agreement shall be for the sole and exclusive
benefit of the Company, each of the Representatives and any other registered
Holder(s) of the Warrant Certificates or Warrant Shares.
22. Counterparts. This Agreement may be executed in any number of
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
[SEAL] XXXXXXXXXX.XXX, INC.
By: __________________________
15
Attest:
______________________________
Secretary
XXXXXX, XXXXX XXXXX, INCORPORATED
By: _______________________________
Name:
Title:
XXXXXXXXXX & CO. INC.
By: _______________________________
Name:
Title:
16
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
("ACT") AND REGISTRATION UNDER APPLICABLE STATE SECURITIES LAWS, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY SIMILAR RULE UNDER THE ACT
RELATING TO THE DISPOSITION OF SECURITIES) AND ANY SIMILAR EXEMPTION UNDER STATE
SECURITIES LAWS, OR (iii) ANOTHER EXEMPTION FROM REGISTRATION UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME, ____________, 2004
No. W- _____ Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that ______, or registered assigns, is
the registered holder of ___ Warrants to purchase initially, at any time from
_____________, 1999 [one year from the effective date of the Registration
Statement] until 5:30 p.m., New York time, on ______________, 2004 [five years
from the effective date of the Registration Statement] ("Expiration Date"], up
to ______ fully paid and nonassessable shares of common stock, $.01 par value
("Common Stock") of xxxxxxxxxx.xxx, Inc., a Delaware corporation (the
"Company"), at the initial exercise price, subject to adjustment in certain
events (the "Exercise Price"), of $____ [110% of the initial public offering
price] per share of Common Stock upon surrender of this Warrant Certificate and
payment of the Exercise Price at an office or agency of the Company, but subject
to the conditions set forth herein and in the Warrant Agreement dated as of
_____________, 1999, between the Company and Xxxxxx, Xxxxx Xxxxx, Incorporated
and Xxxxxxxxxx & Co. Inc. (the "Warrant Agreement"). Payment of the Exercise
Price shall be made
1
EXHIBIT A
by certified or official bank check in New York Clearing House funds payable to
the order of the Company.
No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
--------
however, that the failure of the Company to issue such new Warrant Certificates
-------
shall not in any way change, alter, or otherwise impair the rights of the holder
as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
2
EXHIBIT A
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated as of ____________, 1999
XXXXXXXXXX.XXX, INC.
By: ____________________________________
Name:
Title:
[SEAL]
Attest:
______________________________
Secretary
3
EXHIBIT A
[FORM OF ELECTION TO PURCHASE
PURSUANT TO SECTION 3.1]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ______ shares of Common
Stock and herewith tenders in payment for such securities a certified or
official bank check payable in New York clearing House funds to the order of
_________________________ in the amount of $____, all in accordance with the
terms hereof. The undersigned requests that a certificate for such securities
be registered in the name of ______________ whose address is __________________
and that such Certificate be delivered to _________________ whose address is
__________________________.
Dated:
Signature____________________________
(Signature must conform in all respects to
name and holder as specified on the face of
the Warrant Certificate)
____________________________________
(Insert Social Security or Other Identifying
Number of Holder)
4
EXHIBIT A
[FORM OF ELECTION TO PURCHASE
PURSUANT TO SECTION 3.2]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _____ shares of Common
Stock all in accordance with the terms of Section 3.2 of the Representative's
Warrant Agreement, dated as of __________, 1999, between xxxxxxxxxx.xxx, Inc.
and Xxxxxx, Xxxxx Xxxxx, Incorporated and Xxxxxxxxxx & Co. Inc. The undersigned
requests that a certificate for such securities be registered in the name of
____________________ whose address is _______________________________ and that
such Certificate be delivered to ___________________ whose address is
______________________.
Dated:
Signature____________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
____________________________________
(Insert Social Security or Other Identifying
Number of Holder)
5
EXHIBIT A
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder desires to transfer the
Warrant Certificate)
FOR VALUE RECEIVED _______________________________ hereby sells, assigns and
transfers unto
______________________________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _________________ Attorney,
to transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated: _________________ Signature: ___________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate.)
____________________________________
(Insert Social Security or Other
Identifying Number of Assignee)
6
